Only solution is for Ireland to leave the euro

Flamed Diving

It's sad that you continue with your childish little game. I am honestly sitting here and feeling embarrassed for you while reading your posts, like watching David Brent in The Office. Scofflaw has hit the nail right on the head with what he has been saying, which any reasonable person would be able to. But you seem to be clinging to this one thing with all your might, carrying on, page after page. I seem to have rattled you badly, since you are this obsessed with my posts. Your behaviour has all the hallmarks of a person who was whipped and is trying anything they can to score a tiny point. Recall the "your studying a masters" remark.

I honestly feel sorry for you.

Really.


Anyway, I'm out of this mess. I would be the bigger fool to carry on this dance.

kaymin

Flamed Diving wrote: »

And yet you trust the journalist who wrote that article. Hmm...

Not necessarily - I don't know anything about that journalist. But they've come to similar conclusions that I have. I'll consider all views and assess them for myself. It's good to keep an open mind.

imitation

The title of this thread is the most jarring part, its not the only solution, recessions aren't permanent, its just a cycle, talk to anybody over 40 and they`ll tell you the same. Ireland will pull out of this without leaving the euro, leaving would give little to no benefit for alot of long term damage. The euro or by the extension the EU isnt a revolving door system, and if its felt to be heading that way examples would be set.

kaymin

imitation wrote: »

The title of this thread is the most jarring part, its not the only solution, recessions aren't permanent, its just a cycle, talk to anybody over 40 and they`ll tell you the same. Ireland will pull out of this without leaving the euro, leaving would give little to no benefit for alot of long term damage. The euro or by the extension the EU isnt a revolving door system, and if its felt to be heading that way examples would be set.

No I agree it's not necessarily the only solution - I used that heading to get some interest.

I doubt the generation that bought over inflated properties with mortgages they'll be repaying for the rest of their lives would agree its just a short term issue. Small countries such as Ireland have paid and will continue to pay a heavy price for an unsuitable monetary policy. Personally I don't think we'll come out of this recession without taking drastic action. I think there are plenty of benefits to leaving the euro per my original post and very little benefit to staying in it. The whole euro project could fall apart in the coming months in any case

imitation

kaymin wrote: »

I doubt the generation that bought over inflated properties with mortgages they'll be repaying for the rest of their lives would agree its just a short term issue.

Unfortunately thats a choice they made, the only silver lining is that while they maybe in negative equity now in ten years time they wont be.

Small countries such as Ireland have paid and will continue to pay a heavy price for an unsuitable monetary policy. Personally I don't think we'll come out of this recession without taking drastic action.

We are paying the price for our own mistakes though, if we had regulated ourselves more carefully we would have held on to alot more of the benefit of the low interest rates that foreign investment and the euro brought, and will probably bring again.

I think there are plenty of benefits to leaving the euro per my original post and very little benefit to staying in it.

I think your opinion is too narrow and you haven't considered all the consequences. Do we really want a return to the days of 14% interest ? The current recession will end, and if we leave we`ll be left out cold when there is an upturn in the eurozone. The eurozone has the largest GDP in the world, by leaving the euro we would effectively be cutting ourselves out of this market. I dont think being able to deflate our own currency could ever possibly counter this. Then again I think one of your major points is that we can always renage on our debt by trying to cover it up as a currency change over. It just doesnt work like that, look at Iceland, they are getting hammered by both the EU and IMF for the 3 billion there banks owe.

The whole euro project could fall apart in the coming months in any case

I think this is the crux of your debate, that the euro isnt a real currency and its just a big experiment. I`m much reminded of the first few years, when my parents described it as monopoly money and its exchange rate was quiet weak. I think that stage is long gone, psychologically most people are used to the currency now. Its replacing the dollar as a hard currency in many developing countries. I think it will be an interesting few months / years for the euro, but I dont see it failing.

View

kaymin wrote: »

Small countries such as Ireland have paid and will continue to pay a heavy price for an unsuitable monetary policy.

Yeah, that's it. It's all the ECB's fault - next you'll be telling us about how smart and clever the fiscal policies that FF and the PDs pursued over the last decade or so were. Sure, the property market would still be going up if it wasn't for the ECB failing to see the virtues of the property ladder... :rolleyes:

kaymin wrote: »

I think there are plenty of benefits to leaving the euro per my original post and very little benefit to staying in it.

Yeah, the "benefits" of leaving the EU would no doubt keep you happy - there wouldn't be many in our exporting industries who'd appreciate tariffs on the 62% of our exports that are currently tariff free but let's sacrifice their jobs to keep you happy...

SkepticOne

ei.sdraob wrote: »

@SkepticOne

explain this

how do you explain the above?

or this UK exports in biggest fall since 1947

what exactly did devaluation in UK accomplish??

With figures for one country it doesn't prove much. The same figures could equally be used to argue that the the devaluation wasn't sufficient for the UK's purposes. They also don't show what would have happened if the UK was unable to devalue.

SkepticOne

View wrote: »

Yeah, the "benefits" of leaving the EU would no doubt keep you happy - there wouldn't be many in our exporting industries who'd appreciate tariffs on the 62% of our exports that are currently tariff free but let's sacrifice their jobs to keep you happy...

I don't think you've shown that leaving the Euro would necessarily mean leaving the EU or for that matter the EEA.

kaymin

View wrote: »

Yeah, that's it. It's all the ECB's fault - next you'll be telling us about how smart and clever the fiscal policies that FF and the PDs pursued over the last decade or so were. Sure, the property market would still be going up if it wasn't for the ECB failing to see the virtues of the property ladder... :rolleyes:

Surely you agree that interest rates in Ireland were too low during our boom years - please comment on what I've said and not on what you suppose I'm thinking.

kaymin

imitation wrote: »

I think your opinion is too narrow and you haven't considered all the consequences. Do we really want a return to the days of 14% interest ? The current recession will end, and if we leave we`ll be left out cold when there is an upturn in the eurozone. The eurozone has the largest GDP in the world, by leaving the euro we would effectively be cutting ourselves out of this market. I dont think being able to deflate our own currency could ever possibly counter this. Then again I think one of your major points is that we can always renage on our debt by trying to cover it up as a currency change over. It just doesnt work like that, look at Iceland, they are getting hammered by both the EU and IMF for the 3 billion there banks owe.

I think this is the crux of your debate, that the euro isnt a real currency and its just a big experiment. I`m much reminded of the first few years, when my parents described it as monopoly money and its exchange rate was quiet weak. I think that stage is long gone, psychologically most people are used to the currency now. Its replacing the dollar as a hard currency in many developing countries. I think it will be an interesting few months / years for the euro, but I dont see it failing.

Euro is as real as any other currency first of all.

I'm not suggesting we attempt to cover up a default by a currency change (seems an absurd comment to me) - I just think a default would have to go hand in hand with a currency change.

Default worked for Argentina - why can't it work for Ireland?

Are we really re cutting ourselves off from EU markets by leaving the euro - isn't there a possibility of negotiating a status similar to that of the UK?

ei.sdraob

SkepticOne wrote: »

With figures for one country it doesn't prove much. The same figures could equally be used to argue that the the devaluation wasn't sufficient for the UK's purposes. They also don't show what would have happened if the UK was unable to devalue.

thats figures for one country more than you provided :rolleyes:

im still waiting on any evidence to back your proposition

kaymin wrote: »

Default worked for Argentina - why can't it work for Ireland?

you should really do readup on history of what happened in Argentina when they defaulted

anyways Argentina had its own currency it was just pegged to the dollar

we dont have own currency

kaymin

ei.sdraob wrote: »

you should really do readup on history of what happened in Argentina when they defaulted

anyways Argentina had its own currency it was just pegged to the dollar

we dont have own currency

What is it about the Argentinian situation that you'd like to point out?

At the end of 2001, the Argentinian government defaulted on its debt and by January 2002 it abandoned the peg.

We don't have our own currency - true but isn't that what we're talking about here - leaving the euro.

After the Argentinian default and currency collapse in January 2002, the Argentine economy contracted for only one quarter. Mostly the devaluation enabled the government to pursue the macroeconomic policies that were needed for recovery.

cson

So you're proposing the Argentinian default as a model for Ireland to follow?

View

SkepticOne wrote: »

I don't think you've shown that leaving the Euro would necessarily mean leaving the EU or for that matter the EEA.

I've explained this to you before. Try reading the EU Treaties sometime.

The EU Treaties say the EU member states will adopt the Euro as their common currency (Only the UK has an opt-out in a protocol and their official policy remains that they will adopt it at some time in the future).

There is no mechanism for any EU member state that has adopted the Euro to unadopt it. N - O - N - E.

To do so, would be an absolute breech of the Treaties which would leave the member state in question liable to direct fines by the ECJ for failing to honour the Treaties. In such a case the ECJ is not going to impose light fines. And, it has in fact, handed down fines in the past which run to millions of Euro per day.

In addition, it would also almost definitely result in the other member states regarding, and treating, the state in breech of the Treaty as - in effect - a non-member of the EU and treating them as such (i.e. tariffs etc). That would also be a breech of the EU Treaties by the other member states but what do you think the response of the ECJ would be when the member state - which originally breeched the EU Treaties - complains about the other member states being in breech of the EU Treaties?

As such it would be simpler for that member state to negotiate its withdrawal from the EU right from the start. Let's face it, there would be no basis for that member state continuing as a member state of the EU if it refuses to accept the Treaties that it itself signed up to.

The aim of the EU Treaties is "an ever closer union amongst the people of Europe", not an a la carte menu.


As for the EEA, it is certainly true that all EU member states and the EU are signatories of this agreement. So also are Norway, Iceland and Lichtenstein. However, if you read the EEA Treaty, it is written on the basis that the EU negotiates and deals with each of those 3 states on what is essentially a bilateral basis (i.e. EU-Norway etc.). The EU, in other words, negotiates and acts on behalf of its member states, when it deals with the 3 non-EU members.

So, if an EU member state suddenly decides that it wants out of the EU, and the EU no longer acts for it, then the EEA processes would in effect no longer apply to it as there is no basis in the EEA for EU-former EU Member state negotiations within the EEA Treaty.

And, oddly enough, it is difficult to see why the remaining EU member states would go out of their way to help a departing Euro-sceptic state.

View

kaymin wrote: »

Surely you agree that interest rates in Ireland were too low during our boom years - please comment on what I've said and not on what you suppose I'm thinking.

I have previously drawn the comparasion with economic bungee jumping which should leave you in little doubt as to my opinion of Ireland's (economic) actions over the last decade.

I believe that the fiscal policies we followed during our so-called "boom years" (which in reality were bubble years) were totally and absolutely inappropriate for Ireland. They would have been stupid had we had interest rates that were 3-4% higher and were absolute lunacy when we didn't and knew in advance that we would have interest rates that were likely to amongst the lowest in the world after we had adopted the Euro.

Also, since the policy you are advocating would involve Ireland either breeching the EU Treaties and/or leaving the EU, I think it pretty much tells us what you are thinking. There is no need to engage in a lot of supposition on the matter.

cson

View wrote: »

In addition, it would also almost definitely result in the other member states regarding, and treating, the state in breech of the Treaty as - in effect - a non-member of the EU and treating them as such (i.e. tariffs etc). That would also be a breech of the EU Treaties by the other member states but what do you think the response of the ECJ would be when the member state - which originally breeched the EU Treaties - complains about the other member states being in breech of the EU Treaties?

I think the highlighted point is worth emphasising to those who are in favour of retreating to the punt. The likelihood is that our main trading partners would impose high tariff's thus negating any sort of competitiveness we could achieve by devaluing the currency. And that's if it was even a viable option - I think view has summised the legal perspective quite well.

In reality a decision of that magnitude would according to our constitution have to be put to referendum of the Irish people. Can you really see the Irish people voting to effectively wipe out any savings they had? Especially after public sector unions fought so bitterly to avoid cuts to their pay. Pay which incidentally pays for quite a lot of foreign holidays I'd imagine which leads to my next point; You'd literally end our ability to travel in one fell swoop.

I'm sure this has been mentioned but devaluing would also make our imports hugely exspensive - if you think the motor industry is bad now.... It'd pretty much force us back to the situation we were in the 1950's where the UK was our only tangible trading partner and we pretty much had to rely on domestic produce in every area. Needless to say, it's not a period that was marked down as the most prosperous in the annals of the Irish economy. But, sure we'd have no debt obligations! :rolleyes:

The more I think about it, the more I think that you really have pushed the benchmark of ridiculousness to new boundaries.

K-9

kaymin wrote: »

Surely you agree that interest rates in Ireland were too low during our boom years - please comment on what I've said and not on what you suppose I'm thinking.

It's cause and effect again. You are automatically assuming low interest rates was the cause of the boom or rather bubble.

Other countries in the Euro did not have property bubbles. Iceland outside the Euro had a bubble of a different kind and Sweden had a property bubble outside the Euro in the early 90's.

Low interest rates did not result in property bubbles in other countries, Government policy did, both inside the Euro and out.

hiorta

Whether Ireland 'retreats' to an earlier currency or continues to work through the present difficulties is not going to sort or repair the problem.

The lessons of mad self-indulgence must be learned and heeded - by the succeeding generations as well - or all the suffering will have been in vain. (to paraphrase the Furies).

kaymin

K-9 wrote: »

It's cause and effect again. You are automatically assuming low interest rates was the cause of the boom or rather bubble.

Other countries in the Euro did not have property bubbles. Iceland outside the Euro had a bubble of a different kind and Sweden had a property bubble outside the Euro in the early 90's.

Low interest rates did not result in property bubbles in other countries, Government policy did, both inside the Euro and out.

Oh come on. Interest rates would have been raised if there was signs of a property bubble in Germany or France. The fact that there wasn't isn't proof that low interest rates didn't cause or at a minimum contribute to the property bubble in Ireland.

cson

kaymin wrote: »

Oh come on. Interest rates would have been raised if there was signs of a property bubble in Germany or France. The fact that there wasn't isn't proof that low interest rates didn't cause or at a minimum contribute to the property bubble in Ireland.

Christ I think you've broken the collective hole of the forum with laughter there to quote Archimedes. :eek:

imitation

kaymin wrote: »

What is it about the Argentinian situation that you'd like to point out?

At the end of 2001, the Argentinian government defaulted on its debt and by January 2002 it abandoned the peg.

We don't have our own currency - true but isn't that what we're talking about here - leaving the euro.

After the Argentinian default and currency collapse in January 2002, the Argentine economy contracted for only one quarter. Mostly the devaluation enabled the government to pursue the macroeconomic policies that were needed for recovery.

Honestly, if you think Ireland and Argentina are in the same boat, and that we should mimic there desperate actions, you`d want to take a deep breath and look outside the window.

Argentine economic crisis (1999–2002)

Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. The 2003 estimation of 30,000 to 40,000 people scavenged the streets for cardboard to eke out a living by selling it to recycling plants. This method accounts for only one of many ways of coping in a country that at the time suffered from an unemployment rate soaring at nearly 25%

http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

K-9

kaymin wrote: »

Oh come on. Interest rates would have been raised if there was signs of a property bubble in Germany or France. The fact that there wasn't isn't proof that low interest rates didn't cause or at a minimum contribute to the property bubble in Ireland.

Interest rates started rising in the Summer of 06 and what did the Govt. do? Double Mortgage Interest Relief.

Look, nobody is saying they didn't play a factor in the property bubble. The fact there was a property bubble was our own fault.

People paying 350k for one bedroom boxes? check.
People saying property will always go up? check.
Rent is dead money? check.
Investors buying despite income returns being poor? check.
Nobody factoring in the inevitable interest rate rises? check.
Property tax breaks for developers and investors? check.
Tax subsidies for home buyers? check.
Irish property obsession? check.
Low interest rates? check.
Government and bankers believing their own hype? check.
Exports, R&D and innovation ignored? check.
Taoiseach telling nay sayers to commit suicide? check.

Would all the above have happened anyway considering the Govt. we had, outside the Euro? Check.

SkepticOne

View wrote: »

In addition, it would also almost definitely result in the other member states regarding, and treating, the state in breech of the Treaty as - in effect - a non-member of the EU and treating them as such (i.e. tariffs etc). That would also be a breech of the EU Treaties by the other member states but what do you think the response of the ECJ would be when the member state - which originally breeched the EU Treaties - complains about the other member states being in breech of the EU Treaties? As such it would be simpler for that member state to negotiate its withdrawal from the EU right from the start.

So:

1. Ireland defaults and leaves the Euro.
2. Other states breach EU treaties and impose tariffs on Ireland even though technically Ireland is still in the Euro and at this stage entitled to free trade within the EU.
3. The ECJ impose heavy fines on ireland (and presumably the other countries that have breached their treatie).
4. Ireland negotiates leaving the EU.

Please correct me if I have misunderstood what you are saying might happen.

Let's face it, there would be no basis for that member state continuing as a member state of the EU if it refuses to accept the Treaties that it itself signed up to.

I think the problem with what you are saying is that by the time step 3 occurs the EU has effectively ceased to exist since the member states (not just Ireland) have torn up the core treaties that define the EU. What is the EU without barrier free trade and turned it into something that the member states outside the authority of the EU can deny another member state because it has done something they are not happy with. For that reason and assuming these other member states want to continue with the EU I think the scenario you are outlining is unlikely.

View

SkepticOne wrote: »

So:

1. Ireland defaults and leaves the Euro.
2. Other states breach EU treaties and impose tariffs on Ireland even though technically Ireland is still in the Euro and at this stage entitled to free trade within the EU.
3. The ECJ impose heavy fines on ireland (and presumably the other countries that have breached their treatie).
4. Ireland negotiates leaving the EU.

Please correct me if I have misunderstood what you are saying might happen.I think the problem with what you are saying is that by the time step 3 occurs the EU has effectively ceased to exist since the member states (not just Ireland) have torn up the core treaties that define the EU. What is the EU without barrier free trade and turned it into something that the member states outside the authority of the EU can deny another member state because it has done something they are not happy with. For that reason and assuming these other member states want to continue with the EU I think the scenario you are outlining is unlikely.

Well we are talking about unlikely scenarios here because I don't believe that Ireland will breech the EU Treaties if only on the good grounds that if you breech one international treaty no one will take any of the other international treaties they have with you as being anything other than dodgy (at best) and more probably down right worthless.

The EU Treaties are not a la carte documents. They do not just randomly appear. The EU is NOT just a barrier free trading area. It never was.

The starting point for the EU (and the Treaties) is the desire for "an ever closer union". The objectives set the areas for this to be acheived in and all other parts of the treaties are essentially there to define how to do this - to fill in the rest of the picture if you will (Hence why the Treaties are so bl&*dy long). As such, we are talking about a deliberate long-term political process.

If a member state deliberately breeches the Treaty then that action would be rightly regarded as a breech of the process ofcreating "an ever closer union". There is no way it could be viewed otherwise.

What happens then?

Well, first we'd have this politely (but firmly) pointed out to the relevant member state and they would be "invited" to consider their position.

After that, if that member state adopt the attitude of "We are going to deliberately continue to breech the Treaty" then this forces the ECJ to act.

It would probably force the other member states to act since if they just roll over, they would agree to allow the member state in breech of the Treaties to effectively tear up the "core treaties of the EU". The entire basis for the political process that is the EU would in that case cease to exist.

If at that point, the member states decide to act ultra vires, so be it. By doing so, they might salvage some form of EU, albeit one shaped by such a decision. By failing to do so, they condemn it to death by a thousand cuts - after all, if it is okay for Ireland to breech the Treaties today by abandoning the Euro, then why would it not be okay for France to breech them tomorrow by imposing import tariffs on protectionist grounds?

You can't condemn the second breech of the Treaties if you okay the first.

SkepticOne

View wrote: »

If at that point, the member states decide to act ultra vires, so be it. By doing so, they might salvage some form of EU, albeit one shaped by such a decision. By failing to do so, they condemn it to death by a thousand cuts - after all, if it is okay for Ireland to breech the Treaties today by abandoning the Euro, then why would it not be okay for France to breech them tomorrow by imposing import tariffs on protectionist grounds?

You can't condemn the second breech of the Treaties if you okay the first.

Please note that I'm not condemning anything. I think it is unlikely that member states would tear up the free trade aspect of the EU in order to punish Ireland. They would be entitled to do that but I don't think it would be in their interests.

A more realistic scenario would be that Ireland would first seek an opt-out from the Eurozone. You might say that there is no provision for this, but there doesn't need to be a provision or mechanism. All that is needed is that the other member states agree to allow Ireland to remove itself from the Eurozone. I'm aware it hasn't been done before.

During this time Ireland the official stance of Ireland would not be opposed to the euro or closer union or anything like that. The official line would be that leaving the euro is a deeply regrettable but necessary move.

If it did come to Ireland seeking an opt out of the eurozone for economic reasons then I don't think it is safe to assume that countries within the Eurozone or the EU in general would be automatically against it. The likes of Germany in particular might welcome the removal of some of the weaker countries that may be dragging the currency down.

ei.sdraob

oh the fun continues....


if the likes of UK (with their devaluations) are being savaged, god help if Ireland was "floating" along on its own now.....

but of course lets continue to ignore facts and reality in this thread


http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100003763/britain-and-the-pigs/

As of today, the British government must pay a higher interest rate to borrow money for ten years than either the Italian or the Spanish governments, despite the extraordinary ructions going on within the eurozone.

The yields on 10-year British Gilts have risen to 4.06pc, compared to 4.05pc and 4.01pc for Spain. So if international bond markets are turning wary of Club Med sovereign bonds, they seem even more distrustful of British bonds.

Nate--IRL--

SkepticOne wrote: »

A more realistic scenario would be that Ireland would first seek an opt-out from the Eurozone..................

In order to leave the Euro the change must be immediate and more importantly, secret. How does your proposal tie in with these requirements?

Nate

fontanalis

K-9 wrote: »

Interest rates started rising in the Summer of 06 and what did the Govt. do? Double Mortgage Interest Relief.

Look, nobody is saying they didn't play a factor in the property bubble. The fact there was a property bubble was our own fault.

People paying 350k for one bedroom boxes? check.
People saying property will always go up? check.
Rent is dead money? check.
Investors buying despite income returns being poor? check.
Nobody factoring in the inevitable interest rate rises? check.
Property tax breaks for developers and investors? check.
Tax subsidies for home buyers? check.
Irish property obsession? check.
Low interest rates? check.
Government and bankers believing their own hype? check.
Exports, R&D and innovation ignored? check.
Taoiseach telling nay sayers to commit suicide? check.

Would all the above have happened anyway considering the Govt. we had, outside the Euro? Check.

Well said, the country was like a teenager who found daddys credit card and went to Las Vegas for a few years. Ireland should be a textbook fo how not to do things for any developing country.
Does it not also show arrogance to think that Ireland can compete with the punt?
For god sake there is no internal economy!

ardmacha

Ireland has a major debt financing problem, the balance of trade is not the problem and we've improved in competitiveness by about 10% in one year against our nearest neighbour. We can improve trade, we are a very much more open economy than Greece. If we leave the Euro then all of the government debt in Euros and all of the interbank debt in Euros becomes more expensive to repay. I don't think some of the comments here about being thrown out of the EU are applicable, but if even they are not leaving the Euro would be enormously destabilising and would further aggravate the public finance problem, so that the government would have to default.

kaymin

K-9 wrote: »

Interest rates started rising in the Summer of 06 and what did the Govt. do? Double Mortgage Interest Relief.

Look, nobody is saying they didn't play a factor in the property bubble. The fact there was a property bubble was our own fault.

People paying 350k for one bedroom boxes? check.
People saying property will always go up? check.
Rent is dead money? check.
Investors buying despite income returns being poor? check.
Nobody factoring in the inevitable interest rate rises? check.
Property tax breaks for developers and investors? check.
Tax subsidies for home buyers? check.
Irish property obsession? check.
Low interest rates? check.
Government and bankers believing their own hype? check.
Exports, R&D and innovation ignored? check.
Taoiseach telling nay sayers to commit suicide? check.

Would all the above have happened anyway considering the Govt. we had, outside the Euro? Check.

K-9 wrote: »

Low interest rates did not result in property bubbles in other countries, Government policy did, both inside the Euro and out.

Must have misunderstood you then....

I don't think the property bubble would have arisen if we were outside the euro because I believe the central bank would have raised interest rates which should put a halt to property price rises.