so ambrose evans pritchard was right all along?

raymann

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100008667/the-horrible-truth-starts-to-dawn-on-europes-leaders/

pretty much everything he has been saying over the last few years has been proved absolutely correct.

there is absolutely no situation where ireland or greece should have access to cash at the same risk levels as germany. the convergence of so many eccomomies was NEVER going to happen.

i always dismissed him as a bitter brit sniping from the margins. but with hindsight the whole thing cant work without full fiscal and tax union. that would mean we are not a sovereign country anymore.

i am sat here in france this morning the living embodiment of a modern mobile young european person. but is this a step to far.

i am really worried for irelands future, especially if they touch the corpo tax.

ei.sdraob

A clock is right twice a day, while some of his articles are interesting and refreshing getting a perspective which we dont here in Irish media. Him harping on about same things for better part of the decade is tiring(mind you it sells newspapers to the eurosceptic UK populace, which is what journalists are paid for).

But I disagree with his thesis, there is nothing wrong with currency union of various states (with various economies) using same currency. We have some examples of such:
* USA with 50 states with a huge difference in economies
* most of the worlds countries up to 70s were still indirectly on the gold standard

The problem with EUrozone is not the currency union, but the implementaion.
There is no central regulator keeping an eye on state regulators and more importantly there is no federal insurance scheme. Both are present in US (along with tighter political union)

raymann

ei.sdraob wrote: »

A clock is right twice a day, while some of his articles are interesting and refreshing getting a perspective which we dont here in Irish media. Him harping on about same things for better part of the decade is tiring.

But I disagree with his thesis, there is nothing wrong with currency union of various states (with various economies) using same currency. We have some examples of such:
* USA with 50 states with a huge difference in economies
* most of the worlds countries up to 70s where indirectly still on the gold standard

The problem with EUrozone is not the currency union, but the implementaion.
There is no central regulator keeping an eye on state regulators and more importantly there is no federal insurance scheme. Both are present in US (along with tighter political union)

thats a really bad example. the us has the fed that controls fiscal policy. thats my point. if we give away the power to tax and spend we are no longer sovereign.

thats his point. you cant have currency union without fiscal union. im pro european, but am i prepared to hand over full sovereignty. nope.

thats the only way that a currency union can work. full centralised fiscal control.

ei.sdraob

raymann wrote: »

thats a really bad example. the us has the fed that controls fiscal policy. thats my point. if we give away the power to tax and spend we are no longer sovereign.

thats his point. you cant have currency union without fiscal union. im pro european, but am i prepared to hand over full sovereignty. nope.

thats the only way that a currency union can work. full centralised fiscal control.

The fact that a lot of the countries in the Euro)and outside of it but pegged to the euro) are not in deep poop.
shows that they were able to control their economies with other methods beside setting rates and printing money.

This goes back to the arguments we have here before, it was our government that drove us into the ground and encouraged property speculation, not the euro or europeans (who where warning us only to be told to go and commit suicide)


and you avoided my second example, of the most of the developed world past WW2 (Bretton Woods agreement in '45) being tied to the dollar which in turn was linked to gold, a link broken by Nixon in '71. This period of time has seen stability and incredible growth.

Permabear

This post has been deleted.

ei.sdraob

donegalfella wrote: »

This post has been deleted.

While I dont agree with gold based currencies, one positive aspect of them is that supply is more or less limited therefore restraining governments.

The problem is the governments dont like being restrained and take path of least resistance even if that leads to bankruptcy (ha no pun intended), witness Ireland where the bondmarkets are basically saying "if you want money you will pay loan shark rates for it". What does the govt do? scream that they are being deliberately picked on. No Brian you destroyed confidence in the country, suffer the consequences (which he wont).
We no might endup with an EU/IMF bailout which would give us another credit card and more rope to hang on Lets just hope whoever our new overlords are they try to address the structural problems in our economy which FF do not have the balls to address.

ashleey

And fiscal transfers from rich states to poor states to soften any blows?

Godge

donegalfella wrote: »

This post has been deleted.

+1 - fully agree.


And you can add to this. We continued to believe we could pay the highest salaries in Europe to the lowest productivity public sector workers (teachers being one example of this, other front-line staff like nurses, guards etc. another). We have refused to insist on implementation of the CPA in terms of public service productivity.

We have believed that we should be the only country in Europe without water charges and a property tax.

We have continued to believe that only 50% of the working population should pay income tax.

Finally, we still have 25% of the voting population who believe that the politicians who oversaw our stupidity should continue in office.

jimmycrackcorm

... the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly

What does Ambrose make of California's Financial problems in the U.S. Fiscal union:

http://online.wsj.com/article/SB126297948893221947.html?mod=WSJ_WSJ_US_PoliticsNCampaign_2

donegalfella wrote:

You don't need fully centralized fiscal control. All you need is a borrowing limit that cannot be breached.

It's a bit more than that - only a few years ago our borrowing limit was not a problem until we crashed into a solid wall. Our driving of the economy was Donegal style driving....

Godge wrote:

Finally, we still have 25% of the voting population who believe that the politicians who oversaw our stupidity should continue in office

I don't recall the opposition object to the government spending money in the early part of the decade. You really think they would have cut the boom?

dan_d

That is one of the most "I TOLD YOU SO!!!!" articles I have read.

What's he right about? He's quoting warnings that were given in the early 1990's in Europe by other people and following that, is saying "ha ha, we were right to stay with the good ole pound, Europe is evil".

It's very difficult to read British commentary on anything to do with this, as it tends to be written through spectacles that still see Britain as an Empire and fail to understand why anybody should tell their country what to do.

A feeling they are perfectly entitled to. However speaking as a citizen of a country where we quite clearly don't have a clue what to do, I'm happy to accept outside advice.

A fundamental flaw in this whole Euro business (as far as I can see) is one that they could have never recognised, and that is that we were/are the wildcard. We're a small country, with a very short history of ruling ourselves. Possibly they should have come down much, much harder on us earlier in the decade when things started to go out of control. But there's no point in blaming anyone but ourselves here (plus I don't know if the EU actually had the power to prevent us from doing exactly what we wanted). Centralised control is now a must because all countries are so closely intertwined, but initially they might have got away with it, if they had realised that the Irish are an absolutely wayward people, who prefer to see laws as "guidelines".As ei.sdraob points out, it's not enough just to sort out our economic problems - just give us a new credit card, essentially. We need more input from the EU on our banks. We HAVE to have it. Our regulator is doing good work, but I really think he needs to be given more power, and backed to the hilt by the EU. We need to get rid of this practice of having all the same people on boards, running banks, as directors etc of various institutions. And we need a Gov that is accountable to the people (and to the EU, since apparently being accountable to the people is not enough around here)

But in relation to that article...the Brits are very reluctantly members of the EU, and have never been the most co-operative members, either....therefore I'll be taking their commentary with a pinch of salt.

johnnyskeleton

raymann wrote: »

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100008667/the-horrible-truth-starts-to-dawn-on-europes-leaders/

pretty much everything he has been saying over the last few years has been proved absolutely correct.

there is absolutely no situation where ireland or greece should have access to cash at the same risk levels as germany. the convergence of so many eccomomies was NEVER going to happen.

If that is true, the problem is the freely traded money from the Euribor/Libor which is private enterprise and not the EU.

The idea that the ECB has the power to set interest rates across europe doesn't make sense. Central Banks do have the power to affect rates to a certain extent, but even if the ECB had set its rate at 10% across the EU for the last 10 years, that would not have stopped the flood of cheap money from Japan, China and the Middle East.

The scale of the problem is much bigger than the EU. The proof of this can be found in AEP's own country, the UK. There, notwithstanding that they had their own currency and set their own central bank rates, they still managed to get into the exact same problems as Ireland did.

So if the question is did central interest rates cause the current crises, then no, but they did contribute to it. If the question is would it have happened anyway, IMO the answer is yes.

raymann

dan_d wrote: »

That is one of the most "I TOLD YOU SO!!!!" articles I have read.

What's he right about? He's quoting warnings that were given in the early 1990's in Europe by other people and following that, is saying "ha ha, we were right to stay with the good ole pound, Europe is evil".

It's very difficult to read British commentary on anything to do with this, as it tends to be written through spectacles that still see Britain as an Empire and fail to understand why anybody should tell their country what to do.

A feeling they are perfectly entitled to. However speaking as a citizen of a country where we quite clearly don't have a clue what to do, I'm happy to accept outside advice.

A fundamental flaw in this whole Euro business (as far as I can see) is one that they could have never recognised, and that is that we were/are the wildcard. We're a small country, with a very short history of ruling ourselves. Possibly they should have come down much, much harder on us earlier in the decade when things started to go out of control. But there's no point in blaming anyone but ourselves here (plus I don't know if the EU actually had the power to prevent us from doing exactly what we wanted). Centralised control is now a must because all countries are so closely intertwined, but initially they might have got away with it, if they had realised that the Irish are an absolutely wayward people, who prefer to see laws as "guidelines".As ei.sdraob points out, it's not enough just to sort out our economic problems - just give us a new credit card, essentially. We need more input from the EU on our banks. We HAVE to have it. Our regulator is doing good work, but I really think he needs to be given more power, and backed to the hilt by the EU. We need to get rid of this practice of having all the same people on boards, running banks, as directors etc of various institutions. And we need a Gov that is accountable to the people (and to the EU, since apparently being accountable to the people is not enough around here)

But in relation to that article...the Brits are very reluctantly members of the EU, and have never been the most co-operative members, either....therefore I'll be taking their commentary with a pinch of salt.

i really think this is the way you are reading it. to be honest i find their press coverage, same as on most subjects actually, to honest, fair and accurate.

i cant really fault what hes saying though.

southsiderosie

I generally agree with what you are saying except for this:

donegalfella wrote: »

This post has been deleted.

Germany and France were actually the first to break the Stability and Growth Pact when they were lagging behind the Club Med countries in terms of growth.

Overall, I don't think a currency union is sustainable without strict rules for the states. Part of why the US system works is that a majority of states have balanced budget requirements, the Federal government refuses to bail out 'bad' states, and they generally cannot issue debt without legislative (or direct voter) approval. I don't think these kinds of rules are politically feasible within the EU.

bladeruner

dan_d wrote: »

Possibly they should have come down much, much harder on us earlier in the decade when things started to go out of control. .

"They" was the likes of Our boy Champagne Charlie McCreevy in overseeing Financial regulatory affairs.

There was a Fianna Fail mole in europe making sure the gravy didnt stop flowing !!!

:eek:

View

donegalfella wrote: »

This post has been deleted.

Or alternatively, a balanced budget provision that many US states have and - surprise, surprise - the Germans have added (in the last year) to their constitution.

We - on the other hand - were too busy lecturing them on how to run their economy over the last decade to actually stop and think about "details" like that...

Cool Mo D

A balanced budget provision is not a good thing, it is far too restrictive. The budget should always be unbalanced - it should run a (small) surplus in good years and a (small!) deficit in bad years.

More important than anything, a proactive policy to prevent a housing bubble is needed. Housing bubbles are far, far more dangerous than anything else, because a mortgage is always going to be the single biggest financial commitment the average person ever takes on.

If the Government had replace stamp duty with a yearly property tax, did not use tax breaks to inventiveness building, and set a legal limit of borrowers not being allowed to take a mortgage bigger than 90% of the house value, and 4.5times the joint salary, we would be far from this position now.

topper75

We don't drink whisky in Connemara Mr. Pritchard. It's whiskey.

But yes - I'll have a glass if it is going around.