Bring the Punt Back!!!

shannonpowerlab

When Gernany got into a mess when was it? post WWI? Did they not create new currency to basically drop theworthless old one...

What if the Punt is brought back and ties to some of the healthier currencies...? Then would you not start the whole thing all over again and this country will be a little self sufficient tourist country so that wealthy German ans Swiss people can spend their money here...:pac::pac:

Mahatma coat

I reckon a Dual currency system might work

Euro for the Bigger imports and the People savings but the Punt for the day to day running of the country, offer a one time introduction rate to sweeeten the deal, if the private sector got onboard with the currency then IReland could issue Social welfare payments etc in it, once it is taken up by enough business'it could offer a way to control the exchequer without diggin ourselves into a deeper Hole to the ECB

shannonpowerlab

Yest that maybe a bit like Chinese government did for a while isn't it?

Avgas

The idea that outside the Euro everything would be rosy is lovely...but I don't think it is pain free.

Dumping the Euro overnight would mean:
1. Massive increase in capital outflows (greater than what we are already seeing)-who would want their Euros left in Ireland to become risky punt nuas?
2a. It would make imports rise in cost steeply-we import much of our food and most of our energy, and these would become wickedly expensive overnight!
2b. It would make our exports appear much cheaper (which is good), but for exporters there would be significant short-term uncertainty costs associated with the value of the punt nua versus the dollar/euro....in effect the problem with a shock devaluation strategy is that it can spiral downwards......
NOTE that we are continuing to export and that sector of the economy is actually doing okay-leaving the Euro could badly damage confidence in the export oriented MNC sector.
3. There is another problem. Much of our accumulated debt is currently in Euros. If we left the Euro tomorrow, how would we pay off that debt with punt nuas whose value would fall significantly below an already falling Euros? This was a big problem in Hungary where many people had mortgages denominated in Euros, which became much more expensive when their currency fell in value.
4. Membership of the Eurozone tends to make availability of credit cheaper-right now normal lending practices are suspended. And we know cheap Euro credit was partly a fuel to the Irish fire. However, if we want to go back to the bad old days of very high interest rates for loans that were common when we were de facto tied to the Sterling, then that will hinder Irish growth prospects in future.
5. Membership of the Eurozone keep inflation reasonably low-actually far too low (we've mild disflation now). Indeed it would be very attractive to actually let inflation rip say at levels of 5-6% or even higher (most central bankers think 1-2% is tolerable). We could do that with our own punt nua/central bank/printing press........it would eat into the value of Irish debts and effectively cancel their cost of repayment in theory. HOWEVER, I remind you that much of our debt is denominated in Euros, or Sterling or Dollars...how would a weakening in value dodgy Punt Nua pay off such debts? In the long term we are probably better to hang in there and try and lobby for new personnel in the ECB who are NOT inflation hawks and let it rip a bit for all Europe at say 2-3%....for a while anyway.

The interesting thing is that IF the Euro collapses (and this is distinctly possible although not yet in the 'probable' zone) then we will be forced out...either back to a Punt Nua.....or a distinctive weaker Euro...called say Neuro......remember the ERM used to operate in two bands of relative valuation 2.25% and 6.25%... so there is talk that this is what a Euro break-up could look like.

This Neuro would be worth anywhere between 10-50% less than the hard Euro (maybe rebranded at the "Duro") which would be used by the Germans and a few others, probably the French for sure. Not clear whether the Italians would either make it or want it.

Just some thoughts.

ednwireland

everyone would just carry on using euros an punt nua would be a soft worthless currency, we would just deal in cash in fact my company would prob pay us in sterling.
(after the fall of communism in poland all major deals were done in dollars not the polish currency - mainly because of hyper inflation )

shannonpowerlab

Avgas wrote: »

The idea that outside the Euro everything would be rosy is lovely...but I don't think it is pain free.

Dumping the Euro overnight would mean:
1. Massive increase in capital outflows (greater than what we are already seeing)-who would want their Euros left in Ireland to become risky punt nuas?
2a. It would make imports rise in cost steeply-we import much of our food and most of our energy, and these would become wickedly expensive overnight!
2b. It would make our exports appear much cheaper (which is good), but for exporters there would be significant short-term uncertainty costs associated with the value of the punt nua versus the dollar/euro....in effect the problem with a shock devaluation strategy is that it can spiral downwards......
NOTE that we are continuing to export and that sector of the economy is actually doing okay-leaving the Euro could badly damage confidence in the export oriented MNC sector.
3. There is another problem. Much of our accumulated debt is currently in Euros. If we left the Euro tomorrow, how would we pay off that debt with punt nuas whose value would fall significantly below an already falling Euros? This was a big problem in Hungary where many people had mortgages denominated in Euros, which became much more expensive when their currency fell in value.
4. Membership of the Eurozone tends to make availability of credit cheaper-right now normal lending practices are suspended. And we know cheap Euro credit was partly a fuel to the Irish fire. However, if we want to go back to the bad old days of very high interest rates for loans that were common when we were de facto tied to the Sterling, then that will hinder Irish growth prospects in future.
5. Membership of the Eurozone keep inflation reasonably low-actually far too low (we've mild disflation now). Indeed it would be very attractive to actually let inflation rip say at levels of 5-6% or even higher (most central bankers think 1-2% is tolerable). We could do that with our own punt nua/central bank/printing press........it would eat into the value of Irish debts and effectively cancel their cost of repayment in theory. HOWEVER, I remind you that much of our debt is denominated in Euros, or Sterling or Dollars...how would a weakening in value dodgy Punt Nua pay off such debts? In the long term we are probably better to hang in there and try and lobby for new personnel in the ECB who are NOT inflation hawks and let it rip a bit for all Europe at say 2-3%....for a while anyway.

The interesting thing is that IF the Euro collapses (and this is distinctly possible although not yet in the 'probable' zone) then we will be forced out...either back to a Punt Nua.....or a distinctive weaker Euro...called say Neuro......remember the ERM used to operate in two bands of relative valuation 2.25% and 6.25%... so there is talk that this is what a Euro break-up could look like.

This Neuro would be worth anywhere between 10-50% less than the hard Euro (maybe rebranded at the "Duro") which would be used by the Germans and a few others, probably the French for sure. Not clear whether the Italians would either make it or want it.

Just some thoughts.

Good point...Maybe that is what to come if Ireland were to default because that could be the only path left...

RonMexico

On a side note - Am I the only one who finds the term "punt nua" to be annoying?

Mahatma coat

Yeah, the point is that it Not Gonna be the "Punt Nua" this crazy new Fix all Currency, It'd be The old Punt, which Ireland still has provisions in place to deal with on a dual currency basis, And the Euro would still be Legal tender too, So you have the ****ered International Economy from whom we Import/Export Stuff and a Seperate internal Cash Economy, much more grounded in the realitys of the state, or somesuch

Hayte

shannonpowerlab wrote: »

Yest that maybe a bit like Chinese government did for a while isn't it?

You can't compare Ireland to China. China is a vast producer and a hub for Asian development. Its banks are also solvent and it conducts a vast amount of trade within its own borders plus investment opportunities in China are considered safer and more profitable. You also cannot compare Ireland to non eurozone countries that devalued their own currency as part of a national strategy to get out of recession. We are already in the Euro and have benefited greatly from it so any strategy to exit the Euro has painful consequences that compound some of the problems we already have. I talked about this in another thread where I set out some of the basic logistics of bringing the punt back. Its very risky.

Mahatma coat

But from All accounts China has a Thriving internal Black Market, I'm sayin that the solution might lay in a dual currency aproach to the Situation on a pan European scale, Deal with the Euro and the Implications of this new Global Financial System/Crisis as and of itself, Reintroduce the original Currencies as Cash into the respective European States, whilst maintanin an electronic Dual balance, Free up the inflationary/deflationary pressures of the individual states whilst releasing pressure from the Euro, Simples.

Butch Cassidy

Have any economists with credibility suggested bringing back the Punt?

The Euro was on the markets for years before it came in. How the hell could a government plan in secret to swap currencies? We'd be fluttered! There'd be the quickest run on the banks, new currency would be worth little. Why leave yr euros in yr bank chancing it to see what the value is when you could change over to strong currency?

Is there even any precedent on anything like a withdrawl from a currency like the Euro?

Punt Nua is very annoying yes.

shannonpowerlab

Hayte wrote: »

You can't compare Ireland to China. China is a vast producer and a hub for Asian development. Its banks are also solvent and it conducts a vast amount of trade within its own borders plus investment opportunities in China are considered safer and more profitable. You also cannot compare Ireland to non eurozone countries that devalued their own currency as part of a national strategy to get out of recession. We are already in the Euro and have benefited greatly from it so any strategy to exit the Euro has painful consequences that compound some of the problems we already have. I talked about this in another thread where I set out some of the basic logistics of bringing the punt back. Its very risky.

Well yes it is different from that point of view and also it is different in a way that they have built their wealth on actual delibarate act of making things and shipping them out in a vast volume. But I just remembered the time when I had some dealing with Chiniese manufacturers they always trade in USD and internally they were using their own internal currency.:)

Mahatma coat

The way I see it is as a sort of Blackmarket but in a State run capacity, if that makes sense

Ireland is Shagged
The Euro is Feelin the Strain
Greece has Already Succumbed
Ireland is on the Brink
There is Debate over WHICH Country is next
Globally its Falling apart

So Current thinking isnt getting us very Fuppin Far

<insert Plethora of Witty Cliches RE: Floggin a Dead Horse>

Then Why not something Different, What I'm proposing would be Reasonably straight forward to implement.

johnnyskeleton

shannonpowerlab wrote: »

When Gernany got into a mess when was it? post WWI? Did they not create new currency to basically drop theworthless old one...

What if the Punt is brought back and ties to some of the healthier currencies...? Then would you not start the whole thing all over again and this country will be a little self sufficient tourist country so that wealthy German ans Swiss people can spend their money here...:pac::pac:

You have it backwards. The Euro is a healthy currency. Too healthy. The people who want the punt do so because they want hyperinflation, not because the Euro will experience hyperinflation.

The Germans replaced their currency after a period of hyperinflation, not to create one.

So what you are advocating is not the dropping of a worthless currency for a new stronger one, but the dropping of a strong currency (some say it is too strong for the current situation in Ireland, but they are the ones who are debtors so they would say that, wouldn't they?) for one that we can inflate to bejaysus.

Also, if we were to back it with "some of the healthier currencies" we would be doing so primarily by backing it with the Euro.

shannonpowerlab

shannonpowerlab wrote: »

When Gernany got into a mess when was it? post WWI? Did they not create new currency to basically drop theworthless old one...

What if the Punt is brought back and ties to some of the healthier currencies...? Then would you not start the whole thing all over again and this country will be a little self sufficient tourist country so that wealthy German ans Swiss people can spend their money here...:pac::pac:

Welcome to boards Eamon DeValera, didn't realise you had the internet down there (in hell).

Mahatma coat

johnnyskeleton wrote: »

You have it backwards. The Euro is a healthy currency. Too healthy. The people who want the punt do so because they want hyperinflation, not because the Euro will experience hyperinflation.

The Germans replaced their currency after a period of hyperinflation, not to create one.

So what you are advocating is not the dropping of a worthless currency for a new stronger one, but the dropping of a strong currency (some say it is too strong for the current situation in Ireland, but they are the ones who are debtors so they would say that, wouldn't they?) for one that we can inflate to bejaysus.

Also, if we were to back it with "some of the healthier currencies" we would be doing so primarily by backing it with the Euro.

Spot On, That's What I'm sayin.
The Healthier Currency issue is something I think people arent fully understanding, The Euro Needs to be maintained as the Strong Internatiol Currency of a Unified European trading Bloc, however the internal economies of the individual States cannot be treated as one entity its even difficult to Group nations together into consistent Voting Blocks, so why try a onesizefitsall currency?
Each country has the capacity if it needs to issue a Domestic currency in CASH form redeemable at the Bank for Euro or cashabale into an account which can be selected as Euro or Punt/Drachma/Escudo/Lira...
And Treat the New Pariah States Like The Fall of the East, Clean Sweeps across the board.

Butch Cassidy

johnnyskeleton wrote: »

You have it backwards. The Euro is a healthy currency. Too healthy. The people who want the punt do so because they want hyperinflation, not because the Euro will experience hyperinflation.

The Germans replaced their currency after a period of hyperinflation, not to create one.

So what you are advocating is not the dropping of a worthless currency for a new stronger one, but the dropping of a strong currency (some say it is too strong for the current situation in Ireland, but they are the ones who are debtors so they would say that, wouldn't they?) for one that we can inflate to bejaysus.

Also, if we were to back it with "some of the healthier currencies" we would be doing so primarily by backing it with the Euro.

Some nationalists want it back just for the craic it must be said...

shannonpowerlab

:DI have no qualification none whatsoever. This doe not solve anything with current debt remind you.:D


The current government polisy appears only to choke a patient with breathing difficulty and at this rate the heartbeat will stop soon enough.:eek:

What I was merely suggesting was that if this country cannot afford Euro...get a replacement currency which is (I meant one of the relatively healthy/stable) currency but cheaper than Euro like Swiss Francs...while anticipating potential removal from euro currency zone.

It does not solve anything with debt situation but there will be something left to use as money at the end of 4 year plan....:D

I am repeatign again. This will not fix anything.

But it will be something to trade with rather than having to bring a sack of potatoes to chicken farmer and get a chicken for it.:D:D

Then when you see some Euro flashing out of rich tourist's purse we will be delighted. "Oh, we will be rich!!" and gives motivation to work very hard for the entertainment of rich tourists and they will feel good about spending their valuable EURO.

Then the rich foreign people will buy holiday homes again, start building factories again, and will gradually pull the economy up and there will be another chance to join Euro and then the current younger generation will be bubbling it again just like the last one.

I am just looking at...next 30 years or so.

shannonpowerlab

it does not sound like too crazy an idea at this point now does it?:D

View

shannonpowerlab wrote: »

it does not sound like too crazy an idea at this point now does it?:D

It still remains both illegal and impractical.

shannonpowerlab

Both Laws and practicality are very flexible things you know, designed to suit the people who set them. If it does not suit they ignore them.

Look where we all are standing.:D

We will all be asked to flex and bend over.:D

Do you get it ? Felx?:D