Barroso getting angry

Kid Curry

In relation to the comments exchanged with Barosso yesterday, who exactly was he referring to when he said

“To those who made those comments, I ask: where were you when Europe was financing your farmers after the war to feed your own people?

“Where were you when Europe was the basis for the prosperity and the growth of your countries after the war?

Read more: http://irishexaminer.com/breakingnews/ireland/furious-barroso-rounds-on-mep-joe-higgins-489975.html#ixzz1BaPqbO3Y

Was he directing this at Nigel Farage or Joe Higgins???

later12

Presumably, he meant both, and he is not totally wrong. I thought his response to Joe Higgins hit the nail precisely on the head.

Mr Barroso retorted: “To the distinguished member of this Parliament who comes from Ireland, who asked a question suggesting that the problems of Ireland were created by Europe, let me tell you: the problems of Ireland were created by the irresponsible financial behaviour of some Irish institutions, and by the lack of supervision in the Irish market.

“Europe is now part of the solution…It is trying to support Ireland. But it was not Europe that created this fiscally irresponsible situation, and this financially irresponsible behaviour.

http://irishexaminer.com/breakingnews/ireland/furious-barroso-rounds-on-mep-joe-higgins-489975.html

ArtSmart

Artsmart has a thread on politics bout this. (he's on the ball A.S)

McDave

I dislike Barroso, and his lame attempts to overcompensate for the Commission's lack of power, but his reaction to Higgins was spot on.

Higgins often has an interesting analysis, but he certainly doesn't speak for too many Irish people, many of whom it must be remembered helped dig the hole we now find ourselves in.

There's no point in blaming Europe. Our predicament is largely our own fault, and it's churlish and small-minded to pretend otherwise.

nialldabass

I think a large part of the problem is the fact we have no control of our money, we could not raise intresest rates nor increase or decrease the money supply, Sure why would we need any real watchdogs in our financial system? Europe was taking care of all that for us, wasn't it? And lets not forget the amount of cheap US dollars flying around

Scofflaw

nialldabass wrote: »

I think a large part of the problem is the fact we have no control of our money, we could not raise intresest rates nor increase or decrease the money supply, Sure why would we need any real watchdogs in our financial system? Europe was taking care of all that for us, wasn't it? And lets not forget the amount of cheap US dollars flying around

It's funny that although ECB interest rates remain at the same low levels, are banks are now magically able to raise interest rates. Regulation of banks, I fear, remains a national job - and the answer to "why would we need any real watchdogs in our financial system?" is in the tens of billions.

cordially,
Scofflaw

nialldabass

Scofflaw wrote: »

It's funny that although ECB interest rates remain at the same low levels, are banks are now magically able to raise interest rates. Regulation of banks, I fear, remains a national job - and the answer to "why would we need any real watchdogs in our financial system?" is in the tens of billions.

cordially,
Scofflaw

I quite agree, we need the banks to be sensible, old fashioned but as long as we allow private issuance of our currency we will never have control of the banks. Every note issued has a debt value, owed to the central private bank, so we will be in perpetual debt, after religion its the biggest con foisted upon man, the same bondholders at Anglo are the same bond holders at the IMF ECB, and what we have is a hostile takeover. Sure we will have a few sacrificial scapegoats hung out to dry but we will never get to the root of the problem. Fractional reserve banking and fiat currencey

Days

Things are very serious!!

Scofflaw

nialldabass wrote: »

I quite agree, we need the banks to be sensible, old fashioned but as long as we allow private issuance of our currency we will never have control of the banks. Every note issued has a debt value, owed to the central private bank, so we will be in perpetual debt, after religion its the biggest con foisted upon man, the same bondholders at Anglo are the same bond holders at the IMF ECB, and what we have is a hostile takeover. Sure we will have a few sacrificial scapegoats hung out to dry but we will never get to the root of the problem. Fractional reserve banking and fiat currencey

From a Green perspective, oddly enough, it's very easy to agree that debt-based currency is a serious problem, because it requires constant economic expansion to work.

cordially,
Scofflaw

nialldabass

Scofflaw wrote: »

From a Green perspective, oddly enough, it's very easy to agree that debt-based currency is a serious problem, because it requires constant economic expansion to work.

cordially,
Scofflaw

Yeah I'm very disilusioned by the whole green movement, looking for global solutions, becoming the very thing they should be fighting, setting up carbon trading, which again plays to the hands of big multi nationals and a whole new rung of banking and comodities trading which will only create more wealth so there will be little insentive to cut carbon, in real terms, once they get their snouts in the trough. ALL oil companies and energy companies profits keep increasing and wind and solar is so useless it needs subsidising.
I do believe the answer is out there but if we cary on allowing ourselves to be led by the likes of Al Gore and the money men and control freaks of this world, nothings gonna change :mad:

later12

Scofflaw wrote: »

It's funny that although ECB interest rates remain at the same low levels, are banks are now magically able to raise interest rates.

The funding rate isn't the only thing that a bank takes into account on deciding its lending rates, it also has to look at its deposits, their maturities and their interest rates payable. It isn't all about the ECB's fund rate, and quite right too.

Regulation of banks, I fear, remains a national job - and the answer to "why would we need any real watchdogs in our financial system?" is in the tens of billions.

Tens of billions in what are effectively sovereign liabilities, and the question as to why that has happened has nothing to do with bank regulators, bankers or borrowers directly. It was a political decision to put them 'into the system'.

In any event nobody is denying the lack of regulation in itself, but the answer is most certainly not in national regulators. Too many national regulators give rise to situations like that which occurred whereby there is a culture of regulatory competition to see who can drop their standards the lowest. That's why the new European Banking Authority has been established in London and why they intend to work from a single rule book, not like what happened under CEBS.

McDave

nialldabass wrote: »

I think a large part of the problem is the fact we have no control of our money, we could not raise intresest rates nor increase or decrease the money supply, Sure why would we need any real watchdogs in our financial system? Europe was taking care of all that for us, wasn't it? And lets not forget the amount of cheap US dollars flying around

We did however have control of our economy. The fact that we chose to incentivise the wrong kind of behaviour was entirely down to us. There are plenty of Eurozone countries who got their economic policy right, despite being exposed to the same conditions we were. And even outside the Eurozone, those cheap dollars would probably have done for us anyway. Because the same irresponsible impetus would have underpinned our one-dimensional politics.

Scofflaw

later10 wrote: »

The funding rate isn't the only thing that a bank takes into account on deciding its lending rates, it also has to look at its deposits, their maturities and their interest rates payable. It isn't all about the ECB's fund rate, and quite right too.

A message often lost in the clamour about how the ECB set Irish bank rates, even though Irish banks were dependent on wholesale market borrowing, not ECB borrowing.

later10 wrote: »

Tens of billions in what are effectively sovereign liabilities, and the question as to why that has happened has nothing to do with bank regulators, bankers or borrowers directly. It was a political decision to put them 'into the system'.

Sure - but had regulation been effective, enforcing prudential lending, preventing over-reliance on one sector, and even knowing the real position of the banks, such a political decision might not have been required, and certainly would have been better informed.

later10 wrote: »

In any event nobody is denying the lack of regulation in itself, but the answer is most certainly not in national regulators. Too many national regulators give rise to situations like that which occurred whereby there is a culture of regulatory competition to see who can drop their standards the lowest. That's why the new European Banking Authority has been established in London and why they intend to work from a single rule book, not like what happened under CEBS.

The answer is not in national regulators because the problem was.

cordially,
Scofflaw

Martin 2

later10 wrote: »

The funding rate isn't the only thing that a bank takes into account on deciding its lending rates, it also has to look at its deposits, their maturities and their interest rates payable. It isn't all about the ECB's fund rate, and quite right too.

Tens of billions in what are effectively sovereign liabilities, and the question as to why that has happened has nothing to do with bank regulators, bankers or borrowers directly. It was a political decision to put them 'into the system'.

In any event nobody is denying the lack of regulation in itself, but the answer is most certainly not in national regulators. Too many national regulators give rise to situations like that which occurred whereby there is a culture of regulatory competition to see who can drop their standards the lowest. That's why the new European Banking Authority has been established in London and why they intend to work from a single rule book, not like what happened under CEBS.

That section in bold is a bit like saying it wasn't the fall that killed him but the sudden stop.

later12

Scofflaw wrote: »

A message often lost in the clamour about how the ECB set Irish bank rates, even though Irish banks were dependent on wholesale market borrowing, not ECB borrowing

Well ECB funding rates are still extremely important, I'm just saying they are not the only factor considered when an Irish bank looks at its books and sets a rate. In fairness they did have huge influence over Irish lending over the past 10 years, it's just that they aren't the only consideration right now.

Sure - but had regulation been effective, enforcing prudential lending, preventing over-reliance on one sector, and even knowing the real position of the banks, such a political decision might not have been required, and certainly would have been better informed.

It might not have been required and it might have been better informed but the decision was taken to socialise banking debt and that was a political decision. You can't blame banks for that and you can't blame them for lack of statutory regulation or a poor structure of governance outside of their institution. You can, however, blame the Government who establish the regulatory bodies and who take on the debt.

Martin 2 wrote:

That section in bold is a bit like saying it wasn't the fall that killed him but the sudden stop.

Ireland wouldn't be dealing with a major fiscal and banking crisis were it not for the decision to save the banks at all costs instead of transporting their liabilities to a larger, European debt vehicle which could have dealt with liabilities in a more considered way, given the time and the opportunity, and could have saved the banking crisis from impeding on sovereign debt and therefore may well have helped to ameliorate the problem at an earlier.

All of this is hindsight of course, none of us, myself included, were saying that last year or in 2008.

nialldabass

McDave wrote: »

We did however have control of our economy. The fact that we chose to incentivise the wrong kind of behaviour was entirely down to us. There are plenty of Eurozone countries who got their economic policy right, despite being exposed to the same conditions we were. And even outside the Eurozone, those cheap dollars would probably have done for us anyway. Because the same irresponsible impetus would have underpinned our one-dimensional politics.

Apart from Germany can you name any country that was not caught out by this ? Spain Portugal Greece Italy all badly hit most of the former eastern block badly hit even France, Britain, Holland, Denmark all badly hit by the same banks and banking system and who supplied the cheap dollars the USA or a private bank called the Federal Reserve

Bigcheeze

nialldabass wrote: »

I think a large part of the problem is the fact we have no control of our money, we could not raise intresest rates nor increase or decrease the money supply, Sure why would we need any real watchdogs in our financial system? Europe was taking care of all that for us, wasn't it? And lets not forget the amount of cheap US dollars flying around

Agree that the loss of fiscal control was a significant part of the problem. If our own CB was independently setting rates, the property market, debt mountain and inflation never would have exploded to the same extent it did. Now we don't have the ability to devalue like the uk and us did which would improve competitiveness. In the future, if ecb rates are rising it'll exacerbate the domestic mortgage crisis.

In general I'm pro-eu but I have always believed that going in to the euro was a bad economic decision for ireland. I never thought it would turn out this bad.

later12

nialldabass wrote: »

Apart from Germany can you name any country that was not caught out by this ? Spain Portugal Greece Italy all badly hit most of the former eastern block badly hit even France, Britain, Holland, Denmark all badly hit by the same banks and banking system and who supplied the cheap dollars the USA or a private bank called the Federal Reserve

Can you be a bit more specific about how you're measuring 'caught out by this'? I would suggest that the stock markets of these countries has recovered (in fact they started recovering 23 months ago, those bulls have stamina) and sovereign bond markets have returned to calm in most European countries apart from the peripherals. Looking at sovereign bond yields, all of the benchmark governments post yields in or around what they were last year before the bailouts with the exception of Ireland and Greece. Whether they were 'caught out' at the time or not, the recovery is certainly quite rigorous.

Scofflaw

Bigcheeze wrote: »

Agree that the loss of fiscal control was a significant part of the problem. If our own CB was independently setting rates, the property market, debt mountain and inflation never would have exploded to the same extent it did. Now we don't have the ability to devalue like the uk and us did which would improve competitiveness. In the future, if ecb rates are rising it'll exacerbate the domestic mortgage crisis.

In general I'm pro-eu but I have always believed that going in to the euro was a bad economic decision for ireland. I never thought it would turn out this bad.

I was thinking about that recently - while I'm pro-EU, I've often said that the only euros I support are the ones that support my family.

My conclusion was that, looking back, we were well placed to go into the euro, and the fiscal discipline involved in our preparation for entry was also good for the country. Unfortunately, that discipline wasn't maintained - instead, the post-Rainbow governments vigorously pursued a policy of blowing up a consumption and asset bubble while taxing consumption and asset transfers in order to pad the PS payroll and reduce everybody's income taxes.

So, while we were still numerically within the fiscal envelope that good discipline had given us while getting ready for euro membership in terms of the relations between government spending, tax take, and GDP, the appearance was deceptive, because under the surface the tax base was being narrowed and shifted onto the bubbliest parts of the economy, producing a massive structural flaw in state finances, while simultaneously, the banks were being allowed free rein to grow to several times GDP on the basis of the same bubble sectors, producing a massive structural flaw in the banking sector.

So much for Ireland's shift from fiscal discipline to auction economics after euro entry. The other problem - much wider, obviously, but similarly only exposed when things turned sour - was that, as so often in EU policy formation, there was no plan B for the euro. The hard decisions about what happened in hard times were simply shelved in the good times, so when the crisis hit, the hard decisions had to be thrashed out at the time when they were urgently needed, and became hostage to the domestic politics and special circumstances of the crisis they should have been set up to deal with. The result has been a series of stopgap and only partially credible solutions at the European level, the use of institutions like the ECB for purposes other than their missions, and a good deal of passing the debt around in the hopes that when the music stops it can be handed back to the markets.

In a very real sense, then, Ireland's problems, while very much of its own making, have been exacerbated by the absence of any real plan at the European level - the result is a ridiculous situation where our State-guaranteed banks tap the ECB for €100bn at low interest rates on the one hand using state promissory notes for collateral, while on the other hand the State borrows money at dissuasive interest rates from the other sovereigns in order to sort out both its own collapsed finances and the same banks.

For fear of market reaction, the other European countries have to be seen to be sternly telling us to set our own house in order without burning bank debt, while simultaneously lending huge amounts to us both directly and indirectly to deal with the zombie banks we're incapable of managing by ourselves. It has to prop us up while slapping us upside the head, all the time worried that we might collapse either because it isn't propping us up strongly enough, or because it's slapping us upside the head too hard, and that the markets might see through the charade either because it props us up too much, or because it isn't slapping us hard enough. Meanwhile, like an irritating drunk, we keep trying to break free, insisting we can fight them all by ourselves - when we can't even stand up straight.

cordially,
Scofflaw

Bigcheeze

Scofflaw wrote: »

the post-Rainbow governments vigorously pursued a policy of blowing up a consumption and asset bubble while taxing consumption and asset transfers in order to pad the PS payroll and reduce everybody's income taxes.

The pre-Euro Irish CB was independent of political interference and would have acted as a safety valve for the over heating economy and explosion in credit growth. The exchequer couldn't then become over reliant on asset transfer taxes. Interest rates are the only real tool to control this sort of over-heating and we lost that.

Scofflaw wrote: »

Meanwhile, like an irritating drunk, we keep trying to break free, insisting we can fight them all by ourselves - when we can't even stand up straight.

cordially,
Scofflaw

I don't think that's an accurate interpretation of the objections to the IMF/EU deal. Sinn Fein is the only party saying the above and they won't be in government in the next five years.

Other critics suggest that the deal doesn't solve anything as we cannot conceivably repay the debt and merely delays the inevitable default. The arguments put forward by many Irish economists on this point seem rational to me and I've yet to see a convincing counter-argument.

There's also the point that the EU funds are being lent at 5.8%-ish while borrowed by the EU at 3%-ish. Our friends are lending us funds at a higher rate than the ruthless, dispassionate IMF (4.5%).

later12

Bigcheeze wrote: »

the ruthless, dispassionate IMF (4.5%).

I have to laugh every time I turn on a TV in France or open a newspaper and hear how Dominque Strauss-Kahn is too socialist to be the Socialist party's candidate for the Presidency of France, and then come on here and read how his organisation are too mean and ruthless and, presumably, right wing.

The IMF arrive into a country when they are invited, and extend conditional credit and offer advice. They do not burn flags, pinch old ladies, or eat puppies. They are not a ruthless, dispassionate organisation; quite the opposite. In my opinion, they have been far better friends to Ireland than Ireland's closer European neighbours.

Bigcheeze

later10 wrote: »

I have to laugh every time I turn on a TV in France or open a newspaper and hear how Dominque Strauss-Kahn is too socialist to be the Socialist party's candidate for the Presidency of France, and then come on here and read how his organisation are too mean and ruthless and, presumably, right wing.

The IMF arrive into a country when they are invited, and extend conditional credit and offer advice. They do not burn flags, pinch old ladies, or eat puppies. They are not a ruthless, dispassionate organisation; quite the opposite. In my opinion, they have been far better friends to Ireland than Ireland's closer European neighbours.

My use of the term was reflecting media opinion rather than personal knowledge of the IMF. Probably should have put it in inverted commas.

McDave

nialldabass wrote: »

Apart from Germany can you name any country that was not caught out by this ? Spain Portugal Greece Italy all badly hit most of the former eastern block badly hit even France, Britain, Holland, Denmark all badly hit by the same banks and banking system and who supplied the cheap dollars the USA or a private bank called the Federal Reserve

The banking crisis has obviously had some manner of impact on practically all countries. And strictly speaking, Germany was one of those countries. However, most EU and Eurozone have followed reasonably responsible economic policies and are riding out the crisis quite well. Examples:

- Eurozone: Austria; Finland; France; Germany; Luxembourg; Netherlands; Slovakia; Slovenia;
- Rest of EU: Czech R; Denmark; Estonia; Latvia; Sweden.

McDave

Bigcheeze wrote: »

The pre-Euro Irish CB was independent of political interference and would have acted as a safety valve for the over heating economy and explosion in credit growth. The exchequer couldn't then become over reliant on asset transfer taxes. Interest rates are the only real tool to control this sort of over-heating and we lost that.

That's quite a sweeping statement. Especially in light of our documented experience with the CB post-Euro.

How come the CB changed so much for the worse literally overnight? In reality it didn't. It wasn't put to the test until very recently, and only then was it seen to have spectacularly failed.

Bigcheeze

McDave wrote: »

That's quite a sweeping statement. Especially in light of our documented experience with the CB post-Euro.

How come the CB changed so much for the worse literally overnight? In reality it didn't. It wasn't put to the test until very recently, and only then was it seen to have spectacularly failed.

We're talking about two different things. The CB failed in its duty to regulate, not in its role of setting interest rates which it had pre-Euro.

The record of the CB's in setting interest rates pre-Euro shows how it acted indepently and raised rates when cooling was required. The historically low ECB rates from 2003 onwards were totally inappropriate for our economy. I don't blame the ECB for that, I blame the Irish political decision to join the Euro.

hoorsmelt

later10 wrote: »

I have to laugh every time I turn on a TV in France or open a newspaper and hear how Dominque Strauss-Kahn is too socialist to be the Socialist party's candidate for the Presidency of France, and then come on here and read how his organisation are too mean and ruthless and, presumably, right wing.

The IMF arrive into a country when they are invited, and extend conditional credit and offer advice. They do not burn flags, pinch old ladies, or eat puppies. They are not a ruthless, dispassionate organisation; quite the opposite. In my opinion, they have been far better friends to Ireland than Ireland's closer European neighbours.

:pac: They're all singing off the same hymn sheet. The EU is a virulently neo-liberal entity founded on the 4 freedoms, while the IMF is no better. Perhaps you haven't read about their escapades in South Korea during the Asian Contagion of 97-98? Chopra, the head of the IMF delegation to Ireland, was head of that intervention too, and by the time he was done with the place grandparents were committing suicide to ease the burden of the cuts, deregulation and firesale privatisations on their families, and people were melting down their wedding rings to help the State create gold reserves.

McDave

Bigcheeze wrote: »

We're talking about two different things. The CB failed in its duty to regulate, not in its role of setting interest rates which it had pre-Euro.

The record of the CB's in setting interest rates pre-Euro shows how it acted indepently and raised rates when cooling was required. The historically low ECB rates from 2003 onwards were totally inappropriate for our economy. I don't blame the ECB for that, I blame the Irish political decision to join the Euro.

ECB rates were certainly inappropriate for FF's inept understanding of what an economy is. But that's hardly the point is it.

There's a myth afoot about low ECB rates. After the short-lived interest-rate response to 9/11, ECB rates reverted towards the original game plan of tracking ideal inflation levels. This policy was only abandoned when the bank crisis hit in 2008.

The deal with the Euro was all along to have inflation at just below 2% and interest rates around 2%. That's been the case in the more "normal" times between the 2001 and 2008 crises. Which were incidentally precisely the times when we screwed up our economy most.

So, instead of blaming membership of the Eurozone (which not everyone suffered from), you should save your fire for our lousy domestic economic and fiscal management.

Scofflaw

McDave wrote: »

ECB rates were certainly inappropriate for FF's inept understanding of what an economy is. But that's hardly the point is it.

There's a myth afoot about low ECB rates. After the short-lived interest-rate response to 9/11, ECB rates reverted towards the original game plan of tracking ideal inflation levels. This policy was only abandoned when the bank crisis hit in 2008.

The deal with the Euro was all along to have inflation at just below 2% and interest rates around 2%. That's been the case in the more "normal" times between the 2001 and 2008 crises. Which were incidentally precisely the times when we screwed up our economy most.

So, instead of blaming membership of the Eurozone (which not everyone suffered from), you should save your fire for our lousy domestic economic and fiscal management.

Interest rates were too low, the banks forced mortgages on us...please sir, the exam was too hard, that's why I didn't do well.

cordially,
Scofflaw

Bigcheeze

McDave wrote: »

ECB rates were certainly inappropriate for FF's inept understanding of what an economy is. But that's hardly the point is it.

There's a myth afoot about low ECB rates. After the short-lived interest-rate response to 9/11, ECB rates reverted towards the original game plan of tracking ideal inflation levels. This policy was only abandoned when the bank crisis hit in 2008.

The deal with the Euro was all along to have inflation at just below 2% and interest rates around 2%. That's been the case in the more "normal" times between the 2001 and 2008 crises. Which were incidentally precisely the times when we screwed up our economy most.

So, instead of blaming membership of the Eurozone (which not everyone suffered from), you should save your fire for our lousy domestic economic and fiscal management.

The only policy was inflation around 2%. You made up the bit about an interest rate target of 2%.

McDave

Bigcheeze wrote: »

The only policy was inflation around 2%. You made up the bit about an interest rate target of 2%.

I never said "target", so you made that bit up yourself. However, if you'd bothered to do some basic research you'd recognise the accuracy of my post, i.e.:

"Benefits of price stability
[...]
- reducing inflation risk premia in interest rates (i.e. compensation creditors ask for the risks associated with holding nominal assets). This reduces real interest rates and increases incentives to invest" from: http://www.ecb.europa.eu/mopo/intro/benefits/html/index.en.html

and

Key ECB interest rates: http://www.ecb.int/stats/monetary/rates/html/index.en.html. I'd specifically draw readers' attention to the deposit rates which outside of crisis rates range from 2.00 up to 3.25%

Bigcheeze

McDave wrote: »

I never said "target", so you made that bit up yourself. However, if you'd bothered to do some basic research you'd recognise the accuracy of my post, i.e.:

"Benefits of price stability
[...]
- reducing inflation risk premia in interest rates (i.e. compensation creditors ask for the risks associated with holding nominal assets). This reduces real interest rates and increases incentives to invest" from: http://www.ecb.europa.eu/mopo/intro/benefits/html/index.en.html

and

Key ECB interest rates: http://www.ecb.int/stats/monetary/rates/html/index.en.html. I'd specifically draw readers' attention to the deposit rates which outside of crisis rates range from 2.00 up to 3.25%

Sorry "the deal" not "targets" - picking on a technicality is not a substitute for rebuttal of an argument.

Quoting the actual ecb rates is a bogus argument to support your opinion. Germany was suffering from very sluggish growth for most of the early years of the euro and we know what happened in the last 4 years.

Why didn't you quote the average interest rate in all euro countries over the last 30 years and see how you like those numbers.

Nobody is disputing the 2% inflation target. The Irish cb would have had a similar target before eu membership. No new deal there!

McDave

Bigcheeze wrote: »

Sorry "the deal" not "targets" - picking on a technicality is not a substitute for rebuttal of an argument.

The single currency is largely based on the model of the DM, a strong currency run by the Bundesbank which sought to control inflation and keep general costs down, including that of money to invest in enterprise.

Now if you see that as a mere technicality, I don't think you fully understand what the Euro is about. It's about competitiveness, controlling prices and preventing populist interference by governments in manipulating fiscal instruments for electoral gain.

McDave

Bigcheeze wrote: »

Why didn't you quote the average interest rate in all euro countries over the last 30 years and see how you like those numbers.

With this particularly specious reasoning, I take it you're conceding the point.

Bigcheeze

McDave wrote: »

Now if you see that as a mere technicality, I don't think you fully understand what the Euro is about. It's about competitiveness, controlling prices and preventing populist interference by governments in manipulating fiscal instruments for electoral gain.

You dont seem to inderstand how the irish cb worked before the euro. It was structured to achieve all of that. The difference being that it was focussed on doing that in ireland.

I don't really care if the euro is or is not a good idea.
The issue really boils down to would ireland be in a better or worse position today if we had never joined the euro. If you took a poll of one hundred economists, how do you think they'd respond ?

View

Bigcheeze wrote: »

You dont seem to inderstand how the irish cb worked before the euro. It was structured to achieve all of that. The difference being that it was focussed on doing that in ireland.

The Irish CB largely adjusted interest rates up or down based on what was happening in either the UK and/or the German economies. In financial terms, Ireland was always far too small to engage in the theoretical ideal of "independently" setting its own interest rate.

As Wim Duisenberg - when head of the (much larger) Dutch CB - once commented wrt interest rates, Dutch independence consisted of the 2 seconds it took him to decide that the Dutch would "independently" raise their interest rates by the exact same amount as the German CB had just informed him that they were going to raise their interest rates.

K-9

View wrote: »

The Irish CB largely adjusted interest rates up or down based on what was happening in either the UK and/or the German economies. In financial terms, Ireland was always far too small to engage in the theoretical ideal of "independently" setting its own interest rate.

As Wim Duisenberg - when head of the (much larger) Dutch CB - once commented wrt interest rates, Dutch independence consisted of the 2 seconds it took him to decide that the Dutch would "independently" raise their interest rates by the exact same amount as the German CB had just informed him that they were going to raise their interest rates.

Iceland did have high interest rates and that caused other banking problems as depositors rushed to lodge money in Icelandic banks.

Regulation seems to be the common cause here, not interest rates.

Bigcheeze

K-9 wrote: »

Regulation seems to be the common cause here, not interest rates.

Nobody is denying that regulation is a significant factor, if not the most significant factor.

The thrust of my argument is that Euro membership was a bad economic decision for Ireland and low interest contributed significantly to the over heating of the economy and property bubble.

Bigcheeze

View wrote: »

The Irish CB largely adjusted interest rates up or down based on what was happening in either the UK and/or the German economies. In financial terms, Ireland was always far too small to engage in the theoretical ideal of "independently" setting its own interest rate.

I'd disagree. There is correlation between global interest rates. e.g. What the US Fed does will influence what the ECB does. It doesn't mean that they're not independent.

Scofflaw

Bigcheeze wrote: »

Nobody is denying that regulation is a significant factor, if not the most significant factor.

The thrust of my argument is that Euro membership was a bad economic decision for Ireland and low interest contributed significantly to the over heating of the economy and property bubble.

I'd call it quite differently - euro membership was a good decision for Ireland at the time it was made. We were, at that stage, in good shape to take advantage of being in the euro - and I would say that had we continued to follow the policies we adopted to make us ready for euro membership, we would have done well out of it. We wouldn't have had the spectacular "Celtic Tiger" growth, but we'd have had a much larger real economy rather than a property and construction bubble. We could have used the flow of cheap money to grow Irish businesses instead of pumping it into a house price asset bubble, had Fianna Fáil not chosen to do everything in their power to pump that sector as opposed to trying to route it towards business development. Instead, property development and purchase got the tax breaks, while entrepreneurialism was treated as it always has been by Fianna Fáil - as something suspect.

To quote Honohan's conclusions on the subject:

But the contrasting cases of some other small economies on the European periphery – in and out of the eurozone – show that EMU membership is neither necessary nor sufficient for a banking crisis. And the euro provided an anchor for Ireland as the crisis broke.

In brief, I think we were well-positioned for euro membership, courtesy of good decisions taken in the Nineties, but we blew the opportunity good and hard with a series of giveaway budgets starting with McCreevy in 2001, backed up by dismantling of the regulatory environment, tax breaks for property, and bloating of the PS payroll. All the wrong decisions, all popular at the time.

cordially,
Scofflaw

K-9

Bigcheeze wrote: »

Nobody is denying that regulation is a significant factor, if not the most significant factor.

The thrust of my argument is that Euro membership was a bad economic decision for Ireland and low interest contributed significantly to the over heating of the economy and property bubble.

Yes, but high interest rates as shown by Iceland didn't work either, so it was a bad economic decision for Iceland to stay out of the EU and Euro!

It was and is good for us in some ways and could have been far better if we hadn't have taken the eye of the ball, as they say.

McDave

Bigcheeze wrote: »

You dont seem to inderstand how the irish cb worked before the euro. It was structured to achieve all of that. The difference being that it was focussed on doing that in ireland.

You don't seem to understand that the CB presided over a truly independent Irish currency for a very short period of time. You're making very grand claims for the CB on limited evidence. Indeed the available evidence shows that, when put to the test, the CB was quite lame.

I get the strong impression that you're trying to imply that were we somehow to revert to an Irish currency we'd have a fit-for-purpose CB to steer us through the rough seas. Fat chance!!

McDave

Bigcheeze wrote: »

I don't really care if the euro is or is not a good idea.
The issue really boils down to would ireland be in a better or worse position today if we had never joined the euro. If you took a poll of one hundred economists, how do you think they'd respond ?

Putting my own cards on the table, I think the Euro is a great idea. Great for the European economy and its position in the world. And a practical recognition of the particular EU marriage of the free market and the social net. All it requires is that member countries pursue responsible fiscal policies. That's not too much to ask of a modern European democracy.

On the evidence of our performance in the Euro, I can only despair of how we would have behaved without any peer pressure whatsoever. We would have been utterly at the mercy of our incompetent government and immature electorate. And probably in an even worse position than Iceland.

Incidentally, your "poll of one hundred economists" question is yet another non sequitur.