Irish currency

J.Ball

Do you guys think the irish economy would benefit from bringing back our own form of currency? I was always under the opinion that the euro was a bad idea. Having the same currency all over europe would de-value exchange rates surely (Im not sure about this so if im wrong please correct me)

gigino

Our currency was pegged / level with the UK pound until the late seventies. Then we floated loose. Then we joined the euro. There is an argument that if we had not joined the euro we would not be in as big as mess as we are in , since
(a) it was being tied to the low interest rates of the euro which helped inflate our property bubble - if rates had been 5 or 10% higher our bubble would not have happened
(b) being in the euro facilitated the europeans banks lending to Angle etc, which has had all sorts of implications.
The country we share the land border with, and one of our biggest trading partners if not the biggest, is the UK. Its helping bail us out now. If the euro countries do not lower their interest rates them , as Shane Ross said last week, they should be told we have older friends elsewhere.

PhatPiggins

gigino wrote: »

Our currency was pegged / level with the UK pound until the late seventies. Then we floated loose. Then we joined the euro. There is an argument that if we had not joined the euro we would not be in as big as mess as we are in , since
(a) it was being tied to the low interest rates of the euro which helped inflate our property bubble - if rates had been 5 or 10% higher our bubble would not have happened
(b) being in the euro facilitated the europeans banks lending to Angle etc, which has had all sorts of implications.
The country we share the land border with, and one of our biggest trading partners if not the biggest, is the UK. Its helping bail us out now. If the euro countries do not lower their interest rates them , as Shane Ross said last week, they should be told we have older friends elsewhere.

I agree with everything you say but it was bad policy, poor regulation and top down corruption that have us in this mess.

Entry into the euro should have been the catalyst to drag Ireland into the 21st century and establish us as a first world country instead we're a pseudo first world country with third world debt burdens.

Blaming the euro is like blaming Henry Ford for road fatalities

SBWife

My gut reaction is that being in the Euro gives the powers that be one less tool by which to feck up the economy.

Scofflaw

gigino wrote: »

Our currency was pegged / level with the UK pound until the late seventies. Then we floated loose. Then we joined the euro. There is an argument that if we had not joined the euro we would not be in as big as mess as we are in , since
(a) it was being tied to the low interest rates of the euro which helped inflate our property bubble - if rates had been 5 or 10% higher our bubble would not have happened

Possibly, although Iceland managed it despite 18% interest rates.

gigino wrote: »

(b) being in the euro facilitated the europeans banks lending to Angle etc, which has had all sorts of implications.

Except that they're quite simply not recorded anywhere as having actually done so. Anglo et al largely sold their debt on the UK and US money markets - hardly surprising, since that's where they have subsidiaries.

gigino wrote: »

The country we share the land border with, and one of our biggest trading partners if not the biggest, is the UK.

Biggest for imports, not for exports - that is, we're one of their biggest markets, which is why they're bailing us out.

gigino wrote: »

Its helping bail us out now. If the euro countries do not lower their interest rates them , as Shane Ross said last week, they should be told we have older friends elsewhere.

Who are charging roughly the same rates as the EFSF - slightly higher, currently, given the rate on the UK loan is 5.9% while the EFSF rate is 5.82% and the EU and IMF 5.7%.

cordially,
Scofflaw

gigino

The germans + french control the interest rate to suit themselves. The economy was not controlled with the one interest rate from eastern europe to Belmullet. Still, we are where we are. Interest rates in the UK zone were higher than here a number of years ago, and that would have suited us better. Who in this country - that could borrow at less than 3% - did not borrow during the tiger when property was going up at 20% and everyone from the taoiseach to the central bank said there would be no crash, but a soft landing / levelling off ? Many did, hence the banks + the country is in a mess. We are in the euro now, I guess better to stay in it as otherwise our currency would plumett + we would struggle to retain our multinationals, buy imported goods, oil etc.

gigino

Scofflaw wrote: »

Except that they're quite simply not recorded anywhere as having actually done so. Anglo et al largely sold their debt on the UK and US money markets - hardly surprising, since that's where they have subsidiaries.

Thanks for that point, I am not afraid to say I learn something new every day - but I thought Anglo borrow a bit from the eurozone too. Did not AIB + B of I etc borrow from Europe so ?

Scofflaw

gigino wrote:

The germans + french control the interest rate to suit themselves. The economy was not controlled with the one interest rate from eastern europe to Belmullet. Still, we are where we are. Interest rates in the UK zone were higher than here a number of years ago, and that would have suited us better. Who in this country - that could borrow at less than 3% - did not borrow during the tiger when property was going up at 20% and everyone from the taoiseach to the central bank said there would be no crash, but a soft landing / levelling off ?

Me, and I'm sure I'm not the only one...there has never been such a thing as a soft landing to a property/asset bubble ever.

PhatPiggins wrote: »

I agree with everything you say but it was bad policy, poor regulation and top down corruption that have us in this mess.

Entry into the euro should have been the catalyst to drag Ireland into the 21st century and establish us as a first world country instead we're a pseudo first world country with third world debt burdens.

Blaming the euro is like blaming Henry Ford for road fatalities

A bit more like a drunk driver blaming the car for crashing. Entering the euro implied certain levels of fiscal discipline - which we managed during the Nineties in order to get in, but promptly abandoned once we were in, in favour of rolling around in heaps of easy credit shouting "feckin' loadsamoney yez losers" at the rest of Europe while our government pumped the bubble party hard with every instrument at its disposal.

cordially,
Scofflaw

Scofflaw

gigino wrote: »

Thanks for that point, I am not afraid to say I learn something new every day - but I thought Anglo borrow a bit from the eurozone too. Did not AIB + B of I etc borrow from Europe so ?

Eh, they all did, but only to a very small degree compared to their borrowings from the rest of the world. An Excel spreadsheet of the covered banks' aggregate balance sheets is available from the Central Bank: http://www.centralbank.ie/data/site/cmbs/ie_table_a.4.2_covered_institutions_-_aggregate_balance_sheet.xls

Bonds = "Securities Issued" under "Liabilities". Eurozone holdings at their highest are 17% of bonds. In terms of the growth in Irish bank debt from 2003 to the peak of the boom, they're about 11%, compared to 70% rest of world and 19% Ireland.

cordially,
Scofflaw

RachaelVO

Have to say, even if I am going OT, Scofflaw your posts never fail to educate! You put things is such a way that makes all the nonsense really easy to understand. Thanks for the education

RachaelVO

Have to say, even if I am going OT, Scofflaw your posts never fail to educate! You put things is such a way that makes all the nonsense really easy to understand. Thanks for the education

Euroland

J.Ball wrote: »

Do you guys think the irish economy would benefit from bringing back our own form of currency? I was always under the opinion that the euro was a bad idea. Having the same currency all over europe would de-value exchange rates surely (Im not sure about this so if im wrong please correct me)

Yes, for us joining Euro was a terrible mistake, we would be much better off with own currency. Especially now, when we have substantial trade surplus and positive current account balance.

gigino

I knew it would end in tears. The British were proved right in staying out of it, despite poor labour government