ECB: Irish taxpayers 'should foot bank bill'

southsiderosie

From the Irish Times:

Irish taxpayers should not complain about having to bailout the country's crisis-hit banks and, in future, regulation should be steered at a European level, according to ECB executive board member Lorenzo Bini Smaghi.

In an opinion piece in today's Financial Times, Mr Bini Smaghi said Ireland's taxpayers should foot the bill as they are the ones that benefitted during the pre-crisis boom years and elected the governments that regulated the banks as the problems built.

"The principle of 'no taxation without representation' should work both ways. If taxpayers have the right to share in decision-making, they must also accept the consequences," Mr Bini Smaghi wrote.

"As long as the accountability of supervisors to taxpayers is primarily a national affair ... then there is a high risk that taxpayers will foot most of the bill. They should not complain when it actually happens."

Mr. Bini Smaghi went on to note that the way to prevent this kind of thing was to have uniform, EU-wide banking regulation.

I do think that there is a strong case for unified banking regulations within the eurozone, especially since so many of these banks are deeply invested in the economies of their neighbors. Essentially European banks today are too interconnected to fail. But the main problem I had with this article was that the ECB official's statement, like so many others from EU institutions, reeks of arrogance. Leaders of EU institutions need to give national elected officials some political leeway to pitch these policies to citizens. Starting off by saying 'it's the citizens' fault' is probably not the best way to do that - that's the part that people are going to get stuck on, and the broader point about the need for European banking regulation will be lost.

What do other people think? Should there be EU-wide regulation? Do EU officials need some training in political messaging? Should taxpayers be on the hook for the decisions made by their democratically elected officials? I'd say yes, yes, and yes, but it is clear that the Irish and Greek debts are too large to be repayable, and bond/shareholders are going to have to take a hit.

EoghanConway

That's a great idea, or at least it would have been 10 years ago when it might have made a difference. To suggest it now is idiotic.

Raskolnikov

southsiderosie wrote: »

Should taxpayers be on the hook for the decisions made by their democratically elected officials?

I would rather rephrase that question.

Should taxpayers be on the hook for the decisions made by their unelected bankers?

When Seanie Fitzpatrick and his friends lent us into oblivion - we never got a say on the matter. That's fair enough, Anglo Irish Bank was a private institution. The issue I have is that losses sustained by a private business were transferred onto the Irish taxpayer - at the behest of Europe, in order to protect their banks from losses.

Iwasfrozen

southsiderosie wrote: »

From the Irish Times:



Mr. Bini Smaghi went on to note that the way to prevent this kind of thing was to have uniform, EU-wide banking regulation.

I do think that there is a strong case for unified banking regulations within the eurozone, especially since so many of these banks are deeply invested in the economies of their neighbors. Essentially European banks today are too interconnected to fail. But the main problem I had with this article was that the ECB official's statement, like so many others from EU institutions, reeks of arrogance. Leaders of EU institutions need to give national elected officials some political leeway to pitch these policies to citizens. Starting off by saying 'it's the citizens' fault' is probably not the best way to do that - that's the part that people are going to get stuck on, and the broader point about the need for European banking regulation will be lost.

What do other people think? Should there be EU-wide regulation? Do EU officials need some training in political messaging? Should taxpayers be on the hook for the decisions made by their democratically elected officials? I'd say yes, yes, and yes, but it is clear that the Irish and Greek debts are too large to be repayable, and bond/shareholders are going to have to take a hit.

Our membership of the Eurozone is holding us back at the moment. If we had control of our own monetary policy we could lower interest rates to stimulate growth and devalue our currency to lessen our debt burden. This is what any normal country would do in Irelands position, unfortunately we can't because of our membership of the Eurozone. We also wouldn't have to pay the unreasonable interest rates the EU is charging us. I say in future we need lessen the extent of the EU's power in Ireland, adopt our own currency and perhaps even leave the EU while joining EFTA.

sensibleken

Excuse my language but f*ck that guy!

Im sick of this. German, French, US and UK institutions benifitted by their investments in anglo during the time aswell, they invested and took the risk because the ECB and credit ratings kept saying everything was fine.

These institutions are the big untouchable bonholders who are telling us to take all the pain. Its not only us but its the british and german tax payers i feel sorry for as they are having to stump up money to pay out the irish banks so their own dont get stung. They are bailing out their own institutions in the most roundabout way

The stuff coming from these guys, they seem to think we were all driving porches and swimming in lakes of champagne.

jimmycrackcorm

He does have a point to a degree. This country benefited greatly from the boom. However the problem is taxpayers are only one party to the financial headway. Why should the bondholders not accept responsibility for their lack of oversight in their lending?

jimmycrackcorm

Iwasfrozen wrote: »

O If we had control of our own monetary policy we could lower interest rates to stimulate growth and devalue our currency to lessen our debt burden.

Lower interest rates than the current ecb rate

sensibleken

jimmycrackcorm wrote: »

He does have a point to a degree. This country benefited greatly from the boom. However the problem is taxpayers are only one party to the financial headway. Why should the bondholders not accept responsibility for their lack of oversight in their lending?

Dead right. You'd swear the financial regulator was the all seeing eye on global capitalism. to quote johnny rotten

'ever get the feeling youve been cheated'

Iwasfrozen

jimmycrackcorm wrote: »

Lower interest rates than the current ecb rate

Source: http://www.telegraph.co.uk/finance/economics/interestrates/8434928/European-Central-Bank-raises-interest-rates-for-first-time-in-nearly-three-years-despite-Portugal-bailout.html

Lower interest rates stimulate growth, in a country like Ireland in the throngs of a recession there is no danger of excessive inflation. Higher interest rates are more suited to a booming economy where higher inflation leads in instability. A country like, oh let's say for example, Germany.

later12

"The principle of 'no taxation without representation' should work both ways. If taxpayers have the right to share in decision-making, they must also accept the consequences," Mr Bini Smaghi wrote.

Smaghi does have a point here actually. However, I would tend to argue that this principle applies as a matter of course for routine administration, not for extraordinary or exceptional events which will have effects surpassing the current generation, let alone the next few years.

Elexis

What nobody seems to be mentioning is that it was artificially low interest rates set by the ECB which greatly contributed to our current predicament and that of several other countries in Europe. When we joined the Euro interest rates halved almost overnight and then were further reduced to historic lows. The Federal Reserve in America did the same thing and it should be the number one thing on people's minds when the subject of credit bubbles is brought up.

Crony capitalism had a very bad impact as well because banks etc. knew that they had a government safety net, that their jobs, livelihoods and businesses would be saved by the taxpayer. Government created moral hazard and took the risky out of 'risky lending.'

Saying that it was the Free Market gone mad and more regulation is needed is a cop out. It's similar to saying that fire burns down buildings. That's true but who lights the match and pours petrol all over the flames? Governments and central banks do!

The ECB is so arrogant because nobody calls them out. Regulation is not the answer and the ECB certainly isn't either.

later12

Iwasfrozen wrote: »

in a country like Ireland in the throngs of a recession there is no danger of excessive inflation.

No danger? I don't particularly agree with that. Ireland is still a very open economy and a very low growth rate coupled with high inflation is actually entirely possible. The only difference would be that inflation would be driven by external forces such as our old friends, the commodities, or by run if the mill European influences.

later12

Elexis wrote: »

What nobody seems to be mentioning is that it was artificially low interest rates set by the ECB which greatly contributed to our current predicament and that of several other countries in Europe. When we joined the Euro interest rates halved almost overnight and then were further reduced to historic lows. The Federal Reserve in America did the same thing and it should be the number one thing on people's minds when the subject of credit bubbles is brought up.

We are a long way from a credit bubble, and what was bad for the domestic Irish economy in 2002/3 is not the same as what is bad for it now. Low interest rates and more generous lending are actually, and ironically, what we badly need for the home market to escape the problems caused by - you guessed it - low interest rates and generous lending.

rc28

If you go to the actual FT article, it's reassuring to see practically every commenters laying into him and sticking up for Ireland's point of view. In fact, I have come across so many articles written in the FT that are favourable towards our position.
http://www.ft.com/cms/s/0/15d8fbae-653e-11e0-b150-00144feab49a.html#axzz1JE2QJ9HA

It's kind of shocking he makes absolutely no reference to how from 2002-2006 the ECB totally ignored what was going on in periphery countries like Ireland, Spain and Greece and instead concentrated on keeping interest rates low to support sluggish German and French economies. This is the fundamental 'one size fits all' flaw at the centre of the eurozone monetary policy that cannot continue without serious changes. It was based on a presumption that if one member state's economy was overheating (with high inflation etc) and the interest rate at the time wasn't suitable then the national government of that country would step in and raise taxes to cool things down - unfortunately such is democracy that very few governments would be willing to do that and sacrifice votes. We see this in action now with the ECB raising interest rates to cool inflation in Germany and disregarding the effect this will have on countries like Ireland.

A country must control both its monetary and fiscal policy or instead these must be controlled by some other entity - it cannot be halfway. So the question becomes whether europeans are willing to go for further integration with more fiscal (taxes) control being centralized in Brussells or do we go the opposite way and break up the euro? Both seem totally impossible and unpalatable to me :eek:

Laminations

southsiderosie wrote: »

What do other people think? Should there be EU-wide regulation? Do EU officials need some training in political messaging? Should taxpayers be on the hook for the decisions made by their democratically elected officials? I'd say yes, yes, and yes, but it is clear that the Irish and Greek debts are too large to be repayable, and bond/shareholders are going to have to take a hit.

I think that guy and European reps in general need to swallow down their own medicine. If we are to be on the hook for our government not sufficiently regulating banks, then Europeans need to be on the hook for their governments not preventing their banks from lending heavily into an unregulated boom. Debt restructuring is what is needed and then we can talk about EU wide banking regulation. As for those who benefitted from the boom footing the bill? Fine, pay back all that interest your foreign banks were earning while you fuelled the boom and we'll have a fairer idea of who benefitted...

ECB needs to get real

Iwasfrozen

later10 wrote: »

No danger? I don't particularly agree with that. Ireland is still a very open economy and a very low growth rate coupled with high inflation is actually entirely possible. The only difference would be that inflation would be driven by external forces such as our old friends, the commodities, or by run if the mill European influences.

My point is that there is a relationsship between inflation and unemployment. When one raises the other lowers and vice versa. Raising interest rates will lead to lower inflation which in turn leads to higher unemployment.

Lockstep

Iwasfrozen wrote: »

My point is that there is a relationsship between inflation and unemployment. When one raises the other lowers and vice versa. Raising interest rates will lead to lower inflation which in turn leads to higher unemployment.

There can be but its certainly not black and white.
Stagflation for example.

later12

Iwasfrozen wrote: »

My point is that there is a relationsship between inflation and unemployment. When one raises the other lowers and vice versa.

Not necessarily. Core inflation in Germany will probably slow over the next month (disinflation) and unemployment will probably fall. In the meantime it is perfectly possible that inflation will rise in Ireland next month, and so will unemployment, as has happened previously.

Inflation is about price stability, you can't directly convert it into unemployment fluctuations.

beeftotheheels

Raskolnikov wrote: »

I would rather rephrase that question.
When Seanie Fitzpatrick and his friends lent us into oblivion - we never got a say on the matter. That's fair enough, Anglo Irish Bank was a private institution. The issue I have is that losses sustained by a private business were transferred onto the Irish taxpayer - at the behest of Europe, in order to protect their banks from losses.

His point is that Seanie Fitz did not exist in a vacuum, Anglo got to grow so big, with such an appalling business model precisely because our government allowed that to happen. We allowed that to happen, both through voting for the government and profiting from the Celtic Tiger on Speed, and through taking on daft mortgages so we have to accept some of the responsibility.

Seanie Fitz - Bertie & Co (who we elected) = not the appalling situation we are now in

There is more than enough blame to go around, and some certainly belongs to the ECB, but we have to accept that some of it is ours.

Laminations

beeftotheheels wrote: »

His point is that Seanie Fitz did not exist in a vacuum, Anglo got to grow so big, with such an appalling business model precisely because our government allowed that to happen. We allowed that to happen, both through voting for the government and profiting from the Celtic Tiger on Speed, and through taking on daft mortgages so we have to accept some of the responsibility.

Seanie Fitz - Bertie & Co (who we elected) = not the appalling situation we are now in

There is more than enough blame to go around, and some certainly belongs to the ECB, but we have to accept that some of it is ours.

If you want to talk about vacuums then Irelands situation didn't come from a vacuum, it happened within a wider European context. European banks lent into Irish banks knowing the risks and while the boom lasted they benefitted from those risky investments. Of course we need to accept some blame, hence mortgage owners are paying back over priced mortgages and we've taken tax increases and spending cuts but we need the debt restructured so it recognises Europes blame.

Iwasfrozen

Lockstep wrote: »

There can be but its certainly not black and white.
Stagflation for example.

Stagflation is usually due to an external adverse change to supply. It doesn't just happen and it's an exception to the norm.

later10 wrote:

Not necessarily. Core inflation in Germany will probably slow over the next month (disinflation) and unemployment will probably fall. In the meantime it is perfectly possible that inflation will rise in Ireland next month, and so will unemployment, as has happened previously.

Inflation is about price stability, you can't directly convert it into unemployment fluctuations.

If inflation falls in Gerany it will be as a result of the ECBs actions in lowering the interest rate. Also if inflation falls will unemployment also because the two are opposingly linked.

later12

Iwasfrozen wrote: »

If inflation falls in Gerany it will be as a result of the ECBs actions in lowering the interest rate. Also if inflation falls will unemployment also because the two are opposingly linked.

Ok I don't know where you are getting this notion from, so I'm going to leave it there. There is a link between inflation and unemployment but no, they are not inevitably either directly nor inversely proportional to one another. It is perfectly possible to have disinflation with rising employment, particularly in an export led economy.

sensibleken

beeftotheheels wrote: »

His point is that Seanie Fitz did not exist in a vacuum, Anglo got to grow so big, with such an appalling business model precisely because our government allowed that to happen. We allowed that to happen, both through voting for the government and profiting from the Celtic Tiger on Speed, and through taking on daft mortgages so we have to accept some of the responsibility.

Seanie Fitz - Bertie & Co (who we elected) = not the appalling situation we are now in

There is more than enough blame to go around, and some certainly belongs to the ECB, but we have to accept that some of it is ours.

Irish people are currently talking the vast majority of the pain, seconded by the taxpayers of the UK and Germany. Those that took the risk are taking fcuk all of it. Nobody is saying the Irish nation as a whole is blameless.

I don't remember Sean Fitz being an election issue at the time. I would be of the opinion that the CEOs of private banks are not election issues, they only became such when the last crown nationalised the debt

beeftotheheels

Iwasfrozen wrote: »

Stagflation is usually due to an external adverse change to supply. It doesn't just happen and it's an exception to the norm.


If inflation falls in Gerany it will be as a result of the ECBs actions in lowering the interest rate. Also if inflation falls will unemployment also because the two are opposingly linked.

Imagine Utopia, a little country with a balanced budget, 100% employment and a strong export driven economy. The only thing Utopia imports is oil.

The price of oil goes up, and causes inflation as the price of almost everything goes up.

The cost of those exports go up, but does it follow that demand for those exports will dry out causing unemployment? Not necessarily, the price of oil has gone up everywhere, not just in Utopia, so while the price of Utopian widgets goes up, so too does the price of French and German manufactured widgets.

Simplistic I know but they are not inextricably linked. It depends on the drivers of the inflation.

beeftotheheels

sensibleken wrote: »

Irish people are currently talking the vast majority of the pain, seconded by the taxpayers of the UK and Germany. Those that took the risk are taking fcuk all of it. Nobody is saying the Irish nation as a whole is blameless.

I don't remember Sean Fitz being an election issue at the time. I would be of the opinion that the CEOs of private banks are not election issues, they only became such when the last crown nationalised the debt

I'm not suggesting Seanie Fitz was, or should have been an election issue. Things that were election issues (and I'm just singling out the big ones) were

reduced taxation for everyone
increased spending all over the shop

Fianna Fail could afford to decrease tax and increase salaries precisely because we were in a bubble. Decreasing taxes and increasing spending wins elections. You can only afford to do it if you have a source of revenue, and that source of revenue was the taxes paid by the banks and the developers on their monopoly money profits in a bubble economy.

Had FF regulated more heavily (banks) and used increased property taxation to dampen the property bubble they would not have had the cash to throw at us to win the elections.

So, the election issues we voted for helped Seanie Fitz, or at least they did nothing to hinder him.

Before you say it, No, I don't remember any other parties running on the platform of cooling the economy.

And yes, we are taking an awful lot of the blame. Our European colleagues should reduce the rate at which they are lending to us in order to support us growing, and acknowledge that they have benefited from our bubble, and from our preventing an EU wide banking crisis. I think this will happen, but the EU is a very complicated creature so this will necessarily take time.

wiseguy

later10 wrote: »

Smaghi does have a point here actually..

His whole article is based on false assumptions. It is actually scary that people like him run the ECB.

Take the first paragraph

If taxpayers have the right to share in decision making, they must also accept the consequences

The Irish taxpayers did not participate in the decision making process of private Irish banks. The Irish taxpayers where not asked whether they wanted or not to guarantee all banking debts without even looking at them.

The Regulator, the FF Government and the ECB itself on the other hand where responsible for the banking and financial system at the time. Neither of these have accepted any responsibility, nor are paying for their economic and political mistakes.

The Irish taxpayers where not responsible for decisions taken in private banks, neither did many of us knew what was happening in the banks and economy in general, that was the job of the Regulator and the ECB.


It is extremely worrying and downright scary that such a high ranking member of the ECB has such a flawed opinion.

jimmycrackcorm

Iwasfrozen wrote: »

Source: http://www.telegraph.co.uk/finance/economics/interestrates/8434928/European-Central-Bank-raises-interest-rates-for-first-time-in-nearly-three-years-despite-Portugal-bailout.html

Lower interest rates stimulate growth, in a country like Ireland in the throngs of a recession there is no danger of excessive inflation. Higher interest rates are more suited to a booming economy where higher inflation leads in instability. A country like, oh let's say for example, Germany.

Looking at the history of Irish mortgage rates and an example here and in particular when we had our own currency I think the ECB can be classed as having the low rates already. Low is as low as what you compare it to.

SeanW

Elexis wrote: »

What nobody seems to be mentioning is that it was artificially low interest rates set by the ECB which greatly contributed to our current predicament and that of several other countries in Europe. When we joined the Euro interest rates halved almost overnight and then were further reduced to historic lows. The Federal Reserve in America did the same thing and it should be the number one thing on people's minds when the subject of credit bubbles is brought up.

Crony capitalism had a very bad impact as well because banks etc. knew that they had a government safety net, that their jobs, livelihoods and businesses would be saved by the taxpayer. Government created moral hazard and took the risky out of 'risky lending.'

Saying that it was the Free Market gone mad and more regulation is needed is a cop out. It's similar to saying that fire burns down buildings. That's true but who lights the match and pours petrol all over the flames? Governments and central banks do!

The ECB is so arrogant because nobody calls them out. Regulation is not the answer and the ECB certainly isn't either.

QFT!!!

the_syco

EoghanConway wrote: »

That's a great idea, or at least it would have been 10 years ago when it might have made a difference. To suggest it now is idiotic.

10 years ago it would have been seen as idiotic, as, shure, everything is "grand"...

These things are easy to push through when the country is against the wall, IMO.

Iwasfrozen

later10 wrote: »

Ok I don't know where you are getting this notion from, so I'm going to leave it there. There is a link between inflation and unemployment but no, they are not inevitably either directly nor inversely proportional to one another. It is perfectly possible to have disinflation with rising employment, particularly in an export led economy.

Phillips curve here shows the short term link between inflation rates and unemployment. As inflation rises unemployment lowers and vice versa.

The problem with what you're saying is that if there is rising employment then people will expect inflation to go up and it will because they are demanding higher wages, rents, expenses etc. By rising interest rates the ECB is hoping to lower people's expectation for inflation. Which is good for a booming country like Germany but bad for us.

beeftotheheels wrote:

Imagine Utopia, a little country with a balanced budget, 100% employment and a strong export driven economy. The only thing Utopia imports is oil.

The price of oil goes up, and causes inflation as the price of almost everything goes up.

The cost of those exports go up, but does it follow that demand for those exports will dry out causing unemployment? Not necessarily, the price of oil has gone up everywhere, not just in Utopia, so while the price of Utopian widgets goes up, so too does the price of French and German manufactured widgets.

Simplistic I know but they are not inextricably linked. It depends on the drivers of the inflation.

The situation you're describing would lead to a fall in potential output with a higher interest rate because the economy can no longer produce output to the same capacity. This is what happened in the US and NATO after OPEC decided to place an oil embargo on them in 1973.

I kind of know what your getting at though but remember if the price of oil goes up then suppliers will put up their prices and demand for products will fall because people will decide to spend less.

later12

Iwasfrozen wrote: »

Phillips curve here

The phillips curve!!

Look out the window, what year is it where you are?

Iwasfrozen

later10 wrote: »

The phillips curve!!

Look out the window, what year is it where you are?

Dunno, can't tell the year by looking out the window.

later12

Iwasfrozen wrote: »

Emm, dunno. I can't tell the time by looking out the window.

Ok I'm sorry but that isn't intended as a dismissal of you, but it is a dismissal of the curve. I think most economists would agree that the curve is not always appropriate, there is a very well established position that it is outdated.

Iwasfrozen

later10 wrote: »

Ok I'm sorry but that isn't intended as a dismissal of you, but it is a dismissal of the curve. I think most economists would agree that the curve is not always appropriate, there is a very well established position that it is outdated.

Really? Then why are they still teaching it in college?

later12

No - I have no doubt you are being taught a version of (or varieties of) the Phillips curve, remodelled and updated, not that graphic you linked to a few posts back. You certainly wouldn't refer to it as "The Phillips Curve" with a simple graphic attached and expect that to be taken as a given, as would have been the case maybe 30 years ago.

Iwasfrozen

later10 wrote: »

No - I have no doubt you are being taught a version of (or varieties of) the Phillips curve, remodelled and updated, not that graphic you linked to a few posts back. You certainly wouldn't refer to it as "The Phillips Curve" with a simple graphic attached and expect that to be taken as a given, as would have been the case maybe 30 years ago.

Well no, but we did at the start. I linked a simplistic version because I didn't know if you'd understand it. :pac:

later12

Iwasfrozen wrote: »

Well no, but we did at the start. I linked a simplistic version because I didn't know if you'd understand it. :pac:

Well you are still correct in saying that a definite relationship exists, but as we often observe, inflation is a strange and sometimes even wonderful thing, full of intrigue and mystery with the ability to wreak both joy and havoc!

Iwasfrozen

later10 wrote: »

Well you are still correct in saying that a definite relationship exists, but as we often observe, inflation is a strange and sometimes even wonderful thing, full of intrigue and mystery with the ability to wreak both joy and havoc!

Fair enough,but I still think that rising interest rates is not in Ireland's benifit at the moment.

later12

Iwasfrozen wrote: »

Fair enough,but I still think that rising interest rates is not in Ireland's benifit at the moment.

It isn't, I agree with you! And it the hawkish cycle certainly will be a barrier to employment, so we should expect increased unemployment all things being equal.

I just think that in very general terms, the link between inflation and unemployment is something that even the modern versions of models like Phillips can struggle to explain, and we have to take it on a case-by-case basis.

Unofrtunately, the ECB is between a rock and a hard place here.

nesf

Iwasfrozen wrote: »

Really? Then why are they still teaching it in college?

Because it's easy to learn and understand and is sometimes correct. It just doesn't necessarily apply in unusual circumstances like a recession where the labour market etc doesn't behave normally.

simplistic2

Inflation, when produced by an organisation such as the ECB is always a bad thing for the average joe soap. It, on the other had is a wonderful thing for the golden circle of parasites that surround such organisations. You have governments who use massive amounts of debt to finance all thier luny vote winning projects, senior bank officials, who through a fractional reserve system can lend to their hearts desire and walk away with massive profits, and then you have the rich, who , being first in line for all the new cash comming of the printing press can purchase goods before their is any signifigant rise in inflation.

The ECB is a malignant cancer produced by the cells of the rotten socialist minds of europe and to claim that the taxpayer should food the bill is no different than claming that a pedestrian that is rammed into the pavement should foot the bill for his new legs and also repair the dents in the car.

Sand

LBS' position has already been neatly shown up for the incoherent mess that it is. Taxpayers and voters are not interchangeable terms, so he is of to a bad start with the logic that Irish taxpayers ought to pay due to Irish voters decisions.

Financial regulation is a function of the permament, unelected government - the civil service, and is intended to be free of political interference. From a legislative point of view, they did have full powers to do their job - they simply failed to do so. Matthew Elderfield hasnt required any amazing new superpowers to deal decisively and strongly with Sean Quinn for example. The failing around financial regulation was due to poor execution of oversight by the civil service, who are wholly independant.

It is also worth noting that practically all Irish policy is made in secret, and the Irish voters are not informed until the inevitable Tribunal 20 years later. It would seem difficult to blame Irish voters for policymaking that they are not consulted on or informed of.

It was however a brilliant trollpost by LBS to claim that Irish taxpayers need to share some of the pain.

Its right to say that Irish people need to review the root causes of the debacle we find ourselves in - the unaccountable, underskilled, secretive civil service, poor transparency and political oversight, distortions that incentivise corruption and bad decision making - but that doesnt mean we need to leave nonsense like this unchallenged from clowns like LBS, who as late as 2007 was well informed enough about the risks and problems in the Irish economy to hold up the Irish economic miracle inside the Euro as a shining beacon to other states.

Whats worrying is that a clown like LBS has managed to wind up in the ECB somehow. Doesnt say much for the quality of decision makers there.

later12

Sand wrote: »

Taxpayers and voters are not interchangeable terms, so he is of to a bad start with the logic

A commonly repeated myth, but in the extreme majority of cases, they are. Residence in Ireland is a legal prerequisite for having one's name on the register of electors, and I have yet to meet any Irishman or woman who does not contribute taxes, if not through income tax then at the very least, via VAT, fuels and excise.

Financial regulation is a function of the permament, unelected government - the civil service, and is intended to be free of political interference.

I generally agree. But the Government did interfere, we did know that, and we had heard the reference to Ireland as the Wild West long before any collapse began to take shape - and then we re-elected the Government.

I don't fully agree with LBS, by the way. I just wouldn't take the same line of thought in opposing his position.

Lockstep

Iwasfrozen wrote: »

Stagflation is usually due to an external adverse change to supply. It doesn't just happen and it's an exception to the norm.

It's certainly far from an exception. The point is that even when inflation is rising, it's perfectly possible for unemployment to rise as well, which stagflation clearly shows.

If you're referring to the Philips Curve, even Keynesians like Krugman no longer support it as Philips laid out.

Sand

@Later10

A commonly repeated myth, but in the extreme majority of cases, they are. Residence in Ireland is a legal prerequisite for having one's name on the register of electors, and I have yet to meet any Irishman or woman who does not contribute taxes, if not through income tax then at the very least, via VAT, fuels and excise.

Theres no link between being an Irish taxpayer and being entitled to vote in Irish Dail elections. I work with several Irish taxpayers who are not Irish citizens and are not entitled to vote in Dail elections. As opposed to some infamous Irish citizens who avoid paying tax in Ireland. Also being on the register doesnt mean youre entitled to vote in Dail elections.

But either way, the point remains true - Irish taxpayer and Irish voter are not interchangeable terms. Hence LBS logic is faulty right from the beginning.

I generally agree. But the Government did interfere, we did know that, and we had heard the reference to Ireland as the Wild West long before any collapse began to take shape - and then we re-elected the Government.

Theres not much indication they did - apart from waffle about "light touch regulation" theres no evidence of any political interference in the regulators decisions. They just interpreted "light touch regulation" as "no regulation at all" - to the point where they were conspiring with Anglo to cook the books so that the balance sheet looked better.

If anything, Bertie protests that the regulators never sought a meeting with him and no one warned him which indicates the issue was a lack of interest in regulation by Bertie or his cohorts.

The financial regulators failings are almost entirely down to awful execution by the unelected civil servants tasked with implementing it, who had been completely captured by the banks they were supposed to be monitoring.

We're guilty in Ireland of blaming everything on the elected government, absolving the unelected government of all responsibility - but whilst Bertie made epic errors, he wasnt the man tasked with the technical task of monitoring the banks and the risks they were taking on.

Also, again, I must stress - policymaking in Ireland is done in intense secrecy, to the point thats its a major news story when elected Dail TDs are briefed by the civil service on the fiscal and economic situation. Let alone the transparency offered to Irish voters.

So Irish voters cant be blamed for making the wrong decision when they were denied any significant information or analysis of the true picture. Part of the reason Irish politics is so hopelessly local and personality driven is due to the lack of any objective information on which to make a decision.

Im a firm believer that root and branch reform is required to address the way Irish voters are locked out of their own government, but its because I believe reform is required that I dont believe Irish voters can be held responsible for secrecy under which the civil service operates.

Bullseye1

Of course we all have to take some responsibility but since when do the public vote on the directors of the banks? We have two problems here the public finance bill and the banking problem. The EU Central Bank has just as much to answer for.

View

Sand wrote: »

The financial regulators failings are almost entirely down to awful execution by the unelected civil servants tasked with implementing it, who had been completely captured by the banks they were supposed to be monitoring.

You are aware that the regulations the civil servants operate under are decided upon by elected representatives of the people? Failings in the civil service are not new - yet you'd be hard put to fill the back of a postage stamp with a list of corrective actions taken as a result (much less people held accountable for the failings).

Sand wrote: »

So Irish voters cant be blamed for making the wrong decision when they were denied any significant information or analysis of the true picture. Part of the reason Irish politics is so hopelessly local and personality driven is due to the lack of any objective information on which to make a decision.

Im a firm believer that root and branch reform is required to address the way Irish voters are locked out of their own government, but its because I believe reform is required that I dont believe Irish voters can be held responsible for secrecy under which the civil service operates.

Again, if the civil service operates under a regime of secrecy that is ultimately down to the electorate. Pressure from the electorate on the issue of transparency (in the form of votes that is) can deliver change at the ballot box as politicians who want to get those votes have to respond to that pressure.

As it is, over the last 30 years you could almost guarantee that any party promising obviously needed electoral funding reform (never mind reform of the civil service) was destined to do badly at the polls. There isn't and hasn't been public pressure to clean up politics here - the FoI act was effectively filleted by the government in 2003 with scarcely a murmur from the electorate.

Scofflaw

Bullseye1 wrote: »

Of course we all have to take some responsibility but since when do the public vote on the directors of the banks? We have two problems here the public finance bill and the banking problem. The EU Central Bank has just as much to answer for.

The public votes on the legislature, and the legislature sets what is legal and illegal, what is to be regulated and what is not. If what the banks did is not illegal, that lies at the door of the legislature. If what the banks did was poorly regulated, that lies at the door of the legislature - the ECB has no regulatory role for private banks. Who is ultimately responsible? You'll find the answer in Bunreacht.

cordially,
Scofflaw

Scofflaw

Sand wrote: »

@Later10


Theres no link between being an Irish taxpayer and being entitled to vote in Irish Dail elections. I work with several Irish taxpayers who are not Irish citizens and are not entitled to vote in Dail elections. As opposed to some infamous Irish citizens who avoid paying tax in Ireland. Also being on the register doesnt mean youre entitled to vote in Dail elections.

But either way, the point remains true - Irish taxpayer and Irish voter are not interchangeable terms. Hence LBS logic is faulty right from the beginning.



Theres not much indication they did - apart from waffle about "light touch regulation" theres no evidence of any political interference in the regulators decisions. They just interpreted "light touch regulation" as "no regulation at all" - to the point where they were conspiring with Anglo to cook the books so that the balance sheet looked better.

If anything, Bertie protests that the regulators never sought a meeting with him and no one warned him which indicates the issue was a lack of interest in regulation by Bertie or his cohorts.

The financial regulators failings are almost entirely down to awful execution by the unelected civil servants tasked with implementing it, who had been completely captured by the banks they were supposed to be monitoring.

We're guilty in Ireland of blaming everything on the elected government, absolving the unelected government of all responsibility - but whilst Bertie made epic errors, he wasnt the man tasked with the technical task of monitoring the banks and the risks they were taking on.

Also, again, I must stress - policymaking in Ireland is done in intense secrecy, to the point thats its a major news story when elected Dail TDs are briefed by the civil service on the fiscal and economic situation. Let alone the transparency offered to Irish voters.

So Irish voters cant be blamed for making the wrong decision when they were denied any significant information or analysis of the true picture. Part of the reason Irish politics is so hopelessly local and personality driven is due to the lack of any objective information on which to make a decision.

Im a firm believer that root and branch reform is required to address the way Irish voters are locked out of their own government, but its because I believe reform is required that I dont believe Irish voters can be held responsible for secrecy under which the civil service operates.

Clever though it sounds, none of that is an excuse - it's simply part of the failings of the Irish electorate. We haven't got transparency because we haven't ever demanded it - and if what emerges from the murk of government is unwelcome, that's tough. The electorate cannot be absolved of responsibility for the actions of its government on the basis that it didn't know what they were doing any more than the government can be absolved of responsibility for the acitons of the banks on the same basis. If the electorate does not know what the government is doing, who the heck is supposed to? If the electorate doesn't have to take responsibility for the actions of the government it elected, what motive does the electorate have not to elect bad governments?

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

Clever though it sounds, none of that is an excuse - it's simply part of the failings of the Irish electorate. We haven't got transparency because we haven't ever demanded it - and if what emerges from the murk of government is unwelcome, that's tough. The electorate cannot be absolved of responsibility for the actions of its government on the basis that it didn't know what they were doing any more than the government can be absolved of responsibility for the acitons of the banks on the same basis. If the electorate does not know what the government is doing, who the heck is supposed to? If the electorate doesn't have to take responsibility for the actions of the government it elected, what motive does the electorate have not to elect bad governments?

cordially,
Scofflaw

You keep using this "excuse" to put all the blame on the people of Ireland, who did not ALL engage in the bubble yet who now ALL have to pay for the mess apparently :rolleyes:

Your "excuse" is used to absolve the past government and the Regulator and ECB of any responsibility.

The Irish people did not have a say in the running of the private Irish banks and construction companies. Yes the Irish people elected FF government but with delegated power comes responsibility and accountability. I do not see anyone in the past government or Regulator being held to account or coming forward and admitting that they screwed up, quite the opposite many of the people responsible get to retire on cushy pensions.

Now that the Irish people have elected a new goverment, how long do we have to pay for the sins of our past failed politicians :rolleyes:

How long did the German and Italian people pay for the choices made by the politicians they elected in 1930s :rolleyes:

Maybe you are happy to pay for the choice made by the Greens who you voted for in their support of FF. But I am not, and have repeatedly opposed the wholesale socialisation of debts and bull****.

sensibleken

Scofflaw wrote: »

Clever though it sounds, none of that is an excuse - it's simply part of the failings of the Irish electorate. We haven't got transparency because we haven't ever demanded it - and if what emerges from the murk of government is unwelcome, that's tough. The electorate cannot be absolved of responsibility for the actions of its government on the basis that it didn't know what they were doing any more than the government can be absolved of responsibility for the acitons of the banks on the same basis. If the electorate does not know what the government is doing, who the heck is supposed to? If the electorate doesn't have to take responsibility for the actions of the government it elected, what motive does the electorate have not to elect bad governments?

cordially,
Scofflaw

Its not a first past the post system nor was it a majority fianna fail government. Fianna fail took a battering over berties corruption but managed to do a deal with the greens (who benifited most from a swing to the centre left) to keep going, much to many of our exasperations.

Its also unreasonable to expect everyone to be economists