leaving the euro

geordief

I was listening to someone on RTE1 suggesting this.
Is this being suggested seriously? What has happened to the argument about an independent Irish currency being easy prey to speculators?

Scofflaw

geordief wrote: »

I was listening to someone on RTE1 suggesting this.
Is this being suggested seriously? What has happened to the argument about an independent Irish currency being easy prey to speculators?

It has been conveniently forgotten, along with the question of whether even our current austerity cuts are too much for the economy, never mind cutting the deficit overnight. Now that most people have given up on the search for magic money trees, we're left with the idea of default, leaving the euro, and immediate budget balancing as the remaining 'quick fix' solution that many people desperately want to believe in.

cordially,
Scofflaw

OnTheQT

Unfortunately everything that can be suggested is being suggested at the moment. Doesnt mean in any way all the prophecies are going to come true. I mean George Hook is commenting on this whole situation. Him of all people....This country has far too many experts at the minute. Where were all the great economists when things were going well

Permabear

This post has been deleted.

Sand

@Scofflaw

It has been conveniently forgotten, along with the question of whether even our current austerity cuts are too much for the economy, never mind cutting the deficit overnight. Now that most people have given up on the search for magic money trees, we're left with the idea of default, leaving the euro, and immediate budget balancing as the remaining 'quick fix' solution that many people desperately want to believe in.

I believe youve forgotten "Hope the Germans save us".

@Permabear

We could have easily avoided this farce if we'd told the EU/ECB back in the autumn of 2008 that we were not taking responsibility for our toxic banks and were prepared to let them collapse, if necessary. That would have been interesting, but not necessarily catastrophic.

The problem there is it would have meant making a decision, rather than taking some derranged temporary measure to "buy time" to wait for someone else to make a decision for us.

beeftotheheels

Well here's another teaser. Can any one explain to me how we can leave the euro without risking being kicked out of the EU?

If not, can anyone quantify the damage leaving the EU would have on our economy?

Sand

beeftotheheels wrote: »

Well here's another teaser. Can any one explain to me how we can leave the euro without risking being kicked out of the EU?

If not, can anyone quantify the damage leaving the EU would have on our economy?

Well - for the record, leaving the Euro would be pretty dumb. But then, the DoF have done a lot of dumb stuff, so who knows.

But, again, for the record...the Euro is the not the EU and the EU is not the Euro. Leaving one does not mean we have to leave the other. And there is no mechanism for a Euro member to leave the Euro, and as far as I know theres not mechanism for kicking a member state out of the euro. So the risk would be imagined, perhaps due to deferential fear/inferiority complex.

irishh_bob

Permabear wrote: »

This post had been deleted.

many people believe that the main reason behind lennehans descision to guarentee the whole shooting gallery stemed from intense pressure from europe , its has been reported many times that the french finance minister was on the phone to the minister for finance on the night of the bank guarentee , the big guns in europe were terrified of contagion and fianna fail being the populists that they are were terrified that pensioners and teachers wouldnt get paid the following week in the event of a collapse , however brief

btw , i wish they had let hell break loose , would be preferable to infinite purgotary

eric hoone

i'll take a hot day or two in hell over infinite purgatory also, nice metaphor bob

z0oT

Permabear wrote: »

This post had been deleted.

No argument there, however would the ECB/EU actually have permitted to do that?

caseyann

beeftotheheels wrote: »

Well here's another teaser. Can any one explain to me how we can leave the euro without risking being kicked out of the EU?

If not, can anyone quantify the damage leaving the EU would have on our economy?

Leaving the euro,great idea.

Leaving the EU.We wont have to leave the EU,it is coming apart at the seams and has been for a while now the stitching is showing.
Rather than stay with our own currency and being our own free state for even a hundred years,and sorting our own country out.They lumped us in with everyone else and it was bound to fall apart.Easy fix for cash and the greed of people allowed it go ahead.
Concept was faulty and no one looked at the faults just gained on the easy.;)

robtri

Permabear wrote: »

This post had been deleted.

I am hugely up on this, but surely if we let the banks collapse, Anglo, AIB and BOI.. all the bond holders would be burnt (which i am in favour of) but a lot of banks including the European central bank would be badly burnt as well...
as a result no one would lend us money, which we need to run the country... cause we dont make enough at the min to cover our costs...

K-9

Permabear wrote: »

This post had been deleted.

Well it's a libertarians dream al right.

We'd have had endless house repossessions, a public service we probably still couldn't afford, raising taxes to try and meet the continuing deficit from God knows what level of unemployment, probably still in depression, half the countries shops closed up but besides all that, everything would be a libertarian paradise though so according to the ideology, everything would be okay..

Scofflaw

z0oT wrote: »

No argument there, however would the ECB/EU actually have permitted to do that?

They don't have the power to prevent it. Legally, they don't have the power to force us not to burn the bondholders, either - they're a central bank, not a federal government - they have acquired the ability by virtue of their lending the ELA that keeps the banks open. If we don't care about keeping the banks open, we don't have to care what the ECB says, which is what would also have made Permabear's option possible in 2008 - we could just have said "er, no, sorry, we're going to let them drop", and the only thing the ECB could have threatened in return is, well, not to lend money to our banks...

What would have happened to the depositors, though?

cordially,
Scofflaw

z0oT

Scofflaw wrote: »

What would have happened to the depositors, though?

Would it have been possible for the government to have stepped in, nationalized them, set up a new bank(s), and them moved the deposits, and worthwhile assets to that new bank(s) with a new balance sheet. Them ram some new legislation through the Dail forcing the bondholders et al. to take a debt for equity swap?

Genuine question, as I'm curious as to the feasibility of such actions. Obviously the whole matter wouldn't be a simple touch and go, but surely it would have been better than the current route.

OnTheQT

Excuse the post but avec alcohol...

So lets say in 2008 we told everyone to go and shove it. We're not paying our debts. Next week/month/year when the banks reissue their debts what happens?? They are politely told to go F**k themselves. So all of a sudden our banks have no money. Sounds fun. Can I have my wages this week?

Ok so lets adjust our budget so we have a zero deficit. We tell people on social welfare they are now getting 50e a week. Go pay your rent and food with that. We're also going to have to tell the people on trollies in hospitals theat theyre going to be there for the next month.

Next tell the people paying rent because of the adjustment that rents have fallen massively. Cool! I'm all for that. I'm going to tell my landlord that his 2000e a month mortgage is now going to be funded by a 1200 a month payment. Awesome! I'm sure his bank is going to be impressed by that. Yes!....lets all let this stuff happen because it all sounds so delicious.

Join the real world here. We cant just decide to not pay our debts. Unfortunatley in the word we live in everything is interconnected. We cant make a sweeping decision without affecting everything else

Edit: To burn the bondholders there would have had to have been agreement EU wide. Unfortunatley its difficult to just levy the haircut on them without them accepting it. The consequence to this would be us never getting ineternational funding again. We really dont want to have to depend on the ECB forever

declanx

I would rather say re-issuing the Punt would be nuts as don't have the economy to back up the Punt (in my very limited economic understanding). We have no other options at the moment. I would say lets make the most of it, but most politicians I fear will play it too safe.

In general term is there a size of population, GDP or other indicators that indicate when a currency will be stable?

Dec.

later12

declanx wrote: »

I would rather say re-issuing the Punt would be nuts as don't have the economy to back up the Punt

There are lots of reasons why leaving the euro would be disastrous for us, but this is not one of them. If anything, the immediate economy seems to scream out for the punt because we seek to galvanise our exports and a rising euro does not help that cause. The thing is the longer term economic sustainability of the state could be called into question by abandoning the euro. As we are not a significant economic entity abroad, other concerns do not immediately affect us as they might affect others on leaving the euro.

ziggyman17

As long as some people are claiming 850 euro's a month rent money, as well as collecting the dole and getting other handouts the country will be in the ****.. while people who are fortunate to still have a job struggle along, working to pay bills and nothing else.. For a start the social welfare system (free handouts) has to be re designed.. I actually hope the country goes bankrupt and the bummers get **** all handouts..

feicim

geordief wrote: »

I was listening to someone on RTE1 suggesting this.
Is this being suggested seriously? What has happened to the argument about an independent Irish currency being easy prey to speculators?

Would Ireland leaving the Euro not possibly sink the whole Euro project?

If the deposit holders in Irish banks got wind that Ireland was leaving the Euro there would surely be a run on the Irish banks, (because a currency based on the value of the Irish economy wouldn't be worth much at present and people would fear they would not get a fair exchange rate on their savings) with the effect being that the Irish banks run out of cash, and have to go cap in hand to the government who would have to go cap in hand to the EU banks (if they can), then the other countries would wonder if they are next, and next thing you know all the money is being withdrawn from the other PIGS countries by which time the whole thing looks shaky and falls apart due to speculation and people moving cash assets out of the Euro?

Surely the EU would pay any price not to let this happen?

Or maybe the big boys like France and Germany will jump the gun and pull out to preserve their currencies and let all the rest sort themselves out?

ziggyman17

feicim wrote: »

Would Ireland leaving the Euro not possibly sink the whole Euro project?

If the deposit holders in Irish banks got wind that Ireland was leaving the Euro there would surely be a run on the Irish banks, (because a currency based on the value of the Irish economy wouldn't be worth much at present and people would fear they would not get a fair exchange rate on their savings) with the effect being that the Irish banks run out of cash, and have to go cap in hand to the government who would have to go cap in hand to the EU banks (if they can), then the other countries would wonder if they are next, and next thing you know all the money is being withdrawn from the other PIGS countries by which time the whole thing looks shaky and falls apart due to speculation and people moving cash assets out of the Euro?

Surely the EU would pay any price not to let this happen?

Or maybe the big boys like France and Germany will jump the gun and pull out to preserve their currencies and let all the rest sort themselves out?

Too right they'd jump ship.. The whole eu project was set up so the likes of France and Germany would prosper.. In the end after 2 world wars, Germany finally rule europe, with out firing a bullet..

Dob74

beeftotheheels wrote: »

Well here's another teaser. Can any one explain to me how we can leave the euro without risking being kicked out of the EU?

If not, can anyone quantify the damage leaving the EU would have on our economy?

denmark, sweden in the EU and not in the euro.
Answer the question

View

Dob74 wrote: »

denmark, sweden in the EU and not in the euro.
Answer the question

Denmark, along with the UK, has a legal opt-out on joining the Euro since the Maastricht Treaty although the (Danish) Government has said they intend to hold a referendum on doing so. Sweden, together with the other more recent EU members, is legally obliged to join the Euro when they meet the Maastricht criteria for doing so - to date they have not done so.

You might follow your own advise and answer beeftotheheels' question, namely:

Can any one explain to me how we can leave the euro without risking being kicked out of the EU?

The relevant articles from the EU Treaties which allow leaving the Euro should do the trick...

Boskowski

Scofflaw wrote: »

It has been conveniently forgotten, along with the question of whether even our current austerity cuts are too much for the economy, never mind cutting the deficit overnight. Now that most people have given up on the search for magic money trees, we're left with the idea of default, leaving the euro, and immediate budget balancing as the remaining 'quick fix' solution that many people desperately want to believe in.

cordially,
Scofflaw

So were still somewhere between denial and panic?

n900guy

feicim wrote: »

Would Ireland leaving the Euro not possibly sink the whole Euro project?
.....
Surely the EU would pay any price not to let this happen?

Or maybe the big boys like France and Germany will jump the gun and pull out to preserve their currencies and let all the rest sort themselves out?

No, the largest economic bloc on the planet is not going to be "sunk" ever by a country or economy as small as Ireland. We would simply be outside it looking in.

Boskowski

+1

Amongst the looking for the money trees and the great saviour and putting it all on a horse we've totally forgotten about another delusion of ours - that we're apparently key to the survival of the EU and we therefore have the option of playing 'hardball'. :rolleyes:

n900guy

I thinks it's slightly hilarious actually. What would actually happen if Ireland left the Euro would be no different to the difference of West Germany compared to the DDR. Leaving the euro or the EU would be like us putting ourselves behind an Iron Curtain. Good for local party politics but nothing more.



In fact, seeing as how easily the magical public vs private debate suited the politics in terms of socialising bank debt of investors, it's likely there will be more anti-euro nonsense discussed - because it suits local party politics, and nothing more.

Sand

+1

Amongst the looking for the money trees and the great saviour and putting it all on a horse we've totally forgotten about another delusion of ours - that we're apparently key to the survival of the EU and we therefore have the option of playing 'hardball'.

If we're so unimportant, why does the ECB get hysterical when the option of default/restructuring is raised? The IMF was in favour of default back in November 2010, but apparently the ECB team had to be peeled of the ceiling when the Irish meekly raised the prospect of some form of default.

People cant have their cake and eat it:

Either Irish default is irrelevant to the ECB, in which case lets get on with it. Or it is important to the ECB, in which case we want some payback for doing our part.

The "If you default we'll murder you and your family!! But actually, we dont really care, so whatever" schizophrenia is a sign of how scared the ECB are. Remember whose really on the hook for the Irish banks - it isnt the Irish state. The ECB cant afford for the Irish banks to fail because theyll suddenly be looking at writing off at least 100 billion euro.

beeftotheheels

Sand wrote: »

If we're so unimportant, why does the ECB get hysterical when the option of default/restructuring is raised? The IMF was in favour of default back in November 2010, but apparently the ECB team had to be peeled of the ceiling when the Irish meekly raised the prospect of some form of default.

People cant have their cake and eat it:

Either Irish default is irrelevant to the ECB, in which case lets get on with it. Or it is important to the ECB, in which case we want some payback for doing our part.

The "If you default we'll murder you and your family!! But actually, we dont really care, so whatever" schizophrenia is a sign of how scared the ECB are. Remember whose really on the hook for the Irish banks - it isnt the Irish state. The ECB cant afford for the Irish banks to fail because theyll suddenly be looking at writing off at least 100 billion euro.

Really? It is all to do with the amount our banks have pledged with the ECB and nothing what so ever to do with fears of contagion?

And if the ECB had no such opposition we could happily default and wander off into the sunset because it is not like we were daft enough to promise to repay said borrowings in a legally binding way?

We really can have the worst of both worlds here (if we push ourselves hard enough but as a people I'm beginning to think we might just be capable of pulling this one off).

We can p!$$ off the ECB by risking bringing down the European banking system through contagion (now I will be the first to acknowledge that we can't do this on our own, we're not that important, but we can be the first significant domino to fall), and then our default can be challenged in the Courts such that we are made to pay back most of what we tried not to pay.

We could in fact neither have our cake nor have eaten it!

Sand

@beeftoheels

And if the ECB had no such opposition we could happily default and wander off into the sunset because it is not like we were daft enough to promise to repay said borrowings in a legally binding way?

Inisignificant Ireland defaults tommorrow (in whatever form recovers fiscal solvency - Id argue NAMA bonds first, Promissory Notes next, with every effort made to avoid default on straightforward sovereign bonds). Youre the ECB. What do you do?

Remember...youre the ECB, with responsibility for the Euro and Euro zone stability, not merely the nemesis of the Irish people with a freehand to rain down fire and destruction upon a people as insignificant and unimportant as the Irish people. Engaging in petty retribution will only lead to further euro zone instability, and/or write off whatever recoverable value can be extracted from the remnants of the Irish banks.

People carry on like nobody has ever defaulted before. Nations have always defaulted, and continue to default. The US is in the midst of a large default. Ireland has defaulted as recently as the early 1990s and it didnt impede a massive economic boom. I swear, its like people showed up for a single economics leture (and definitly missed the game theory...), got the gist of "Default is bad and ought to be avoided" and have held onto it as some article of faith ever since.

Remember - you dont have to actually push the button, you only have to convince the other guy youre crazy enough to push the button. And the ECB/EU have vastly more to lose than we do. We are afterall....very insignificant. Whereas the ECB/EU is very significant. Even a few percent of a hell of a lot is still a hell of a lot. And a 100% of feck all is still...feck all.

later12

Sand wrote: »

Inisignificant Ireland defaults tommorrow (in whatever form recovers fiscal solvency - Id argue NAMA bonds first, Promissory Notes next, with every effort made to avoid default on straightforward sovereign bonds).

not to get in the way of the rest of your argument, but, why would there be any order? Debt becomes payable instantly.

beeftotheheels

Sand wrote: »

Remember - you dont have to actually push the button, you only have to convince the other guy youre crazy enough to push the button. And the ECB/EU have vastly more to lose than we do. We are afterall....very insignificant. Whereas the ECB/EU is very significant. Even a few percent of a hell of a lot is still a hell of a lot. And a 100% of feck all is still...feck all.

No, you need to be prepared to convince the other guy that you will push the button despite the rain of fire it will bring down on you.

a) If you're that crazy then I'm not really very happy with you leading my country!

b) If you don't understand that pushing the button will result in a rain of fire coming down on you you are both too dumb and too crazy for me to be happy with you leading my country!

c) If you appreciate that pushing the button will bring a rain of fire down on you and want to play chicken then that is all well and good but for god's sake know when to blink.

Suggesting that we can play hardball without knowing when to blink puts you in categories a) or b) and you are not fit to lead my country.

n900guy

Sand wrote: »

If we're so unimportant, why does the ECB get hysterical when the option of default/restructuring is raised? The IMF was in favour of default back in November 2010, but apparently the ECB team had to be peeled of the ceiling when the Irish meekly raised the prospect of some form of default.

People cant have their cake and eat it:

Either Irish default is irrelevant to the ECB, in which case lets get on with it. Or it is important to the ECB, in which case we want some payback for doing our part.

The "If you default we'll murder you and your family!! But actually, we dont really care, so whatever" schizophrenia is a sign of how scared the ECB are. Remember whose really on the hook for the Irish banks - it isnt the Irish state. The ECB cant afford for the Irish banks to fail because theyll suddenly be looking at writing off at least 100 billion euro.

The ECB is owed large amounts of money by banks like Anglo Irish - purley because our government decided that that was the case. That is why they kick up a stink. "Ireland" is not some magical mystery place of significance, except to us. The ECB would be chasing the banks and developers who ran up the billions in debt; instead, they are chasing Ireland because Ireland now is responsible for the debt.

beeftotheheels

later10 wrote: »

not to get in the way of the rest of your argument, but, why would there be any order? Debt becomes payable instantly.

You might want to repeat the difference between default and restructuring here.

I acknowledge that I'll probably keep referring to default since I cannot envisage a significant proportion of our creditors agreeing to any unilateral restructuring right now (in the future fingers crossed, but not right now given we seem to be capable of struggling along and not due to return to the markets just yet, and assuming that during 2008/ 2009 most of those who were highly leveraged, deleveraged, so those still in the game can afford to litigate or play hardball).

Raskolnikov

Permabear wrote: »

This post had been deleted.

Do you really think that we could have avoided pain in your scenario? What you're talking about is allowing the entire Irish banking system to implode. That means deposit holders are going to lose a massive chunk of their deposits.

While I am not going to dismiss your solution (at this stage, I have come to the conclusion that no matter what happens, Ireland is in the sh!tter). What I will say is that you have to acknowledge that the pain would be considerable. You would have ended up with several generations of people who would end up stuffing their matresses with bank notes; you would have mass unemployment on a scale that would make the 80's experience look like a cakewalk, you would have 100's, if not 1,000's of people dying every year because there was no money to provide for essential organ/cancer services.

GaryCanDance

ziggyman17 wrote: »

As long as some people are claiming 850 euro's a month rent money, as well as collecting the dole and getting other handouts the country will be in the ****.. while people who are fortunate to still have a job struggle along, working to pay bills and nothing else.. For a start the social welfare system (free handouts) has to be re designed.. I actually hope the country goes bankrupt and the bummers get **** all handouts..

I understand that the social welfare system in this country is very flawed and almost everybody either is or knows somebody who's using it to receive money they don't deserve or worse money they don't need but if you truly believe that a modern country can have a decent functioning economy or more importantly, society without a some form of welfare system or job seekers allowance you need to really think over your moral and economic understandings of this world.

You'd swear that the "bummers" and you so eloquently put it were hiding that money under there mattresses. The money given out in social welfare payments goes directly back into the local economy and prominently into areas well in need of investment.

beeftotheheels

Raskolnikov wrote: »

Do you really think that we could have avoided pain in your scenario? What you're talking about is allowing the entire Irish banking system to implode. That means deposit holders are going to lose a massive chunk of their deposits.

While I am not going to dismiss your solution (at this stage, I have come to the conclusion that no matter what happens, Ireland is in the sh!tter). What I will say is that you have to acknowledge that the pain would be considerable. You would have ended up with several generations of people who would end up stuffing their matresses with bank notes; you would have mass unemployment on a scale that would make the 80's experience look like a cakewalk, you would have 100's, if not 1,000's of people dying every year because there was no money to provide for essential organ/cancer services.

Damn! I'm inferring from your post that you failed to record the "special" episode of Quantum Leap called "Permabear saves the Irish economy" and I was hoping to ask you for a copy.

I'll just have to look it up on youtube I guess.

Raskolnikov

Sand wrote: »

Youre the ECB. What do you do?

If Ireland decided to give the two fingers to the ECB, and I was the ECB; I would be doing everything I could to make the Irish pay. Considering that we're at the mercy of the ECB, it wouldn't be too hard. You could withdraw ECB ELA (emergency liquidity assistance) for a start. Overnight, that would mean that the Irish banking system would implode, as we could no longer tap the ECB for their cash for trash facility. That one measure alone would cause our economy to implode - who knows what else the beaucrats in Brussels would be able to think up of.

If you're seriously suggesting a default, then there isn't a chance in hell that Europe will allow us to remain a member of the Eurozone. If we stiff Europe, they will just stop providing us with money; if we have no money, we will be forced to leave the Euro and start printing our own money. If we are forced out of the Eurozone, I shudder to think what the foreign multinationals would consider.

I accept that we're going to default in some shape or form. However, I think that if we unilaterally default, we will probably be making a big mistake (as I have shown above).

Raskolnikov

beeftotheheels wrote: »

Damn! I'm inferring from your post that you failed to record the "special" episode of Quantum Leap called "Permabear saves the Irish economy" and I was hoping to ask you for a copy.

I'll just have to look it up on youtube I guess.

Beef,

I wish I could laugh, I really do. Our circumstances are thoroughly dismal, and I just can't see an exit strategy. Originally, my thoughts were similar to a lot of folks here - let's just let the crappy banking system fail and start a fresh. When you drill down into the details though, the real cost to the overall economy and citizens is almost as stupendous as the losses we have sustained.

I am actually quite positive on my own future, and my abilities to be successful in life. I belive in the global economy, and think that gold and commodities are basically a fad; I am bullish with regards to our future in the long-term. When I look at Ireland though, I am just so fearful. In the last 10-15 years, we have grown accustomed to a lifestyle that is enjoyed by perhaps the top 5% of inhabitants on our planet, mainly because of a credit-based bubble that everyone benefitted from. Our future is a million miles away from our glory days of the Noughties. We have been sucking billions of Euro out of the economy every year since 2007. If someone can present me a similar scenario where a country has managed to deflate its way out of a crisis, I am all ears.

beeftotheheels

Raskolnikov wrote: »

Beef,

I wish I could laugh, I really do. Our circumstances are thoroughly dismal, and I just can't see an exit strategy. Originally, my thoughts were similar to a lot of folks here - let's just let the crappy banking system fail and start a fresh. When you drill down into the details though, the real cost to the overall economy and citizens is almost as stupendous as the losses we have sustained.

I am actually quite positive on my own future, and my abilities to be successful in life. I belive in the global economy, and think that gold and commodities are basically a fad; I am bullish with regards to our future in the long-term. When I look at Ireland though, I am just so fearful. In the last 10-15 years, we have grown accustomed to a lifestyle that is enjoyed by perhaps the top 5% of inhabitants on our planet, mainly because of a credit-based bubble that everyone benefitted from. Our future is a million miles away from our glory days of the Noughties. We have been sucking billions of Euro out of the economy every year since 2007. If someone can present me a similar scenario where a country has managed to deflate its way out of a crisis, I am all ears.

I am with you on this. The problem is that no one actually knows how all this is going to pan out, we just don't know so I take issue with people saying that had their advice been followed then the pain would all be over with no evidence to back this up (absent being able to make a quantum leap).

Is this comparable to the 80s or the 30s? Is it comparable to either given the euro and the EU dimension? If there are no comparables then what evidence is there for supporting any particular cause of action?

We're faced with the choice of doing nothing rash and unilateral in the hope that a multilateral solution will be available at some point in the future, being the road we are currently on, or doing something rash and unilateral which could kill or cure. Personally I take the view that you only inflict kill or cure treatment when you run out of all other options, and it is not clear to me that we have done so at this stage. We are still trundling along, we don't need to return to the markets yet.

Another point is the search for a money tree, the belief that things are as bad as they can be and our government and European colleagues have made the worst possible decisions. I don't see this, we have seen from Argentina and many other examples that it can get a whole lot worse than where we are right now. Sure, we're paring back on things like manicures and weekend breaks, but we are not paring back on meals per day, or households per dwelling, or law and order. It could be a lot worse than it is now.

Then we have people complaining that three years of the current route hasn't fixed things so we should throw in the towel. 3 years is nothing in the context of the global economy. The bubble which burst four years ago was inflated over the better part of thirty years. We are hearing things about Japan's lost decade but if we look to the 30s we see the crisis continuing in one form or another until the second world war.

Hence I support trundling along, reducing the deficit over time and hoping that either growth or a European debt restructuring or both will be on the cards in the future.

ei.sdraob

beeftotheheels wrote: »

I am with you on this. The problem is that no one actually knows how all this is going to pan out, we just don't know so I take issue with people saying that had their advice been followed then the pain would all be over with no evidence to back this up (absent being able to make a quantum leap).

Is this comparable to the 80s or the 30s? Is it comparable to either given the euro and the EU dimension? If there are no comparables then what evidence is there for supporting any particular cause of action?

We're faced with the choice of doing nothing rash and unilateral in the hope that a multilateral solution will be available at some point in the future, being the road we are currently on, or doing something rash and unilateral which could kill or cure. Personally I take the view that you only inflict kill or cure treatment when you run out of all other options, and it is not clear to me that we have done so at this stage. We are still trundling along, we don't need to return to the markets yet.

Another point is the search for a money tree, the belief that things are as bad as they can be and our government and European colleagues have made the worst possible decisions. I don't see this, we have seen from Argentina and many other examples that it can get a whole lot worse than where we are right now. Sure, we're paring back on things like manicures and weekend breaks, but we are not paring back on meals per day, or households per dwelling, or law and order. It could be a lot worse than it is now.

Then we have people complaining that three years of the current route hasn't fixed things so we should throw in the towel. 3 years is nothing in the context of the global economy. The bubble which burst four years ago was inflated over the better part of thirty years. We are hearing things about Japan's lost decade but if we look to the 30s we see the crisis continuing in one form or another until the second world war.

Hence I support trundling along, reducing the deficit over time and hoping that either growth or a European debt restructuring or both will be on the cards in the future.

The "Keep Buggering On" Approach

How is that working out so far :rolleyes:

n900guy

beeftotheheels wrote: »

Is this comparable to the 80s or the 30s? Is it comparable to either given the euro and the EU dimension? If there are no comparables then what evidence is there for supporting any particular cause of action?

We don't live in an isolated state. The comparison is to a US state as part of a larger economy. Effectively, we are not much different to an indebted and poorly developed ex-DDR state. The future is as much as it was for them as it will be for us - and in the US, compare to states like Michigan.

beeftotheheels

n900guy wrote: »

We don't live in an isolated state. The comparison is to a US state as part of a larger economy. Effectively, we are not much different to an indebted and poorly developed ex-DDR state. The future is as much as it was for them as it will be for us - and in the US, compare to states like Michigan.

But it is not because the EU is not a State.

We are somewhere in between being on our own, and being part of a bigger whole precisely because the bigger whole is not itself a nation state but an unprecedented voluntary combination of nation states trying to weigh up national interests as well as EU interests.

dissed doc

beeftotheheels wrote: »

But it is not because the EU is not a State.

We are somewhere in between being on our own, and being part of a bigger whole precisely because the bigger whole is not itself a nation state but an unprecedented voluntary combination of nation states trying to weigh up national interests as well as EU interests.

It was about the euro though - we live in single economic state with regard to currency. Viewing our main trading partner - the eurozone - as friends and allies and not enemies is a step many need to take, execpt for them getting their news from the Telegraph or US television.

beeftotheheels

dissed doc wrote: »

It was about the euro though - we live in single economic state with regard to currency. Viewing our main trading partner - the eurozone - as friends and allies and not enemies is a step many need to take, execpt for them getting their news from the Telegraph or US television.

Yes, but the common currency does not mean that our situation is comparable to a US State because the EU does not control fiscal policy (nor would I want them to) so we have to admit that we are in unchartered territory here.

I'm a Europhile, I view our friends and neighbors as being our allies in this although I acknowledge that there are certain difficulties here relating to the fact that we are in unchartered territory. The Commission and the ECB want our interest rate reduced in order to encourage growth, the French seem intent on pandering to their electorate by grandstanding over our CT rate and neither the Commission nor the ECB control the EFSF.

Do I think that the French will eventually realize that such grandstanding is counter productive? Yes, we didn't take the IMF opportunity to burn bondholders for the benefit of the entire European Experiment and to reduce the risk of contagion, so punishing us and restricting our growth thus making us more likely to restructure or default is a bad thing. But the EU as it currently is has to take into account the fact that the French Government are elected by the French electorate, not by a European one.

OnTheQT

People speaking of trundling along are in for a rude awakening. 3 years is nothing. The damage to our soverign rating is irepairable for most likely a deacde. Get used to trundling along for sometime because that is exactly what is going to happen

Dob74

n900guy wrote: »

We don't live in an isolated state. The comparison is to a US state as part of a larger economy. Effectively, we are not much different to an indebted and poorly developed ex-DDR state. The future is as much as it was for them as it will be for us - and in the US, compare to states like Michigan.

For the record, state and local government most balance there budgets in the US.
Only the federal gov is supposed to run up defiects.

later12

OnTheQT wrote: »

People speaking of trundling along are in for a rude awakening. 3 years is nothing. The damage to our soverign rating is irepairable for most likely a deacde.

Why a 'most likely a decade', what makes that more likely than 5 years or 20?

I have to laugh sometimes when I see the answers to all of the questions that governmental organisations and international financial houses spend fortunes on researching, and are then casually whipped out on here as points of fact!

View

Dob74 wrote: »

For the record, state and local government most balance there budgets in the US.
Only the federal gov is supposed to run up defiects.

I am open to correction on this but I believe that your comment is not true. Some US states have explicit requirements in their constitutions that they must balance their budgets (irrespective of the short-term impact this causes on the services the state provides their citizens), other have very strong political conventions, based on historical experience, for doing so (but no actual legal requirement to do so). This largely seems to be the case that the individual states realise that - as we see - it is a lot easier to get into a financial mess than it is to get out of it.

It should also be mentioned in passing that while we were off on our Celtic Tiger "Aren't we so clever?" trip, that Germany - having picked-up on the lessons from the US - was modifying its "Basic law" (aka constitution) to make such balanced budgets mandatory for all government levels there. That constitutional requirement kicks in, depending on the level of government, over the next decade.

OnTheQT

later10 wrote: »

Why a 'most likely a decade', what makes that more likely than 5 years or 20?

I have to laugh sometimes when I see the answers to all of the questions that governmental organisations and international financial houses spend fortunes on researching, and are then casually whipped out on here as points of fact!

Because its probably going to be a couple more years before our banks can access normal funding. And then a couple more years to build up somewhat of a reputation. Its an opinion. Not a fact. I do believe people are entitled to give opinions on message boards. And lets be real here all the forcasting and researching never showed the possibility of what has happened. I have little faith in any of them

later12

OnTheQT wrote: »

Because its probably going to be a couple more years before our banks can access normal funding. And then a couple more years to build up somewhat of a reputation. Its an opinion. Not a fact. I do believe people are entitled to give opinions on message boards. And lets be real here all the forcasting and researching never showed the possibility of what has happened. I have little faith in any of them

That's fine of course, but reading your post you didn't suggest it was merely opinion, you said it was ''exactly what is going to heppen''.

You are correct to say that all the forecasting and research was way off, and in many cases it still is. Many companies now listen to economic forecasters and even their own risk people, within their own corporations, with a lot more scepticism than before - that's if they listen at all. Not all of that is down to poor form on behalf of risk analysis or other forecasts, but indeed down to prevailing global uncertainty, not least in, for example the US and the commodity rich economies.

Nevertheless, as wrong as these people may be or have been, offering simplistic three-line alternatives as ''what is going to happen'', even when that is just an opinion, is not much better. We cannot just start picking numbers out of thin air.