Cost of Euro Exit: UBS

Scofflaw

The costs of euro exit have been quantified in a research note by Swiss UBS - the note is available here: http://www.scribd.com/doc/64020390/xrm45126

The economic cost (part 1)

The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak Euro country leaving the Euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That cost would then probably amount to EUR3,000 to EUR4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The economic cost (part 2)

Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over EUR1,000 per person, in a single hit.

The political cost

The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

Those are very large price tags, particularly the political price.

cordially,
Scofflaw

meditraitor

I have to agree,

It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

Here lies the problem,

ei.sdraob

meditraitor wrote: »

Here lies the problem,

These guys need to invest in a history book.

The USSR and its currency broke up without civil war(s) and with dollar becoming and still remaining the defacto currency of choice in all of the ex Soviet republics, most of the republics have transitioned to democracy (of varying degrees of "democracy"!) and some are now part of EU and for most part are doing rather ok.

The turbulence that followed was a result of 70 years of waste, neglect and mismanagement falling into a power void for most of the 90s.

Scofflaw

ei.sdraob wrote: »

These guys need to invest in a history book.

The USSR and its currency broke up without civil war(s) and with dollar becoming and still remaining the defacto currency of choice in all of the ex Soviet republics, most of the republics have transitioned to democracy (of varying degrees of "democracy"!) and some are now part of EU and for most part are doing rather ok.

The turbulence that followed was a result of 70 years of waste, neglect and mismanagement falling into a power void for most of the 90s.

The words "almost all" actually have a meaning different from "all". Perhaps a dictionary...?

cordially,
Scofflaw

meditraitor

ei.sdraob wrote: »

These guys need to invest in a history book.

The USSR and its currency broke up without civil war(s) and with dollar becoming and still remaining the defacto currency of choice in all of the ex Soviet republics, most of the republics have transitioned to democracy (of varying degrees of "democracy"!) and some are now part of EU and for most part are doing rather ok.

The turbulence that followed was a result of 70 years of waste, neglect and mismanagement falling into a power void for most of the 90s.

isnt this whats happening in the PIGS + italy?

hmmm

That's a scary document. Anyone who advocates Ireland unilaterally leaving the Euro would do well to have a read.

I had forgot about the breakup of Czechoslovakia & the experience there. It would be interesting to find out more (a quick Google wasn't very promising).

ArmaniJeanss

Scofflaw wrote: »

Those are very large price tags, particularly the political price.

This is an interesting point.
What would be the consequences to central European politics if strong surplus countries like Germany, Finland, Holland, Austria were to break away and abandon the likes of Italy, France, Belgium, Spain and Portugal.

People tend to forget (or not even know) that the likes of Spain and Portugal are fledgling democracies - Portugal an authoritarian dictatorship until 1974, Spain until 1975 and had an attempted military coup as recently as 1981.
So it may be possible that many relatively young (40s,50s) citizens hark back to these days as some sort of glory days.
Italy and France's fractious historic relationships with their Teutonic neighbours don't need to be documented I guess.

The European project, the old EEC, was originally conceived partly as a way of ensuring that peace would reign in Europe.
The first 30 years of every century from the 14xxs to the 19xxs had a major conflict between 2 or more of the major powers in Europe.
We probably consider ourselves too civilised to allow it to happen again but I'm guessing they thought the same in every previous century as well.

Scofflaw

We probably consider ourselves too civilised to allow it to happen again but I'm guessing they thought the same in every previous century as well.

"The war to end wars" bought, what, 20 years of peace? And this was the Europe I was born in (roughly):



cordially,
Scofflaw

ArmaniJeanss

Scofflaw wrote: »

"The war to end wars" bought, what, 20 years of peace? And this was the Europe I was born in (roughly):

cordially,
Scofflaw

I'd actually forgotten how recent Greek democracy was as well, dictatorships and military juntas, uprisings and coups until the mid 1970s.

Hopefully the young people of Austria, Finland, Holland and in particular Germany have been given good history lessons under their education systems. These are the people who will ultimately be making the decisions whether the rest of us are worth continuing to support/bail out, and it would be nice if they knew how much of a powder-keg Europe can be.

Otherwise perhaps time to sell those Ryanair shares and invest in Acme Missiles PLC.

hmmm

Without wanting to sound like the usual anti-Europe poster, the Romano Prodi quote on page 2 is very apt. Crises were anticipated at the founding of the Euro, and it was anticipated that European integration would take further steps as a consequence. Perhaps however they'd have preferred a crisis that wasn't quite so existential in nature

Godge

Very interesting read, food for thought for those who are calling for default and run!

paul71

Scofflaw wrote: »

"The war to end wars" bought, what, 20 years of peace? And this was the Europe I was born in (roughly):



cordially,
Scofflaw

Interesting map, I assume the tanks on Greece, Portugal and Spain refer to the totalitarian governments in power at the time. 75% corrulation to countries requiring bailout, with the unsurprising exception being ourselfs.

Scofflaw

hmmm wrote: »

Without wanting to sound like the usual anti-Europe poster, the Romano Prodi quote on page 2 is very apt. Crises were anticipated at the founding of the Euro, and it was anticipated that European integration would take further steps as a consequence. Perhaps however they'd have preferred a crisis that wasn't quite so existential in nature

I think it's very easy to make it sound sinister, but if you think about it logically, the EU was founded to address problems affecting all of Europe (plus the peace angle). Whenever there is a problem that faces all of Europe, there is always the choice between pulling together or pulling apart. And in general the answer has been to pull together, as it is for virtually any team in virtually any difficulty. And crises are just large, spectacular, pan-European problems, so they pose the question more urgently and more deeply.

If the EU were at heart a bad idea, something that constrained each individual country's freedom of action (aka sovereignty) by more than it provided strength and resilience, or subordinated one country to the interests of another, then crises would drive the EU further apart, as they have done for other uneasy unions, and as they generally do for uneasy unions.

That's why those who believe that the EU is a bad idea, does constrain more than it provides, and does subordinate one country to another's interests, believe that the EU will fall apart whenever there's a crisis - and when it doesn't, they are forced back on the idea that the crises must in some sense be fake, because otherwise the necessary conclusion is that the EU is, at heart, not really the bad thing they believe it to be.

cordially,
Scofflaw

Scofflaw

paul71 wrote: »

Interesting map, I assume the tanks on Greece, Portugal and Spain refer to the totalitarian governments in power at the time. 75% corrulation to countries requiring bailout, with the unsurprising exception being ourselfs.

There ought to be a dog collar on ours - authoritarian, just not military.

cordially,
Scofflaw

View

paul71 wrote: »

Interesting map, I assume the tanks on Greece, Portugal and Spain refer to the totalitarian governments in power at the time. 75% corrulation to countries requiring bailout, with the unsurprising exception being ourselfs.

Only three member states have had to avail of a "bailout" loan facility - Greece, us and Portugal. Cyprus possibly should have one - as most of their electricity generation blew up (literally) in July - but for the time being have managed to avoid it.

paul71

View wrote: »

Only three member states have had to avail of a "bailout" loan facility - Greece, us and Portugal. Cyprus possibly should have one - as most of their electricity generation blew up (literally) in July - but for the time being have managed to avoid it.

True, forgot that the Spainish bailout has as yet not happened. Hadn't heard of the Cyprus issue, off to google now!

ei.sdraob

Scofflaw wrote: »

The words "almost all" actually have a meaning different from "all". Perhaps a dictionary...?

cordially,
Scofflaw

When you cant address the point raised do you usually proceed at picking on the grammar of the poster? :rolleyes:

That this report ignores that there is an example of a currency union between 15 states (some being in europe) falling apart within the last 20 years is rather interesting.

Neither is it the first currency union in europe to fail


Perhaps UBS could tell us how much debt was taken on per person here in Ireland in last few years and will be taken up to 2014 for
* botched guarantee
* bailing out banks directly
* bailing out banks via NAMA (which you so admired in past, but strangely quiet on lately, as its predicted failures keep being highlighted)
* being commanded by ECB to save bondholders at any cost
* borrowing for overinflated welfare and PS who still has to adjust to new reality

The Irish taxpayer already went to extreme lengths to save the euro, while the euro politicians are still bickering among each other, going from crisis to crisis

Scofflaw

ei.sdraob wrote: »

When you cant address the point raised do you usually proceed at picking on the grammar of the poster? :rolleyes:

When the grammar is important, certainly - in this case, because the difference between "all" and "almost all" makes nonsense of an attempt to claim they're simply ignoring a particular example. As a result, there isn't really a point of yours to address - you're simply wrong through misreading something.

ei.sdraob wrote: »

That this report ignores that there is an example of a currency union between 15 states (some being in europe) falling apart within the last 20 years is rather interesting.

Neither is it the first currency union in europe to fail


Perhaps UBS could tell us how much debt was taken on per person here in Ireland in last few years and will be taken up to 2014 for
* botched guarantee
* bailing out banks directly
* bailing out banks via NAMA (which you so admired in past, but strangely quiet on lately, as its predicted failures keep being highlighted)
* being commanded by ECB to save bondholders at any cost
* borrowing for overinflated welfare and PS who still has to adjust to new reality

The Irish taxpayer already went to extreme lengths to save the euro, while the euro politicians are still bickering among each other, going from crisis to crisis

All of which is very interesting, if debatable, but has absolutely nothing to do with the point. UBS perhaps failed to address it for exactly those reasons.

If your point is that the crisis has been costly in Ireland - which is undoubtedly true - so what? Does it prevent a euro exit being costly? No. Do most of the costs you cite relate to the euro? Again, no. So you seem to be trying to win a game of football with a tennis racquet there.

cordially,
Scofflaw

RichardAnd

Scofflaw wrote: »

When the grammar is important, certainly - in this case, because the difference between "all" and "almost all" makes nonsense of an attempt to claim they're simply ignoring a particular example. As a result, there isn't really a point of yours to address - you're simply wrong through misreading something.



All of which is very interesting, if debatable, but has absolutely nothing to do with the point. UBS perhaps failed to address it for exactly those reasons.

If your point is that the crisis has been costly in Ireland - which is undoubtedly true - so what? Does it prevent a euro exit being costly? No. Do most of the costs you cite relate to the euro? Again, no. So you seem to be trying to win a game of football with a tennis racquet there.

cordially,
Scofflaw

Scofflaw, regardless of whether you think ei.sdraob is right or wrong, I have to say you don't debate in a very likable manner. I've seen you do this before when someone disagrees with your views on Europe or a similar which, if I am honest, I find are rather sheltered. You nit pick on little things and phrase it in a dreadfully haughty manner as if you're trying to sound like some sort of intellectual.

I happen to think that ei.sdraob is making a good point and I don't think you should discount it just because you think otherwise.

Scofflaw

RichardAnd wrote: »

Scofflaw, regardless of whether you think ei.sdraob is right or wrong, I have to say you don't debate in a very likable manner. I've seen you do this before when someone disagrees with your views on Europe or a similar which, if I am honest, I find are rather sheltered. You nit pick on little things and phrase it in a dreadfully haughty manner as if you're trying to sound like some sort of intellectual.

I happen to think that ei.sdraob is making a good point and I don't think you should discount it just because you think otherwise.

As you can see, I don't really think ei.sdraob does have a point - to be honest, I think he's simply throwing some whataboutery with only a very vague relevance to the UBS analysis, having started with an attack on the UBS analysis which seems to have been based on not even reading the words involved. Hence my rather off-hand treatment of his posts.

UBS have estimated the costs of euro exit - which have nothing to do with our bank bailouts, or NAMA , our guarantee, our PS wages and social welfare rates. So why raise those points? Presumably to try and say "so what if a euro exit would costs us half our GDP in just the first year?" on the basis that...well, apparently that we've already made some unrelated stupid and costly mistakes?

You say I'm being excessively dismissive - I'd agree I'm being dismissive, but I don't think it's excessive. When a poster addresses his posts to his own straw men so often, an off-hand dismissal of the latest example seems reasonable - if (and I accept the point) not particularly creditable on my part. But nobody has infinite patience.

cordially,
Scofflaw

ei.sdraob

1. our general government debt is going from

44 billion in 2006 to 173 billion by end of this year, and will continue to rise up to 200 or so billion in the "optimistic" scenarios which are predicated on growth which remains ellusive
Part of that debt is due to the ECBs insistence that bondholders do not get touched, we are piling on debt and some of this debt is the taken on to save the euro
Thats €28,666 of new debt in 5 years per each man woman and child, yes some of this debt is taken on due to the "issues" in our PS/Welfare but about half is related to banks and bailouts. Thats the extra cost we have taken on to save ourselves and the euro, because we are good little europeans :rolleyes:


2. I have an issue with the report claiming that civil war would result if the currency breaks up, that is just silly and ignores history, Switzerland itself was part of a currency union which fell apart, i suppose no one told that to the UBS guy.


@Scofflaw where exactly have i made a strawman? please point at the post, being told that it would cost X to save the euro and Y not to save it needs to be put into perspective of Z billions already spent

cavedave

Apologies if this is the wrong thread. But does this move

Two proposals have been adopted by the European Commission that will reduce to 0% the interest rate and extend the maturities on loans to Ireland and Portugal under the European Financial Stabilisation Mechanism (EFSM).

http://www.rte.ie/news/2011/0914/economy.html

Mean that the EU in general has decided to really make a big effort to keep the euro together? O is it something less dramatic than that?

Scofflaw

ei.sdraob wrote: »

1. our general government debt is going from

44 billion in 2006 to 173 billion by end of this year, and will continue to rise up to 200 or so billion in the "optimistic" scenarios which are predicated on growth which remains ellusive
Part of that debt is due to the ECBs insistence that bondholders do not get touched, we are piling on debt and some of this debt is the taken on to save the euro
Thats €28,666 of new debt in 5 years per each man woman and child, yes some of this debt is taken on due to the "issues" in our PS/Welfare but about half is related to banks and bailouts. Thats the extra cost we have taken on to save ourselves and the euro, because we are good little europeans :rolleyes:

No, half of it is not the banks - about a third of the new debt is the banks, and putting the blame for that on the EU requires believing that our government wouldn't have bailed the banks out if we were an isolated rock, which is nonsense - the government here has always responded to bank issues with bailouts, just as virtually every government everywhere has done. The majority of the bonds paid off were paid off under the Lenihan Guarantee, which was a unilateral Irish move - I've given the figures repeatedly.

And - again - so what? As I said, all I can see you doing there is saying that because we've already made costly mistakes, making the costly mistake of leaving the euro would be OK. How does that make anything approaching sense?

ei.sdraob wrote: »

2. I have an issue with the report claiming that civil war would result if the currency breaks up, that is just silly and ignores history, Switzerland itself was part of a currency union which fell apart, i suppose no one told that to the UBS guy.

The report doesn't claim that - it makes the point that those are the circumstances that are usually involved in the breakup of a currency union. You've taken that to mean that they're claiming it would be a result of such a breakup, because you haven't carefully read what was actually said:

It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

That's not an implied result, but an implied cause.

ei.sdraob wrote: »

@Scofflaw where exactly have i made a strawman? please point at the post, being told that it would cost X to save the euro and Y not to save it needs to be put into perspective of Z billions already spent

To be honest, 'straw man' is somewhat kind. You've raised a number of irrelevant points, and seized on some minutiae that you've interpreted badly. That results in you arguing against things that aren't there, or aren't relevant, so 'red herrings' is probably more accurate.

As I said to RichardAnd, I'm being rather dismissive of your comments, because I'm not sure why you've chosen to make a point of attacking this research note, given that you're not actually raising any relevant issues. Is it the fact that pointing out a cost to exiting the euro implicitly makes a case for continued euro membership? Because that's what it seems to be - unless you're having a go at it simply because I happen to be the one flagging it, as seems often to be the case?

regards,
Scofflaw

View

ei.sdraob wrote: »

being told that it would cost X to save the euro and Y not to save it needs to be put into perspective of Z billions already spent

So, we'll somehow recover the Z billions, by deciding today to go with the Y option of not saving the Euro then, will we?

Please do explain how that'll work...

ei.sdraob

How is discussing "the amount spent to save the euro" irrelevant to a discussion about the "the amount needed to save the euro vs not saving it"
How is that a red herring? :rolleyes:


For example, would you discuss the PPARS fiasco without discussing the money sunk into it already?

View wrote: »

So, we'll somehow recover the Z billions, by deciding today to go with the Y option of not saving the Euro then, will we?

Please do explain how that'll work...

Did I say that now :rolleyes:
discussing what it will cost to save euro vs not by mentioning the sunk costs is somehow out of context? really??
ffs cant even have a discussion without being barked at for pointing out that we already spent a fortune saving the euro.


Instead of asking what is the "Cost of Euro Exit" we should be asking "what is the total cost of remaining in it", sorry for looking at the issue from a different perspective and not being blinded by almost religious euro-loving zeal

Scofflaw

ei.sdraob wrote: »

How is discussing "the amount spent to save the euro" irrelevant to a discussion about the "the amount needed to save the euro vs not saving it"
How is that a red herring? :rolleyes:


For example, would you discuss the PPARS fiasco without discussing the money sunk into it already?

First, what UBS have pointed out are the costs of a country leaving the euro - for that country. Not the cost of 'saving the euro'.

Second, the costs you've cited as - I presume - having been racked up by Ireland for 'saving the euro' are nothing of the sort. Even you've had to admit that the costs you cite include our PS pay and SW payments, making them - even by your logic - utterly irrelevant. Yet you cited them anyway.

No amount of rolling-eyed icons will make those red herrings anything but red herrings.

ei.sdraob wrote: »

Did I say that now :rolleyes:
discussing what it will cost to save euro vs by pointing that not mentioning the sunk costs is out of context of somehow? a strawman?? really ffs

Even if what you were talking about came within a mile of the point, and was within another mile of actually being accurate, you'd still be talking rubbish, because sunk costs are a further argument for staying in the euro, not, as you appear to think, an argument for leaving it.

Leaving aside the dodgy figures and questionable claims you've used for a moment, what you appear to be saying is that since (in your view) it has already cost us €x bn to stay in the euro and keep the euro going, an equally large (or larger) cost of €y bn to leave the euro is irrelevant to the question of whether we should leave it.

That makes absolutely no sense. Seriously - zip, zero, nada. It's a ludicrously stupid comment.

Instead of asking what is the "Cost of Euro Exit" we should be asking "what is the total cost of remaining in it", sorry for looking at the issue from a different perspective and not being blinded by almost religious euro-loving zeal

"Instead of"? I'm sure even you don't mean that - you have to mean that we should compare the costs. That would at least make some sense, although if the figures you've cited aren't anything to do with the costs of remaining in the euro, even if one treats them as you have. They are - even by your claims - a combination of costs to do with having had a banking crisis while in the euro.

If what you wanted to do was to say "hang on, let's compare the costs of staying in versus the costs of leaving", which is something worth doing, why didn't you (a) make that clear, and (b) try to use genuinely comparable figures?

regards,
Scofflaw

ei.sdraob

Oh why bother, this is like discussing atheism with "bible belter"

The EU can never ever do wrong or make a ****up, the euro is a great success, I better get on with the programme so :rolleyes: (yes thats a roll eye)

And by the way having sunk alot of money into a project is never an argument for continuing that project, thats how projects just endup going deeper and deeper into poo.

Scofflaw

ei.sdraob wrote: »

Oh why bother, this is like discussing atheism with "bible belter"

The EU can never ever do wrong or make a ****up, the euro is a great success, I better get on with the programme so :rolleyes: (yes thats a roll eye)

And now we're really into straw men. It would be worth arguing the merits of the euro if you could actually bring relevant arguments to bear.

ei.sdraob wrote: »

And by the way having sunk alot of money into a project is never an argument for continuing that project, thats how projects just endup going deeper and deeper into poo.

True, but arguing that one should abandon the project because one has sunk money into it - which is what you just did - is even dafter. The amount of money spent on something is not, by itself, an argument for abandoning it.

Why don't you outline the costs you believe are involved in remaining in the euro, as opposed to the costs you believe are involved in having remained in the euro up to now? The latter are not actually relevant, because we are still in the euro - unless you believe them to be indicative of the further costs, in which case you make that case. Not that I can see how our PS wage bill or SW bill is even faintly relevant.

regards,
Scofflaw

ArmaniJeanss

cavedave wrote: »

Apologies if this is the wrong thread. But does this move


http://www.rte.ie/news/2011/0914/economy.html

Mean that the EU in general has decided to really make a big effort to keep the euro together? O is it something less dramatic than that?

Its definitely good, though the bit you quoted has already been edited out of the article in an update as it was clearly wrong.
Its 0% markup, not 0% interest rate - so if the EFSM borrows money at 4% and lends it to us, we'll have to also pay 4% rather than the 6.9% we'd pay at the moment.

Scofflaw

ArmaniJeanss wrote: »

Its definitely good, though the bit you quoted has already been edited out of the article in an update as it was clearly wrong.
Its 0% markup, not 0% interest rate - so if the EFSM borrows money at 4% and lends it to us, we'll have to also pay 4% rather than the 6.9% we'd pay at the moment.

Exactly - a zero margin. So, using the example of monies already disbursed:

Ireland has received two tranches of money from the European Financial Stability Mechanism (EFSM), one in January and one in May.

The one in January was €5 billion for 5 years at 2.59% + the fixed margin of 2.925% agreed by governments** = 5.51%.

The one in May was €3 billion for 10 years at 3.5% + the fixed margin of 2.925% = 6.43% (more expensive because for 10 years not five and because rates charged on the international markets have gone up.)

Instead of 5.51% and 6.43% those become (and they actually do) 2.59% and 3.5% respectively. Interest on those tranches drops from €280m and €320m to €130m and €180m respectively.

I'm not sure we've ever had market rates that low.

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

And now we're really into straw men. It would be worth arguing the merits of the euro if you could actually bring relevant arguments to bear.



True, but arguing that one should abandon the project because one has sunk money into it - which is what you just did - is even dafter. The amount of money spent on something is not, by itself, an argument for abandoning it.

Why don't you outline the costs you believe are involved in remaining in the euro, as opposed to the costs you believe are involved in having remained in the euro up to now? The latter are not actually relevant, because we are still in the euro - unless you believe them to be indicative of the further costs, in which case you make that case. Not that I can see how our PS wage bill or SW bill is even faintly relevant.

regards,
Scofflaw

Did I mention anything anywhere about wanting to leave the euro? stop putting words in my mouth :rolleyes::rolleyes::rolleyes:

ArmaniJeanss wrote: »

Its definitely good, though the bit you quoted has already been edited out of the article in an update as it was clearly wrong.
Its 0% markup, not 0% interest rate - so if the EFSM borrows money at 4% and lends it to us, we'll have to also pay 4% rather than the 6.9% we'd pay at the moment.

Great news, Which shows thats those of us who claimed in past threads that we were being shafted by our EU "friends" with high interest and there is room for less interest were correct, instead we were told to shut up by our resident europhiles, there was no better deal and all that

Scofflaw

ei.sdraob wrote: »

Did I mention anything anywhere about wanting to leave the euro? stop putting words in my mouth :rolleyes::rolleyes::rolleyes:

So, you're not arguing we should leave the euro...in that case, what exactly was the point of what you posted, if any? That there are other large numbers out there?

regards,
Scofflaw

View

ei.sdraob wrote: »

Did I say that now :rolleyes:
discussing what it will cost to save euro vs not by mentioning the sunk costs is somehow out of context? really??

ffs cant even have a discussion without being barked at for pointing out that we already spent a fortune saving the euro.

If you want to have a discussion by all means do but it would help if you could stop trying to imply that debt clocked up on public service spending here is somehow being incurred as part of an effort to save the Euro.

Likewise, the costs incurred as a result of our decision to go for "the cheapest bailout in history" weren't incurred out of any sense of "save the Euro". Many of the other member states were apoplectic when we presented them with that particular fait accompli.

Since, we were perfectly capable of ignoring the EU for that decision, the notion that the Oireachtas is somehow being "forced" to do anything against its wishes lacks credibility.

All the hoo-haa in this regard smacks of our many and varied government TDs who loudly and repeatedly declare their opposition in the media to government cut-backs in their constituencies and then quietly vote to support them in Oireachtas.

Godge

ei.sdraob wrote: »

Perhaps UBS could tell us how much debt was taken on per person here in Ireland in last few years and will be taken up to 2014 for
* botched guarantee
* bailing out banks directly
* bailing out banks via NAMA (which you so admired in past, but strangely quiet on lately, as its predicted failures keep being highlighted)
* being commanded by ECB to save bondholders at any cost
* borrowing for overinflated welfare and PS who still has to adjust to new reality

What have the above points got to do with leaving the Euro.

The botched guarantee was a decision of FF/Greens that destroyed the country. It got an immediate bad reaction from many of our European colleagues - the British, in particular, were furious, so how can that be linked to saving the euro? It just does not make any sense.

Nama and the bank bailouts were direct results of the failure of the stupid guarantee introduced by FF/Greens.

We were not commanded by the ECB to save bondholders at any cost. We freely promised, as part of the bank guarantee, to save bondholders at any cost. Other countries did not, and were able to burn the bondholders. All the ECB made us do was honour our own promises which we made as our own decisions - Brian Lenihan on the advice of David McWilliams decided the guarantee. Financial markets do not work if people renege on their promises. If FF hadn't made the incredibly stupid decision to guarantee the banks and the bondholders for the so-called cheapest bailout in the world, we wouldn't have had to bailout any bondholders.

As for your last point, that was Bertie and the boys throwing money around. In summary, we Irish brought this on ourselves by electing that stupid clown Bertie and his mates for a third time. It was nothing to do with saving the Euro.

Armin_Tamzarian

Godge wrote: »

Brian Lenihan on the advice of David McWilliams decided the guarantee.

Really?

jodaw

blah blah blah

scaremongering

cordially,
jodaw:rolleyes:

Godge

Armin_Tamzarian wrote: »

Really?

http://www.independent.ie/entertainment/books/david-mcwilliams-the-night-lenihan-banged-on-my-front-door-1930001.html


Yes, really, read the account here of how David McWilliams persuaded Brian Lenihan to guarantee all the funding of the banks, that is what started us off on the road to ruin, the most disastorous decision ever made in the history of the state.

OMD

Godge wrote: »

http://www.independent.ie/entertainment/books/david-mcwilliams-the-night-lenihan-banged-on-my-front-door-1930001.html


Yes, really, read the account here of how David McWilliams persuaded Brian Lenihan to guarantee all the funding of the banks, that is what started us off on the road to ruin, the most disastorous decision ever made in the history of the state.

Be careful Godge. Anytime I criticise DMcW and his massive role in the destruction of this country his supporters come on here and attack me.

Godge

OMD wrote: »

Be careful Godge. Anytime I criticise DMcW and his massive role in the destruction of this country his supporters come on here and attack me.

Thank God for the internet. Otherwise David McW and his supporters would be skulking around second-hand and bargain bookstores trying to buy up all the copies of his book where he admits his role in destroying the country.:D

Duke Leonal Felmet

It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

ei.sdraob wrote: »

These guys need to invest in a history book.

The USSR and its currency broke up without civil war(s) and with dollar becoming and still remaining the defacto currency of choice in all of the ex Soviet republics

Here, I edited the quote to help you out.

You're welcome.

meditraitor

jodaw wrote: »

blah blah blah

scaremongering

cordially,
jodaw:rolleyes:

can you offer something to the debate? your smart enough to type; are you smart enough to analyse and contribute?

Cork boy 55

To keep our Punt Nua from being the value of toilet paper we would have to jack up interest rates. Oh, and also reintroduce capital controls to stop people taking their money out of the country. The IDA would have a hard time attracting foreign capital. Also food would become very expensive to import so we would be back to potatoes and cabbage

andrew

Reading that report made me realise how much of a one way street that the Euro is. I always knew that this was the case, but to see, in numbers, that there's no way any country can leave the euro without incurring massive costs on the entirety of the EU, is a bit scary I think. This is not a criticism of the Euro or anything; if anything I guess it's good that the euro has so much credibility. But still, one way streets are inherently scary I think.

Scofflaw

andrew wrote: »

Reading that report made me realise how much of a one way street that the Euro is. I always knew that this was the case, but to see, in numbers, that there's no way any country can leave the euro without incurring massive costs on the entirety of the EU, is a bit scary I think. This is not a criticism of the Euro or anything; if anything I guess it's good that the euro has so much credibility. But still, one way streets are inherently scary I think.

I suppose that if the euro had been a failure - as opposed to being designed without any of the necessary safety features for crises - the cost of leaving would be lower.

cordially,
Scofflaw

Sand

@Meditraitor

blah blah blah

scaremongering

cordially,
jodaw

can you offer something to the debate? your smart enough to type; are you smart enough to analyse and contribute?

In fairness, that was a pretty high quality post. Relative to the standard fare in Politics anyhow.

Couple of points here:

- Very few people are arguing for Euro exit as a practical solution. Those who are arguing for a Euro exit clearly arent interested in things like reports or facts. This renders the value of the UBS report ( warning against Euro exit) to be pretty inconsequential. People who should read it wont, people who dont need to read it dont need to.

- Default within the Euro does not require an exit from the Euro zone. This needs to be repeated as many times as it takes to sink in to the scaremongering faction who cannot differentiate between default inside the Euro and a Euro exit. As Merkel has admitted, there simply isnt a playbook for what happens if anyone defaults inside the Eurozone. The default position is that everyone gets a black eye, picks themself up and carrys on.

- On the economic costs, the report dwells heavily on the costs of the Euro breakup. It doenst consider the costs of a Euro union. The crisis and trauma we are enduring now is actually a cost of the Europ union. Weak, flabby, uncompetitive "because I'm worth it" economies were locked into a no holds barred match with a Teutonic cage fighter, and the results have been ugly - very ugly. Our economies were flooded with cheap credit and our economy was distorted by it. That cost however is ignored when considering the pros and cons of a euro breakup.

- The report is a little hysterical. It claims the economic costs would be outweighed by the political costs. In this is claims that the "soft power" of Europe would cease. Not be weakened or reduced. Cease.

I've a lot of problems with this. Firstly, the Eurozone is not the EU, let alone Europe. Secondly its absolutely ridiculous to claim that Europes "soft power" would "cease" should the Euro collapse as Europes "soft power" is cultural, diplomatic and economic - not simply monetary.

The point around currency unions is an odd one. Currency pegs are far more common in modern times than currency unions, and what currency unions exist are often basically tiny, small, economies being dragged into the orbit of a regional power which politically dominates its "partners". So claiming "almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war" is easily explained by there being almost no modern fiat currency monetary unions to begin with. There have been many, many currency pegs and they have broken up many, many times. Under much less stress than the Euro is currently under.

There has quite simply been nothing like the Euro project in terms of a common currency union between what are essentially politically and economically independant countries. So theres no point claiming historical precedents in modern times when the Euro project itself is a historical anamoly in modern times.

Essentially, the UBS report would have been better phrased as saying that we've never seen a Euro breakup before becuase we've never had a Euro before.

In terms of political costs, the report also ignores the damaging political effects of the strife around the Euro project and how that spills over into the wider EU project. We have a Europe which has retreated into bitter sniping and bitching about national sterotypes (lazy Greeks, feckless Irish, arrogant French let alone the WW2 ****e thats been spouted about the Germans...) Its quite clear that any future EU treaties on practically any topic will face next to no chance of being passed given increased E.U. skeptism which has errupted over the euro crisis.

And whilst the UBS report sums up the various "per capita" costs like a shopping list, it then moves on to claim the political costs will dwarf the economic costs.

This ignores the logical consequence: electorates may place a higher value on certain political considerations ( no transfer union, no foreign control of budgetary process, etc) than they do on certain economic bills. Regardless of weather it costs them 4K Euro or 6K euro per head, the German people may simply never want to pay for Greek civil servants to retire at 50. And Greeks may simply never want Germans dictating to them.

Duke Leonal Felmet

I wish I was omniscient,