Towards a fiscal Union

Voltex

Im pretty sure that most of the people who post on this forum have a good idea of the issues that influence and distort how the irish economy is performing in general.

In my mind the only way forward for Ireland and the Euro is for a greater fiscal Union, where major policy issues are as one. This would lead the way to € bonds with the weight of the EU and ECB behind it giving a bond/treasuries market equal to that of the US (the US bond/treasury market is the only place large enough and liquid enough to absorb all the worlds excess capital..thats why the recent down grade had little effect on yields).

But of course such a change in policy would require a referendum in Ireland.

Would you vote for increased fiscal control in Brussels?
If not why?

ei.sdraob

Voltex wrote: »

Im pretty sure that most of the people who post on this forum have a good idea of the issues that influence and distort how the irish economy is performing in general.

In my mind the only way forward for Ireland and the Euro is for a greater fiscal Union, where major policy issues are as one. This would lead the way to € bonds with the weight of the EU and ECB behind it giving a bond/treasuries market equal to that of the US (the US bond/treasury market is the only place large enough and liquid enough to absorb all the worlds excess capital..thats why the recent down grade had little effect on yields).

But of course such a change in policy would require a referendum in Ireland.

Would you vote for increased fiscal control in Brussels?
If not why?

If you asked me a year or so ago i would have said yes, now I would say no

Euro politicians have since proven themselves in the last year as incompetent and petty, dragging europe from crisis to crisis due to their denial, delusions and indecisiveness
No thank you we have our own local gombeens to sort out, we dont need to hand over more power to career euro gombeens.

andrew

Voltex wrote: »

Im pretty sure that most of the people who post on this forum have a good idea of the issues that influence and distort how the irish economy is performing in general.

In my mind the only way forward for Ireland and the Euro is for a greater fiscal Union, where major policy issues are as one. This would lead the way to € bonds with the weight of the EU and ECB behind it giving a bond/treasuries market equal to that of the US (the US bond/treasury market is the only place large enough and liquid enough to absorb all the worlds excess capital..thats why the recent down grade had little effect on yields).

But of course such a change in policy would require a referendum in Ireland.

Would you vote for increased fiscal control in Brussels?
If not why?

On the bonds point, there's an interesting proposal by (amongst others) Irish economist Philip Lane to create eurobonds called 'European Safe bonds;' An article explaining the idea can be found here and the actual proposal can be found here.

I think in principal more fiscal integration would be a good thing, and in reality it's absolutely necessary if the euro is to continue to exist. But as the poster above said, EU officials in the past have made fiscal rules and then broken and ignored them. Any fiscal rules would have to come with some sort of teeth which somehow compelled governments to comply.

igorbiscan

If this needs a referendum then Id say the chances of the irish people passing this are remote considering the disgraceful bank bailouts we've had to swallow.Id guess the only way would be by way of a large writedown on our bad banking debts.

andrew

igorbiscan wrote: »

If this needs a referendum then Id say the chances of the irish people passing this are remote considering the disgraceful bank bailouts we've had to swallow.Id guess the only way would be by way of a large writedown on our bad banking debts.

What has this got to do with banking debts?

Manach

No - is what I'd be inclined to vote.
In that fiscal issues would need to be decided at a lower granularity level as possible, so local experts would be able to set local fiscal rules to benefit the nations economy.
On the other hand however, a strong core Franco-German/EU fiscal policy would prime the engines of those countries and thus power Europe in general to retake global market share.

spider guardian

All it took to sink the first Lisbon Treaty was unfounded claims (among others) of the threat of jobs being lost because of "handover of fiscal control to Europe". Of course we handed over a certain amount of economic sovereignty when we adopted the Euro but at least we can still set our own rate of corporation tax.

Greater fiscal union might benefit the Eurozone as a whole but will it benefit Ireland? In times of economic hardship will we be allowed to adopt measures that will cut the cost of business and stimulate the economy?

On the other hand I could never see the EU allowing us to run such a high deficit as we did before the bailout programme. At least the unaccountable bureaucrats would have no problem implementing cuts, they don't have to deal with an angry electorate.

OP, could you elaborate more on what implications this would have for Ireland? I find it difficult to predict anything with certainty these days, a couple of years ago who would have predicted the current crisis in the Eurozone? Even last year who would thought it would have lasted this long?

mlumley

No,no,no,no,no. We are already being told to sell our assets to pay off our debts. Who is going to buy them? Germany & France. They will make their economies sounder at the price of ours. They will run Europe for their benifit ( intrest rates show this) and we will survive on hand outs. Look at how English Gas, Elecric and water companies rip them off to bolster profits for their companies, thats what will happen here. We are a small fish in a very big pond, why make ourselves even smaller with France and Germany calling the shots even more than they do now.

We will have to give up our corporate tax rate to satisfie FDrance, even though they give rebates that make our tax rate look high. Do what Britain is doing, look at getting out of Europ. it will collaps soon anyway, especialy the Euro if Europ dont get a grip.

PS. I am not anty Europe, just anty USE.

igorbiscan

Sorry friend,is this whole debt contagion based on the fact that if we didnt bail out anglo,etc then the the franco-german banks would be burnt,isnt that why we're paying extra taxes and will be for a long time.the greek default will burn the franco-german banks,so we are essentially bailing out anglo to bail out the franco-german banks,so yes they are bad banking debts we're paying for and its getting harder and effing harder to swallow,ask me if i feel like voting for greater fiscal union..i think bad banking debts is the reason for all this discussion..

One more thing,the general public in ireland is very anti-europe at the mo-so considering the how the last few referendums went the chances of a referendum for greater fiscal union passing are very very remote..i'm on the no side if you want to start a poll..

andrew

igorbiscan wrote: »

Sorry friend,is this whole debt contagion based on the fact that if we didnt bail out anglo,etc then the the franco-german banks would be burnt,isnt that why we're paying extra taxes and will be for a long time.the greek default will burn the franco-german banks,so we are essentially bailing out anglo to bail out the franco-german banks,so yes they are bad banking debts we're paying for and its getting harder and effing harder to swallow,ask me if i feel like voting for greater fiscal union..i think bad banking debts is the reason for all this discussion..

While the bailout did cost more (some say) on account of not 'burning' certain bondholders (though by law it was arguable that we couldn't have done so anyway), 'burning' these bondholders wouldn't have cut a huge amount off our debts. Doing so wouldn't have changed the situation we're in now all that significantly.

In addition, the bailout in the first place wasn't done for the sake of Franco German banks. It was done in order to prevent a collapse of the Irish financial system, which would've been a really bad thing. Anglo was bailed out to prevent the complete collapse of the Irish economy.

So while you're right that bad banking debts is the reason we're talking about this, it's not related to France and Germany in the same way that you think.

In a more general sense, I can see the general point, that ultimately any fiscal union would just serve French and German interests. For any such a union to be passed, at the very least it would have to be convincingly beneficial for all. I don't think most voters have a clue about a fiscal union is though, so even it literally made everyone several hundred euro wealthier I think people will still vote against it.

Scofflaw

I think it's very easy to fall into the habit of saying that closer fiscal union would benefit France and Germany, but what exactly does that mean? Most of the countries in the eurozone are small countries like ourselves, and I don't see that there's any particular benefit for France and Germany in having the smaller economies follow the lead of the larger economies to a greater extent than now.

What would be to their benefit would seem to me to be having the smaller economies stick to the fiscal rules - no excessive deficits, etc - but the quid pro quo of that is that they have to follow those rules as well. The current proposal is for semi-automatic penalties for breaching the Stability & Growth Pact, and the mechanism would apply to all the eurozone members. If Germany and France want to block sanctions being applied to them, they'll need a qualified majority - 55% of the eurozone states and 65% of its population, so at least another 7 states. If they manage to form a sufficient voting bloc to block sanctions against themselves, they'll have to trade that off against voting to block sanctions for others.

On the other hand, any common fiscal policy is going to have to take account of the economic weight of France and Germany - and if that seems like a benefit to those countries, bear in mind that it will also have to take account of the other 15 eurozone economies, whereas currently France and Germany set their fiscal policies to benefit themselves.

cordially,
Scofflaw

igorbiscan

ok,im not generally a negative person towards to e.u., but the recent meetings of merkel & sarkozy have clarified what the real deal is.Its ridiculous to call it a european union when you have the leaders of two countries (albiet two of the biggest) having seperate meetings to make their own agenda while no other country objects.Yes they have a major part to play but this is eurozone problem,not just germany & france and whatever we decide everyone else will paddle along.They may call them emergency meetings of european finance ministers but nobody sits up till merkel & sarkozy have a meeting.What does that tell us?
Imagine slovenia and belgium having a seperate meeting to discuss the future of the eurozone,cirazy!
And I think its very disrespectful.

Scofflaw

igorbiscan wrote: »

ok,im not generally a negative person towards to e.u., but the recent meetings of merkel & sarkozy have clarified what the real deal is.Its ridiculous to call it a european union when you have the leaders of two countries (albiet two of the biggest) having seperate meetings to make their own agenda while no other country objects.Yes they have a major part to play but this is eurozone problem,not just germany & france and whatever we decide everyone else will paddle along.They may call them emergency meetings of european finance ministers but nobody sits up till merkel & sarkozy have a meeting.What does that tell us?
Imagine slovenia and belgium having a seperate meeting to discuss the future of the eurozone,cirazy!
And I think its very disrespectful.

Ireland and France had a separate meeting to agree their position on the CAP changes before the Council met. Is that disrespectful too?

regards,
Scofflaw

cyberhog

Voltex wrote: »

Would you vote for increased fiscal control in Brussels?

I'm undecided, I'm not in favour of any more sovereignty-eroding measures, but if the eurozone collapses we could find ourselves in an economic dark age.

As George Osbourne put it: "the eurozone countries need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration... A disorderly outcome would be disastrous for everyone, including Britain, so we should allow greater integration to happen, while ensuring we are not part of it and our own national interests are protected."

http://www.telegraph.co.uk/news/politics/georgeosborne/8687908/George-Osborne-Britain-is-leading-the-way-out-of-this-crisis.html

ei.sdraob

spider guardian wrote: »

At least the unaccountable bureaucrats would have no problem implementing cuts

wrong! points at IMF/EU overlords unable to cut due to our Croke Park agreement protecting certain cosy sector from cuts

Scofflaw wrote: »

What would be to their benefit would seem to me to be having the smaller economies stick to the fiscal rules

Excuse me but Germany were the first to break and ignore the stability pack. Who will tell them "noz youz can not dooz zat Günter" next time Germany decide to ignore what they signed up to?
Already existing EU treaties are being stamped over and ignored in order to ram thru' various bailout packages, what is to stop this happening again.


Anyways we gave Europe plenty of power with Lisbon Treaty, What exactly Europe needs that can not be done within the existing Lisbon constraints?
Can eurobonds not be issued under existing treaties?
do they really need a new referendum??
Can our problems not be fixed without eurobonds, like by actually implementing real cuts and not hiding behind CP???
Does europe even need eurobonds, what is to stop countries becoming completely reliant on these and not bothering to fix their issues? > Instead of a greater union of equals some countries would end up being colonies to the core.

In the last year we had some very nasty comments towards Ireland (and even more nasty comments towards Greek people) with the "union" being exposed for a sham that it has become. One ECB exec even went as far as referring to 300 million people as "subjects".

Scofflaw

ei.sdraob wrote: »

What would be to their benefit would seem to me to be having the smaller economies stick to the fiscal rules

Excuse me but Germany were the first to break and ignore the stability pack. Who will tell them "noz youz can not dooz zat Günter" next time Germany decide to ignore what they signed up to?

Which has nothing to do with the point I was making, as is often the way. The post is in respect of the benefits to Germany, and smaller eurozone countries that Germany might be expected to bail out having to stick to fiscal rules is something that's of benefit to Germany.

The point that if semi-automatic penalties come in Germany and France will find it hard to evade sanctions is covered in the rest of the paragraph.

Do please read peoples' full posts before pugnaciously asserting some point which has already been covered.

regards,
Scofflaw

CiaranC

Manach wrote: »

No - is what I'd be inclined to vote.

In the first referendum or in both? :pac:

If you were paranoid you would almost think the eurocrats developed this crisis to force us into a european superstate

ei.sdraob

Scofflaw wrote: »

Which has nothing to do with the point I was making, as is often the way. The post is in respect of the benefits to Germany, and smaller eurozone countries that Germany might be expected to bail out having to stick to fiscal rules is something that's of benefit to Germany.

The point that if semi-automatic penalties come in Germany and France will find it hard to evade sanctions is covered in the rest of the paragraph.

Do please read peoples' full posts before pugnaciously asserting some point which has already been covered.

regards,
Scofflaw

What happens when Germany (or any other state) choose again to ignore (or bend) the rules they signed up to.
No seriously we have states in EU (including ours) who have illustrated that the rules of they game they signed up to can be ignored and bent, how is having more rules prevent them from doing it again

We are now in a silly situation where there is a proposal that states that are broke get penalised by penalties being applies, does squeezing blood from a bankrupt rock ever work?

CiaranC wrote: »

If you were paranoid you would almost think the eurocrats developed this crisis to force us into a european superstate

I am sure there are "aspiring" politicians who see this as an opportunity for a power grab, which is why I asked what exactly is it that can not be done under existing treaties/rules
how about we all learn to play by the original rules we signed up to (such as debt/gdp targets) first before signing up to more stuff.

irishh_bob

Voltex wrote: »

Im pretty sure that most of the people who post on this forum have a good idea of the issues that influence and distort how the irish economy is performing in general.

In my mind the only way forward for Ireland and the Euro is for a greater fiscal Union, where major policy issues are as one. This would lead the way to € bonds with the weight of the EU and ECB behind it giving a bond/treasuries market equal to that of the US (the US bond/treasury market is the only place large enough and liquid enough to absorb all the worlds excess capital..thats why the recent down grade had little effect on yields).

But of course such a change in policy would require a referendum in Ireland.

Would you vote for increased fiscal control in Brussels?
If not why?

NO , independance is more important to me than wealth and besides , closer integration would result in us loosing more of both , corporation tax would go , wages and welfare would drop , michael noonan would effectivley be made reduntant with a single european finance minister

Scofflaw

ei.sdraob wrote: »

What happens when Germany (or any other state) choose again to ignore (or bend) the rules they signed up to.
No seriously we have states in EU (including ours) who have illustrated that the rules of they game they signed up to can be ignored and bent, how is having more rules prevent them from doing it again

Because what allowed Germany - and every other state in breach of the Pact - to avoid penalties was that the penalty process was political, requiring a majority vote on the Council. Needless to say, no such majority vote was ever achieved.

Changing the rules so that you require a majority to block sanctions makes it far less easy for any member state to avoid sanctions.

I did say all that in the post you originally responded to.

ei.sdraob wrote: »

We are now in a silly situation where there is a proposal that states that are broke get penalised by penalties being applies, does squeezing blood from a bankrupt rock ever work?

It's recognised that it's a poor sanction (the Commission, at least, is on record saying so), but what else is there? Forcing them to fly their flags at half-mast?*

ei.sdraob wrote: »

I am sure there are "aspiring" politicians who see this as an opportunity for a power grab, which is why I asked what exactly is it that can not be done under existing treaties/rules
how about we all learn to play by the original rules we signed up to (such as debt/gdp targets) first before signing up to more stuff.

I'm sure that if it can be done under the existing Treaties, that would be very widely preferred. The only reason for a Treaty change would be to make the thing water-tight, because the last thing you need is for the whole thing to unravel a couple of years down the line as a result of a legal challenge. Although, to be honest, that's not necessarily a bad scenario.

cordially,
Scofflaw

Zubeneschamali

Voltex wrote: »

Would you vote for increased fiscal control in Brussels?

Yes. I've been voting for the United States of Europe at every opportunity my whole adult life.

conorhal

Yes, because the one size fits all economic policy of the ECB has served us so well over the past decade.........