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Fiscal Treaty Referendum.....How will you vote?
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Iceland didn't bail out its banks because their balance sheets were 10 times its GDP - and they've said as much.
Nevertheless Iceland was offered a "helping hand" from the IMF, Britain and ECB. The offer was declined by the then right wing government. According to the current, left wing, finance minister it wasn't though a "good decision" but a "necessary decision."
Ireland bailed out its banks because the government thought they'd come up with a cunning plan to do so - the "cheapest bailout in the world". And the decision to bail out the Irish banks was an Irish decision - nobody made us do it. None of the documentation or what was said at the time even mentions the ECB or the EU, all of whom were visibly unhappy and surprised when presented with Lenihan's "masterstroke" as a fait accompli
An interesting tidbit surfaced after the trial against Geir Haarde, the icelandic prime minister during the banking crisis. Now Iceland is not a member of the EU but nevertheless EU's José Manuel Barroso telephoned Haarde before the decision was made not to guarantee the banks' debts. Barroso read a pre-written text to Haarde asking that the creditors of the icelandic banks debts would be treated fairly instead of "flushed down the toilet."
I don't of course know whether Barroso telephoned the irish government as well but it is not unlikely.0 -
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Nevertheless Iceland was offered a "helping hand" from the IMF, Britain and ECB. The offer was declined by the then right wing government. According to the current, left wing, finance minister it wasn't though a "good decision" but a "necessary decision."
Amidst the sound and fury, it is often forgotten that banks serve a vital economic function.An interesting tidbit surfaced after the trial against Geir Haarde, the icelandic prime minister during the banking crisis. Now Iceland is not a member of the EU but nevertheless EU's José Manuel Barroso telephoned Haarde before the decision was made not to guarantee the banks' debts. Barroso read a pre-written text to Haarde asking that the creditors of the icelandic banks debts would be treated fairly instead of "flushed down the toilet."
I don't of course know whether Barroso telephoned the irish government as well but it is not unlikely.
More the other way round - Lenihan decided, and then phoned around to tell people. First the rest of the Cabinet, then the UK, France, and the ECB.
Although there is a Fianna Fáil revisionist version, in which a phone call from Trichet that Lenihan neither took nor returned forced the government to guarantee the entire Irish banking system.
cordially,
Scofflaw0 -
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Ozymandius2011 wrote: »Iceland is doing fine outside the EU/Euro with 7% unemployment compared to 14% here. I would argue that having unsuitable interest rates imposed on Eurozone countries largely caused the housing bubbles in various EU states such as Ireland and Spain. If we were outside the Euro we could have done what Iceland did and put the failing banks into receivership and refused to bail out the bondholders. The risk of contagion within the Eurozone prevented us doing that. Angela Merkel said a few days ago that the Euro was a "political project".
Quoting the unemployment rate for a single point in time conveys very little information; one really needs to look at trends and historical precedents to get a more complete picture. In light of that, I've presented the unemployment rates of Iceland and Ireland between 1991 and 2012. The table and plots are compiled from these sources: [1], [2] The rates are for June/July of each year except 2012, wherein it's March.
Iceland has had a lower unemployment rate than Ireland for the last 20 years. In 2007 just before the crisis the relationship was 2.3% vs 4.5%, or if averaged over the period 2000 to 2007, it's 2.8% vs 4.4%. In the pre-boom years, Ireland's rate was at least 2.5 times Iceland's rate (1991-1998) and at its peak it was 5.3% versus 15.7%. Currently both rates stand at 7% and 14%, so from offset and ratio points of view there is nothing unprecedented in the relationship between our rates.
It's a slightly different story when each country is taken individually. There is a historical precedent for high unemployment in Ireland, from the graph we can see that in 1993 it was 15.7%, in fact in the 80s (pre-euro) it was as high as 18% with an even higher rate of emigration than today - ours is a history of boom and bust. Iceland in contrast has no historical precedent of 7% unemployment in the last 20 years.
I think at this stage in our recovery process, it is pointless to advocate an Icelandic style solution to Ireland's problems, that boat has sailed, and given the relative size and nature of our economies it wouldn't necessarily have produced the same result here. That's not to say I wouldn't have liked to see Anglo's debts "flushed down the toilet" but it's too late now.0
![[2]](http://is.wikipedia.org/wiki/Mynd:Unemploymenticeland91-07.png){kind=link}
This discussion has been closed.
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