Should Ireland pull out of the Euro once public spending is balanced?

Tigerandahalf

Is it possible that public spending will be balanced by 2016? For the moment let's say it would be. I think a 3% of GDP rate has been the target for 2015.
If we are balanced by then should we consider pulling out of the euro. Surely, it gives us a lot of bargaining power. A sovereign default, debts off our back, print the punt and our economy starts to grow again. Would the punt hold its value? If not why not, considering the basics of the economy would be very good once all the debt was cleared.
Surely Europe realises this and thus would have to give us substantial debt writeoff to remain within the euro.
I know some people would say Spain/Greece/Italy could be gone before us so the choice might be made for us.
If it did collapse though, is the Irish economy in a relatively good position to grow and go forward.
Or will the Fiscal Compact Treaty be agreed by all, all countries will be forced to get their house in order and debt will be written off before printing the euro by the ECB to get things going again.

woodoo

I think so. We should start backing up on the EU too. All we really need of them is a trading partner. I'm not interested in further integration anymore.

Tigerandahalf

I think integration towards a federal Europe spooks a lot of people. We need to be in the Euro market area I guess but do we need to be in the Euro?
Can countries like Italy, Greece, Spain keep their economies going by using the euro? Or would everything be ok if there was proper regulation of banks and gov budgets?

daltonmd

I don't think it's possible that our spending will be balanced - I can't see how this will happen.

I wish we would pull out of the Euro - I think everything we achieved during entry to the EU has been wiped out, I think the devastation will last for many years.

We are no longer an independant country - I read this recently:



"that the single currency could not accommodate both industrial powerhouses such as Germany and smaller countries such as Greece. Germany,would be phobic about inflation, while the euro would prove fatal to the poorer countries because it would “devastate their inefficient economies”.

Said over 20 years ago my Maggie Thatcher.

I think she's been proven absolutely correct.

I remember the furore when the UK refused to join the Euro - it would ruin their economy, obliterate trade - well it survived, we survived breaking away from sterling in 1979.

As you say it may not be our choice.

Tigerandahalf

A lot of our trading partners are not in the Euro.
Britain and US are our main trading partners.
The BRIC countries (Brazil, Russia, India, China) are going to play an increasing role in our exports. China is already forging strong links.
We have lost much of our waters. Fishing has been wiped out. The very communities in marginal coastal areas of Ireland that need fishing/tourism to propser have been cut off. The potential growth for the fishing sector is huge if we kept and protected our waters.

lmimmfn

yes, we should and go for sterling( controversial yes, and uk isint doing so well but stg is holding strong and honestly i would prefer the UK in control rather than the ECB/IMF - again contraversial, but lets be honest, they dont give a crap about our small island trade wise )

Godge

Tigerandahalf wrote: »

Is it possible that public spending will be balanced by 2016? For the moment let's say it would be. I think a 3% of GDP rate has been the target for 2015.
If we are balanced by then should we consider pulling out of the euro. Surely, it gives us a lot of bargaining power. A sovereign default, debts off our back, print the punt and our economy starts to grow again. Would the punt hold its value? If not why not, considering the basics of the economy would be very good once all the debt was cleared.
Surely Europe realises this and thus would have to give us substantial debt writeoff to remain within the euro.
I know some people would say Spain/Greece/Italy could be gone before us so the choice might be made for us.
If it did collapse though, is the Irish economy in a relatively good position to grow and go forward.
Or will the Fiscal Compact Treaty be agreed by all, all countries will be forced to get their house in order and debt will be written off before printing the euro by the ECB to get things going again.

Why? Do people have no sense of responsibility? How could leaving the Euro benefit a small open trading economy like ours where the benefit of a stable currency is paramount?

Hayte

This has already been asked before on numerous occasions and the answer hasn't changed. Leaving the Eurozone (the monetary union) is a terrible idea. Some people in this thread are already confusing the Eurozone with the European Union. I would hope nobody is actually suggesting an exit from the European Union because that would be even more terrible and absurd. This country has benefited from and continues to benefit from a wide range of EU member state perks such as the free movement of goods, capital, services and workers, access to European wide funding and foreign direct investment.

And the monetary union in addition to the above has also benefited this country because like Godge said, it reduces monetary instability by eliminating exchange rates within the union, which has the largest single market in the world. Ireland is a part of that.

But the real silliness of attempting to leave the monetary union comes into sharp focus when you ask yourself "how does Ireland leave the monetary union?" rather than "should Ireland leave the monetary union?"

All notes and coins will need to be exchange with Punts at a fixed rate on a certain date. Investors and businesses won't just wait for that to happen, and in fact you can bet they will be gaming currency fluctuations using foreign exchange derivatives to make money.

You can realistically expect massive capital flight during a currency shift like this. Now our banking system is already in tatters and the rot isn't going to get fixed by 2016 because its systemic. What I don't get is the assumption that Ireland benefits the Eurozone more than the Eurozone benefits Ireland or that we have significant economic and political negotiating leverage within the Eurozone. Where does this belief come from?

Scofflaw

daltonmd wrote: »

I don't think it's possible that our spending will be balanced - I can't see how this will happen.

I wish we would pull out of the Euro - I think everything we achieved during entry to the EU has been wiped out, I think the devastation will last for many years.

We are no longer an independant country - I read this recently:



"that the single currency could not accommodate both industrial powerhouses such as Germany and smaller countries such as Greece. Germany,would be phobic about inflation, while the euro would prove fatal to the poorer countries because it would “devastate their inefficient economies”.

Said over 20 years ago my Maggie Thatcher.

I think she's been proven absolutely correct.

I think she's been proven entirely wrong. The euro didn't devastate our inefficient economy at all - what happened was that we allowed, or rather encouraged, a property bubble based on low global interest rates. Other than that, and the government then choosing to balance the tax take on that bubble, our problems all related to our economy doing very well.

daltonmd wrote: »

I remember the furore when the UK refused to join the Euro - it would ruin their economy, obliterate trade - well it survived, we survived breaking away from sterling in 1979.

Er, in order to go into the ESM. The UK has done neither worse nor better than us, really - they also had a property bubble, if less ferocious than ours because their government didn't actively set out to inflate it, they've also had a series of bank collapses, and they're also in recession again, despite their quantitative easing.

In order to attribute all our problems to the euro, it's necessary to complete ignore the fact that places outside the euro have had almost identical problems - the UK and Iceland, for example. Somehow, people seem to be able to point to what those countries have done since the crisis as "if only we weren't in the euro" while apparently remaining entirely oblivious to the point that those countries are also in crisis despite not being in the euro.

Not only that, but people also ignore entirely the reason we're not likely to go the way of Japan as a result of our property bubble bursting - our currency cannot suffer deflation past a certain point, because it is not only our currency. Outside the euro, it would be possible for us to enter exactly the same kind of deflationary spiral Japan went into, and hasn't really yet come out of 20 years later.

cordially,
Scofflaw

battle_hardend

Tigerandahalf wrote: »

A lot of our trading partners are not in the Euro.
Britain and US are our main trading partners.
The BRIC countries (Brazil, Russia, India, China) are going to play an increasing role in our exports. China is already forging strong links.
We have lost much of our waters. Fishing has been wiped out. The very communities in marginal coastal areas of Ireland that need fishing/tourism to propser have been cut off. The potential growth for the fishing sector is huge if we kept and protected our waters.

many people believe that agriculture will play a key role in our recovery and future , thier have been serious moves and deals with china recently with respect of this sector

i think we should withdraw from the euro, for us , the uk and the usa are more important when it comes to trade than the eu , we are and never will be at the heart of europe , i hear alot about the punt plummeting in value were we to withdraw , it would drop for sure but its redicolous to think it would sink like a stone , this is still a relativley wealthy and stable country

the main thing stopping such a move would be the lack of will and courage on the part of politicans , the amount of cuts required would surely finish any TD,s career , you cannot cut fuel allowance to pensioners without a furore ,leave the euro and it would be nesscessery to cut wellfare by 50%

Dannyboy83

No, we should not pull out of the Euro, anymore than a relapsing alcoholic should check out of rehab.

We need the opposite - we need to ensure our government must answer to a higher power. The only time we've ever experienced economic stability in this country is when we've had to answer to a higher power, in the form of preparing for EU entry etc.

Scofflaw

battle_hardend wrote: »

many people believe that agriculture will play a key role in our recovery and future , thier have been serious moves and deals with china recently with respect of this sector

i think we should withdraw from the euro, for us , the uk and the usa are more important when it comes to trade than the eu ,

I'm not sure why we hear this so regularly:

Area|Imports|Exports
Great Britain and Northern Ireland |16,677.7|14,468.3
Other EU Countries |13,709.8|39,259.7
USA |5,891.9|21,448.8
Rest of World|11,982.2|17,711.7

We export nearly three times to other EU countries what we do to the UK, nearly twice what we export to the US.

battle_hardend wrote: »

we are and never will be at the heart of europe , i hear alot about the punt plummeting in value were we to withdraw , it would drop for sure but its redicolous to think it would sink like a stone , this is still a relativley wealthy and stable country

the main thing stopping such a move would be the lack of will and courage on the part of politicans , the amount of cuts required would surely finish any TD,s career , you cannot cut fuel allowance to pensioners without a furore ,leave the euro and it would be nesscessery to cut wellfare by 50%

I'm not sure how you reconcile the various ideas contained in those paragraphs.

cordially,
Scofflaw

battle_hardend

Dannyboy83 wrote: »

No, we should not pull out of the Euro, anymore than a relapsing alcoholic should check out of rehab.

We need the opposite - we need to ensure our government must answer to a higher power. The only time we've ever experienced economic stability in this country is when we've had to answer to a higher power, in the form of preparing for EU entry etc.

i find your total lack of confidence in your own country deeply depressing

Sleepy

Depressing? yes.

Justified? Abso****inlutely...

Scofflaw

battle_hardend wrote: »

i find your total lack of confidence in your own country deeply depressing

Let's see - we've had a series of grotesque economic misadventures since the birth of the state. We've had two booms, one larger than the other, and managed to have asset bubbles each time. We had a genuine and impressive growth in prosperity in the tightly disciplined run-up to euro entry, and then blew it spectacularly once we were in, with one of the world's most bubbly property bubbles. We've had the third most expensive bank bailout in the world of the last 40 years, a decision that was taken, in effect, by just two people, and rushed through a completely compliant parliament. The investigations into the banking sector, planning, and politics through Mahon have detailed a culture of casual and callous corruption, while the investigations into the banking sector and its regulation in the wake of the bank collapse detailed an almost equally depressing story of greed, stupidity, groupthink, and incompetent complaisance. All the signs are that to the extent our political class were not corruptly involved in the property bubble, they were dense enough to honestly believe it could either go on forever or be brought to a soft landing, either of which would be a world first. Throughout the collapse, special interests have continued to be protected and sheltered, as they have been throughout the history of the state. We're one of the most centralised and opaque states in Europe, and we repeatedly re-elect dynasties of local politicians despite their manifest and consistent incompetence and their occasionally detected corruption. We have a rubber-stamp parliament and an ineffective media largely under the thumbs of a couple of well-connected press barons.

And that's before we get onto our social history.

I'm not in favour of not being able to make our own decisions, but I am in favour of having those decisions reviewed and subjected to criticism as much as possible.

cordially,
Scofflaw

Manach

On the slightly OT subject of leaving the EU as well, leaving aside my conservative PoV, aside from the large capitials transfer from the EU - it has been responsible for laws that placed human rights at the fore front of legislation, championed Woman's equality and boosted trade by means of enforcing continent wide standards and effective measures against cartels/monopolies that would choke trade, especially in small countries like ourselves.

daltonmd

Scofflaw wrote: »

Let's see - we've had a series of grotesque economic misadventures since the birth of the state. We've had two booms, one larger than the other, and managed to have asset bubbles each time. We had a genuine and impressive growth in prosperity in the tightly disciplined run-up to euro entry, and then blew it spectacularly once we were in, with one of the world's most bubbly property bubbles. We've had the third most expensive bank bailout in the world of the last 40 years, a decision that was taken, in effect, by just two people, and rushed through a completely compliant parliament. The investigations into the banking sector, planning, and politics through Mahon have detailed a culture of casual and callous corruption, while the investigations into the banking sector and its regulation in the wake of the bank collapse detailed an almost equally depressing story of greed, stupidity, groupthink, and incompetent complaisance. All the signs are that to the extent our political class were not corruptly involved in the property bubble, they were dense enough to honestly believe it could either go on forever or be brought to a soft landing, either of which would be a world first. Throughout the collapse, special interests have continued to be protected and sheltered, as they have been throughout the history of the state. We're one of the most centralised and opaque states in Europe, and we repeatedly re-elect dynasties of local politicians despite their manifest and consistent incompetence and their occasionally detected corruption. We have a rubber-stamp parliament and an ineffective media largely under the thumbs of a couple of well-connected press barons.

And that's before we get onto our social history.

I'm not in favour of not being able to make our own decisions, but I am in favour of having those decisions reviewed and subjected to criticism as much as possible.

cordially,
Scofflaw

Hmmmm, when you put it like that... (:o)

Icepick

Manach wrote: »

On the slightly OT subject of leaving the EU as well, leaving aside my conservative PoV, aside from the large capitials transfer from the EU - it has been responsible for laws that placed human rights at the fore front of legislation, championed Woman's equality and boosted trade by means of enforcing continent wide standards and effective measures against cartels/monopolies that would choke trade, especially in small countries like ourselves.

This needs to be stressed. People do not realize how many good laws we had to implement thanks to the EU.
Also, farming would be hit hard without subsidies, especially beef farming.

Dannyboy83

Scofflaw wrote: »

an ineffective media largely under the thumbs of a couple of well-connected press barons.

I just wanted to link the following article by Vincent Browne in relation to the above:

http://www.irishtimes.com/newspaper/opinion/2012/0425/1224315145169.html
.
.
.
So how come this spectacular turnaround? This could all be a compete coincidence, of course, but during the week that the extraordinary U-turn was undertaken – this was the week beginning April 16th, 2007 – a private undisclosed meeting took place between Tony O’Reilly and Ahern, accompanied by Brian Cowen.

At a Fianna Fáil press conference during that election campaign, Cowen was asked about that meeting. He confirmed the meeting had taken place and refused to state what was discussed.

But the extraordinary feature of that was that immediately following the meeting the Sunday Independent changed its tack 100 per cent on Ahern and we are asked to believe that “editorial was independent”.

Sleepy

Dannyboy83 wrote: »

I just wanted to link the following article by Vincent Browne in relation to the above:

Unfortunately Vincent Browne is like the boy who cried wolf. You can only go full blown apoplectic so many times in the public eye before you're considered a nut-job.

Matt Cooper covered that whole sordid affair (and many others) very well in his "Who Really Runs Ireland?". Best read with a bottle of good whisky close at hand though!

Scofflaw

Scofflaw wrote: »

Outside the euro, it would be possible for us to enter exactly the same kind of deflationary spiral Japan went into, and hasn't really yet come out of 20 years later.

Ah, Japan.

Isn't this the same Japan where per capita incomes grew at a faster rate in the last decade than they did in Europe and the US?

And the same Japan that has an unemployment rate of around 5% at the moment?

And that's after 20 years of "stagnation"?

And IIRC, Japan has low-ish levels of personal taxation, but high rates of corporate tax.

It might not seem alright, but it looks alright to me.

Scofflaw

Deleted User wrote: »

Ah, Japan.

Isn't this the same Japan where per capita incomes grew at a faster rate in the last decade than they did in Europe and the US?

And the same Japan that has an unemployment rate of around 5% at the moment?

And that's after 20 years of "stagnation"?

And IIRC, Japan has low-ish levels of personal taxation, but high rates of corporate tax.

It might not seem alright, but it looks alright to me.

Ah Japan...twenty years later. What green green grass!

amused,
Scofflaw

Rory1

no

Izymunz

If we did pull out of the Euro-zone the effects would be disastrous. The slow growth that we now have is mainly due to our Exports. If you take away 'the euro' exchange rates are added to the exports within the euro-zone. This would create uncertainty. Our goods will become less competitive. Thus our economy will dive deeper and deeper into despair. Also, if we did abandon the life support that the ECB have given us we would lose out, big time.
The only we our economy can now recover is by heavy support from the euro-zone. That is our crutch.