How will a No vote prevent austerity?

swampgas

Dwellingdweller wrote: »

One factor that's gone unconsidered thus far is that if Greece do leave the Euro, their loans from the ECB will be redistributed to the other member states, including Spain, Portugal and Ireland (though it's likely that Germany will try and spread the debt so that countries heretofore not overburdened will suddenly have a large chunk of debt to deal with). 110 billion will have to be re-allocated, that's going to have a large effect on the overall economic situation. Nobody can really afford, at this stage, to be paying for loans that they didn't create.

Interesting - have you any links where I can read further?

Dwellingdweller

swampgas wrote: »

Interesting - have you any links where I can read further?

There was a well-known Economist talking about it on RT, the News channel. I'm looking for the interview but I can't find it.

Scofflaw

Dwellingdweller wrote: »

One factor that's gone unconsidered thus far is that if Greece do leave the Euro, their loans from the ECB will be redistributed to the other member states, including Spain, Portugal and Ireland (though it's likely that Germany will try and spread the debt so that countries heretofore not overburdened will suddenly have a large chunk of debt to deal with). 110 billion will have to be re-allocated, that's going to have a large effect on the overall economic situation. Nobody can really afford, at this stage, to be paying for loans that they didn't create.

OK - I'm pretty sure you're actually referring to the Greek bailout deal here, which is not borrowed from the ECB, but from the European bailout funds and the IMF. And you're assuming a 100% default - which, on official creditors like the bailout funds and the IMF, is highly unlikely.

Nor can the Greek debt, even in the event of a default, be allocated as you claim. Each country can only lose its contribution or guarantee - in our case we would presumably lose the billion we put into the Greek Bilateral Fund, but we are no longer EFSF guarantors, so would not lose any money that way.

Finally, the maximum that can be lost in a Greek default is only the funding already drawn down by Greece. The rest of the bailout fund doesn't even exist, since the money is not raised until needed, so it's hard to see how it would be lost.

cordially,
Scofflaw

thecommietommy

Godge wrote: »

You keep peddling this misinformation.

http://economic-incentives.blogspot.com/2012/05/debt-and-deficits-in-eu-fiscal-rules.html

The 0.5% rule has been in place since 2005.

Doesn't surprise me that a rule was in place but can anyone tell me how come it wasn't applied to Ireland and other countries then so from 2005 on ??

Scofflaw

thecommietommy wrote: »

Doesn't surprise me that a rule was in place but can anyone tell me how come it wasn't applied to Ireland and other countries then so from 2005 on ??

There's no actual penalty attached to the 'structural balance' rule, as far as I can see. An excessive deficit procedure is only triggered by the 3% and 60% rules.

cordially,
Scofflaw

The Waltzing Consumer

thecommietommy wrote: »

Doesn't surprise me that a rule was in place but can anyone tell me how come it wasn't applied to Ireland and other countries then so from 2005 on ??

Well that is a different issue and something that this fiscal treaty will address. So you seem to think this is a good thing and your question posts the question of enforcement which this treaty does address.

7 pages in, and I still have not seen one clear and factual argument how a No vote would prevent austerity or prevent less austerity. That is pretty damning for the No posters here and the style of argument that is present really does speak for itself:

1) Statement made by a No voter
2) Statement challenged with facts, existing laws or statistics
3) Rebuttal not challenged and unrelated new statement made
4) Repeat

RandomName2

The Waltzing Consumer wrote: »

Well that is a different issue and something that this fiscal treaty will address. So you seem to think this is a good thing and your question posts the question of enforcement which this treaty does address.

7 pages in, and I still have not seen one clear and factual argument how a No vote would prevent austerity or prevent less austerity. That is pretty damning for the No posters here and the style of argument that is present really does speak for itself:

1) Statement made by a No voter
2) Statement challenged with facts, existing laws or statistics
3) Rebuttal not challenged and unrelated new statement made
4) Repeat

Well "Vote No to Austerity" is shaping up to be a similar campaign as that of "Vote Yes for Jobs". The silly hypothetical specific changes highlighted by the No side in the previous campaign (lower minimum wage for instance) were far more vulnerable to scrutiny than some grand left-wing gesture stating that "austerity sucks".

But, you know, I'll be devil's advocate for a moment:

1) Voting 'no' could boost the standing of radical parties who, if they come to government, could propose a rolling back of austerity measures.
2) Voting 'no' could force a deal with our creditors for them to wipe out some of our debt, or reduce the interest rate of our loans, in order that we pass the treaty on a subsequent vote.
3) Voting 'no' would prevent a restriction on public spending so that radical parties, if elected, would not be barred from generating a deficit in order to pay for public services/ promote growth.

Just so you know I don't agree with any of the above; but it would explain the lack of elaboration from the political parties of the 'no' side.

Francie Barrett

A No vote would actually accelerate austerity as we would be forced to stop borrowing and balance the budget; which is why I don't understand some union opposition.

meglome

Francie Barrett wrote: »

A No vote would actually accelerate austerity as we would be forced to stop borrowing and balance the budget; which is why I don't understand some union opposition.

It's funny isn't it.

I read everything I could and decided to vote Yes. But when I find I'm on the opposite side to Sinn Fein, The ULA, the UK independence party, many of our unions and Declan Ganley (Libertas) I can't help but feel even better about that Yes vote.

beeftotheheels

Mr Bump wrote: »

Swanpgas, for me we have to keep pushing for a better deal, if we have to keep going back then thats what we do, as for the chicken game, your right, it is a chicken game, and if we dont play we will always have to bend over and just say yes, its time in my humble opinion we get a large set of you know what and stand our ground, the germans are drving the way and that way will just keep little old Ireland hemorrhaging, for me that needs to stop, remember just my opinion, and that opinion will deliver a NO vote from me at the poles, and as far as i can tell a lot more people are thinking of the NO now then two weks ago,
Reagrds
Mr Bump

With all due respect that reads like a ten year old trying to negotiate with seasoned grown ups.

The "I'll hold my breath until you give me what I want" argument is generally dismissed by more experienced players hence the fact that only inexperienced (in the grand scheme of either Irish or European politics) Irish politicians are pushing it. Just watch the current EU "We can't make Greece Stay in the Eurozone" position with SYRIZA.

Blackmail has moral hazard arguments against it, Greece is testing those boundaries, their bank run and rhetoric from the core suggests we need to fully appreciate the downside risks before advocating a similar strategy.

A downside risk not mentioned in your post, at all, at all!

goat2

[QUOTE=Godge;78730131]sorry, do you mean that if we vote no, we could somehow force taxpayers in the rest of Europe to pay for the debts that we have run up? Are you having a laugh? Seriously, who would pay for the write-down? The Germans? The Greeks? Somebody would have to pay and ultimately that is the failure of the "No" campaign on this sort of thing, they have absolutely no clue as to who would pay up for our budget deficits if we voted no.[/QUOTE]
i did not run up any debts, paid tax all my life, worked hard, now i have nothing, just my health, and i dont owe anyone a cent,
so when you say we,
do you mean the greedy of this country, who borrowed and knew they did not have the earnings to pay back and the banks who gave so freely to people without a cent to their name

swampgas

beeftotheheels wrote: »

Blackmail has moral hazard arguments against it, Greece is testing those boundaries, their bank run and rhetoric from the core suggests we need to fully appreciate the downside risks before advocating a similar strategy.

This to me is the single most interesting political dimension to the current crisis. Who will blink first, Greece or the rest of the EU?

The stakes are enormous for everyone involved.

My own opinion is that the EU simply can't afford to allow a precedent where they can be blackmailed to the extent that SYRIZA are attempting, even at the cost of a Greek exit and possible contagion.

swampgas

goat2 wrote: »

i did not run up any debts, paid tax all my life, worked hard, now i have nothing, just my health, and i dont owe anyone a cent,
so when you say we,
do you mean the greedy of this country, who borrowed and knew they did not have the earnings to pay back and the banks who gave so freely to people without a cent to their name

Unfortunately, as an Irish citizen you are on the hook for the country's debts along with all the rest of us. Welcome to the club.

bladespin

Ok so, as usual there's a few monster raving etc who want to go the opposite to how the mainstream dictate but I can't yet find a reasonably good reason to vote yes either, any ideas?

meglome

bladespin wrote: »

Ok so, as usual there's a few monster raving etc who want to go the opposite to how the mainstream dictate but I can't yet find a reasonably good reason to vote yes either, any ideas?

Scofflaw's list is useful

Scofflaw wrote: »

What's not new:

1. the 3% deficit rule
2. the 60% debt rule
3. the structural balance rule
4. the penalties and procedures attached to breaches of the rules

What's new:

1. transposing the fiscal rules into national law
2. creating a national 'correction mechanism'
3. making 1 and 2 subject to a ruling of the CJEU
4. the voting mechanism for determining whether the rules have been breached, which moves from requiring majority to support to requiring a majority to block

That's more or less it, plus the ESM conditionality. After all, it's only 11 pages.

cordially,
Scofflaw

Not very easy to 'sex' that up to sell it but quite easy to make stuff up about it. Personally I like the new stuff being brought it.

Scofflaw

bladespin wrote: »

Ok so, as usual there's a few monster raving etc who want to go the opposite to how the mainstream dictate but I can't yet find a reasonably good reason to vote yes either, any ideas?

It's a short Treaty, so it's not a long list, but I'd say the following:

1. harder for the bigger countries (or any country) to evade fiscal discipline - that's the change in the excessive deficit procedure mechanism.

2. a set of Irish institutions to keep an eye on the government's structural balance, which is underlying government spending without temporary or once-off measures, according to a Europe-wide set of criteria.

3. the requirement to have an Irish correction mechanism that kicks in when, according to the judgement of the institutions in (2), the government is committing to excessive structural spending.

4. better coordination of economic affairs across the eurozone.

5. access to ESM, although that's not really due to anything specific to the Treaty.

(2) and (3) there are the most appealing to me. We have a dreadful lack of independent scrutiny of our government's spending plans - neither our media nor our opposition are up to the job, while our entirely domestic "independent institutions" are rarely independent, and if they show any signs of criticising the government are usually called sharply to heel by a rewrite of their legislative basis - the Referendum Commission is a case in point.

Under the Treaty, such bodies have to be created by legislation which, vitally, is then subject to review by not only the EU Commission but by the other signatories, and Ireland can be taken to the CJEU and fined if the legislative basis for them and their scrutiny mechanisms does not produce proper independence.

So, while (2) and (3) could be done domestically, making them the subject of a Treaty is a very much better bet. And I do think they're something we need.

cordially,
Scofflaw

Ozymandius2011

The absolute immunity of the ESM from scrutiny is a huge problem for voters concerned with transparency. It risks creating fertile ground for corruption because it is shielded from accountability.

Scofflaw

Ozymandius2011 wrote: »

The absolute immunity of the ESM from scrutiny is a huge problem for voters concerned with transparency.

But we're not voting on the ESM. Whether Ireland ratifies the ESM Treaty is up to the Dáil, not the referendum.

Ozymandius2011 wrote: »

It risks creating fertile ground for corruption because it is shielded from accountability.

I think that results from misunderstanding of the role of the ESM as well as what immunities are provided to it by the Treaty.

First, the immunity is not "absolute", but quite limited, and only applies to the media level of scrutiny. The Board of Governors of the ESM can make any rules they like about their powers of scrutiny and accountability within the ESM, and that Board consists of representatives of the governments comprising the ESM's shareholders.

And private corruption is not protected by the kind of functional immunity that the Treaty gives ESM officials. Someone who engages in corruption in the course of his/her job does not do so as part of his/her job - corruption is a private activity, not part of the course of their duties. And the immunity applies only to what is done during the course of an official's duties.

In other words, the ESM is like a company, and the shareholders of that company - our government,and the rest of the governments holding shares in the ESM - will be entitled to see whatever they like within the ESM.

So the ESM is accountable. It is not open to media or public scrutiny, but it is both accountable and transparent to the governments involved.

Second, what exactly are the opportunities for corruption? The ESM raises money on the markets, and lends that money to distressed countries. Both of those are open activities. The former can't be covert, because the ESM has to publish its offers for anyone to know about them. The latter will be subject to the same kind of public Memorandums of Understanding that our programme is, while the spending of the money itself is amenable to the same controls as any public spending in the country being loaned the money.

So I'm not sure what the "opportunities for corruption" are supposed to be, and would be interested to hear you outline them, because otherwise that looks like the kind of scaremongering the No side have been engaged in throughout this campaign.

cordially,
Scofflaw

paddydu

Just vote NO and start again with out any one telling us what to do

meglome

paddydu wrote: »

Just vote NO and start again with out any one telling us what to do

How does voting no have anything 'start again'? And plenty of people are telling us to vote no, we just ignore that do we?

bladespin

Scofflaw wrote: »

2. a set of Irish institutions to keep an eye on the government's structural balance, which is underlying government spending without temporary or once-off measures, according to a Europe-wide set of criteria.

3. the requirement to have an Irish correction mechanism that kicks in when, according to the judgement of the institutions in (2), the government is committing to excessive structural spending.

Best explanation of the thing I've read anywhere but there's not much that makes me want to rush out and vote yes, basically I'd just like to know how it will benefit us? All I'm hearing is it's a set of rules we will have to put in place, all good I'm sure but I'm not supporting extra hardship, I'd like something in return.

meglome

bladespin wrote: »

Best explanation of the thing I've read anywhere but there's not much that makes me want to rush out and vote yes, basically I'd just like to know how it will benefit us? All I'm hearing is it's a set of rules we will have to put in place, all good I'm sure but I'm not supporting extra hardship, I'd like something in return.

You don't know how making sure our government has to follow sensible fiscal policy is a good thing? Honestly?

And our hardship has to do with borrowing one third of all government spending, which we cannot continue to do.

I have no idea what you think you'll get in return or who will supply it, and I can't figure out why doing the sensible thing should require 'something in return'. Though to be fair that's the Irish system, we demand big promises then get pee'd off when they can't possibly carry them out.

bladespin

meglome wrote: »

You don't know how making sure our government has to follow sensible fiscal policy is a good thing? Honestly?

And our hardship has to do with borrowing one third of all government spending, which we cannot continue to do.

I have no idea what you think you'll get in return or who will supply it, and I can't figure out why doing the sensible thing should require 'something in return'. Though to be fair that's the Irish system, we demand big promises then get pee'd off when they can't possibly carry them out.

Fiscal policy is fine, a good thing IMO, we could have that without the treaty as was pointed out already so why vote yes?

That's my question, want to have a go at answering it instead of providing a sanctimonious lecture we don't need?

swampgas

bladespin wrote: »

Fiscal policy is fine, a good thing IMO, we could have that without the treaty as was pointed out already so why vote yes?

Here's my take on it.

This isn't something special for Ireland. The idea is that as a bunch of countries are using a common currency, the Euro, there needs to be some basic rules, enforced as best we can, to stop any one country ruining it for everyone else by running their economy into the ground. We're all in it together, currency-wise, and while Greece, Ireland and Spain are in the spotlight now, who knows what economic madness a government in any Eurozone country might do to get re-elected in future? Most of these rules already exist, but they are being tweaked to make them more effective.

Also, there will be a special fund, the ESM, to act as an emergency fund if a Eurozone country gets into trouble. But to be eligible to access the ESM, you need to sign up to some rules saying that you won't go mad spending money you don't have, expecting the ESM to bail you out afterwards.

The referendum is to give the government permission, on our behalf, to sign us up for the new rules, and indirectly, to give us access to the ESM fund if we need it.

bladespin

I'm a little confused on the ESM thing, given that reagrdless of the outcome we will remain part of the Euro, surely the EU would have to provide a bail-out if needed, could they let a Euro state default and fail?

meglome

bladespin wrote: »

Fiscal policy is fine, a good thing IMO, we could have that without the treaty as was pointed out already so why vote yes?

We could have done all sorts of things. We could have avoided voting for Fianna Fail repeatedly, we could have noticed the crazy polices they followed, we could have not allowed ourselves to be bought off in elections with unsustainable promises. (You get the idea)

So yes we could do it, however history tells me we won't if left completely to our own devices. Obviously it's far better it's done on a Europe wide basis anyway so everyone has to stick to the same rules. No brainer IMHO.

bladespin wrote: »

That's my question, want to have a go at answering it instead of providing a sanctimonious lecture we don't need?

Scofflaw's post clearly explains why this is a good idea. I was trying to figure out what you expect from a 11 page treaty. You said "I'd like something in return" so I was also trying to figure out what you thought that would be and who would provide it.

The sanctimoniousness was no extra charge.

swampgas

bladespin wrote: »

I'm a little confused on the ESM thing, given that reagrdless of the outcome we will remain part of the Euro, surely the EU would have to provide a bail-out if needed, could they let a Euro state default and fail?

In theory, yes. What would happen in reality is impossible to say.

However being signed up for access to the ESM makes it more likely we wouldn't actually need it, as it would mean (I think) that the rates at which Ireland could borrow would be lower.

If we had to negotiate a bail-out at the last minute, it is likely that it would cost us a lot more than using the ESM directly.

Stabshauptmann

Eliot Rosewater wrote: »

I dont see that implication myself.
I agree that Austerity isnt working, and do not want to increase the levels of Austerity by agreeing to stricter budget deficit rules

I think the implication is pretty obvious. "Austerity is bad" implies "vote No" means that voting No will somehow lessen the affect of the badness, austerity.

But this wheels us back to the question of the thread: how will voting No lead to less austerity than voting Yes? The question is not "will voting Yes lead to austerity?". For the No vote argument to work one must demonstrate that voting Yes will lead to more austerity than if we vote No.

I understand that if we vote Yes we won't be able to borrow as much as we please, but if we vote No, how will this enable us to borrow as much as we please? From whom will we borrow?

Did you read the post you quoted?

Voting yes = stricter rules on budget deficits & public debt = higher levels of austerity required than under existing "rules".

Stabshauptmann

oscarBravo wrote: »

Really?!

If the implication of "Austerity isn't working: vote no" is something other than "vote no to prevent austerity", can you explain what that implication is?

I did explain, in the very next sentence. That is, in the second sentence of my post which was only two sentences long. I can see how it is important that you make yourself feel smart with brilliant zingers, but please, grow up.

Scofflaw

Stabshauptmann wrote: »

Did you read the post you quoted?

Voting yes = stricter rules on budget deficits & public debt = higher levels of austerity required than under existing "rules".

That would work rather better if the fiscal rules were actually tighter, but it's not the fiscal rules themselves that are being changed by the Treaty. We're already signed up to observe the same rules on budget deficits and public debt, so you'd have to say:

Voting yes = same rules on budget deficits & public debt = same levels of austerity required as under existing "rules".

It seems to me in general that the existing fiscal rules hardly caused austerity before the collapse of our property bubble, and while they require us now to amend our budgets, the idea that in their absence we would go on running deficits of the size we currently have seems unrealistic.

cordially,
Scofflaw