When will Ireland default?

Anthony16

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

Anyone

Anthony16 wrote: »

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

Its in Ireland's interest also to prevent a Euro collapse. If you think its bad now, it would be a hell of lot worse with a devalued worthless currency, and the inability to borrow. We'll be back picking spuds within a year.

dlouth15

Anthony16 wrote: »

If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.

The Irish government is no longer seeking that.

Anthony16

Why then is there a clause whereby it can be used in special cases to retrospectively recapitalise banks.I know Noonan has muttered he is no longer interested in this but Enda also said he never asked for a debt write down while his colleagues claimed differently.

What do u guys suggest is the future?Carry on in hope that there will be enough growth to enable us to pay back our massive debt load. That is delusional imo. Unless we get a big debt write down there is no hope for this country.Its a dump really.Greece managed to get a debt writedown which shows the Germans are wary of a eurozone break up and will do their utmost to prevent it

RED PASSION

Is money still save in the banks or will the government refuse to honour the bank guarantee if the country defaults

efb

The bank Guarentee is finished. The ECB covers all personal deposits up to €100K

Hootanany

We owe 600 billion we can never pay that back.

McDave

Anthony16 wrote: »

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

If it took Ahern and Co a decade or so to sell the country into hock, don't be surprised if it takes a similar duration to undo the damage. Don't forget that both public and private spending was frontloaded in massive amounts. It's a huge problem to turn around. And that's not even taking the public takeover of Anglo/INBS debt into account.

Expect a few more years of rebalancing, and hopefully then a sustainable recovery off a realistic economic base.

As to the timing of any potential deals, I think a lot of countries will be putting pressure on Germany after their elections. IMO, the time to commit to an investment and growth strategy will arrive once the German public has given Merkel a renewed mandate, and banking reforms are agreed at EU/EZ level.

Amirani

Hootanany wrote: »

We owe 600 billion we can never pay that back.

Not many countries intend to pay back all of their sovereign debt.

McDave

NiallSparky wrote: »

Not many countries intend to pay back all of their sovereign debt.

Or even a substantial amount! Most countries simply roll it over.

The sovereign debt crisis emerged primarily because many countries were getting into the budget deficit habit, allowing their total debt to balloon, and some lenders were starting to get the willies. That's one of the reasons for the Maastricht debt criteria. Sixty percent total debt and no more than 3% annual debt - although the latter probably assumes growth in and around that region, as opposed to the sclerotic rates of recent times.

Gone West

The default, or "whatever" will happen only after all the assets have been stripped from the people and sold off.
Ireland will be treated just like a company that is about to collapse, strip anything of value, sell it to pay off preferred investors, then go bankrupt.

Criminal incompetence should be a crime, and the uneducated ignoramuses who represent us, and "negotiate" at the big table with the big boys should have never left the family farm or their teaching job.

Anthony16

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

View

Fuzzy wrote: »

The default, or "whatever" will happen only after all the assets have been stripped from the people and sold off.

Well there must be no danger of default then since there seems to be no rush to sell off assets.

_Kaiser_

Anthony16 wrote: »

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

Ah but the Greeks were out protesting and threatening to default regardless - here we have the "European of the year" and a docile servile electorate.

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

I fully expect the EU to collapse under its own weight and the incompatible national interests, cultures and moralities of its member states and then maybe we can go back to the EEC model, but until then nothing much will change.. the rich will get richer, the gap between the social classes will increase (we may not have Lords and Ladies but we have definite and growing divisions), and the only people who'll pick up the tab or face any consequences will be the aforementioned docile, servile electorate.

You reap what you sow

McDave

Kaiser2000 wrote: »

Ah but the Greeks were out protesting and threatening to default regardless - here we have the "European of the year" and a docile servile electorate.

There's a very simple reason why we are not protesting in great numbers on 'bailouts', Troika, etc. And it is this.

Most Irish people actually endorsed Ahern and his crew and went along with the C****c T***r fiction. Irish voters may well be docile and servile as you suggest. But at least they have the cop on to realise that if they 'man the barricades', they're effectively protesting against themselves and their callow support of crony politics down the years.

McDave

Kaiser2000 wrote: »

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

Ireland will not default so long as it reckons it can maintain reasonable standards of living for enough of its people. We were never prepared to go the Icelandic route because we suspected the short sharp shock treatment would have dumped people out of the public service in massive numbers, and pay cuts would have been too painful for most.

Instead, our membership of the Eurozone has given us the opportunity to manage our way out of the crisis with most people still at work with reasonable enough wages. And with the prospect of setting our economy on a sustainable track, once the worst of the crisis is over.

As for sovereignty and independence, whether we're in or out of the EU, we live in an increasingly interdependent world. The EU has given member countries the opportunity to pool aspects of sovereignty where these can yield better results. The Euro for instance will yield increased sovereignty for its members insofar as the Eurozone will be able to maintain its longer term independence vis a vis the dollar, rouble, renminbi, etc. Many other aspects of sovereignty will remain ours. And we will always have the choice of pulling out of the EU if we feel it is no longer in our interests.

McDave

Anthony16 wrote: »

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

I think we'll get terms on our debts which will account for a substantial proportion of the promissory note 'debt'. But we will still have to pick up the tab for much of the Anglo/INBS charade because it was largely our charade which our State permitted to go unchecked, and about which it was spectacularly ill-informed. We'll also have to suck up the debts of the systemic banks as they were completely our State's responsibility to regulate.

And don't forget, we dodged a serious bullet on DEPFA whose massive debt was repatriated from IFSC cowboy land to Germany not long before Lenihan/Cowen's infamous guarantee.

If we had done as Iceland did, where would we be now? The foreign companies would have left in their droves, leaving unemployment at least twice what it is now and no way of paying social welfare, due to severly curtailed tax revenue. We would be borrowing even more just to keep the country running, if we could get it! The approach taken, tough and in ways unfair, is the only option open to us and anyone claiming otherwise is living in dreamland. Things ARE tough, but there is light at the end of the tunnel. Stick with it and we'll all emerge stronger.

3DataModem

What's the problem with handing over sovereignty? How much has it really benefitted us, and how much has it cost us?

McDave

Kaiser2000 wrote: »

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

Incidentally, how do you define 'sovereignty'? I often feel people bandy terms like sovereignty and neutrality around rather indiscriminately without getting to the crux of what they actually mean.

McDave

3DataModem wrote: »

What's the problem with handing over sovereignty? How much has it really benefitted us, and how much has it cost us?

These are questions which have to be asked. And honestly answered.

As far as the EU is concerned, we have temporarily handed over defined competences within strict legal terms. Some characterise this as pooling sovereignty. The pooled sovereignty will in time generate sovereignties at EU level that could not really exist at national level.

As far as Ireland is concerned, there are many areas of so-called sovereignty which we simply haven't exercised at all. And to our detriment. For instance, the State had the legal right to oversee and regulate our banking and financial sectors. But instead of working out what the abolition of the Glass-Steagall Act in the US and the general liberalisation of international capital movements meant in reality, our numbskull leaders and public servants merely saw it as a 'market' to exploit and another notch to add to our low tax off shoring business. It didn't occur to them for a second that their Charlie McCreevy laissez faire approach would lead to widespread abuses which would need to be closely monitored and controlled.

The Irish State did not exercise it's sovereignty in this regard. Not one whit. Worse still, when the whole charade went belly up, the government didn't have a clue and was turned over by a bunch of snake oil bank salesmen. Read this again: The entire 'sovereign' Irish State was played by a bunch of incompetents who couldn't run their own businesses.

So much for sovereignty!

golfwallah

Hootanany wrote: »

We owe 600 billion we can never pay that back.

But we can pay it back over the long term - it's just that the long term lengthens (and the pain associated with it for us all) as government (on our behalf) continues to borrow to prop up excessive current spending.

Remember, for example, that many of today's so called "strategic defaulters" will eventually inherit assets from their parents and the banks can wait around for a long time too to get their money back.

Personally, I'd prefer to see the unacceptably high debt overhang reduced quicker than have it hanging over us for years to come.

spank_inferno

Hootanany wrote: »

We owe 600 billion we can never pay that back.

Where are you getting the 600 from?

Isn't it closer to 180 billion?
(including debt already owed before the 2008 crash).

KyussBishop

I don't know if Ireland reliably has anything to gain from a default - we still need to use deficit spending to keep services going, and while still in the Euro, we'd get hammered in the bond markets without EU help.
If we want to default in any way that's beneficial, we'd probably have to leave the Euro, and if we leave the Euro then leaving the EU itself seems to come with that.

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.


The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

ezra_pound

KyussBishop wrote: »

I don't know if Ireland reliably has anything to gain from a default - we still need to use deficit spending to keep services going, and while still in the Euro, we'd get hammered in the bond markets without EU help.
If we want to default in any way that's beneficial, we'd probably have to leave the Euro, and if we leave the Euro then leaving the EU itself seems to come with that.

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.


The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

I agree with you whole entirely.

This is a complete u turn from your previous convictions. Have you abandoned mmt?

golfwallah

McDave wrote: »

There's a very simple reason why we are not protesting in great numbers on 'bailouts', Troika, etc. And it is this.

Most Irish people actually endorsed Ahern and his crew and went along with the C****c T***r fiction. Irish voters may well be docile and servile as you suggest. But at least they have the cop on to realise that if they 'man the barricades', they're effectively protesting against themselves and their callow support of crony politics down the years.

True and hence the old adage: "In a democracy you get the government you deserve and you deserve the government you get."

At election time, voters need to look beyond the politics of promise. For example, Pat Rabbitte conceding in a recent interview about breaking election promises on child benefit: “Isn’t that what you tend to do during an election”: http://www.thejournal.ie/pat-rabbitte-election-promises-labour-929522-Jun2013/

And we all know that the opposition were clamouring for even more reckless government spending during the Celtic Tiger era.

Ireland isn’t unique, either, as similar reckless political promises of goodies today are what got political parties into government in many democracies. There are a few notable exceptions where there seems to be some form of national consensus on how the pie should be shared between the various competing social partners (as in Germany or Switzerland, perhaps?). But in Germany they learned the hard way from promises made before two world wars.

Maybe it takes a catastrophe for people to learn lessons – I’d like to see a bit more debate on this issue and how to put more manners on political parties as regard their unaffordable political promises.

McDave

KyussBishop wrote: »

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.

As I see it, there has been economic mismanagement in certain EU countries. At EU level, bases for sustainable macroeconomic policies are laid down in the Maastricht criteria. Most countries chose to ignore them. That's not the EU's fault.

The ECB has made money available at modest interest rates, and recently at low rates. It is not the fault of the ECB if certain countries abused borrowed money.

As for 'control', Ireland had practically complete control of its macroeconomic and financial policy during the C****c T***r years. And Ahern & Co. blew it completely.

McDave

KyussBishop wrote: »

The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

Even accounting for the concept of 'ever closer union', I don't see any basis whatsoever for a unified European nation. I don't know of a single country or region which would accept a new legal basis in the EU treaties to permit this. There are too many distinct cultures in Europe for there to be a basis for a single nation.

Regardless of the Euro, EZ countries are still mainly sovereign, and will remain largely so for the foreseeable future. Certain aspects of sovereignty will continue to be pooled on a formal legal basis. But member states will still remain nations, cultures or whatever makes them distinct.

McDave

golfwallah wrote: »

Maybe it takes a catastrophe for people to learn lessons – I’d like to see a bit more debate on this issue and how to put more manners on political parties as regard their unaffordable political promises.

Jean Monnet said Europe would be built on crises. And so it's transpiring. I guess the need for change is only widely understood when things go badly wrong and solutions are seen to have real meaning.

Certainly our own crisis has demonstrated the need for sustainable economics. Whether we learn from this is entirely another matter. When I listen to Labour railing against 'austerity' (which I personally see as simply balancing the books), I fear we're well capable of making similar mistakes all over again.

Phoebas

spank_inferno wrote: »

Where are you getting the 600 from?

Isn't it closer to 180 billion?
(including debt already owed before the 2008 crash).

I presume he's including household debt as well as sovereign debt. Dunno why he thinks we can never pay it back.

realitykeeper

Ireland should not default but it should let the banks go bust. Europe will never forgive Ireland its debts and rightfully so. They were good enough to lend us the money in good faith and the least we ought to do is repay it along with whatever interest is due. Angela Merkel had the right idea when she said "let every country clean up its own s**t."

KyussBishop

McDave wrote: »

As I see it, there has been economic mismanagement in certain EU countries. At EU level, bases for sustainable macroeconomic policies are laid down in the Maastricht criteria. Most countries chose to ignore them. That's not the EU's fault.

The ECB has made money available at modest interest rates, and recently at low rates. It is not the fault of the ECB if certain countries abused borrowed money.

As for 'control', Ireland had practically complete control of its macroeconomic and financial policy during the C****c T***r years. And Ahern & Co. blew it completely.

Europe has no system in place for dealing with crisis in a sustainable and co-ordinated fashion, and to get that, Europe has to take a massive lurch towards integrating into a single unified nation, by allowing some co-ordination of fiscal policy from within Europe.

Europe is still not equipped to deal with the next economic crisis (nevermind even this one) - there has been no adequate reform, that would stop a crisis just like this from happening all over again, and nobody has been held to account for this crisis either, to deter it from happening again.

A country without control over its own currency, loses a huge amount of control over fiscal policy whenever an economic crisis hits - I don't understand this habit people have, of judging economic issues only from the good times, when it is the bad times that truly defines the state of a countries economic control.

KyussBishop

McDave wrote: »

Even accounting for the concept of 'ever closer union', I don't see any basis whatsoever for a unified European nation. I don't know of a single country or region which would accept a new legal basis in the EU treaties to permit this. There are too many distinct cultures in Europe for there to be a basis for a single nation.

Regardless of the Euro, EZ countries are still mainly sovereign, and will remain largely so for the foreseeable future. Certain aspects of sovereignty will continue to be pooled on a formal legal basis. But member states will still remain nations, cultures or whatever makes them distinct.

When you adopt a single currency among countries as we have, without adequate protections against economic crisis, then every economic crisis encountered will grind down the weakest of the participating countries, and will allow the more politically powerful countries to block the weaker countries access to needed money - this goes on until the currency dissolves, or the countries agree to a central federal government that handles fiscal policy co-ordination (the third option is adequate regulations - but there is absolutely no appetite for this, from what I can see, and it is far too easily dismantled in the future, which would cause exactly the same problems as now).

Europe has no answer on how to deal with economic crisis in a sustainable way, that does not involve significant centralization, which moves Europe far closer to becoming a single unified nation.

If I thought Europe would be competent at this, I'd be for it since it would allow for an end to the economic crisis, but Europe are not competent and the single currency (due to lack of all the required centralized safeguards for times of crisis) has been a disaster, and it should probably at this stage be aborted, since there are no signs of real reform and recovery policies coming.

It's a pretty monumentally bad/painful time to end the Euro, but since no recovery policies seem to be on the way, it may well be less worse than sticking with it at this stage.


There is also no real meaningful sovereignty for a country, when it has no control over the currency it uses - it means every economic crisis causes a serious loss of control over fiscal policy, and thus over the countries whole politics (and ensures a huge amount of that control, is handed to the private financiers who own the government bonds/debt).

McDave

KyussBishop wrote: »

Europe has no system in place for dealing with crisis in a sustainable and co-ordinated fashion, and to get that, Europe has to take a massive lurch towards integrating into a single unified nation, by allowing some co-ordination of fiscal policy from within Europe.

Europe is still not equipped to deal with the next economic crisis (nevermind even this one) - there has been no adequate reform, that would stop a crisis just like this from happening all over again, and nobody has been held to account for this crisis either, to deter it from happening again.

Banking and financial regulation has yet to be agreed. As has a mechanism for requiring states to stick to the Maastricht criteria. Neither of these steps requires a massive lurch towards becoming a nation. And if they form an adequate basis for responsible macroeconomic policy and control of finance, the member states and the markets will be happy enough.

As for the next economic crisis, which will surely come sometime, if EZ macroeconomics and debts are in good shape, and if finance is controlled, we'll be in better shape to respond.

As for this current crisis, it's up to electorates and elected leaders to make sure the same mistakes aren't made again. There's no guarantee, and for sure there will still be losers out there. But if more EZ countries are in better fiscal shape than before, that' a result.

McDave

KyussBishop wrote: »

A country without control over its own currency, loses a huge amount of control over fiscal policy whenever an economic crisis hits - I don't understand this habit people have, of judging economic issues only from the good times, when it is the bad times that truly defines the state of a countries economic control.

Under Ahern we had *plenty* of fiscal control. Yet we still managed to mess it up completely.

McDave

KyussBishop wrote: »

When you adopt a single currency among countries as we have, without adequate protections against economic crisis, then every economic crisis encountered will grind down the weakest of the participating countries, and will allow the more politically powerful countries to block the weaker countries access to needed money - this goes on until the currency dissolves, or the countries agree to a central federal government that handles fiscal policy co-ordination (the third option is adequate regulations - but there is absolutely no appetite for this, from what I can see, and it is far too easily dismantled in the future, which would cause exactly the same problems as now).

I'm sorry, but this is simply too makey uppy for words.

McDave

KyussBishop wrote: »

If I thought Europe would be competent at this, I'd be for it since it would allow for an end to the economic crisis, but Europe are not competent and the single currency (due to lack of all the required centralized safeguards for times of crisis) has been a disaster, and it should probably at this stage be aborted, since there are no signs of real reform and recovery policies coming.

It's a pretty monumentally bad/painful time to end the Euro, but since no recovery policies seem to be on the way, it may well be less worse than sticking with it at this stage.

There can be no sustainable recovery until participating countries demonstrate their ability to reform their economies and state structures. Once there's an acceptable level of harmonisation, meaningful EZ level solutions can then be overlaid.

As for recovery, that requires investment, and the funding required will not be agreed until structural reforms are achieved.

To my mind, there's a very clear sequence that needs to be adhered to before common solutions are agreed. We're close to the broad rectification of national problems. Once the German electorate has endorsed pro-EZ action, I think we'll move to the EU regulation level, closely followed by a period of investment-led growth. At that point the EZ part of the international crisis will be officially over. IMO.

McDave

KyussBishop wrote: »

There is also no real meaningful sovereignty for a country, when it has no control over the currency it uses - it means every economic crisis causes a serious loss of control over fiscal policy, and thus over the countries whole politics (and ensures a huge amount of that control, is handed to the private financiers who own the government bonds/debt).

So much for the UK's sovereignty when Soros broke the Bank of England.

If, for our part, we returned to the Punt, I doubt our currency independence would count for much unless we had Norwegian amounts of oil or Swiss levels of discipline.

KyussBishop

McDave wrote: »

Banking and financial regulation has yet to be agreed. As has a mechanism for requiring states to stick to the Maastricht criteria. Neither of these steps requires a massive lurch towards becoming a nation. And if they form an adequate basis for responsible macroeconomic policy and control of finance, the member states and the markets will be happy enough.

As for the next economic crisis, which will surely come sometime, if EZ macroeconomics and debts are in good shape, and if finance is controlled, we'll be in better shape to respond.

As for this current crisis, it's up to electorates and elected leaders to make sure the same mistakes aren't made again. There's no guarantee, and for sure there will still be losers out there. But if more EZ countries are in better fiscal shape than before, that' a result.

Only until the next crisis. Upon which countries do not have adequate control over fiscal policy, to avoid being dragged down again.

The last 30 years of economics has been all about dismantling regulations - it would be naive to think this will not happen again, and the history of European economic reform for the last half-decade, has been in implementing the bare-minimum solutions required, to avoid disintegration.

We don't have any reforms, only the vague promise of reforms, which could just as easily not come about - there has been nowhere near enough reform that would allow us to deal with a future economic crisis.

European macroeconomics won't be in good shape in the next crisis, without some centralized fiscal policy control - use of debt, with a currency countries do not control, will not be sustainable.

The same mistakes will be made again, because the electorate only has a small pool of parties to pick from in most countries, and almost all of those parties tailor to the financial/business/wealthy elite in their respective countries, to a large extent - it's not a matter of 'if', only a matter of time, because of the total lack of adequate reform.

McDave wrote: »

Under Ahern we had *plenty* of fiscal control. Yet we still managed to mess it up completely.

This isn't replying to what you quote at all - you are judging fiscal control, based on economic 'good times', when it is economic bad times which determine how much control you really have - we have fúck all control now.

McDave wrote: »

There can be no sustainable recovery until participating countries demonstrate their ability to reform their economies and state structures. Once there's an acceptable level of harmonisation, meaningful EZ level solutions can then be overlaid.

As for recovery, that requires investment, and the funding required will not be agreed until structural reforms are achieved.

To my mind, there's a very clear sequence that needs to be adhered to before common solutions are agreed. We're close to the broad rectification of national problems. Once the German electorate has endorsed pro-EZ action, I think we'll move to the EU regulation level, closely followed by a period of investment-led growth. At that point the EZ part of the international crisis will be officially over. IMO.

Countries are not demonstrating this ability, and that is what is setting us up for the precise same situation in the next economic crisis.

It's been half a decade already, and there's still only the vague 'hope' of proper reform and recovery policies - half a decade, with another decade (and a half, maybe) to go - Europe has shown it will (collectively) only do the bare minimum required to avert disintegration.

This crisis will not be over until a massive stimulus-based recovery restores full employment throughout Europe (there is no 'end' to the crisis, until full-employment is achieved again - unless massive unemployment is not considered a 'crisis').

McDave wrote: »

So much for the UK's sovereignty when Soros broke the Bank of England.

If, for our part, we returned to the Punt, I doubt our currency independence would count for much unless we had Norwegian amounts of oil or Swiss levels of discipline.

Straight away, the UK has far less interest on its national debt, because its central bank is able to guarantee the payment of that debt - something Ireland can not do, because of lack of control over our currency, and thus is hammered on the bond markets for.

That's only one way of many, that monetary sovereignty is essential for sovereign control over fiscal policy in bad times, and thus for political independence itself.

McDave

KyussBishop wrote: »

The last 30 years of economics has been all about dismantling regulations - it would be naive to think this will not happen again, and the history of European economic reform for the last half-decade, has been in implementing the bare-minimum solutions required, to avoid disintegration.

We don't have any reforms, only the vague promise of reforms, which could just as easily not come about - there has been nowhere near enough reform that would allow us to deal with a future economic crisis.

European macroeconomics won't be in good shape in the next crisis, without some centralized fiscal policy control - use of debt, with a currency countries do not control, will not be sustainable.

The same mistakes will be made again, because the electorate only has a small pool of parties to pick from in most countries, and almost all of those parties tailor to the financial/business/wealthy elite in their respective countries, to a large extent - it's not a matter of 'if', only a matter of time, because of the total lack of adequate reform.

The last 30 years of Anglo-Saxon economics maybe. But at EU level, fiscal controls and budgetary responsibility were introduced in principle 20 years ago. Somebody's thinking ahead.

McDave

KyussBishop wrote: »

This isn't replying to what you quote at all - you are judging fiscal control, based on economic 'good times', when it is economic bad times which determine how much control you really have - we have fúck all control now.

Look, if you can't exercise sovereign control during the "good" times, what makes you think things will be done better during downturns?

You're completely and utterly avoiding the fact that Ireland had considerable scope for autonomous policy during the bubble years, but did not exercise it.

McDave

KyussBishop wrote: »

It's been half a decade already, and there's still only the vague 'hope' of proper reform and recovery policies - half a decade, with another decade (and a half, maybe) to go - Europe has shown it will (collectively) only do the bare minimum required to avert disintegration.

This crisis will not be over until a massive stimulus-based recovery restores full employment throughout Europe (there is no 'end' to the crisis, until full-employment is achieved again - unless massive unemployment is not considered a 'crisis').

Many of the problems suffered in EZ countries have built up over decades, particularly Greece's non-society and Italy's massive public debt. And you expect ingrained problems to be solved in a fe years? Be reasonable.

As for recovery, I expect there will be massive EU-wide investment launched within the next 12 to 18 months. This will transpire to be a more constructive and sustainable approach than Anglo-Saxon quantitative easing.

KyussBishop

McDave wrote: »

The last 30 years of Anglo-Saxon economics maybe. But at EU level, fiscal controls and budgetary responsibility were introduced in principle 20 years ago. Somebody's thinking ahead.

That doesn't contradict anything I've said - I pointed out the widescale rolling back of regulations, you are talking about something completely different.

McDave wrote: »

Look, if you can't exercise sovereign control during the "good" times, what makes you think things will be done better during downturns?

You're completely and utterly avoiding the fact that Ireland had considerable scope for autonomous policy during the bubble years, but did not exercise it.

I'm talking about lack of sovereign control, and when it comes to monetary/fiscal sovereignty, that most affects countries during economic bad times, meaning that is the time to judge how much control a country has.

You just seem to be labouring the point a bit here.

McDave wrote: »

Many of the problems suffered in EZ countries have built up over decades, particularly Greece's non-society and Italy's massive public debt. And you expect ingrained problems to be solved in a fe years? Be reasonable.

As for recovery, I expect there will be massive EU-wide investment launched within the next 12 to 18 months. This will transpire to be a more constructive and sustainable approach than Anglo-Saxon quantitative easing.

A few years? Half a decade. If it's not solved after that long, then how long will it be?

I hope we do get that investment launched, but to be honest, I'm very cynical about that and can easily see it being derailed or implemented in a deliberately stunted way (as most recovery policies have been thus far).

Sand

Any level of debt can be presumed to be manageable if you predict enough growth to support it. So far, predicting a growth takeoff has proven easier for the government than that growth actually occurring.

I said several years ago that we should never ever ever want to see an Irish sovereign default. However, the Green Jersey brigade have made that increasingly difficult to avoid by happily converting as much bank and private debt into actual Irish sovereign bonds - even the "promissory note deal" was essentially a con trick that converted a legally dubious promissory note that could arguably be defaulted on with relatively minimal effects into straight-up Irish sovereign debt that realistically cant be defaulted on without all hell breaking loose.

That said, if you presume Ireland hasn't already defaulted ("Ireland Inc" and Irish companies have actually defaulted on debt - just on the little guy) then we will default when fiscal discipline becomes politically impossible. We can keep paying our bills to an essentially indefinite point - shut down schools, hospitals and prisons (and sell the prisoners to medical research programs, everyone wins), send the army round to loot Foxrock of all portable wealth etc. Whatever it takes to service the interest, until the politicians realize they cant sell whatever it takes anymore. That's when Ireland will default - it will be a matter of wont pay, not cant pay.

McDave

KyussBishop wrote: »

That doesn't contradict anything I've said - I pointed out the widescale rolling back of regulations, you are talking about something completely different.

There's a qualitative difference between the deregulation agenda led by the Anglo-Saxon economies, and the more prudent approach laid down in Maastricht. There's a world of a difference between the politicised Fed and the 'constitutionally' independent ECB.

The EU/EZ is developing a way of doing business that differs significantly from the US and the UK.

McDave

KyussBishop wrote: »

I'm talking about lack of sovereign control, and when it comes to monetary/fiscal sovereignty, that most affects countries during economic bad times, meaning that is the time to judge how much control a country has.

To the contrary. You can judge how competent a country's exercise of sovereign control is in the manner in which it manages during the good times, for instance by saving for a rainy day, or avoiding pro-cyclical policies. One of the stated aims of EZ economic policies is to avoid boom-bust cycles.

I'm afraid you're being a little selective in over-emphasising the importance of sovereignty in a down cycle. Probably because Ireland's demonstrable failures during the upswing, when we did have definite policy control don't suit your sovereignty narrative.

McDave

KyussBishop wrote: »

A few years? Half a decade. If it's not solved after that long, then how long will it be?

Half a decade = 5 years. A few = 3 or 4. What's the big deal? There's no major difference.

I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.

dlouth15

McDave wrote: »

I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.

What in your opinion would constitute this corrective action? Fair play to you for putting your cards on the table, but I think you are being a bit optimistic here.

KyussBishop

McDave wrote: »

There's a qualitative difference between the deregulation agenda led by the Anglo-Saxon economies, and the more prudent approach laid down in Maastricht. There's a world of a difference between the politicised Fed and the 'constitutionally' independent ECB.

The EU/EZ is developing a way of doing business that differs significantly from the US and the UK.

Again that's not contradicting anything I've said (much of it doesn't even relate to anything I've said); the European regulatory system obviously wasn't near good enough, and it's far short of the necessary reforms (and looks like it will be for some time still).

That's not even considering deterrence: Hardly anyone has gone to jail, fraud has not been investigated (hell, here in Ireland whistleblowers wanting to expose fraud have been threatened with prison if they do report it), and there is zero appetite for pursuing this.

All the fraudsters who caused the crisis are de-facto above the law, and very little is being done to reign them in, with no sign of change in Europe - when are we going to see a proper investigation and arrests for all of this, throughout Europe? We won't, because it will destabilize the banking system further, and that would require real reforms and recovery policies to fix.

McDave wrote: »

To the contrary. You can judge how competent a country's exercise of sovereign control is in the manner in which it manages during the good times, for instance by saving for a rainy day, or avoiding pro-cyclical policies. One of the stated aims of EZ economic policies is to avoid boom-bust cycles.

I'm afraid you're being a little selective in over-emphasising the importance of sovereignty in a down cycle. Probably because Ireland's demonstrable failures during the upswing, when we did have definite policy control don't suit your sovereignty narrative.

You're just point-scoring now. We're talking about control, not 'competence'.

We have far less control over fiscal policy when the limits of our fiscal policy is dictated by our inability to seek lower-interest debt (and other funding methods), which are not available to us because we don't have sovereign control over our currency.

That fact is 100% unavoidable. If we had our own currency, we would not be paying such high interest rates on debt, because a country with sovereign control over its currency can always guarantee the debt - we can't, because we don't have that control.

What we could have done in the good times, does not affect what we can not do now - we have lost that control now, during the bad times, when it counts the most.


Seriously, you're just labouring the point again to try and pretend like you have a counterargument.

McDave wrote: »

Half a decade = 5 years. A few = 3 or 4. What's the big deal? There's no major difference.

I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.

5 years and counting, and where is this recovery? We believe it's still 'just around the corner', like has constantly been implied the last number of years? I don't think so.

I really hope I am proven wrong about that, but the last 5 years of Europe taking the bare-minimum action necessary to avoid a collapse, and not nearly enough to engage in proper reform/recovery, speak heavily against that.

View

KyussBishop wrote: »

We have far less control over fiscal policy when the limits of our fiscal policy is dictated by our inability to seek lower-interest debt (and other funding methods), which are not available to us because we don't have sovereign control over our currency.

We remain perfectly free to seek lower interest debt. Our ability to obtain it depends on our ability to manage our finances though.

KyussBishop wrote: »

That fact is 100% unavoidable. If we had our own currency, we would not be paying such high interest rates on debt, because a country with sovereign control over its currency can always guarantee the debt - we can't, because we don't have that control.

This claim is at variance with our experience when we had the Punt. We paid higher interest rates then and only dreamed we'd ever pay the low rates we are currently paying.

Also, some EZ member states are paying lower interest rates on their borrowings than the UK for instance. We in turn are paying lower interest than Poland for instance (although higher than the UK). According to your idea both Poland and the UK should be paying lower interest than all the EZ member states, yet that clearly isn't the case.

Hootanany

Where should one put fhere money.