Off Topic Thread 3.0

Synode wrote: »

Can you blame them for delaying declaring backing of the bonds? They needed to see that the 'peripheral' countries were making the reforms needed to ensure the loans were repayed. If you were a German taxpayer, how confident would you have been in Ireland if we turned around and said we're going to keep spending like we have been? There was no way the bigger economies could get that past their electorate, who would have been underwriting the risk.

This is wrong. They did not delay guarranteeing the bonds in order to wait for the PIGS to ensure the loans were repaid. They were entirely separate issues. They could have taken the correct courses of action on day one, instead they waited 3-4 years until Trichet was replaced by Draghi and we ended up assuming billions of euro worth of debt that we never needed to. Now the cost of QE far outweighs what the original cost would have been. It's been a lesson for Europe that has been paid for by the Irish (and far more so the Greeks).

There was no public spending crisis in Europe (outside of Greece, but that was the case long before and is really a product of their history, some would also say Italy is a candidate). The problem was not how much we were spending in Ireland/Spain/Portugal. The problem was that the European banking sector. Some of whom were even worse than Anglo but survive to this day because they were lucky enough not to be in Ireland when the interbank markets froze over.

But the government have obviously done a stellar job of convincing everyone that Ireland was put on the hook for paying >40% cost of the entire European banking crisis because of our own behaviour, rather than the truth.

Synode wrote: »

Maintaining and increasing spending might work in big, strong economies like Germany, France, and the Netherlands. But it's unworkable in a country like Ireland with our parish pump politics and apparent inability to plan for the future effectively.

This isn't actually true though, you're not basing this on anything concrete, deficit spending has worked in all sorts of economies. We know from history that it works from tiny economies like Denmark in the 80s up to economies the size of the US or Germany.

Re: Draghi and OMT. At the time, there was a massive amount of discussion about the consolidation of debt in various ways. There was a deep unease in the German public about assuming responsibility for debts that were perceived as being brought about by economic mismanagement in periphery countries. This was always a bit untrue.

The best reading I have done on the subject is that inequities that were built into the euro project meant that rates of return were much higher in countries such as Ireland, Portugal, Greece, Italy etc than in the 'core' European countries. This resulted in massive amounts of capital flowing into these countries from the large banks to avail of the higher returns. When the subprime mortgage crisis hit the states and banks started folding, this caused a disruptive shock to the entire global financial system. Lending dried up, liquidity and confidence collapsed.

The riskier returns in these peripheral markets went bust. In most cases, these peripheral countries were experiencing housing and property bubbles - I'm only really familiar with Ireland, but I believe the same was true of Portugal at the very least. Property is arguable the most capital intensive investment, so this completely collapsed the economies of these countries, pretty much overnight. Emergency lending had to be extended, which resulted in the PIGs being bent over a barrel.

Truthfully, the poor regulation and lack of foresight in these countries is partially to blame. Ireland was not called the 'Wild West' of banking for no reason. However, this risk was one of the reasons that there were higher rates of return. When the house of cards collapsed, the debt was forced on to national governments instead of across the EU. This was unjust. Private banks lent to risky markets and the governments in those markets were forced to socialise the risk to save the massive banks in the countries which dominated EU institutions. I think it is infantile to completely excuse Ireland's irresponsible governance, but the EU (read German) position was unfair.

A lot of stuff that was politically unfeasible had to happen. A banking/currency union instead of just a currency union would have stopped this, but there was no political appetite for this around the turn of the century and the technocrats in the EU had their hearts set on the euro. A consolidation of the debt markets risk would have allowed the governments of the collapsed PIGS to finance themselves, but the german electorate would have gone ****ing mental. Ditto for a equitable debt solution once the idea that it was irresponsible spending was to blame. The real irresponsibility was allowing our tax base to become SO dependent on foreign capital inflows to our property market. But that is too complex an idea to communicate to a public audience, so we ended up with the nonsense about a housing budget and a countries budget being the same. Which lead to a completely nonsensical % deficit spending rule. Which flies in the face of a century of economic learning.


Uh, this went on a bit longer than I meant.

https://twitter.com/dog_rates

This Twitter account makes me happy.

Stheno wrote: »

Literally

I'm not working today and am sitting here waiting for a phone call which might be good news.

Time is dragging by

I'm sending good vibes your way.

(5th November 2016, 5th November 2016, 5th November 2016...)

awec wrote: »

Subtle hints tend to work better. I'm just trying to encourage more diverse topics.

Transgender rights?

awec wrote: »

Like actually knocking on your door and singing to you while you stand on your doorstep like a tit? :pac:

Yep...watched them sneakily out the side window. Dopes of neighbours actually giving them money as well!!