Theoretically, the Punts Reintroduction

later12 · 17-04-2012 3:33pm

Yes, I wouldn't disagree there. I was only questioning the necessity of capital controls in isolation, presuming that if we're at that stage of the discussion, everything else is settled.
So yes an alternative to capital controls is presently impractical in the real world because of, amongst other reasons, intra central bank imbalances and community opposition.
Given that, peripheral Target2 liabilities would be the primary barrier to the GIPS's future within the EU anyway, so if we're leaving the EA, capital controls would no longer be a problem: we'd presumably have left the EU after defaulting on CBI liabilities in the first place.

beeftotheheels wrote: »

...we have to stay in unless and until there's an orderly dissolution, or better yet, until every one else leaves and we're left along with the euro as our currency (assuming no-one else needs a referendum) which avoids us having foreign currency debts.

This, please!

later12 · 17-04-2012 3:36pm

Also I have a question based on the discussion that's just been going on re: backing out of treaties.

Does anyone know if Ireland is a signatory to the Vienna Convention, or what EA states are not signatories to the convention,and whether this is of any relevance at all to the Eurozone? I don't think we were signatories a few years back; this may have changed.

Also, why would leaving the Eurozone require an Irish referendum? Doesn't the Constitution just say the state "may" ratify Maastericht (or all the European treaties for that matter)?

beeftotheheels · 17-04-2012 3:39pm

later12 wrote: »

Also I have a question based on the discussion that's just been going on re: backing out of treaties.

Does anyone know if Ireland is a signatory to the Vienna Convention, or what EA states are not signatories to the convention,and whether this is of any relevance at all to the Eurozone? I don't think we were signatories a few years back; this may have changed.

Also, why would leaving the Eurozone require an Irish referendum? Doesn't the Constitution just say the state "may" ratify Maastericht (or all the European treaties for that matter)?

The Vienna Convention on the Law of Treaties? http://treaties.un.org/Pages/ViewDetailsIII.aspx?&src=TREATY&mtdsg_no=XXIII~1&chapter=23&Temp=mtdsg3&lang=en

Is it relevant? Yes and No. Yes, in so far as it doesn't actually impinge on EU jurisprudence, no, if it does.

Bunreacht says our currency is the euro hence we'd need to change that.

later12 · 17-04-2012 4:05pm

beeftotheheels wrote: »

Is it relevant? Yes and No. Yes, in so far as it doesn't actually impinge on EU jurisprudence, no, if it does.

I see. And since there's nothing in the Treaties about leaving the Eurozone, presumably Vienna becomes the legal reference for a potential exit, or at least for those countries that are signatories?

My understanding is that Vienna would allow an exit that is based on a fundamental change in circumstances relative to when a Treaty was signed. So presumably a country in the Euro might be able to just whistle away (if all other barriers to exit were magically sorted) without having to re-write treaties and so forth?

beeftotheheels · 17-04-2012 4:13pm

later12 wrote: »

I see. And since there's nothing in the Treaties about leaving the Eurozone, presumably Vienna becomes the legal reference for a potential exit, or at least for those countries that are signatories?

My understanding is that Vienna would allow an exit that is based on a fundamental change in circumstances relative to when a Treaty was signed. So presumably a country in the Euro might be able to just whistle away (if all other barriers to exit were magically sorted) without having to re-write treaties and so forth?

Some have put forward that proposition, not sure I'd be 100% comfortable with it myself, and bearing in mind that it would almost certainly have to be tested in Court by a disgruntled investor.

Oh, and bear in mind that the country would be looking to accede from some Treaty provisions and not others. If the want to exit the EU then the door is open to them.

View · 17-04-2012 4:43pm

later12 wrote: »

I see. And since there's nothing in the Treaties about leaving the Eurozone, presumably Vienna becomes the legal reference for a potential exit, or at least for those countries that are signatories?

My understanding is that Vienna would allow an exit that is based on a fundamental change in circumstances relative to when a Treaty was signed. So presumably a country in the Euro might be able to just whistle away (if all other barriers to exit were magically sorted) without having to re-write treaties and so forth?

Vienna as I understand allows a state to abrogate an entire Treaty, not selected provisions of a Treaty (and even then I think that only applies if you haven't agreed an alternative mechanism in the treaty itself such as the EU Secession clauses). In addition, I believe the "fundamental change" phrase you mention really means in extremis not because you changed your mind about it and/or it is proving awkward on a short-term basis.

Even then the other states can challenge your action in an international tribunal with there being a real risk you lose and get branded the diplomatic equivalent of how an "oath breaker" would have been seen in the (more religious) past.

beeftotheheels · 17-04-2012 4:57pm

View wrote: »

Vienna as I understand allows a state to abrogate an entire Treaty, not selected provisions of a Treaty (and even then I think that only applies if you haven't agreed an alternative mechanism in the treaty itself such as the EU Secession clauses). In addition, I believe the "fundamental change" phrase you mention really means in extremis not because you changed your mind about it and/or it is proving awkward on a short-term basis.

Even then the other states can challenge your action in an international tribunal with there being a real risk you lose and get branded the diplomatic equivalent of how an "oath breaker" would have been seen in the (more religious) past.

Nope

Art 44(3)
If the ground relates solely to particular clauses, it may be invoked only with respect to those clauses where:
(a) the said clauses are separable from the remainder of the treaty with regard to their application;
(b) it appears from the treaty or is otherwise established that acceptance of those clauses was not an essential basis of the consent of the other party or parties to be bound by the treaty as a whole; and
(c) continued performance of the remainder of the treaty would not be unjust

So in theory you could challenge euro membership alone, using the UK etc as examples suggesting euro clauses are not inherent to EU Membership but, under what specific provision are you going to go?

Not Art 56 since clearly the reason no exit mechanism in the euro is that an exit was never contemplated.

Not 61 (impossibility of performance) or 62 (change of circumstances) since in both cases Greece doesn't have clean hands due to the lies on accession to the eurozone being the root of the problem.

Now there's a thought. Ourselves and Spain probably do have clean hands to invoke these given we complied with the SGP until the crisis hit. Greece, Italy and Portugal could not.

And we all know that the Commission is strongly of the view that the Treaties are not International Law.

Oh, and it wouldn't be arbitration - I would think that given the CJEU is of the view that it has exclusive jurisdiction to hear international law matters between Member States relating to EU competencies it would insist on hearing the case, and I can't see it being sympathetic to a Vienna Convention challenge, especially in relation to parts of the treaties only.

paddy0090 · 17-04-2012 10:17pm

All the talk of dangerous or lunatic ideas is a bit much. The break up, partial or total, of the Euro is a distinct possibility and increases everyday with the ongoing saga. The common analogy about the can being kicked down the road is often used but more recently talk of a cliff is commonly added. IMO if the Euro can see out the year the saga will end and it'll be fine until the next crisis.

There comes a tipping point where the benefit of something(the euro) is outstripped by the cost of maintenance. If the Germans have evaluated this so should we. It's perfectly realistic to anticipate that it might happen and that it can be done however difficult it might be. I seen the Austro hungarian example used somewhere, sorry can't remember where, each new state stamped the old currency until it could print new ones. This helps keep the cost down. And yes I know the context.

I was at an allsop viewing recently and heard 3 people talking and saying thats why they were buying now even though prices are falling. Nothing gave me the impression that they were particularly stupid or left/right wing radicals.

As far as being able to import goes, people will accept the punt because there'll always be someone willing to take the business someone else has dropped. That's capitalism. Though I agree it would lead to massive inflation.

Initally we would need IMF support, and it wouldn't do anything for the budget deficit. The idea being that we could get back to balance books faster through above average growth in exports.

I don't think the transfer pricing thing would bother the MNCs too much they'd just move the patents elsewhere(Netherlands, Luxembourg) and that's the problem for them solved. Btw you can have a Euro account anywhere in the world even if it isn't the local fiat.

As for foreign creditors... well look if I'm skint I'm skint. If all I have to pay you with is leaves then all I can pay you with is leaves. They huffed and puffed over Greece and then got shafted by the Troika. Who also huffed and puffed and then did the sensisble thing.

The exit isn't as impossible as people make out. Of the incompatible triad set out for the Currency no bankrupts no bailouts no exit it's the only one remaining. Pretending that the law is in this case and all others unbendable or breakable is just the stuff of fantasy. As Brendan Keenan of the Indo pointed "Q:How do you opt out of the Euro? A: You can't"

I'm not for a minute suggesting we could /should go it alone. I think if we were to go we should wait for Spain to jump first(them Cajas haven't gone away you know). In much the same way we waited for Greece to get a restructuring before we started carping about the bank bailout. If growth doesn't materliaze soon they'll likely start to sabotage the economy.

Scofflaw · 18-04-2012 3:40am

paddy0090 wrote:

Initally we would need IMF support, and it wouldn't do anything for the budget deficit. The idea being that we could get back to balance books faster through above average growth in exports.

Unfortunately, we will not get further IMF support. I've pointed this out before in the context of the ESM - we're twice over what the IMF will usually lend as it stands, so we're deep into their pockets already. Even were we not quite so deeply in their pockets already, we wouldn't get IMF support without European support anyway.

I'm afraid any plan involving IMF support over what we already have - particularly without European support - needs a rethink on that point.

cordially,
Scofflaw

deise go deo · 18-04-2012 6:34am

FreudianSlippers wrote: »

Where would we get the money to print the notes and mint the coins?

Raid a few Manopoly boxes?

paddy0090 · 18-04-2012 2:49pm

If the IMF are already helping over and above what they usually would then.......It should also be noted that the Europeans, Germany in particular, are too! We'll see what happens when Greece needs another bailout. Nothing quite focuses the mind like the prosepect of being hung in the morning.

This is all theoretical. I refer you to the title of my post above. And the title of the thread.

The Economist noted last year that some business people and companies were eyeing up the opportunities that the break up of the Euro would create. Others were creating contingency plans to mitigate the effects on there business. And it's been noted that many businesses in Britain are hoarding cash. While I accept there are a variety of reasons for this, some of them are waiting for the break up of the Euro. There a competion with a cash price for anyone who can come up with a way to exit the euro, and pending further work it's been claimed.

Going back to the Allsop auctions, if you look at the prices achieved against the yields there's no value in some of the sales compared to the open market. Not exactly panic buying but a shift away from cash, which is feeding back into the market. A recent viewing of a sh*ithole house of bedsits was black. (No I'm not a property booster)

Interesting piece from a chilean economist Andreas Velasco about the crisis here. He dismisses pegging your currency with a couple of examples. Basically he points out that if Politicians are allowed to borrow cheaply they will until someone or some event stops them.

I think Governments intervening in Financial markets to protect financiers is in most cases bad. Especially when it's really about underpinning their own casino politicing.

As far as what a new punt would look like, IMO probably like the old one;we'd be 50% poorer; a more unequal society(as we're becoming now); massive trade surplus; massive inflation; coffins undodged; growth rates on a par with developing economies(one of the benifits of being poor). There's more but I'll leave it at that.

beeftotheheels · 23-04-2012 8:51am

Now here's an interesting piece if true.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_21/04/2012_438736

The European Investment Bank making provision for non-euro currency by countries in a bailout program.

Is the EIB the first to say the unthinkable out loud? Doesn't that then make it thinkable?

Scofflaw · 23-04-2012 9:39am

beeftotheheels wrote: »

Now here's an interesting piece if true.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_21/04/2012_438736

The European Investment Bank making provision for non-euro currency by countries in a bailout program.

Is the EIB the first to say the unthinkable out loud? Doesn't that then make it thinkable?

Given the last couple of years, it's hardly unthinkable. Also, it's disturbingly refreshing to see basic prudence being exercised by a bank, and a plan B put in place by an EU institution.

cordially,
Scofflaw

beeftotheheels · 23-04-2012 9:50am

Scofflaw wrote: »

Given the last couple of years, it's hardly unthinkable. Also, it's disturbingly refreshing to see basic prudence being exercised by a bank, and a plan B put in place by an EU institution.

cordially,
Scofflaw

But this isn't striking me as a plan B.

Lets face it, the size of the EIB loans involved are peanuts compared with the official financing and I suspect that there can be limited hope of EIB repayment in the event that Greece exits the euro, so you're including language purporting to manage a risk that is probably not manageable.

So why then?

Focusing Greek minds in the run up to the election?

Setting a standard that can then be rolled out to deal with other countries where the forex risk might be more manageable?

Scofflaw · 23-04-2012 9:59am

beeftotheheels wrote: »

But this isn't striking me as a plan B.

Lets face it, the size of the EIB loans involved are peanuts compared with the official financing and I suspect that there can be limited hope of EIB repayment in the event that Greece exits the euro, so you're including language purporting to manage a risk that is probably not manageable.[]

So why then?

Focusing Greek minds in the run up to the election?

Setting a standard that can then be rolled out to deal with other countries where the forex risk might be more manageable?

I think a lot there would depend on whether Greek exit from the euro was managed or the chaotic side-effect of default. In the former case, the risks are probably manageable, and in the latter case...why not cover the possibility given that you're already covering the first case?

cordially,
Scofflaw

beeftotheheels · 23-04-2012 10:12am

Scofflaw wrote: »

I think a lot there would depend on whether Greek exit from the euro was managed or the chaotic side-effect of default. In the former case, the risks are probably manageable, and in the latter case...why not cover the possibility given that you're already covering the first case?

cordially,
Scofflaw

Because, this being finance, acknowledging something can make it so. If there's a potentially unmanageable risk you don't try to manage it through a contract if doing so actually increases that risk. It is one thing for leaders of State to play politics, but this is a technocratic institution.

The only way I see any orderly exit is by the euro being dismantled. Otherwise the sink costs are way too high. If that's the case don't highlight the program countries, roll the language out across the board.

By an Institution officially acknowledging the risk, I really can't see that they're gaining anything in terms of comfort from the contract.

So it must be something else.

Scofflaw · 23-04-2012 10:46am

beeftotheheels wrote: »

Because, this being finance, acknowledging something can make it so. If there's a potentially unmanageable risk you don't try to manage it through a contract if doing so actually increases that risk. It is one thing for leaders of State to play politics, but this is a technocratic institution.

The only way I see any orderly exit is by the euro being dismantled. Otherwise the sink costs are way too high. If that's the case don't highlight the program countries, roll the language out across the board.

By an Institution officially acknowledging the risk, I really can't see that they're gaining anything in terms of comfort from the contract.

So it must be something else.

I bow to the combination of expertise and logic!

humbly,
Scofflaw

Farmer Pudsey · 23-04-2012 10:58am

It is more that just Greece that will exit the euro. Spain and Italy will not accept the austerity that we have. The continual planned austerity by the ECB is not working. The Germans have deleveraged all the loans from their banks into the ECB who have loaned the money to Italian, Spanish and Irish Banks who have bought their country bonds instead of using money to restart their economies.
I had hoped it would not happen however over the last 3 months I have thaught that the breakup of the euro more likly as the Germans have carried out economic war with the PIIGS. Germany must relise that these countries are not like Germany and have no Industrial economy.
A couple of weeks ago the IDA issued a statement more or less stating that they must try to get more blue collor work into Ireland as the penny dropped that we cannot depend on IT and Pharmasuctal to solve all our problems
We also need a vibrant tourism industry which we cannot restart with the euro unless we manage to drop wages in tourism by 25-40% which is unsustainable
The government is unwilling to tackle the Welfare issue and the cost of public services and medical inflation so I am afraid it is bye bye euro unless the Germans open up the check book

positron · 23-04-2012 5:30pm

IMHO, the only way out of this for PIIGS and thus for rest of Europe (if they want to stay together, that is) is inflation. Inflation means everyone will sharing the burden of the deeds of a few, but that's how things work globally, isn't it?

Joe 90 · 23-04-2012 5:36pm

positron wrote: »

IMHO, the only way out of this for PIIGS and thus for rest of Europe (if they want to stay together, that is) is inflation. Inflation means everyone will sharing the burden of the deeds of a few, but that's how things work globally, isn't it?

Yes, it looks like the only way out for the PIIGS is inflation but I don't thenk the Germans are too fond of inflation, hence the end of the Euro as it is must be pretty inevitable.

Tigerandahalf · 23-04-2012 5:55pm

Farmer Pudsey wrote: »

It is more that just Greece that will exit the euro. Spain and Italy will not accept the austerity that we have. The continual planned austerity by the ECB is not working. The Germans have deleveraged all the loans from their banks into the ECB who have loaned the money to Italian, Spanish and Irish Banks who have bought their country bonds instead of using money to restart their economies.
I had hoped it would not happen however over the last 3 months I have thaught that the breakup of the euro more likly as the Germans have carried out economic war with the PIIGS. Germany must relise that these countries are not like Germany and have no Industrial economy.
A couple of weeks ago the IDA issued a statement more or less stating that they must try to get more blue collor work into Ireland as the penny dropped that we cannot depend on IT and Pharmasuctal to solve all our problems
We also need a vibrant tourism industry which we cannot restart with the euro unless we manage to drop wages in tourism by 25-40% which is unsustainable
The government is unwilling to tackle the Welfare issue and the cost of public services and medical inflation so I am afraid it is bye bye euro unless the Germans open up the check book

I agree with you there. Ireland is not in as bad a position as we were a few years back. We are not far from balancing our deficit. A couple of tough budgets could do a lot of the work. At that stage Ireland would have a lot more power if it chose to default on sovereign debt. It could even do this and remain within the euro as most countries would see that Ireland got their spending under control and was preparing itself for growth.
It's Germany that is not facing upto reality. If the euro goes the Deutschemark would gain in value and put pressure on their exports. Their economy will be in trouble. They won't want to do this and ultimately Germany will have to agree to debt write off or to print money. They don't want the latter as it would drive inflation.

beeftotheheels · 27-04-2012 12:27pm

beeftotheheels wrote: »

Because, this being finance, acknowledging something can make it so. If there's a potentially unmanageable risk you don't try to manage it through a contract if doing so actually increases that risk. It is one thing for leaders of State to play politics, but this is a technocratic institution.

The only way I see any orderly exit is by the euro being dismantled. Otherwise the sink costs are way too high. If that's the case don't highlight the program countries, roll the language out across the board.

By an Institution officially acknowledging the risk, I really can't see that they're gaining anything in terms of comfort from the contract.

So it must be something else.

Seems that it was a solo run by the EIB which annoyed Olli Rehn who called it “unfortunate and incomprehensible”. The EIB has now agreed to remove all such clauses.

hatrickpatrick · 27-04-2012 6:47pm

beeftotheheels wrote: »

In this scenario we wouldn't have to worry about the ECB or the European Commission, because we'll have left the EU.

Ooops. You missed that bit in painting this dreamy scenario didn't you? So no, the US and UK money won't come flooding in because we no longer have access to our biggest export market (EU incl UK).

Yes of course, because it's not like there are no other countries which are in the EU, but not the eurozo- Oh wait, wait a minute...

beeftotheheels · 27-04-2012 7:12pm

hatrickpatrick wrote: »

Yes of course, because it's not like there are no other countries which are in the EU, but not the eurozo- Oh wait, wait a minute...

None of whom joined and then left the euro.

Read my subsequent posts on the thread explaining this.

Farmer Pudsey · 15-05-2012 11:34pm

What odd now on the reintroduction of the punt before the end of the summer

SeanW · 16-05-2012 2:28am

beeftotheheels wrote: »

I'm really beginning to despair of this little country of ours.

No attention to detail, no original thought. Limited informed debate.

Unlimited disinformation campaigns. And a stooopid constitution that requires people to vote on things without requiring that they actually understand what it is they are voting on.

Ah yes, that pesky little thing called democracy. I know it's really considered an inconvenience among EUphiles and career politicians, but I think our constitution provides a good safeguard.

meglome · 16-05-2012 3:10am

SeanW wrote: »

Ah yes, that pesky little thing called democracy. I know it's really considered an inconvenience among EUphiles and career politicians, but I think our constitution provides a good safeguard.

In a referendum everyone's opinion is equal but in life everyone's opinion is not equal.

On the Journal opinion polls are showing a 60-70% no vote, but also show that 70% have not read or will not read the treaty. And to be honest I've seen just about every reason you can think of for voting no most of which have no actual relationship to the treaty. It's basically Lisbon and Nice all over again. I don't know how anyone thinks the current situation is something we should be happy about.

Nothingbetter2d · 16-05-2012 1:24pm

can't we file for bankruptcy and then start a new country from scratch lol

SeanW · 18-05-2012 1:51pm

meglome wrote: »

In a referendum everyone's opinion is equal but in life everyone's opinion is not equal.

On the Journal opinion polls are showing a 60-70% no vote, but also show that 70% have not read or will not read the treaty. And to be honest I've seen just about every reason you can think of for voting no most of which have no actual relationship to the treaty. It's basically Lisbon and Nice all over again. I don't know how anyone thinks the current situation is something we should be happy about.

I imagine most people (at least those who intend to vote) have a fair idea what the treaty is about,

In any case most people have an opinion about the European Union, more specifically how much power the Brussels government should have over our businesses, our industries and our lives.

An opinion that says "We don't want more Europe" obviously doesn't gel well with career politicians and Europhiles. How dare those pesky plebs with their democratic rights get in the way of our grand ambition for a pan-European superpower!!

FreudianSlippers · 19-05-2012 8:20am

SeanW wrote: »

I imagine most people (at least those who intend to vote) have a fair idea what the treaty is about,

In any case most people have an opinion about the European Union, more specifically how much power the Brussels government should have over our businesses, our industries and our lives.

An opinion that says "We don't want more Europe" obviously doesn't gel well with career politicians and Europhiles. How dare those pesky plebs with their democratic rights get in the way of our grand ambition for a pan-European superpower!!

I fail to see how the Fiscal Compact Treaty really means more Europe in our daily lives. I also heard on the radio the other day a discussion about the treaty and young people texting and phoning in had little to no idea about what the treaty was about. In fact, one young girl; when presented with the treaty wording and purpose said "yeah I like that bit... keep that but change the other stuff. I'm still voting no" - completely failing to realise that was the extent of the treaty and there was no "other stuff"

Theoretically, the Punts Reintroduction

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