Nigel Farage MEP

Frank Lee Midere wrote: »

Wrong. Most of the periphery was growing stronger than the interest rates warranted. That decision - for the benefit of the centre - is the main reason why capital flowed into the peripheral countries. These countries could do little, it's like trying to handle flood damage downstream of the Hoover dam if it released all it's water. The large fault was in the ECB. Basically it caused the Great Recession in Europe.

As a matter of fact, there was no "Great Recession" in Europe. The EZ all told went temporarily into a shallow recession. Individual EZ countries went into deeper recession, others remained in growth mode right throught the credit crisis. These aspects are all matters of public record, so it's pointless rhetoric on your part to breathily characterise them as you do.

Regardless of your trite Hoover Dam comparison, there is plenty peripherals could have done to deal with walls of credit. Our own example is instructive. We blindly pursued procyclical policies stimulating inflationary growth and misallocating vast amounts of resources into economic dead ends such as excessive pay, quango jobs, asset bubbles and consumer spending. We didn't regulate our financial institutions. Despite having among the best paid politicians and public servants in the world, we did little to anticipate problems most other countries in the EZ and beyond (don't forget countries outside the EZ also had access to all that cheap US credit) were able to deal with.

Spain could have done much to influence outcomes there, but Zapatero basically claimed he trusted the banks, and neither of the right of centre prime ministers did much to improve competitiveness or challenge restrictive practices. Maybe Spain, Greece and Italy can learn a little from one of the other peripherals, Portugal, which is emerging from its troika programme partly on foot of an improved export performance.

At this stage, it's beyond glib to claim there was nothing we, and other peripherals, could have done. So why would anyone resort to such fatalism? Well, I can think of three primary constituencies in this regard, FFers looking to excuse their disastrous handling of the Irish economy, Eurosceptics, and the harder ideological left.

McDave wrote: »

Like Iceland?

Denmark is pegged to the Euro.

And most countries within the Euro are among the most stable countries globally. Less stable EZ countries are still wealthy by global standards and there's strong evidence some of them are taking steps to improve their conditions. Work in progress.

Iceland is doing ok now...http://www.tradingeconomics.com/iceland/gdp-growth-annual

The euro zone is stagnating at best...http://www.tradingeconomics.com/euro-area/gdp-growth


Iceland's unemployment rate is very low and going down..compare that to many EZ countries.

They may still be wealthy by global standards but I don't know what you mean about strong evidence they are taking steps to improve....Why do they still need such low interest rates if its all good?

Iceland's interest rates are rising and not so low.

Scofflaw wrote: »

The Icelanders themselves consistently say they're not "doing OK", and seem more than a bit dubious of the people who hold them up as some kind of paragon.

cordially,
Scofflaw

Is that why they are putting up the interest rates?

I don't think they are doing really fantastic but they've come through a tough time.

People who seem to think the euro crisis has been fixed and that we're moving on and up seem oblivious to the fact that nothing has been actually fixed and that unemployment especially in the youth is at ridiculous levels in many EZ countries...mostly the ones that did not benefit from the low interest rates 10 years ago when Germany needed low interest rates.

How did Europe fix their crisis?

I know what Iceland did...you can agree or disagree....what did Europe do? Kick a can...gotcha

sin_city wrote: »

Is that why they are putting up the interest rates?

I don't think they are doing really fantastic but they've come through a tough time.

People who seem to think the euro crisis has been fixed and that we're moving on and up seem oblivious to the fact that nothing has been actually fixed and that unemployment especially in the youth is at ridiculous levels in many EZ countries...mostly the ones that did not benefit from the low interest rates 10 years ago when Germany needed low interest rates.

How did Europe fix their crisis?

I know what Iceland did...you can agree or disagree....what did Europe do? Kick a can...gotcha

Iceland is also still kicking a can - still has capital controls, which are unlikely to be lifted this year or next, still has failed banks on the books, still can't run itself as the open economy it was pre-crisis. The high interest rates aren't there to stem inflation resulting from growth, but to support the krona.

See, for example:

http://www.voxeu.org/article/iceland-s-capital-controls

http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=7477

And recognising that Iceland is not the post-crisis nirvana eurosceptics would like to claim it as says nothing really about the eurozone, which, as you say, hasn't really resolved its crisis either.

cordially,
Scofflaw

GCU Flexible Demeanour wrote: »

In fairness. I think what people are looking for is the path that's most likely to take them out of the crisis. Now, that's a judgment call as there's no way of predicting what happens if we leave the euro versus what happens if we stay.

It's a little bit like asking whether we're better off staying on the Titanic with Angela Merkel, or getting into a leaking lifeboat with Ming Flanagan. Either way, we're going to end up in the water. But folk (on both sides) want to believe there's some way of staying dry.

Given the reality that we're all going to get wet, I think the focus changes more to where we're more likely to be able to be part of a coherent group that can take sensible decisions to further its interests.

Isn't that really the core of Farage's appeal? Even as the Scots debate leaving the UK, "British" is a more coherent group concept than "European".

In our context, "Irish" is a reasonably coherent group. But we've little confidence in our capacity to take decisions that further the group interest. That's partly why, IMHO, it would be hard to see a euro-sceptic party making much ground in Ireland. We sort of know the eurozone is giving us one up the back passage, but it's still better than the riding that we'd get if we ended up in the leaky lifeboat.

The euro - combined straitjacket and lifevest, and requires you to stay in a group rather than striking out on your own. But the group has the best chance of kicking the sharks away and reaching dry land eventually.

To put that another way, there's an element of recognition in the Irish public that the easy solutions are mostly wishful thinking, and that while the discipline imposed by euro membership sometimes feels excessively constrictive, it's mostly preventing us doing things it wouldn't be sensible to do anyway.

However, I do think that the Irish public would like some more innovative solutions, and a more left-wing flavour to the solutions and outcomes, something I think will be reflected on May 23rd.

cordially,
Scofflaw

sin_city wrote: »

Ok forget their interest rates...how's their unemployment rate?

Are you saying they did the wrong thing and places like Greece and Spain are now benefiting EZ can kicking?

Again, what has the EZ done? The debt is just going up and up

Eh, ours and theirs follow roughly the same trajectory, as you can see:



Ours is higher in absolute terms, just as it was pre-crisis - 4% to their 2%, and we now have 12% to their 6%.

As to what the EZ has done - well, staved off the possibility of collapse at the expense of not having a dramatic purge of the system. It may be a few years before the banks are able to absorb the losses that would come from debt forgiveness.

It's pleasant (or vexing, depending) to think that a dramatic purge of the system would have seen us much further on the road to recovery by now, and common to believe that's what Iceland did - but it wasn't actually what they did, and the historical experience suggests it wouldn't have worked out well.

cordially,
Scofflaw

McDave wrote: »

You seem quite prepared to ignore that Iceland went through a lot of pain to get to the point where they could start growing off a low base.

But taking your simplistic assertion that Iceland is doing OK now, Irish, Spanish and Italian bond yields hit record lows at the end of last week (http://www.irishtimes.com/business/markets/irish-yields-lower-than-uk-s-for-the-first-time-since-2008-1.1789709), Ireland's falling below the UK's (http://www.irishtimes.com/business/markets/irish-yields-lower-than-uk-s-for-the-first-time-since-2008-1.1789709), and Portugal is about to join Ireland in exiting their bailout. That leaves just Greece and Cyprus in troika territory.

Seems the EZ is "doing OK now". Game over.

Again, Ireland versus Iceland GDP:



Not really seeing the dramatic difference which presumably should follow from Iceland "doing it right" and the EZ/Ireland "doing it wrong".

cordially,
Scofflaw

SeanW wrote: »

Had EITHER Austrain or "purist" Keynesian economists been listened to, this whole mess would never have happened, because both agree on the inevitable consequences of applying interest rates too low. That's what makes this so tragic, that it was so predictable and so easy to avoid.

And therein lies your problem. Adherence to a simplistic one-size-fits-all ideology. And in your case, two. Precisely the kind of superficial sloganeering critics of the Euro level at the single currency.

As for low interest rates in the Eurozone, it's only a recent phenomenon. Throughout the lifetime of the currency crisis, and in particular at the time the Irish economy was going off the rails, EZ interest rates were anything but low. Current low interest rates are in part a response to the strength of the Euro, particularly in relation to other currencies which have debased their values through beggar-their-neighbour quantitative easing.

SeanW wrote: »

No, it's your problem. Both Keynesian and Austrian economics are widly divergent, they disagree fundamentally on numerous key points.

When such ideologically divergent (oil and water type divergent) major economic schools of thought agree that doing something is stupid and can only lead to catastrophe (i.e. having inappropriate, especially low interest rates) then the evidence for that assertion becomes much stronger.

The case against it must likewise be much stronger if you assert that both are wrong simultaneously, but from what I can see such assertions are themselves based on ideology, not any logically solvent points.

So what? Regardless, both are economic ideologies. Western states regularly deploy aspects of either when they see fit. It's not like they're applying a formula within a closed experiment. They act pragmatically. You're applying simplistic academic criteria.

sin_city wrote: »

My links from trading economics show Iceland's unemployment rate a lot lower than the links you have provided.

Do you another graph or a graph of the number of bankers jailed to prevent further crisis in each country?

The graph I used (also from trading economics) has two scales - the left-hand scale is Iceland, the right-hand scale is Ireland. It makes the point that pre-crisis Iceland had half our unemployment rate, and Iceland currently has half our employment rate, and that the two countries have followed almost identical trajectories.

Simply saying "Iceland has half our unemployment rate" is meaningless - their current rate is three times their pre-crisis rate, as is ours of ours.

cordially,
Scofflaw

dlouth15 wrote: »

Remember that when you're dealing with percentages you have to be careful about talking about proportional increases in those percentages. It is a common enough trap to fall in to.

Unemployment increasing by a factor of three by going, for example, from 1% to 3% does not reflect the economic damage that would be the case if unemployment went from 5% to 15%. Both have increased by a factor of three but in the latter case the economic damage is much greater.

Well, if you are going to object to that, then it should be atressed that Iceland's crash was in no way directly comparable to Ireland's.

Iceland did not have a domestic property bubble and hence, unsurprisingly, does not have large numbers of unemployed former construction workers like Ireland.

The main point - and this is where the Iceland example was mentioned several posts back - is that using a different currency does not enable you to miracolously avoid the negative results of mis-managing your economy.

Were there a miracle currency that enabled us to avoid economic mis-management, presumably the world would have switched to it long ago!