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Deficit of 13.1% with banking debt vs. 9.4% without??? Referendum consequences?

  • 23-04-2012 3:23pm
    #1
    eitlean
    Closed Accounts Posts: 44 ✭


    Correct me if I'm wrong but:

    We have a current deficit of 13.1%, which would otherwise be 9.4% were it not for the banking re-capitalisation which the E.U. deemed should be included on current balance sheets.

    Therefore, am I right in thinking that the referendum in May could directly affect my standard of living because the government would have to keep debt to GDP within a very tight percentage which would be made all the worse if any possible private banking capitalisation were included in future?

    I think I've made up my mind to how I'll be voting. It'll be a NO. If my taxes face increases and services being cut because they don't factor in protection for the citizen against private banking debt then I think it's a very bad deal for us.


Comments

  • #2
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    You're voting No to a treaty about budget limits on the basis that the government's bank recapitalisation spending had to be statistically included in the deficit?

    Why?

    puzzled,
    Scofflaw


  • #3
    Nonoperational
    Registered Users Posts: 7,401 ✭✭✭Nonoperational


    That's some bizarre reasoning. Wow. Sometimes I question the value of referendums at all with some of the stuff people come out with.


  • #4
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    Scofflaw wrote: »
    You're voting No to a treaty about budget limits on the basis that the government's bank recapitalisation spending had to be statistically included in the deficit?

    Why?

    puzzled,
    Scofflaw

    Well, if we have to recapitalise a failed private entity and it's included in the deficit, which we'll have to make sure is within (what is it?) 0.3% of GDP, does that not mean that current spending would have to be modified to suit the deficit? Meaning higher taxes or more service cuts?

    gpf101, at least I'm trying to make heads and tails of this referendum. We're not all naturally gifted like you. ;)


  • #5
    beeftotheheels
    Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    eitlean wrote: »
    Well, if we have to recapitalise a failed private entity and it's included in the deficit, which we'll have to make sure is within (what is it?) 0.3% of GDP, does that not mean that current spending would have to be modified to suit the deficit? Meaning higher taxes or more service cuts?

    gpf101, at least I'm trying to make heads and tails of this referendum. We're not all naturally gifted like you. ;)

    As things stand at the moment yes, those numbers get included in some quantifications of the deficit, but we also report a deficit which doesn't include them.

    And yes, through cuts or taxes we need to balance the books.

    But here's the bit people tend not to think about. In the boom years the banks, and developers, and house purchasers inflated our tax take by paying too much tax on their inflated boom time profits. So the largest part of our deficit is due to those taxes disappearing when the bubble imploded, and we had nothing to replace them with.

    We need to adjust our taxing and spending. It was unsustainable, fueled by the bubble.

    The bank debt sucks. Of course it does. But a large part of it our Government took on off their own bat, by guaranteeing Anglo. A couple of billion is questionable, the recent payments on IBRC senior unsecured, but I think we may be able to get some of that back.

    But no matter how angry we get about how mismanaged our country was. It was our politicians who should bear the largest part of the blame. Not the EU.


  • #6
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    beeftotheheels wrote: »
    As things stand at the moment yes, those numbers get included in some quantifications of the deficit, but we also report a deficit which doesn't include them.

    And yes, through cuts or taxes we need to balance the books.

    But here's the bit people tend not to think about. In the boom years the banks, and developers, and house purchasers inflated our tax take by paying too much tax on their inflated boom time profits. So the largest part of our deficit is due to those taxes disappearing when the bubble imploded, and we had nothing to replace them with.

    We need to adjust our taxing and spending. It was unsustainable, fueled by the bubble.

    The bank debt sucks. Of course it does. But a large part of it our Government took on off their own bat, by guaranteeing Anglo. A couple of billion is questionable, the recent payments on IBRC senior unsecured, but I think we may be able to get some of that back.

    But no matter how angry we get about how mismanaged our country was. It was our politicians who should bear the largest part of the blame. Not the EU.

    Personally, I blame both. Probably, us more so than the EU. But, and this is where I think the referendum lacks is that there is nothing that says you, the citizen, will not have to bear this sort of irresponsibility again. Although, we(as a country) are for the most part to blame (lack of regulation and foresight) I do not think the average Joe should shoulder the bad debt through crappy services and less pay, no matter how much the Irish politicians (about the furthest removed people from normal society as you can get) screwed it up.

    What guarantees are there for us?


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  • #7
    beeftotheheels
    Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    eitlean wrote: »
    Personally, I blame both. Probably, us more so than the EU. But, and this is where I think the referendum lacks is that there is nothing that says you, the citizen, will not have to bear this sort of irresponsibility again. Although, we(as a country) are for the most part to blame (lack of regulation and foresight) I do not think the average Joe should shoulder the bad debt through crappy services and less pay, no matter how much the Irish politicians (about the furthest removed people from normal society as you can get) screwed it up.

    What guarantees are there for us?

    There are none. The best that we can hope for is that we've learned a serious lesson. To question everything. Especially our political classes. We can no longer take things on trust. We can no longer take things for granted. We should seek to question everything and understand eveything for ourselves.

    But that also means that we should make every vote count. No more childish "no" votes to referenda as a protest to Government policy. No longer assuming that they'll put the question to us again and again (because that is just wrong, our first vote should be our final vote).

    Personally I don't like the treaty. But I don't think it changes anything for Ireland if we vote yes. We have to sort out our finances and it will take us years to do that. Regardless of the rubbish being spouted by some parties that this is "an austerity treaty", the reality is that austerity is all we have to look forward to in the coming years which or whether.

    But I think voting yes has no down side. It is not going to bring us any more austerity. Technically it doesn't bind our Government the way a Lisbon or a Nice does, they should be able to "unratify" the treaty in a couple of years when it is discredited.

    But voting yes might just make it a little bit easier for the Germans to take the steps to actually help resolve this crisis. Changing the Treaties, to change the role of the ECB, to allow eurobonds. Those things could actually help. And if the Germans continue to view us as disobedient selfish children, they'll never allow either to happen.

    Yes, in an ideal world the German Government should be explaining to the German people that this is a little bit more complicated than just spoiled, profligate peoples on the edge of Europe and good, virtuous Germans.

    But they haven't. So I'm going to vote yes in the hope that it helps bring the German people around, and in the belief that there is no downside for me as an Irish person in doing so.


  • #8
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    eitlean wrote: »
    Personally, I blame both. Probably, us more so than the EU. But, and this is where I think the referendum lacks is that there is nothing that says you, the citizen, will not have to bear this sort of irresponsibility again. Although, we(as a country) are for the most part to blame (lack of regulation and foresight) I do not think the average Joe should shoulder the bad debt through crappy services and less pay, no matter how much the Irish politicians (about the furthest removed people from normal society as you can get) screwed it up.

    What guarantees are there for us?

    As beeftotheheels said, there are no guarantees for us. The only way we can "guarantee" not winding up in a similar situation is not to repeat the electoral mistakes of 1997-2007. And by that I don't mean "not electing Fianna Fáil", I mean not rating our political parties in an election based on how much of a giveaway bonanza they're promising us, not listening to easy spiel about how letting the banks regulate themselves will give us endless prosperity, not believing that taxes can be perpetually paid out of borrowed money (people including the stamp duty in the mortgage were borrowing to pay their taxes), and not believing that our political class have somehow managed to crack the "no free lunch" problem, or that they're necessarily all that clued in to what they're actually doing, but recognising that they're as likely to be swept up in the euphoria of a bubble as anyone else.
    eitlean wrote:
    Well, if we have to recapitalise a failed private entity and it's included in the deficit, which we'll have to make sure is within (what is it?) 0.3% of GDP, does that not mean that current spending would have to be modified to suit the deficit? Meaning higher taxes or more service cuts?

    OK, I can see what you're asking more clearly there, but I still can't see what the Treaty has to do with it. Any time the government decides to bail out banks, one of a couple of things has to happen - the government has to cut services to do so, raise taxes to do so, or borrow to do so. In the last case, which is the one the Treaty is supposed to render less attractive (it doesn't make it impossible), all you're actually doing is spreading the cost of the exercise over a few years, causing a smaller but longer-term cut in services or rise in taxes, so I'm not sure why this is a major stumbling block.

    And that's aside from the fact that we're already signed up to the Stability & Growth Pact, which contains largely the same limits anyway.

    cordially,
    Scofflaw


  • #9
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    Scofflaw wrote: »
    As beeftotheheels said, there are no guarantees for us. The only way we can "guarantee" not winding up in a similar situation is not to repeat the electoral mistakes of 1997-2007. And by that I don't mean "not electing Fianna Fáil", I mean not rating our political parties in an election based on how much of a giveaway bonanza they're promising us, not listening to easy spiel about how letting the banks regulate themselves will give us endless prosperity, not believing that taxes can be perpetually paid out of borrowed money (people including the stamp duty in the mortgage were borrowing to pay their taxes), and not believing that our political class have somehow managed to crack the "no free lunch" problem, or that they're necessarily all that clued in to what they're actually doing, but recognising that they're as likely to be swept up in the euphoria of a bubble as anyone else.



    OK, I can see what you're asking more clearly there, but I still can't see what the Treaty has to do with it. Any time the government decides to bail out banks, one of a couple of things has to happen - the government has to cut services to do so, raise taxes to do so, or borrow to do so. In the last case, which is the one the Treaty is supposed to render less attractive (it doesn't make it impossible), all you're actually doing is spreading the cost of the exercise over a few years, causing a smaller but longer-term cut in services or rise in taxes, so I'm not sure why this is a major stumbling block.

    And that's aside from the fact that we're already signed up to the Stability & Growth Pact, which contains largely the same limits anyway.

    cordially,
    Scofflaw

    I know currently we have to meet a debt to GDP ratio of 3% and in the new treaty it will be 0.3%. If that's the case, although it seems small, we'll have to go another 2.7% of the way to closing the gap and any point in time. If we put that in monetary terms. On a take of €30billion that would be €810million. That's nearly twice what they hope to take in with the property tax when it's fully up and running.

    I haven't heard much in the debate on whether it needs to be such a tight percentage?

    The other question I have is this: It seemed under the Stability and Growth Pact that there was room for manouevre should a government feel it necessary to break the 3% rule (I'm not sure if there are times where that may be deemed necessary) but with this new Treaty it seems that it will be much more rigorously enforced (may be a good thing for the markets) but are we potentially screwing ourselves over by not having as much economic freedom?


  • #10
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    eitlean wrote: »
    I know currently we have to meet a debt to GDP ratio of 3% and in the new treaty it will be 0.3%. If that's the case, although it seems small, we'll have to go another 2.7% of the way to closing the gap and any point in time. If we put that in monetary terms. On a take of €30billion that would be €810million. That's nearly twice what they hope to take in with the property tax when it's fully up and running.

    I haven't heard much in the debate on whether it needs to be such a tight percentage?

    That might be - no offence - because there's no 0.3% figure in the Treaty. The deficit figure is 3% as before:
    Fiscal Treaty wrote:
    CONSCIOUS of the need to ensure that their deficits do not exceed 3 % of their gross domestic product at market prices and that government debt does not exceed, or is sufficiently declining towards, 60 % of their gross domestic product at market prices,

    I think you're thinking of the "structural deficit" limit, which is 0.5% or 1.0%, but which is not the straight equivalent of a 0.3% deficit limit.
    eitlean wrote: »
    The other question I have is this: It seemed under the Stability and Growth Pact that there was room for manouevre should a government feel it necessary to break the 3% rule (I'm not sure if there are times where that may be deemed necessary) but with this new Treaty it seems that it will be much more rigorously enforced (may be a good thing for the markets) but are we potentially screwing ourselves over by not having as much economic freedom?

    The room for manouevre is still there. For example, the structural deficit limit of 0.5% looks tight, in that it can only be deviated from in "exceptional circumstances":
    The Contracting Parties may temporarily deviate from their medium-term objective or the adjustment path towards it only in exceptional circumstances as defined in paragraph 3.

    What are these exceptional circumstances, though? And what is a "structural deficit"?
    "Exceptional circumstances" refer to the case of an unusual event outside the control of the Contracting Party concerned which has a major impact on the financial position of the general government or to periods of severe economic downturn as defined in the revised Stability and Growth Pact, provided that the temporary deviation of the Contracting Party concerned does not endanger fiscal sustainability in the medium term.

    And what's a "period of severe economic downturn"? Turns out, as far as I can tell, that it's any period of negative growth or even low positive growth.

    And "structural deficit"?
    In addition, "annual structural balance of the general government" refers to the annual cyclically-adjusted balance net of one-off and temporary measures.

    Nobody really knows what this is, unfortunately, since it's only something that can be defined after the event. Overall, though, it means that if Ireland was spending to provide a stimulus in a downturn, that would be a "temporary measure", while the bank recapitalisations would be "one-off measures".

    Finally, nothing in the Treaty can actually prevent the government from running a larger deficit, nor would it necessarily be penalised if, having done so, it agreed to get back on track as soon as possible.

    So my criticism of the Treaty is probably opposite to yours - the limits, while they look tight, turn out on the contrary to have sufficient wriggle room to make them probably meaningless a lot of the time.

    cordially,
    Scofflaw


  • #11
    stringed theory
    Registered Users Posts: 82 ✭✭stringed theory


    eitlean wrote: »
    Correct me if I'm wrong but:
    If my taxes face increases and services being cut because they don't factor in protection for the citizen against private banking debt then I think it's a very bad deal for us.

    The pernicious idea that we can avoid austerity by voting no.
    How? Do you think we'll then default on the bank debt, still borrow more money somehow, and avoid austerity?

    Not that voting yes will help. much, but as beeftotheheels points out, the purpose of the treaty is politics, German politics. And there is no down side to voting yes. It just means we can't borrow money we wouldn't be able to borrow anyway.
    The reason to vote yes is to avoid alienating Germany and the EU and to gain intangible political and economic benefit out of that ( based on the belief that the EU has been extremely beneficial to Ireland, over forty years, that our partners have been benign, and that there is absolutely no reason to believe this is about to change )

    And that, from my understanding of how the world works, makes total sense to me, and I fear that people, partly influenced by the British media, will vote no precisely to piss off Germany, the EU ( and to avoid austerity, of course... ) opening up the possibility of an unravelling of our relationships with consequences that are hard to predict.


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  • #12
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    stringed theory wrote: »
    The pernicious idea that we can avoid austerity by voting no.
    How? Do you think we'll then default on the bank debt, still borrow more money somehow, and avoid austerity?

    Not that voting yes will help. much, but as beeftotheheels points out, the purpose of the treaty is politics, German politics. And there is no down side to voting yes. It just means we can't borrow money we wouldn't be able to borrow anyway.
    The reason to vote yes is to avoid alienating Germany and the EU and to gain intangible political and economic benefit out of that ( based on the belief that the EU has been extremely beneficial to Ireland, over forty years, that our partners have been benign, and that there is absolutely no reason to believe this is about to change )

    And that, from my understanding of how the world works, makes total sense to me, and I fear that people, partly influenced by the British media, will vote no precisely to piss off Germany, the EU ( and to avoid austerity, of course... ) opening up the possibility of an unravelling of our relationships with consequences that are hard to predict.

    No offense, but that sounds very cushy and middle class. If I were to take a guess: you're employed and probably have private medical care.

    Go talk to somebody in the public health system or somebody that is unemployed and I'm sure their temperament regarding relationships with Germany(if you want to direct attention at that country) are very different.

    As somebody that witnessed, very recently, somebody go through the public health system and the very obvious effects of cuts I can say that I have more hostility for the European right-wing core (which Germany seems to be a euphemism for) that exists at the moment than I do fondness.

    If as you suggest, this Treaty is a way of 'making friends' then those that would like to use it as a protest vote are equally entitled to do so in my opinion.


  • #13
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    stringed theory wrote: »
    And there is no down side to voting yes. It just means we can't borrow money we wouldn't be able to borrow anyway.
    No: it means Ireland can't borrow the sort of money we currently cannot borrow, for as long as we adhere to the terms of the Fiscal Treaty.

    In fact, I would suggest the Treaty goes slightly further than that again, in that it essentially emphasizes the need for Ireland to run surpluses for a long time to come (good, in our case), and to use those surpluses to pay down debt - possibly to a greater degree than is reasonable or necessary in order to ensure fiscal stability (arguably, a bad thing).

    The case for austerity is well argued in an Irish context, but please don't just misleadingly dismiss this as having no downside or being completely black and white. That's probably the fastest way to render the argument of the Yes side unreliable and perhaps unappealing too.


  • #14
    meglome
    Registered Users Posts: 7,980 ✭✭✭meglome


    eitlean wrote: »
    No offense, but that sounds very cushy and middle class. If I were to take a guess: you're employed and probably have private medical care.

    And that has what to do with his point? And you're making some fine assumptions there.
    eitlean wrote: »
    Go talk to somebody in the public health system or somebody that is unemployed and I'm sure their temperament regarding relationships with Germany(if you want to direct attention at that country) are very different.

    Well if I was unemployed or working in the health service I'd be cheering Germany on. We are borrowing one third of all government spending, spending which vast amounts of goes on wages and social welfare. We're getting the money at a nice cheap rate thanks to Germany. Without Germany there would be some very nasty cuts.
    eitlean wrote: »
    As somebody that witnessed, very recently, somebody go through the public health system and the very obvious effects of cuts I can say that I have more hostility for the European right-wing core (which Germany seems to be a euphemism for) that exists at the moment than I do fondness.

    I fail to see how it's Germany's fault that we lived beyond our means.
    eitlean wrote: »
    If as you suggest, this Treaty is a way of 'making friends' then those that would like to use it as a protest vote are equally entitled to do so in my opinion.

    A yes vote makes us some friends, makes Germany feel better about Euro bonds etc and we can back out of it in the future if we want. Don't see any massive reason to vote against it, though like others have said it's not going to make me all warm and fuzzy.


  • #15
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    meglome wrote: »
    And that has what to do with his point? And you're making some fine assumptions there.
    I'd say a pretty good assumption too! ;)

    Well if I was unemployed or working in the health service I'd be cheering Germany on. We are borrowing one third of all government spending, spending which vast amounts of goes on wages and social welfare. We're getting the money at a nice cheap rate thanks to Germany. Without Germany there would be some very nasty cuts.
    Germany, Germany, Germany... Refer to what I was saying above! It's not Germany. It's a European right wing bias. Germany is also benefitting from some nice low inflation due to the raggle taggle nations such as Ireland that are pegged to their Euro. Any more cliché arguements?
    I fail to see how it's Germany's fault that we lived beyond our means.
    It is partly their fault. They were the lender to many Irish banks and were as irresponsible as our own regulators were inflating a property boom and tax take.
    A yes vote makes us some friends, makes Germany feel better about Euro bonds etc and we can back out of it in the future if we want. Don't see any massive reason to vote against it, though like others have said it's not going to make me all warm and fuzzy.
    You say 'make friends' with Germany. I'd rather say 'protest vote' against right wing austerity driven bias that exists in the E.U. at this point in time (including Ireland btw).


  • #16
    stringed theory
    Registered Users Posts: 82 ✭✭stringed theory


    later12 wrote: »
    The case for austerity is well argued in an Irish context, but please don't just misleadingly dismiss this as having no downside or being completely black and white. That's probably the fastest way to render the argument of the Yes side unreliable and perhaps unappealing too.

    I agree that the case for or against the treaty is highly arguable, after Ireland regains the ability to borrow on the markets. I just think the priority should be to get to that stage, and then see if the treaty still exists in the current form.
    Originally Posted by eitlean viewpost.gif
    No offense, but that sounds very cushy and middle class.

    Sorry if I sound cushy. It may be because I've spent a lot of time in underdeveloped countries where the term austerity means something quite different, and I feel extremely lucky to live in such a nice cushy neighbourhood where all we have to do is avoid biting the hand that feeds us, in terms of international trade, single market, confidence of investors etc.
    If you want to make a protest vote because of health service cuts etc. go ahead, but these are questions that have more to do with Irish politics, and distribution of resources and wealth creation within Ireland, or do you really think these problems will be solved in the long term by borrowing more money?


  • #17
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    stringed theory wrote: »
    Sorry if I sound cushy. It may be because I've spent a lot of time in underdeveloped countries where the term austerity means something quite different, and I feel extremely lucky to live in such a nice cushy neighbourhood where all we have to do is avoid biting the hand that feeds us, in terms of international trade, single market, confidence of investors etc.
    So, do you think Ireland is immune from hardship, inequality and downright neglect? I have witnessed it. I, too, have been to a third world country only last year. I can tell you that the access to health services here is very third world.
    If you want to make a protest vote because of health service cuts etc. go ahead, but these are questions that have more to do with Irish politics, and distribution of resources and wealth creation within Ireland, or do you really think these problems will be solved in the long term by borrowing more money?
    We are without doubt in a situation where Ireland's actions are most definitely decided above us. The EU/IMF decided that we must introduce the range of taxes that we have introduced. It has also dictated what reductions in deficit must be made. They could, if they wanted, say in what manner those cuts be introduced - that it be fairly done. When you see advisors being paid €150,000 you have to take a step back and think if the EU/IMF can tell us what tax should be paid surely they can tell the government to get a grip with needless spending to be fair to those that are suffering here during the austerity period...


  • #18
    Cool Mo D
    Registered Users Posts: 1,419 ✭✭✭Cool Mo D


    eitlean wrote: »
    So, do you think Ireland is immune from hardship, inequality and downright neglect? I have witnessed it. I, too, have been to a third world country only last year. I can tell you that the access to health services here is very third world.

    No it isn't. There is no public health system in third world countries. Most people in third world can't even access private health services, even if they could afford it.

    Ireland's healthcare system really isn't that bad, with the big exception of A&E. It isn't that expensive either, compared to what it costs to provide.


  • #19
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    Cool Mo D wrote: »
    No it isn't. There is no public health system in third world countries. Most people in third world can't even access private health services, even if they could afford it.

    Ireland's healthcare system really isn't that bad, with the big exception of A&E. It isn't that expensive either, compared to what it costs to provide.
    Not in my experience.

    I wonder do you have private health care? It really is bad...


  • #20
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    eitlean wrote: »
    So, do you think Ireland is immune from hardship, inequality and downright neglect? I have witnessed it. I, too, have been to a third world country only last year. I can tell you that the access to health services here is very third world.


    We are without doubt in a situation where Ireland's actions are most definitely decided above us. The EU/IMF decided that we must introduce the range of taxes that we have introduced. It has also dictated what reductions in deficit must be made. They could, if they wanted, say in what manner those cuts be introduced - that it be fairly done. When you see advisors being paid €150,000 you have to take a step back and think if the EU/IMF can tell us what tax should be paid surely they can tell the government to get a grip with needless spending to be fair to those that are suffering here during the austerity period...

    Not quite. The troika didn't say there should be a property tax. What happened was that the previous government made a property tax part of their suggested programme, and that programme was then agreed with the troika.

    It could be renegotiated, but only if something else - some other combination of cuts and taxes - replaces the revenue in question.

    That's why the troika always says "this is an Irish programme" - because it is. It's very similar to most arrangements with creditors - as long as you hit the targets, how you propose to hit them is up to you...but...when you've said you'll do x, y, and z to hit the targets, they expect you to stick to x, y, and z unless you have a good reason for changing course and an acceptable substitute.

    So the troika have a hand in policy only insofar as those policies have been agreed as the course of action, and none of the policies are agreed at a level of detail which tells you who in Ireland winds up paying what. The policies as agreed are available in the various 'specific policy' memorandums attached to each troika quarterly report.

    cordially,
    Scofflaw


  • #21
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    Scofflaw wrote: »
    Not quite. The troika didn't say there should be a property tax. What happened was that the previous government made a property tax part of their suggested programme, and that programme was then agreed with the troika.

    It could be renegotiated, but only if something else - some other combination of cuts and taxes - replaces the revenue in question.

    That's why the troika always says "this is an Irish programme" - because it is. It's very similar to most arrangements with creditors - as long as you hit the targets, how you propose to hit them is up to you...but...when you've said you'll do x, y, and z to hit the targets, they expect you to stick to x, y, and z unless you have a good reason for changing course and an acceptable substitute.

    So the troika have a hand in policy only insofar as those policies have been agreed as the course of action, and none of the policies are agreed at a level of detail which tells you who in Ireland winds up paying what. The policies as agreed are available in the various 'specific policy' memorandums attached to each troika quarterly report.

    cordially,
    Scofflaw

    I question that to be honest. I think they not only want you to meet targets but they also want you to become self sufficient and competitive for the future, hence their stance on the medical and legal professions.

    If they wished they could make it much more equitable in regards to pay, taxes and cuts. For instance, why not have a much more streamlined government as part of the deal? Like I said, advisors on 5 times the average wage is ridiculous. And, yes, you can say that's the Irish side that's the problem. But, as I see it that same Irish side agreed this Treaty and I'm going to vote against it because I think it's bad and it's also a good chance to protest vote (as much as I wished it didn't come down to that).


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  • #22
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    eitlean wrote: »
    I question that to be honest. I think they not only want you to meet targets but they also want you to become self sufficient and competitive for the future, hence their stance on the medical and legal professions.

    If they wished they could make it much more equitable in regards to pay, taxes and cuts. For instance, why not have a much more streamlined government as part of the deal? Like I said, advisors on 5 times the average wage is ridiculous. And, yes, you can say that's the Irish side that's the problem.

    Actually, the points about the medical and legal professions are "structural reforms" intended to increase GDP growth, that being the other side of debt sustainability. They're not there simply in order to be equitable - that's an Irish decision.
    eitlean wrote: »
    But, as I see it that same Irish side agreed this Treaty and I'm going to vote against it because I think it's bad and it's also a good chance to protest vote (as much as I wished it didn't come down to that).

    Again, not sure that makes sense. Yes, Irish negotiators represented the Irish position in the Treaty negotiations - as one of 17 countries. It's hardly a government-arranged treaty. I won't comment on the 'protest vote' angle other than to note that most people find objectionable the idea that people might vote Yes because the government said so, and that I don't see any significant difference between that and voting No as a protest vote.

    cordially,
    Scofflaw


  • #23
    eitlean
    Closed Accounts Posts: 44 ✭eitlean


    Scofflaw wrote: »
    Again, not sure that makes sense. Yes, Irish negotiators represented the Irish position in the Treaty negotiations - as one of 17 countries. It's hardly a government-arranged treaty. I won't comment on the 'protest vote' angle other than to note that most people find objectionable the idea that people might vote Yes because the government said so, and that I don't see any significant difference between that and voting No as a protest vote.

    cordially,
    Scofflaw


    Two things the present Irish government most probably did bring to that Treaty:
    1) The avoidance of making it constitutional, so to avoid a referendum.
    2) The threat of not being able to access the ESM.

    Either of those two, in themselves, are reason enough to protest vote against in my opinion.


  • #24
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    eitlean wrote: »
    Two things the present Irish government most probably did bring to that Treaty:
    1) The avoidance of making it constitutional, so to avoid a referendum.
    2) The threat of not being able to access the ESM.

    Either of those two, in themselves, are reason enough to protest vote against in my opinion.

    Not having to put the fiscal limits into the Constitution is known to be something the Irish negotiators were working towards. However, that's actually rather different from the question of whether a referendum was required or not, as you can see from the fact that the fiscal limits themselves aren't going into the Constitution, but we are having a referendum, which rather vitiates your version.

    Personally, I don't think putting the fiscal limits themselves into the Constitution was ever a sensible idea, because it would have wound up enshrining the particular current thinking about such limits in what's supposed to be a very permanent text.

    The latter is highly unlikely - the idea that every other country bound themselves to ratifying the Fiscal Treaty for ESM access just to try to get one over on the Irish electorate is silly in itself, before one gets on to the point that if you were right about point 1 there wouldn't have been any point anyway. Irish ratification of the Fiscal Treaty is not required for it to go ahead, so other countries get absolutely nothing out of such a deal apart from binding themselves to something they could have avoided.

    There was never any question that ESM access would be conditional on something - that was in the very first draft. The Fiscal treaty was negotiated afterwards as that conditionality. No reference to the Fiscal Treaty could have been put in the original version of the ESM treaty, because it had not been negotiated at that stage.

    cordially,
    Scofflaw


  • #25
    beeftotheheels
    Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    Scofflaw wrote: »
    Not having to put the fiscal limits into the Constitution is known to be something the Irish negotiators were working towards.

    I think this point needs a little consideration in context. In any other EZ country putting something into the constitution does not require a referendum. Taking something out of the constitution does not require a referendum.

    In some cases a parliamentary majority will do, in others a "super majority" will do.

    But in all cases, other than Ireland, the politicians can put something in and take it back out as they see fit.

    Therefore, asking Ireland to put something in, which we cannot as easily take back out, would be manifestly unfair to us.

    Any attempt to avoid changing the Bunreacht, was actually an attempt to level the playing field for us. To allow the Oireachtas put something in, and take it back out as they see fit. To not ask us to give the treaty a degree of permanence that no other country had been required to give it.

    I don't think that that is cynical. I think that, acknowledging our domestic legal system, that is fair. It is not asking us to go further than any other signatory State.

    When Merkel talks about "constitutional or other form of permanent law" she doesn't understand how permanent our constitution is. Her starting point is a constitution that the Gov with some allies in parliament can change. A landslide Gov can change on their own. Our starting point is a constitution that no Gov can change. Only the people can change. And depending on the question asked, the people might not change even where they think a change is necessary.

    Imagine that tomorrow the Gov wanted to change the name of the country to Narnia. So they had a referendum where the question asked is "Do you want to change the name of the country to Narnia?". Even if 100% of the country wanted to change the name of the country (I have chosen this as an absurd example by the way), if 55% of those voting preferred Tír na nÓg to Narnia, the name would remain Ireland. This despite the fact that hypothetically, 100% of the electorate did want to change the name of the country, just a majority don't prefer Narnia. If instead they'd asked the question "Do you want to change the name of the country?" the referendum would have passed by 100 to 0. A second referendum offering the option of Tír na nÓg would have changed the name.

    We're not putting the "treaty" into the Bunreacht mind, we're allowing the Gov to ratify it. Which means that they can terminate it as they see fit. We're not walking into a cul-de-sac here. We can walk away in the future if our democratically elected Government believes that that serves Ireland's best interests.

    This is a compromise that I personally am happy with.


  • #26
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    Sure - it would have been a very poor idea to actually have the fiscal limits enshrined in the Constitution. That's not what the Constitution is there for, and, as you say, it's not set up that way.

    However, once a narrative gets hold, like "the government are only doing this to avoid a referendum", there's little chance of changing it. The fact that we're having a referendum is then explained by the government's ineptitude - they tried to avoid one, but were so incompetent they failed.

    It bears the hallmarks of conspiracy theory thinking - the principal agent is, as usual, a government which is curiously both omnipotent, in being able to have such a stipulation added to an international treaty to suit itself, yet incompetent, in that it only finds out afterwards that a referendum will be required anyway...even though advice on what to change would have been available from their AG as they went along, if that was what they were doing.

    An explanation in which they negotiated the change because they (and others) thought it was a bad idea in itself, and left it up to the AG whether a referendum was going to be required after they had negotiated out what they saw as a bad idea, is simply not considered, even though it fits with what was said at the time:
    The Government has insisted for weeks that it has no way of forming a view on a the requirement for a referendum until the attorney general examines the final text of the treaty. On the basis of the current draft, the question is held to be finely balanced.

    Even if the Government opted not to go to the people, Irish and European officials expect a legal challenge in the Supreme Court against any such decision.

    http://www.irishtimes.com/newspaper/world/2012/0127/1224310807555.html

    cordially,
    Scofflaw


  • #27
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    meglome wrote: »
    Well if I was unemployed or working in the health service I'd be cheering Germany on. We are borrowing one third of all government spending, spending which vast amounts of goes on wages and social welfare.
    Now, there are some remotely credible reasons as to why a social welfare recipient ought to vote for the fiscal treaty - the most credible being that it restores Ireland's reputation in Europe - but this??? You seem to have failed to have developed a point altogether.

    This has been the problem with successive European treaties - the failure of the Yes side to elucidate any credible, coherent benefit to voting Yes. Although I cannot say the same for everyone on this board, by pursuing this line, you are making the Yes side seem incredible and incoherent.
    A yes vote makes us some friends, makes Germany feel better about Euro bonds etc
    I'd love to know what "etc" is here, because a "Yes" vote appears to render Eurobonds pretty meaningless and un-necessary.


  • #28
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    later12 wrote: »
    Now, there are some remotely credible reasons as to why a social welfare recipient ought to vote for the fiscal treaty - the most credible being that it restores Ireland's reputation in Europe - but this??? You seem to have failed to have developed a point altogether.

    This has been the problem with successive European treaties - the failure of the Yes side to elucidate any credible, coherent benefit to voting Yes. Although I cannot say the same for everyone on this board, by pursuing this line, you are making the Yes side seem incredible and incoherent.

    I think it's generally accepted that the point of voting Yes is ESM access. That's not something that the No side really want to talk about too much, except to dismiss, because it really is a rather major point, and in a sense the entire referendum debate takes place in that context.

    The Germans want everyone to sign up to this for the same reasons everyone signed up to the original Stability & Growth Pact, of which this is essentially an update (and I haven't forgotten your point about the structural deficit addition) - and that one certainly wasn't intended to solve a crisis.
    later12 wrote: »
    I'd love to know what "etc" is here, because a "Yes" vote appears to render Eurobonds pretty meaningless and un-necessary.

    How so?

    cordially,
    Scofflaw


  • #29
    beeftotheheels
    Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    Scofflaw wrote: »
    However, once a narrative gets hold, like "the government are only doing this to avoid a referendum", there's little chance of changing it. The fact that we're having a referendum is then explained by the government's ineptitude - they tried to avoid one, but were so incompetent they failed.

    It bears the hallmarks of conspiracy theory thinking - the principal agent is, as usual, a government which is curiously both omnipotent, in being able to have such a stipulation added to an international treaty to suit itself, yet incompetent, in that it only finds out afterwards that a referendum will be required anyway...even though advice on what to change would have been available from their AG as they went along, if that was what they were doing.

    Made all the more curious by the fact that so many people who believe in their democratic right to have a say in the referendum, also believe in their democratic right to vote in protest to something other than the actual issue that they are voting on.

    If you can follow that logic to its conclusion...


  • #30
    meglome
    Registered Users Posts: 7,980 ✭✭✭meglome


    later12 wrote: »
    Now, there are some remotely credible reasons as to why a social welfare recipient ought to vote for the fiscal treaty - the most credible being that it restores Ireland's reputation in Europe - but this??? You seem to have failed to have developed a point altogether.

    This has been the problem with successive European treaties - the failure of the Yes side to elucidate any credible, coherent benefit to voting Yes. Although I cannot say the same for everyone on this board, by pursuing this line, you are making the Yes side seem incredible and incoherent.

    I'd love to know what "etc" is here, because a "Yes" vote appears to render Eurobonds pretty meaningless and un-necessary.

    To be fair I was being somewhat facetious in response to the usual 'but they'll eat our babies' line of argument. I used the 'logic' being argued and turned it around.

    Scofflaw covers the rest above.


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  • #31
    BritsOut
    Closed Accounts Posts: 10 ✭BritsOut


    That is simply a statistical analysis however it is true that had we not recapitalized them then our GDP would be 9.4% and yes Europe are the reason we recapitalized them and continued to pour money into them. The next treaty will enforce more European ideas which isn't neccessarily a bad thing but judging by what is in this treaty it is a bad thing. I will be voting no and I encourage you to do the same


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