Euro Area

[Sarmatian]

I skipped through most of the thread but I want to ask this - if the EU crashes down, what would it mean in terms of economic growth and PPP (Purchasing Power Parity) in the next five years?

Chernobyl comes to mind...

[Louis VI the Fat]

I skipped through most of the thread but I want to ask this - if the EU crashes down, what would it mean in terms of economic growth and PPP (Purchasing Power Parity) in the next five years?

It will be almost as expensive as it will be if an army of naked ginger Irish confusingly led by a blue-painted Mel Gibson were to overthrow Merkel and install Bono as kaiser Wilhelm III.



And only slightly more likely...

[Fragony]

I don't think the Netherlands is too successful to fail. Leaving EU is not a sound option at this point, really, leaving euro is looking for problems rather than solving them (Dutch bonds are largely unaffected by Ireland as of now, but a new Dutch currency will need some time to find its balance). That might change once, say, Germany leaves, as we can peg our currency to a Dmark or possibly do a monetary union with Germans (if Germany leaves it might be part of broader exit party). However that is highly speculative if.

But possible in theory, we have the means to stand on our own, the fluxuations of the euro are only of concern for the stock-markets not to the real economy. The EU is a political project to whipe out the nation-state, the EEG was sound cooperation. Other countries simply can't compete if we decide to be competitivily inward and just drop the EU. For security we have the Nato, we have nothing to lose. We lose a lot more if we stay, eurabia

[Hosakawa Tito]

Interesting article: Where are the Business Europhiles Now?

Seems Henkel miscalculated.The fiscal incompetence and outright lying,cheating, tax evasion, etc... has the more fiscal responsible member countries thinking of splitting the euro zone. Can't say I blame them.

[Furunculus]

nope, indeed not.

it is only to be hoped that if germany does exit the rest can be persuaded to stay in, because an outright collapse would be disastrous for Britain.

Germany leaving would give the rest a more competitive currency valuation and a more appropriate interest rate, and germany is the only country that can leave without having to enforce money controls as capital would flee any other country trying to exit the Euro, and that would knacker the single market.

[gaelic cowboy]

The ECB and EU are likely to start musing aloud about a single Eurobond the idea being it prevents Italy, Spain and the rest of the "South" from borrowing too much.
While everyone has been watching Spanish and Portuguese sovereign debt auctions lately everyone has missed that Germany sovereign debt auctions even before the bailouts were sometimes undersubscribed or even failed.

Basically the return is too low for investors and Merkel's comments about scalping bondholders have probably ruined the image of Germany as a safe haven for cash, add in the potential for more bailouts and we start to see the logic. Interestingly having spending nations attached to saving ones would increase the average rate for the bond itself leading more people helping Germany to fund itself.

I cannot see this Eurobond idea actually flying in Germany politically though, in practice it mean's that even responsible Germany would be subject to someone else and not just Ireland and Greece. At the minute Germany is doing fine but a collapse in export trade would mean germany could not run a deficit to bridge a short term funding gap a Eurobond stops that ability. In case your wondering Ireland's problems are not sovereign but banking related so Eurobonds don't really solve the problem which is a lack of confidence that our banks have adequate capital to cover losses.

A two tier or even three tier euro is not really likely in my view the elite has invested too much in it.

[gaelic cowboy]

Germany leaving would give the rest a more competitive currency valuation and a more appropriate interest rate, and germany is the only country that can leave without having to enforce money controls as capital would flee any other country trying to exit the Euro, and that would knacker the single market.

It probably would not be neccessary to devalue IF Germany left as the new German Mark would likely appreciate on world markets, that might not be such a good thing for German exporters to have a strong Mark.

Germany if it continues to save can use the PIIGS as effectively a dumping ground for excess capital keeping it's competitiveness with other exporters by preventing consumption growth in the economy.

The reality is of course German tax payers are not likely to want to continue to want to save just to fund the dole in Ireland to help Mercedes sell cars in China.

[Furunculus]

It probably would not be neccessary to devalue IF Germany left as the new German Mark would likely appreciate on world markets, that might not be such a good thing for German exporters to have a strong Mark.

Germany if it continues to save can use the PIIGS as effectively a dumping ground for excess capital keeping it's competitiveness with other exporters by preventing consumption growth in the economy.

The reality is of course German tax payers are not likely to want to continue to want to save just to fund the dole in Ireland to help Mercedes sell cars in China.

the point of germany leaving is that it is germany propping up the value of the euro, if they leave then the euro devalues by default.

[gaelic cowboy]

the point of germany leaving is that it is germany propping up the value of the euro, if they leave then the euro devalues by default.

Agreed but my point still stands that German exporters would be against leaving it while the German electorate would be for the leaving it.

[Fragony]

How likely is Germany dropping the coin? There has to be a treshold they aren't going to act like the buffer forever. Germany is a producer, they'll live

[Banquo's Ghost]

How likely is Germany dropping the coin? There has to be a treshold they aren't going to act like the buffer forever. Germany is a producer, they'll live

Very unlikely, despite Chancellor Merkel's rather odd thinking-out-loud. The costs of replacing a currency are huge and need a long preparation time (the euro took over three years). The new D-mark would immediately appreciate which would make German exports far more expensive. Germany is already the euro's biggest creditor, so all her euro holdings would depreciate significantly as the euro crashed.

That's not to say it won't happen - as you say, there is a breaking point. But it won't be by German choice as leaving will be hugely expensive and would damage their economy for years to come.

[gaelic cowboy]

Very unlikely, despite Chancellor Merkel's rather odd thinking-out-loud. The costs of replacing a currency are huge and need a long preparation time (the euro took over three years). The new D-mark would immediately appreciate which would make German exports far more expensive. Germany is already the euro's biggest creditor, so all her euro holdings would depreciate significantly as the euro crashed.

That's not to say it won't happen - as you say, there is a breaking point. But it won't be by German choice as leaving will be hugely expensive and would damage their economy for years to come.

It may be forced on Germany the 2013 date for scalping bondholders has basically sent them currying from Irish, Greek and Portuguese bonds.

What annoys me is why the ECB just didn't take the bailout money and ringfence any banks with EFSF money who had potential bad loans from Irish banks. It's a stitch up pure and simple the ECB and the elite is incapable of admitting that putting more debt on the Irish people will not save there own banks.

[Furunculus]

It may be forced on Germany the 2013 date for scalping bondholders has basically sent them currying from Irish, Greek and Portuguese bonds.

What annoys me is why the ECB just didn't take the bailout money and ringfence any banks with EFSF money who had potential bad loans from Irish banks. It's a stitch up pure and simple the ECB and the elite is incapable of admitting that putting more debt on the Irish people will not save there own banks.

because it would be more blatently a bail-out in contravention of mastrict, and thus liable to cause the Karlsruhr to rule against its legality, which given the eternity clause in german basic law would necessitate germany's exit of the Euro (and possibly the EU) as the only way to return to compliance with German basic law............. perhaps?

[gaelic cowboy]

because it would be more blatently a bail-out in contravention of mastrict, and thus liable to cause the Karlsruhr to rule against its legality, which given the eternity clause in german basic law would necessitate germany's exit of the Euro (and possibly the EU) as the only way to return to compliance with German basic law............. perhaps?

Well they better have there fun deflating our economy now cos when Lisbon 3 arrives on our shores it is doomed pure and simple. Ireland has been basically made eurosceptic for a decade or more depending on how long this bailout craic lasts.

Everyone knows the bailouts of Ireland, Greece are not working and that eventually when the strain becomes too much and Ireland, Greece will have to either tap for more funds again or extend the terms.

The debt will either have to be inflated away or cancelled it really is that simple.

[Furunculus]

Ireland has been basically made eurosceptic for a decade or more depending on how long this bailout craic lasts.

every cloud has a silver lining. :(

[gaelic cowboy]

every cloud has a silver lining. :(

It really is not much comfort to be honest but it is still the truth unlike the bailout

[Louis VI the Fat]

...or alternatively Ireland and Greece can stop whining and clean ship instead, so they don't end up in a position like this in the fist place

[rory_20_uk]

It's easier not to eat chocolate when there's none in the house. It's a lot easier to be fiscally prudent when people aren't throwing blank cheques at you (although I realise Greece has no concept of paying taxes).

[Louis VI the Fat]

I realise Greece has no concept of paying taxes

I resent the difference in treatment of Greece and Ireland.

The Irish have the good fortune of being English speaking, and of being fairer skinned than the Greeks. Hence, in the English speaking press (by extention, global press), the Greeks are portrayed as corrupt, lazy, swarthy mediterranean who evade taxes for sports. The Irish, by contrast, are portrayed as creating a thriving business environment.

One country's tax exemption for the rich and befriended companies is corruption, the other stimulating business. Greek politicians are actually wary of being photgraphed with local tycoons. They would be embarassed to publicly announce that they have granted an aligned shipping tycoon billions worth of tax exemption in return for some jobs in their district. Irish politicians are proud of it, proudly announce they received a telephone call from their liason at Google, Microsoft, Intel. Proudly announce they agreed to tax exemption for them in exchange for some jobs.

Greek politicians can only dream of the personal haul of Irish politicians.

The free world's best paid political position is that of Irish Taoiseach. Bertie Ahern raised his own salary so much that the leader of 4,5m Irish now earns more than the German chancellor, UK PM or US president. And that's just the official wage. The final haul of the current crop has yet to be established, but Ahern's predecessor and mentor, Haughey, left politics a man of considerable fortune, some fifty million Euros.

[Fragony]

Why is Greece so important, it's a holiday resort nothing more. Why not just kick them out, getting the feeling that not doing so is 99% ideology.

[gaelic cowboy]

...or alternatively Ireland and Greece can stop whining and clean ship instead, so they don't end up in a position like this in the fist place

Clean ship with what my good man how do we clean ship when were now stuck with even more DEBT you just helped our stupid goverment make a banking insolvency crisis into a sovereign insolvency crisis. Fianna Fail may have been completely reckless in giving the banks a blank cheque but what the hell is the EU actually doing honouring the bloody thing for now.

explanation in writing please to the dept of finance

Department of Finance,
Government Buildings,
Upper Merrion Street,
Dublin 2,
Republic of Ireland

[gaelic cowboy]

I resent the difference in treatment of Greece and Ireland.

The Irish have the good fortune of being English speaking, and of being fairer skinned than the Greeks. Hence, in the English speaking press (by extention, global press), the Greeks are portrayed as corrupt, lazy, swarthy mediterranean who evade taxes for sports. The Irish, by contrast, are portrayed as creating a thriving business environment.

One country's tax exemption for the rich and befriended companies is corruption, the other stimulating business. Greek politicians are actually wary of being photgraphed with local tycoons. They would be embarassed to publicly announce that they have granted an aligned shipping tycoon billions worth of tax exemption in return for some jobs in their district. Irish politicians are proud of it, proudly announce they received a telephone call from their liason at Google, Microsoft, Intel. Proudly announce they agreed to tax exemption for them in exchange for some jobs.

Greek politicians can only dream of the personal haul of Irish politicians.

The free world's best paid political position is that of Irish Taoiseach. Bertie Ahern raised his own salary so much that the leader of 4,5m Irish now earns more than the German chancellor, UK PM or US president. And that's just the official wage. The final haul of the current crop has yet to be established, but Ahern's predecessor and mentor, Haughey, left politics a man of considerable fortune, some fifty million Euros.

How in the hell does any of that solve the fact that once our government takes that first IMF tranche the insolvency of the banks is now wholly transferred to the people.

You continue to ignore that fact Ireland will not be able to pay this back and that the debt will have to be sorted properly. Bailing out the country merely transferred the debt it did not remove the problem.

Ireland is the only eurozone country in deflation at the minute our labour costs are reducing and industrial production is up the highest in the eurozone.

Those are the good things about the Irish economy but the bad things are that the debt still needs to be faced and as long as it's not it will be like a nuke ready to go off at any minute.


I love the way this whole lark is being presented as a way to FIX Ireland when it's really about saving banks both Irish and European, we keep telling you the truth and we kept getting continually told were being whiney ungrateful spud eating peasants.

Just cos a broke Irish electorate is annoying does not mean they are incorrect about defaulting on the banks.

[Louis VI the Fat]

Clean ship with what my good man how do we clean ship when were now stuck with even more DEBT you just helped our stupid goverment make a banking insolvency crisis into a sovereign insolvency crisis. Fianna Fail may have been completely reckless in giving the banks a blank cheque but what the hell is the EU actually doing honouring the bloody thing for now.

explanation in writing please to the dept of finance

Department of Finance,
Government Buildings,
Upper Merrion Street,
Dublin 2,
Republic of Ireland

In effect, what you are saying is that Europe should've disagreed with Irish policy. Europe should not have supported Ireland when it turned out Ireland did not have the funds to persevere in its policy. This no doubt would've resulted in Ireland being 'Eurosceptic for a decade'.

Now that we do agree, and have send tens of billions of European taxpayer money to guarantee Irish debts, Ireland will be 'Eurosceptic for a decade' too.

Or perhaps we should've let it linger on, as apparantly Dublin wanted too, with utter disregard for the financial stability of the entire continent. 'We've got enough money to last 'till spring, so until then we can hope for some fairy Godmother / the X-men / Elvis Presley to show up with a solution. While we wait for that, we shall endanger the currency and livelihood of the whole of Europe, which is none of concern'.
Well I question why Europe should be the one without a seat when the music stops. Europe is not a martyr for failed Irish policy. Europe can not change Irish policy at the last minute. It was too late for that.


Damned if we do, damned if we don't. The easy way out: it is all Europe's fault. Nobody has to take responsibility.
As for the Europscepticism: can we count on Ireland the next decade being Britannosceptic, IMF-o-sceptic, Denmarkosceptic? They paid for the bailout too, only a minority of the funds are from the Eurozone.



If the EU had not honoured the Irish policy, then it would've gone from a banking insolvency crisis to a sovereign crisis to a European crisis. What we should've done, is hang some bankers and bondholders. Not all of them, just as much as it takes to have the surviving ones go from door to door across the whole of Ireland and beg the locals for forgiveness as offer their bonusses of the past decade in compensation. This policy is sadly not feasible in the current climate of 'I love being sucked dry for all I'm worth'.

Failing that, I wonder if it shouldn't have been possbile and doable to simply tell the bondholders they'll receiveve 75 cents on the euro, take it or leave it.

Failing that too, a bailpout is the next best solution. Although as far as I'm concerned, it is daylight robbery unless it is followed up upon with an overhaul of the financial system, which, however as we all know is not going to happen.


The cleaning up is not a short term solution, or a solution of any kind, never mind an easy way out. It's of a more general nature. The cleaning starts wih the very realisation there is no easy way put, no quick and painless solution. The cleaning up must be of the culture at large that plagues the entire West: the refusal to accept any personal responsibility anymore. This to me is the ulterior cause of our current woes.

In this case:
Don't like sovereignity to be eroded? Then don't squander it with a 32% budget deficit, do not to manoeuver yourself into a position of helplessness.
Don't like foreigners lending you money? Then levy taxes.
Don't like conditions on a foreign loan? Then don't complain about what is self-explanatory - all risky loans have conditions - but make sure you do not become dependent on a foreign loan.
Don't like poor Irish to have to pay? Then don't complain about a foreigner who by necessity has to deal with an Irish government. Instead force your governemtn to go get your money back from the rich Irish culprits who walk away scott free.
Etc.
And lastly: don't like Greece, Ireland, and etc etc endangering your currency? Then speak up before it is too late. After the fact, if you let something happen for eight years, you have become just as much responsible as any of them.

[Louis VI the Fat]

How in the hell does any of that solve the fact that once our government takes that first IMF tranche the insolvency of the banks is now wholly transferred to the people.

You continue to ignore that fact Ireland will not be able to pay this back and that the debt will have to be sorted properly. Bailing out the country merely transferred the debt it did not remove the problem.

I love the way this whole lark is being presented as a way to FIX Ireland when it's really about saving banks both Irish and European, we keep telling you the truth and we kept getting continually told were being whiney ungrateful spud eating peasants.

Just cos a broke Irish electorate is annoying does not mean they are incorrect about defaulting on the banks.

That bit was about the difference in the way the anglophone press wrote about Greece or Portugal and Ireland. One is a pig, too lazy to work, thieving off EU funds. The other a county in distress.

Remember those Greeks earlier this year? Going on strikes, attacking banks? Like the Irish, they resented being the ones presented with the bill. What was written about them in the Anglophone press? Lazy, socialists, silly swarties who even when they are bankrupt protest austerity measures. The Irish, who speak English, have another face. The face of the austerity measures, this time, is an Irish pensioner, who's hurting.
Likewise, the Greek failure to levy sustainable taxes is a sign they are morally lacking. Whereas the Irish failure to levy sustainable taxes is a sign of their anglo competitiveness.

[gaelic cowboy]

In effect, what you are saying is that Europe should've disagreed with Irish policy. Europe should not have supported Ireland when it turned out Ireland did not have the funds to persevere in its policy. This no doubt would've resulted in Ireland being 'Eurosceptic for a decade'.

Now that we do agree, and have send tens of billions of European taxpayer money to guarantee Irish debts, Ireland will be 'Eurosceptic for a decade' too.

The public is mad as hell that our government is not closing down these banks it is seen as an attack on the people.

Or perhaps we should've let it linger on, as apparantly Dublin wanted too, with utter disregard for the financial stability of the entire continent. 'We've got enough money to last 'till spring, so until then we can hope for some fairy Godmother / the X-men / Elvis Presley to show up with a solution. While we wait for that, we shall endanger the currency and livelihood of the whole of Europe, which is none of concern'.
Well I question why Europe should be the one without a seat when the music stops. Europe is not a martyr for failed Irish policy. Europe can not change Irish policy at the last minute. It was too late for that.

As I have said before the banks lied about the fact they were insolvent and that it was not a liquidity crisis therefore they should close. If the banks are insolvent then there really is no point in trying to revive a zombie bank now is there.

Oh and the bank guarantee was extended again by EU finance ministers again during the last few weeks it could easy have been let lapse before you bailed us out.

Damned if we do, damned if we don't. The easy way out: it is all Europe's fault. Nobody has to take responsibility.
As for the Europscepticism: can we count on Ireland the next decade being Britannosceptic, IMF-o-sceptic, Denmarkosceptic? They paid for the bailout too, only a minority of the funds are from the Eurozone.

People are basically enraged that the EU is backing the elite instead of the Irish people the IMF/EU deal has put to the sword the good impression of Europe we used to have.

If the EU had not honoured the Irish policy, then it would've gone from a banking insolvency crisis to a sovereign crisis to a European crisis. What we should've done, is hang some bankers and bondholders. Not all of them, just as much as it takes to have the surviving ones go from door to door across the whole of Ireland and beg the locals for forgiveness as offer their bonusses of the past decade in compensation. This policy is sadly not feasible in the current climate of 'I love being sucked dry for all I'm worth'.

It already is a sovereign crisis Louis that is the problem what the hell is the point in pretending that the Masters of the Universe will lend to you if they believe there is more rot in the system.

Failing that, I wonder if it shouldn't have been possbile and doable to simply tell the bondholders they'll receiveve 75 cents on the euro, take it or leave it.

Yes now were getting to something we can agree on, they already believe there gonna be scalped anyways.

Failing that too, a bailpout is the next best solution. Although as far as I'm concerned, it is daylight robbery unless it is followed up upon with an overhaul of the financial system, which, however as we all know is not going to happen.

A bailout would work only if Ireland were only trying to get public finances back on track.

The cleaning up is not a short term solution, or a solution of any kind, never mind an easy way out. It's of a more general nature. The cleaning starts wih the very realisation there is no easy way put, no quick and painless solution. The cleaning up must be of the culture at large that plagues the entire West: the refusal to accept any personal responsibility anymore. This to me is the ulterior cause of our current woes.

People know fine well they are responsible for borrowing to buy property etc but there not responsible for trying to save zombie banks.

In this case:
Don't like sovereignity to be eroded? Then don't squander it with a 32% budget deficit, do not to manoeuver yourself into a position of helplessness.
Don't like foreigners lending you money? Then levy taxes.
Don't like conditions on a foreign loan? Then don't complain about what is self-explanatory - all risky loans have conditions - but make sure you do not become dependent on a foreign loan.
Don't like poor Irish to have to pay? Then don't complain about a foreigner who by necessity has to deal with an Irish government. Instead force your governemtn to go get your money back from the rich Irish culprits who walk away scott free.
Etc.
And lastly: don't like Greece, Ireland, and etc etc endangering your currency? Then speak up before it is too late. After the fact, if you let something happen for eight years, you have become just as much responsible as any of them.

There are two many problems and the solutions are not solutions at all they are instead sticking plasters.

The 32% budget deficit would be far far smaller if FF were not for trying to maintain an untenable position.

I am against a bailout of my country that merely bails out our banks pure and simple.

[gaelic cowboy]

Remember those Greeks earlier this year? Going on strikes, attacking banks? Like the Irish, they resented being the ones presented with the bill. What was written about them in the Anglophone press? Lazy, socialists, silly swarties who even when they are bankrupt protest austerity measures. The Irish, who speak English, have another face. The face of the austerity measures, this time, is an Irish pensioner, who's hurting.
Likewise, the Greek failure to levy sustainable taxes is a sign they are morally lacking. Whereas the Irish failure to levy sustainable taxes is a sign of their anglo competitiveness.

We have not escaped the tut tut of the Anglophone press you just missed it thats all, sometimes the UK telly has been very hard to watch indeed.

[gaelic cowboy]

I feel I need to get my view down again cos the thread has drifted a bit.

The point I was trying to make is that bailouts will not cure the insolvency of the banks/countries the debt will have to be restructured eventually to a more manageable level.

This does not have to mean an end to the Euro but it is a likely outcome if we have more bailouts or even the threat of the more in the future.

[Furunculus]

the difference between ireland and greece in its response to the euro crisis:
http://www.telegraph.co.uk/news/pict...e.html?image=1

[gaelic cowboy]

the difference between ireland and greece in its response to the euro crisis:
http://www.telegraph.co.uk/news/pict...e.html?image=1

For me the difference is the fact in Ireland people still feel they have a stake in things however small or fictional it may be in reality, plus the election in the new year has taken a bit of heat out of the anger too. There is a sense here that we can take hardship and we can fix things but don't take it for granted and because there has to be a pain then we all of us have to share in it.

Plus how do you riot against a bondholder anyway.

A few Sinn Fein an extreme left types have threw a few shapes lately but Irish people are not a natural constituency of either Leftism or Anarchy.(were basically rural conservatives who live in towns)

[Brenus]

“We have not escaped the tut tut of the Anglophone press you just missed it thats all, sometimes the UK telly has been very hard to watch indeed.”
Yeah, but all talk show in Radio Station like LBC were why do we have to help the lazy corrupted (Mediterranean) Greeks who got more sun than here and enjoy life then it was why we have to help our hardworking Irish neighbours…
And the government (the same that didn’t want to give one kopek to the Greek and death to the Euro Zone) explaining if we don’t we will face a wave of immigration for this island…