Comments on: If all else fails, then maybe it’s time to ditch the euro

By: David McWilliams Doubts National Recovery, Own Importance « Views from the Lifeboat

Thu, 09 Dec 2010 09:43:38 +0000

[...] Muttered Macker as he clutched a signed first edition copy of The Generation Game to his chest, “I told ‘em, I told ‘em, back in 2008 I said it, I said it,” he said, as he opened a shiny new dustbin to look for half-eaten apple cores. “Look!” he said, thrusting some crumpled and torn newspaper articles at random pedestrians. “16 July, 2008 – if all else fails, maybe it’s time to ditch the euro.” [...]

By: Nope

Nope — Sun, 18 Jan 2009 21:14:38 +0000

First time post. You have been one of the view voices in the wilderness pointing out the near insane effect of the ‘Celtic toad’, the Celtic tiger was a short phase backed by the tech bubble which effectively ended in 2000/1. The last 8 years have been the ‘Celtic toad’ a crapulent exercise in property ‘boom’ which transferred the wealth generated during the real boom from the pockets of those that slept on corporate floors back to our usual banal and inept rulers, the civil service, the banks, the unions and their uncritical and unthinking supporters who owned property in Dublin.

The Euro is however a political project with aspirations that go back to the very origins of the European project…an end to intra state fratricide and death by nationalism.

The current economic climate is global and has been in the making since the end of the Second World War. Personal borrowing has been carried out on false premises for decades.

Irrespective of the flat currency in circulation the effects will not be mitigated. Ireland is too small not to be blown in the storm, Euro or not.

While withdrawal might have short-medium term benefits, they would be as transient as the housing boom in effect and serve as a terrible blow to something which ultimately has done much to end war in Europe as an ever present threat. Should Ireland be the inspiration to ultra nationalist cranks who seek nothing more than a return to ‘my flag is bigger than yours’….is that what our generation should be remembered for in perpetuity throughout Europe David?

Try giving some of the money back to those who worked to generate it in the first place as bond stock option slaves for US corporate masters instead of penalising them further for daring to generate money, instead of staying parked in north Dublin on an economic zero – the state job for life. Ceasing to run Ireland like a third world state with all benefits focused on the location of the governmental seat might be an idea also.

So for once I disagree with you David. This crash is a long way from finished both domestically an internationally and a little restraint in action might be wiser than drastic borrowing and spending, propping up failed institutions that should be let close and dumping the Euro . What little ammunition we have left should be kept lest we find ourselves with nothing when things are really drastic.

If only it was possible to send our bank directors, union leaders and politicians and the entire civil service senior/middle management to the artic for a few years we might just – just have a chance to get by working and not borrowing..

By: Paul

Paul — Tue, 29 Jul 2008 19:49:35 +0000

David is so wrong on this point. Ireland has a higher rate of inflation than the Eurozone average so if we withdrew from the Euro it is likely that we would quickly have higher interest rates than the ECB rate. In particular a falling currency would increase the cost of imports ie almost everything consumed in this country while failing to attract inward investment because of the declining global outlook. Interest rates would then have to rise again to combat the effects of the infaltion caused by the declining currency. It is likely that we would quickly return to the situation we had in the 1980s when inflation and interest rates were in double digits and unemployment reached 18%. No government could risk this happening so I feel it is unlkely that we will leave the Euro. After al it is the stability that the Euro brings that attracted much of the inward investment that enabled Ireland to achieve economic success.
The time to deal with the recession was before it happened, by damping the worst excesses of the boom years. The government failed to plan ahead and no there is no easy fix for the problems caused by the debt mountain that we now must face.

By: Garry

Garry — Tue, 22 Jul 2008 08:07:03 +0000

Lets just pretend for a moment this isn’t complete bollocks and that the suggestion was serious

OK so maybe its time to ditch the euro. What do we do?

“If all else fails, maybe its time to join sterling”,
“If all else fails, maybe its time to join the uncle sam”
or even “If all else fails, maybe its time to create and launch our own currency”

I wonder what any of the above articles would look like? I think they would focus minds on what would need to be done rather than just saying complaining about the current situation.

By: A Butler

A Butler — Mon, 21 Jul 2008 21:19:18 +0000

Well said shtove

The UK reformed their bankruptcy laws a couple of years ago with the effect that people who got sucked into stupid debt; high street shopping on ridiculous branded items with no real assets to show, could declare bankruptcy and wipe the slate clean.

It also had the effect of the credit card companies reigning in these 0% balance transfer offers over 12months and people maxing out credit cards moving from one to the other.

Also the US property downturn is hitting the bank hard precisely because you can quiet easily walk away from the negative equity and after a certain short period of time, provided you have made changes to your life, go again for a mortgage.

I am all for the bank sharing the pain here; however our banks, government & laws traps people in a debt vice driving then further down the road of debt misery over the length of their lives (speaking from personal experience in the 80’s here). Note the Irish banks have a very low bad debt by international standards because Irish laws protect them and when you fail to pay they destroy all your assets and your life.

The euro seems a soft touch for all these self interest groups to blame while failing to release the debt burden from the ordinary individual.

Will our voiceless political opposition get running with this idea?

Which bank would fail if changes were made: Anglo, PTSB or BOI?

By: shtove

shtove — Mon, 21 Jul 2008 20:23:57 +0000

If Ireland leaves the euro the government will only be able to borrow at crippling rates, and the bond market will collapse. National bankruptcy.

Amazing that people are looking to the US and UK for solutions to the lunacy.

Best thing to do – stay in euro, pump the economy with government spending, and reform bankruptcy/debt laws so that people can have their existing (not future) debts crammed down on long term minimal repayment provisions – which has the added advantage of driving the banksters to the wall.

By: aidan

aidan — Mon, 21 Jul 2008 17:44:02 +0000

“dave villa said,

on July 17th, 2008 at 12:29 pm

For all intents and purposes the Island of Ireland pop(6 million) is just another region of Britain pop(60 million).Why not rejoin the UK?.Same shops , TV stations, Newspapers, football clubs etc.Dublin and Belfast could have teams in the premiership!.The structure of euro economies such as France and Germany are completely different to ours as we are finding to our cost.Our best bet for the future is to increase trade with the Fare East, Commonwealth etc.The euro suited Austria and Belgium because they are so heavily dependent on Germany for their exports.Ireland was and is completely different.”

while this comment seems off the wall there is alot of truth in it, we like to think of ourselves as europeans , but in reality we are little brits and little yanks, we like their cultures and ape them to a large extent the only think we don’t ape is the militarism, I believe ireland needs to free itself from european interference and paddle its own canoe again, i believe this is what is now happening we are already starting to distance ourselves from europe, however as in all periods of change it is circumstances and not politicians or the establishment that will decide our fate, remember that the establishment of 1912 was not there by 1922, if the euro continues to appreciate against the dollar then drastic action by this country will be necessary

By: Shane Dempsey

Shane Dempsey — Sun, 20 Jul 2008 15:02:52 +0000

There will always be as many arguments against as for leaving the Euro. It’s essentially one of those arguments of perspective and potential that’s irreconcilable until a decision is reached and history unfolds. It’s funny but I don’t remember much debate about the negative effects of joining the Euro when we made the decision. This is probably more poor recollection on my part but I’m sure someone here remembers :) Are we economically more sophisticated now or is it a small pocket of people sharing their thoughts over the net? I’d like to think that, based on the results of the lisbon treaty referendum, the Irish are looking more critically at the advice from our politicos than in the past. (accepting political trust is a cyclical thing). On some of the specifics of this debate. I’m not against the idea, in principle, of Tobin Tax or similar levies on national currency speculation. I quite liked the Sterling Stamp Duty idea, however, it’s likely that this damages liquidity unless implemented as a “braking function” on speculation through application on higher volumes of speculation alone. i.e. financial regulations should be utilitarian and when they don’t work it’s possible to fix them! I’d reject comparisons between an unpegged and reconsituted Irish punt and Sterling. Given our well publicised economic woes and small scale it appears unlikely a new Irish currency would, initially, be in sufficient demand to trade so strongly against the dollar. There’s the question of the dollar’s weakness. Some analysts will suggest this is inevitable as the result of a balance of power shift from the West to the East. A long and expensive war isn’t helping either. This is not the first time an eclipse of the US has been suggested and arises from an unhealthy IMHO obsession with trade balances. Many felt Japan would eclipse the US during the 80s and for a short period of time it worked. What are the Chinese accepting as payment for their goods? Billions of dollars, many of which are being invested in US companies, real estate etc. The strategy of beating a country into economic submission by accepting all the fiat currency they can print for your manufactured goods tends not to work. In a way, the gold standard continues in the minds of anyone who associates economic prestige with a particular country. What was the gold standard about but perceived security? The US is the prime example and as long as its economic competitors continue to accept payment in dollars and commit their profits to dollar investments then the US economy looks secure for the long term. As secure as anyone else’s anyway. So a pegged currency against the dollar or even the euro isn’t necessarily an awful idea in the short term. The HK dollar is pegged and the rate has been judiciously adjusted several times. Arguably more important than the currency debate is the corporate and personal tax debate that incentivises people and organisations to bring their wealth to Ireland. For our small size we can arguably make ourselves even more attractive.

By: Ger Kennedy

Ger Kennedy — Sun, 20 Jul 2008 11:14:26 +0000

A new punt? I think not your greatest idea David. Look at what is happening in Iceland at the moment.

Ger

By: Glen Quinn

Glen Quinn — Sat, 19 Jul 2008 23:24:55 +0000

I think if Ireland was to go back to the punt would be very good for the country because it gives the Irish government more power to get our economy right again.

In order for our country to become a prime exporter then the ideal situation would be to make the punt cheeper than the dollar, this would ensure that Ireland would be able to build up a big manufacturing sector and well as high value sectors such as software, pharmacuticals etc. Making the punt cheaper than the dollar would also ensure inward investment coming into the country as well as other countries buying our goods because it would be cheeper to buy our goods as opposed for them to make it themselves, think of China this is what they have done and are still doing it.

Speculators would not have a feel day because the central bank could have tight control on the currency by interving in the money markets and either buying or selling the currency again think of China.

All in all, I see Ireland going back to the punt as a very good strategy.