May 6, 2009

Ditching the euro could boost our failing economy

Posted in Euro · 324 comments ·

One of the things about crises is that they tend to blow the credibility of shibboleths out of the water.

A shibboleth is a mantra to which people get attached because it is easier than hard thinking. If enough people repeat the mantra it becomes gospel, and instead of using our heads, we exchange alleged truisms. Ireland’s been exposed to enough shibboleths in the past five years to last us a lifetime.

One of these was “property only goes up”. The second was “the fundamentals are sound” which, along with “this time it’s different”, are particularly costly mantras. We also got the “soft landing” shibboleth. Or what about the one last October, “our banks are well-capitalised”?

Well we all know where these mantras have landed us. If you are not aware what is going on in our country and you have access to the internet, have a look at the following clip of the unemployed queuing in Dublin on Much has been made of this clip already, but it’s worth looking at it again.

Yesterday, the ‘Frankfurter Allgemeine’ ran a story about how Limerick was like the third world, while the influential US magazine the ‘Weekly Standard’ devoted its front page to our woes at the weekend. Here in Australia, a waitress — a second generation Irish Aussie — asked me worriedly this morning: “Is everything okay in Ireland?”, having just read a report in ‘The Australian’. This was a reasonable question because, with unemployment rising at this level and tax revenue falling, there will come a time, not too far in the future, when Mr Lenihan will cross the corridor to Mr Cowen and tell him that we have “no money to pay the teachers next week”.

Make no mistake about it, countries run out of money and if this happens in Ireland you can be sure another mini-Budget will be introduced and the State will expropriate whatever wealth it can to stay afloat.

This is when things get critical, and rather than putting a plan B in place for this event, the State is again clinging to a mantra rather than examining our options.

Anyone with a basic understanding of economics knows that we can’t deflate our way to growth. The problem is a lack of demand. People are hoarding money. There is plenty of money in Ireland, but as we are hoarding, this money on deposit doesn’t translate into cash spending.

Monetary policy in Ireland is broken. The banks are now too sick to play an active role in refinancing the economy, so therefore the economy continues to contract. As taxes rise, this has the same effect as taking cash out of people’s pockets so we spend even less.

On top of this, we face the twin spectre of wages falling at a time when our debt burden is rising. Wages will fall because there are simply so many people on the dole prepared to work for less than their neighbour. The debt burden is rising because so many people who bought houses at the tail end of the boom on low interest rate deals are now facing those “enticement” rates rising.

What can we do about this? The obvious answer is to leave the euro, reinstitute our own currency, allow it to plummet to reflect the real competitive position of our ruined, feeble economy and start again. The vast majority of economists and commentators say this is not possible. In fact, they ridicule those who suggest that this might be worth entertaining.

Let me just remind you that the vast majority of economists and commentators believed the “soft landing” mantra. New ideas go through a cycle. First they and their proponents are ridiculed, then they are violently attacked and only then are they accepted as a universal truth. I suspect the same will happen to the idea of leaving the euro.

There are clearly issues with doing something as radical as this, as it would have to be coincident with a lifting of all state guarantees on interbank lending. The State could still guarantee deposits in the new currency. Many investors who owed the Irish banks or invested in Irish government bonds would get burned. But that is the nature of markets. They would be paid back in the new currency, which would have to find its value.

The new currency would fall rapidly, giving our trading sector a significant boost and making Ireland cheaper overnight for people to do business in. Clearly, the government deficit would have to be addressed through strict spending targets.

As the Central Bank would do what the US, UK, Australia, Canada and Sweden are doing now and print money, the liquidity trap that we are in would evaporate. Clearly inflation would rise rapidly, and the State would need to introduce CPI-linked bonds to refinance itself.

But lots of successful countries have done that in the past — Sweden, Finland and Israel come to mind.

There are more than enough domestic savings to cover any government short-term shortfalls. In fact, inflation in Iceland, a country which embarked on a similar policy last September, shot up but has now collapsed. Clearly, the Irish banking system that gambled in Euro would be bankrupt. But banks are only institutions and maybe that’s no bad thing because it would allow a new bank (or banks) to emerge. The price of land would fall dramatically even in the new currency but would find its level. After this, we could reboot the engine.

Unemployment would fall rapidly as it has done in practically every country which has embarked on such a policy. The Asian Tigers, after their collapse in 1997, are the best example of this rapid re-employment phenomenon. One look at the Asians or the Scandinavians should put paid to arguments about what small open economies can do.

We are already running a trade surplus and we’d run a bigger one. Our deposit base is significant. Clearly lots of money would flee the country initially, but it would come back as the domestic economy recovered quickly. Sure we’d have a lot of explaining to do politically, but we’ve to do that anyway.

There are other problems in terms of fairness. Young people with debts would benefit, middle-aged people with assets would lose out. But as most of the value of these assets will be wiped out in the grinding recession the next few years will bring, over a five-year period there might be no net change.

Obviously there are many other issues at stake, such as whether investors would re-engage with Ireland after a devaluation. Conventional wisdom says no. But conventional wisdom has been wrong from the start here.

I’ll leave you with one example of this. In 1992, conventional wisdom said that if we devalued, the economy would implode, investors would take flight and we’d pay for years. In the event, we were forced to devalue and the economy boomed.

The one thing that scares investors most is a dying asset. No one will touch it. I don’t know about you, but I’d prefer to live in a country that gives itself a chance of life, than one where the current policies can only lead to slow strangulation.

  1. G

    That job queue in Dublin (youtube clip) was a complete stunt, that company could have requested CVs and called people for interview, it was disgraceful treating people like that. This however does not take from the fact that unemployment is a serious issue. How things have changed.

    There’ll be no dropping the euro though, but stimulating article nonetheless.

    • giorgio

      David, I am rather perplexed by the superficial analytical rigour of your arguments on Ireland leaving the euro.

      Once a country has voluntarily surrendered its currency and its monetary policy independence to a common currency area, the costs of leaving that monetary union and establishing a new national currency are huge. Some are certain, some are merely probable.

      These include:

      1. Default on domestic debt. If Ireland were to choose to leave the Euro, it has essentially two choices with regards to its domestic debt. The first is to leave the debt as it is — that is to say, Euro denominated. The problem with this approach is that the entire debt is then denominated in a foreign currency, over which Ireland would have no power of taxation. The only way of earning Euros would be through trade, which is likely to be significantly disrupted — and so default on the Euro denominated national debt is almost certain. The second and more probable option is the forced conversion of Euro denominated debt into new Irish punt debt. This would constitute a default in the eyes of most investors. Default on sovereign debt generates lasting economic costs as the long term cost of capital for the government increases. The international cost of capital for Irish corporates is also likely to be impacted not only because of the “sovereign ceiling” but also because of the nature of the default. If the Irish government is changing the currency of the country, it will most likely force the change on the domestic corporate sector who will thus share the government’s default.

      2. Collapse of the domestic banking system. If a New Irish Punt were to function properly, the seceding Irish government would have forcibly redenominated domestic bank deposits into new Irish Punt. The reality of implementing this becomes highly arbitrary. For instance, should only Euro accounts be forcibly redenominated, or should sterling and dollar accounts also be converted into the new Irish punt? Post the New Irish Punt being established, the Euro is a foreign currency. If one foreign currency is to be converted into the New Irish Punt, why not convert all foreign currencies in the domestic banking system? Should the conversion apply only to domestic citizens, or to foreigners with accounts in the domestic banking system? What about foreigners with Euro accounts in an overseas branch of a domestic bank? The obvious response of anyone with exposure to the secessionist banking system is to withdraw money from the bank as quickly as possible. This could be done electronically — unless the Irish government puts in place stringent capital controls. In that event, the wise depositor anticipating the creation of a new Irish punt would withdraw their money in physical Euro form, pack it into a suitcase and head abroad — unless the government seals their borders to the movement of people. In that event, the sensible depositor would withdraw their money in physical Euro form, pack it into a suitcase and bury it in their garden. The only way that can be prevented is to shut the banking system entirely, or perhaps place a limit on the amount of withdrawals that can be made over the transition period. The only real way to prevent a run on the Irish banking system would be the introduction of the new Irish currency as a “shock” event, which was entirely unanticipated by the world at large. Given the enormous complexity involved in introducing a New Irish Punt, this is not a practical possibility.

      3. Departure from the EU It seems highly unlikely that the Irish government could leave the Euro and expect to remain a fully functioning member of the European Union itself. The act of leaving the Euro necessitates a unilateral breach of the Treaty of Maastricht. Sealing borders to capital flows or the movement of people is also a breach of several European treaties (and thus European law). The whole process of introducing a new Irish currency is clearly against the guiding principles of the European project. Quite how severe the rupture would be is unclear. It may be that some negotiated agreement between Ireland and the rest of the EU could be kept in place.

      4. Tariffs and protectionism The idea that Ireland would immediately have a competitive advantage through devaluing the new Irish punt against the Euro is not likely to hold in reality. The rest of the Euro area is unlikely to regard secession with tranquil indifference. In the event that a new Irish currency were to depreciate 20% against the Euro, it seems highly plausible that the Euro area would impose a 20% tariff (or even higher) against the exports of the seceding country.

      5. Civil disorder. If a country has gone to the extreme of reversing the introduction of the Euro, it is at least plausible that centrifugal forces will seek to break the country apart. Will the Euro club still want a secessionist state as a member? Competitive devaluations may meet the force of competitive protectionism. Moreover, it does seem unlikely that the Irish population would take the “debauching” of their savings and investments in a benign fashion. At the very least, widespread protests could be expected.

      Leaving the Euro therefore suggests default on the national debt, the collapse of the domestic banking system, exit from the European Union (its legal structures, trade agreements etc), tariffs imposed against the country’s exports by its most important trading partners, and the possible break-up of he seceding country itself. Do you honestly think that the Irish Government is likely to wish to risk such huge costs?

  2. G

    That job queue in Dublin (youtube clip) was a complete stunt, that company could have requested CVs and called people for interview, it was disgraceful treating people like that. This however does not take from the fact that unemployment is a serious issue. How things have changed.

    There’ll be no dropping the euro though, stimulating article nonetheless.

  3. IMT

    “The obvious answer is to leave the euro, reinstitute our own currency, allow it to plummet to reflect the real competitive position of our ruined, feeble economy and start again.”

    Maybe I am missing something here but if the new currency was allowed to plummet by the Irish Central Bank by keeping interest rates low, wouldn’t the cost of all imported goods/services rocket, thereby making our economy even more uncompetitive? Those companies which did not have strong exposure to international markets would be destroyed. Inflation would be rampant and the government would be under more pressure to postpone cutbacks in socail welfare and the public sector. Could someone explain how we would avoid this scenario?


    The Brits have allowed sterling depreciate by 25% and their inflation won’t rise much above 2%.If Ireland hadn’t devalued in 1993-the economy would of collapsed within 2 years.Not one politican is in favour of exiting the Euro, and this is as good a reason as any to follow Dave’s advice.The unemployment will hit 20% within a year under the present idiotic policy.Dublin is just a poor man’s Liverpool and trying to convince people that we are a Milan or Geneva is risible.There is no inflation to import in the first instance-devalue or perish.

  5. Garry

    ….there will come a time, not too far in the future, when Mr Lenihan will cross the corridor to Mr Cowen and tell him that we have “no money to pay the teachers next week”.

    July 12′th 2010 is my guess.

    Sure they’ll be on their holliers then, no worries Brian wha!!!

  6. tony_murphy

    Ireland will have a long painful death in Eurozone

    Ireland has to pull out of the Euro to survive. It’s just so obvious. Time to cut losses and rebuilt

  7. mediator

    This is an interesting article David.

    I remember putting forward all the arguments against the Euro many years ago in pub conversations with friends and was generally ridiculed because of the “Europes been good to us” mantra.

    I would imagine that similar mantras will be put forward
    should your suggestion gain currency (forgive the pun)

    Also it is a risky strategy given the momentum for
    a single global financial and ultimately monetary system
    (A momentum that isn’t talked about but that is freely observable
    to anyone with a will to do so)

  8. Gambit

    I’m thinking it would be more palatable politically to defer such a move until we’ve voted to accept the Lisbon Treaty.

    This would essentially tell the Eurozone that we love them, but we’re not currently in love with them.

  9. Tim et all – did he say teacher’s pay ? Wow this is a very serious article maybe wills prognosis in last blogg is best discribed to sleep facing Albania .And I am not blasphemous .

  10. Philip

    This is going to be an entertaining blog for the next few days. Great article. The lines are being drawn for sure now.

    I think we will be turfed out of the Euro along with Spain, Greece and Italy. We are not a Germany. We would be doing the decent thing to exit it now. As David says, we’d have to dump the millstone of the guarantee and just look after the deposits.

    • gadfly55

      This is the first test for the euro, and as much as the Anglo-Americans hope to maintain the dollar as world reserve currency, and look forward to the disintegration of the euro, the ECB will guide the Euro through this crisis, and the Europeans will learn that cohesion and integration is the only way to long-term peace, prosperity and social cohesion. The Irish short-term scamming cute whoorism has demonstrated to all who matter, that the only hope for this small part of a small island is under the direction of wiser heads on the continent who have the experience of far worse historical trauma than the mere upset of a slump.

      • wills

        Gadfly55: I contend the anglo-american order are de-valuing the dollar into oblivion through print runs’.

  11. gadfly55

    Only the ECB is keeping money flowing into the banks. Paying back the debts in euro borrowed for the property bubble would bankrupt the country immediately if we left the euro.

      • Garry

        To me this article implies that the ECB are not just keeping Irish backs afloat, they are keeping Ireland afloat

      • wills

        Garry: the banking oligarchs always look after their own kind. ECB is merely a bankers hub through which bonds and funds travel back n forth to maintain the ruling private banking interests and through out the overall financial trans-national spiders web of corporate and governmental and hedge fund market fixing.

        • Garry

          be that as it may, we are still surviving because of them

          This article is implying the Irish government recapitalises the banks, which requires borrowing money so they sell bonds, the same banks buy the bonds and pass them on the the ECB which buys them if nobody else will. A kind of financial Steorn if you will.

          So in reality the ECB is bailing us out, all to create the illusion of demand for Euro bonds and that things are working put well

          All im saying is the amounts are getting smaller so I guess the noose is tightening, they arent able to sell as much shite, so it’ll run out at some stage. July next year is my throw at the dartboard to make a guess

    • Philip

      That’s why we need to remove the guarantee. In that way, the big borrowers get clobbered. The small fry will thrash about a bit, but after a year, many will make it as the market picks up. This is a reboot, so there will be a period when the lights flicker.

      • Garry

        The guarantee can be let expire, it cannot be withdrawn…. September 2010.

        which unfortunately is after July 12′th 2010 when the teachers stop getting paid :)

        Mind you then the TD’s and teachers are all on holliers for the summer so we can just stop writing checks and have the new currency ready for when the guarantee expires and the holidays are over…

        Long hot summer of rioting and looting followed by the FCA imposing order and a PaddyPound to make us all feel rich… Fantastic!

        • Robert

          Yeah Garry this is the second time today that you mentioned “teachers are all on holliers”. You also mentioned it at 11.19 am – Over four hours previous!!

          It seems a pity that you wasted your day thinking about “teachers on their holliers” – and all because DMcW just happened to mention teachers in his article.

          I doubt you would have bothered to respond otherwise.

  12. irish Betting Office – a Mac Bet would be : bubble bubble toil and trouble fire burn and cauldron bubble – woopie woopie Dun Aengus calls in ……..plumber is fixing the circle still …….and no toilets

  13. G

    @ bloggers

    Maybe they can play this after the leader’s speech at the next Ard Fheis, I wonder will the automatons be jumping up then??????

    Forgive the profanity, but I just couldn’t help it, it seems so appropriate for the times we live in

    Lily Allen (just feel we need some humour)

    If that doesn’t do it then maybe this can motivate:

  14. It doesn’t matter what the currency is – if we still have ICTU MEMBERS in the pay of the employers we can never have honest negations with employers, they still see ‘workers’ as being beneath them and whose only purpose is to make them Richer.

    As you well know David, Trade Unionists are not afraid to tell Lies. Jack O’Connor did it to your face, in Crawdaddy. Instead of ditching the euro why don’t you campaign to ditch lying union officials who cover up the fact that their union sacked its own members.

  15. tony_murphy

    If Ireland ditched the Euro, the new currency wouldn’t be worth a lot I’d guess, imported goods would be expensive. People would have to buy locally. Foreign investment and jobs would come back. The Euro is only good for Germany.

    Ireland is going to have to pay back it’s debts, and it’ll never do that within the Eurozone. People in employment exporting will.

    Get people back working. Get control over currency.

    Joining the Euro was the most stupid thing ever.

    • Right, because isolated economies that can’t afford imports and make low-quality exports have a habit of turning into economic tigers…

      Ireland has done well when we have been open. Closing our economy (the effect of pulling out of the euro), even if we’re only shutting the door on our own fingers, would be a disaster.

      And how, exactly, are we supposed to pay off our euro-denominated debts with an new currency that will rapidly depreciate?

      • Show me the formula for predicting economic tigers? We became one despite being a relatively isolated economy with little indigenous industry. We don’t compare favourably with the nordic countries or even Iceland which has some natural mineral reserves.

        Those looking to setup in another country look for economic and political stability and market access. We’re not suggesting leaving the EU. We’d be just as well to peg a reconstituted punt against a dollar at a low ball rate. Take a sharp hit up front. The dollar really is key for us. It’s key for the UK aswell, our major trading partner.

        The price of goods is hugely affected by tax and supply chain expenses. I’ve been an owner of retail businesses and I think we could sell products for a lot less with some tax reform (won’t happen) and supply chain price reductions (happening already & quickly). Our goods could be cheaper in this country but the tiger economy added flab to costs, taxes + duties associated with delivering products to the consumer. Throw in ridiculous rents and we really need to start again.

        Our debts would still be in Euro but our economy may improve over a period of time. We don’t pay the debts back in one go. Within the Eurozone we have no chance of currency inflation reducing our debt burden. We also have no possibility of currency deflation making us recompetitive. Our personal debts can’t inflated away.

        With a new currency we could reprice our workforce to be more attractive. What’s the disadvantage for individuals? Our money would be worth less on holidays. Prices all around the Eurozone are tumbling. There’s a worldwide recession. It just happens that our recession is more intense and severe thanks to many years of financial mismanagement.

        Exporters will still export to Ireland as long as we can afford to buy stuff. Foreign banks will still operate here. Outside the Eurozone, we’re still a market. Life wouldn’t end outside the Eurozone.

        Pre-Eurozone our government would have been forced to consider a strategy involving currency devaluation in the face of this crisis. Now, our strategy is to hope the ECB indirectly subscribe to Irish governmental bond issues at ever higher and LESS SUSTAINABLE rates. Ireland are the subprime borrowers from the ECB. All we’re doing now is storing up a trans-generatonal tragedy of debt. The ECB will ask for steep payment for this, beyond mere cash. Ratification of Lisbon, an end to whatever democracy we had and probable control over our tax rates. Can this really be dismissed as scare-mongering? Do our interests converge with those of the ECB? At the moment, perhaps, as they don’t want a eurozone failure but we’re being taken to the cleaners in our financial restructuring. Beyond this, our interests had diverged from the ECB’s a few years ago when we would have raised interest rates outside the Eurozone to reduce inflation.

        I’d say some of our builders will do a much better negotiation job with teir bankers than the Irish government is doing. By the looks of NAMA they already have!

        David’s suggestion is terrifying in its implications and needs some work in its analysis BUT the truth of our financial situation is terrifying. if we repeat the trends of the past 12 months we’ll be bankrupt this time next year. Eurozone thinking will kill our economy.

  16. Gary

    Its currently politically impossible to consider leaving the Euro. But if other economies such Britain and USA pull out of rescission and were still stuck in the doldrums, maybe the alleged truisms will no longer be true. We are part of the PIIGS, and all our countries have serious competitive issues to address from been part of the Euro. This is made more difficult without having full control of the economic leavers. Hopefully there is solution without the drastic measures of even contemplating ditching the Euro. The EU as whole will eventually need to address these issues. The Gulf between the PIIGS and Western Europe and cannot continue indefinitely.

  17. David, you need to add some flesh to this kite!

    To present a credible argument, there would need to be a lot more work in teasing out the related issues.

    In joining, it was a lot easier to follow a framework devised by others who have a much better record than our bumbling poltroons.

    Siege economy with the IMF as insurer

    International debt market

    Small Irish export sector 50% dependent on UK market

    Overwhelmingly dependent on US firms – - huge indirect linkages
    including tech transfer knowledge

    Personal debt more than 100% of GNP

    Possible breakdown in social order/strikes with risk of losing remaining international credibility

    Interest rate level? exchange controls

    • Philip

      Dumping the Euro is just another way of repricing ourselves in the international market.

      All your points are spot on in or out of the Euro. Question is, would it get any better by staying put?

      If we repriced to 20% of our current wage costs (assuming other services provided internally dropped accordingly) we’d radically alter the live register. Also, there would be a huge emphasis on being self dependant as imports are too expensive. Then the chase would start – other currencies would follow.

      The reality is that countries are now being revalued according to their real wealth creation capability. Right now, Ireland is running a fair bit below optimum precisely becasue the high Euro is keeping so many people out of work.

      • In Iceland, the fishing and aluminum industries and the main export sectors.

        We don’t have big native export sectors.

        Irish firms have little presence in Europe.

        This is why the reaction of US firms would be key.

        • Philip

          We need to go back to the Russians who about 30 yrs ago wanted to build us a smelter for our massive Zinc/Tin/ Alum resources. Apparently US told Ireland to discourage it. Are we not one of the largest resources in Eurasia?

          We also need to understand what our wealth is. Our politicians have no idea and are fixated on land and resources and have no value for knowledge. We are apparently one of the largest exporters of software in the world – I can see the guffaws already. And we have had huge business in Banana ripening – more laughter. Joking aside, we need to broaden our horizons to knowledge rather than material exports and if the latter, we need to be adding a lot – not just assembly.

          • Completely agreed Phillip but the guffaws have it. We must raise the bar intellectually or we will persist in this lowest common denominator style of corporate governance.
            We seem to be reverting to the “peasants, priests and pixies’ accusation.
            I thought we were well beyond that now.

          • Deco

            Well t be precise…they are fixated on sites…and handy jobs off the taxpayers back, for their mates…..
            A little bit more openness will unravel it all…

  18. VincentH

    Yes I’ve wondered about the ‘small open economy’ while tied to the Euro. It struck me as being a bit of a contradiction.
    The central plank of the euro is control and we simply do not have any.
    And Oh, another one, ‘we were all in this’, the F*** we were. Most people simply wanted a safe home to live in, a reasonable chance for the kids and that they would not rot in a hospital.
    So, after all the bullcrap of the last number of years what have we gotten. A system where Health is so expensive that firing the lot of them only to hire from Belgium France or the UK would drop the bill by 35%.
    And the vaulted education system produces little more than cannon fodder.
    Where there is no talk of rent control, not a word. And where people who thought themselves safe are so in debt that their oxters eyes and the crown of their heads would be a dim hope.
    Just a little FYI, five years ago, it would have been cheaper to send an alcoholic to a private clinic in Arizona, than to any place here.

  19. Malcolm McClure

    David said: “…the Central Bank would do what the US, UK, Australia, Canada and Sweden are doing now and print money, the liquidity trap that we are in would evaporate.”

    I said in response to previous blogs, there is no point in printing money unless it is tied to something of intrinsic value like copper, silver and gold, even though the value of those may fluctuate, at least people could calibrate their currency against published market prices.

    On 22nd April in the “Bad debts” blog and subsequent blogs I suggested:
    ‘The solution seems to be a return to specie money, ie gold, silver and copper coins, struck in weights related to the market value of each commodity. Now coins are mostly zinc, copper plated steel and nickel with little intrinsic value.
    In the 1960s the old copper pennies (pinniiin) weighed a third of an ounce and there were 240 to the punt.
    Today copper is worth about $2 or £1.36 per pound weight. So the copper in an old penny is now worth about 2.8 old pence or 6.7 new pence or 7.5 cent. (In 2006 copper was worth $3.50 a pound, so a penny was worth 5 old pence as scap.) So the Euro in your pocket is now worth about 13 old pence.
    Silver coins struck prior to 1942 had 75% silver. Silver is now $12 per ounce, or $9 per 75% silver ounce. The shilling weighed 5.665 grams so there were five to the ounce, making 5 shillings worth €6.90. So the 5 shilling coin weighing 28.3 grams would be worth 13X6.90 = about 90 pennies If this were made up to 100 pennies per 5 shilling coin, (with 20 pennies per shilling) the extra 10 pence would pay the cost of the mint.’

    The first step in currency reform is to replace ‘funny money’ with coins of intrinsic value. Investors would then flock to our shores as the only currency speculation would be based on Ireland’s metal reserves and metal supply and demand, not government debts.

    Before leaving the Euro, the government must create reserves of those metals and base a solid independent currency on them, printing notes that promised to pay the bearer in specie coins.

    When the Irish pound was originally established in 1927, it had a real and clearly defined value. The new unit was to be known as the Saorsta´t pound, which would be maintained at parity with the pound sterling. Convertibility to sterling would be ensured by a full backing by British Government securities, liquid sterling balances and gold, under the control of the Currency Commission, and was underpinned by a guarantee that Irish banknotes would be paid at par in sterling (without fee, margin or commission) at the Bank of England.
    What we have now, as I discussed earlier, is a Euro that was worth 78 pence in 2001, now worth about 13 old pence, considered just as specie.
    When they launched the Euro the bank produced €4 billion notes and €230 million in coins.

    Does anyone know how much money is in circulation and in reserves in Ireland today?

    • Philip

      I agree with the need to define a base of some sort, so the currency has a “value”. But I think we can be more imaginative than coins or metal. We have 2M Employees each capable of generating an average of 50K. That’s 100Bn per year. Set your counter for printing kudos at that maximum and let it churn from there.

    • wills

      Malcolm: Full of ideas and solutions there,,, making it acomplete and utter common sense read, which is exactly what we all need. The answers to the problems must be old common sense solutions already tried and tested and awaiting to be used again, to which i reckon driving motor above is getting at. Taking the reins of our problem for ourselves and doing something now that will offer a alternative.

  20. martino

    I was shopping for groceries in Germany recently and wanted to buy some cheese. Kerrygold had some pre-sliced cheddar on the shelf, nicely packed, I think 175g for something like €2.50. Next to it was German produced cheese, 250g for about €1.50. Now, I really wanted to buy the Kerrygold but the head won out over the heart and I bought the less expensive German product. I know transport has to be factored in, but if we had our own currency we could sell our products cheaper abroad and boost our real export economy and balance of payments. Maybe it’s a good idea and should be talked about more. The Danes don’t have the Euro and I think they’re doing ok.

    On an aside I had some local election candidates coming to the door yesterday. I asked them what qualifications did this lady have to make her fit for public office. ‘Well she’s a woman, and a mother,’ said her canvasser. Brilliant, eh?

    • G

      people are pushing and asking questions, I like it, change comes dropping slowly!!!! good post martino, been in a similar position and economics won out, I go to Lidl and Aldi and I buy what I can afford, it works for me and many others…………….c’est la vie………..

  21. DavidIreland

    David, I have been following your ideas for a few years. I am sick and tired of commentators suggesting “nobody saw it coming”, “everybody got it wrong” etc. On the contrary, I read your book “The Generation Game” and it does good job of saying what was going wrong and how it could get bad. I see also that our “incredibly intelligent” leader spoke a few days ago touting your idea of tapping into the Irish diaspora – did he credit you with this?

    Your latest article leaves me puzzled. You say:

    “There is plenty of money in Ireland, but as we are hoarding, this money on deposit doesn’t translate into cash spending”.

    If this is true, then why is the banks deposit to loan ratio suggested to be so bad? I know I’m missing something – can anybody fill me in?

    Thanks and keep up the good work.

    • Philip

      Economic activity as represented by MV=PQ. Malcolm did a great job of pulling this out of the hat a few blogs ago. Money (M) is there, but it’s not moving – (V)elocity. Banks cannot lend and people not spending. P(interest is low) and Q (Activity or GDP) is sinking steady for now.

    • Deco

      “Nobody saw it coming” is the catch cry of the idiots who spent a decade lying to us about the fact that it was a ponzi scheme all along. It was not visibility that was the problem, but their own hypocrisy that determined their ‘official’ statement at the time.

  22. Garry

    It is a real shame that RTE havent comissioned a program on Iceland, how they are doing and what their options are…

    Even if it was done by our host who believes our future lies outside the eurozone, it would be informative and a timely reminder of whats going on outside our little island.

  23. Lorcan

    “beware of Greeks bearing gifts”.

    Must confess that I did throw my eyes to heaven a little this morning when I read your article. “There’s David with that old chestnut again”

    I’m sure I’ve posted most of this before, but here goes again.

    Firstly David, you are to be commended in the way you set out your stall. The first few paragraphs spend knocking straw men does pay some dividends when you approach your central argument. But unfortunately, your central argument is so ill conceived that any amount of reader ‘softening up’ could not save it.

    So yes I agree that the old logic has failed. But that was the logic of doing nothing, the logic of ‘hoping for the best’. It had (has) little to do with reality. I also agree that Ireland is in trouble, and this trouble has been widely reported.

    But then we come to this line “countries run out of money and IF this happens in Ireland”. Ok, so there’s an ‘if’. and it really is a big ‘if’. For Ireland to run out of money, not only will Ireland have to fail, but the whole of the EU will have to fail. As long as there is an ECB Ireland will continue to have access to funds to maintain itself. This may not run well with your argument, but that is the reality of the situation. We may be a saddle bag on the side of Europe, but they are willing to carry us for the sake of the system.

    You cite the examples of Sweden, Finland and Israel. They are all good examples of countries that had strong currency devaluations. But they are not examples of countries that abandoned their currency, which is what you are proposing for us. Even Iceland, for all its problems, still had the same legal tender that it had before all its problems.

    Abandoning the currency, as you propose will not work. It is an interesting thought experiment, but little more.

    A new currency would equate to a national default, which I’m not particularly against as an idea, but I fear the new currency would only be legal tender in name. The euro would still be the de-facto national currency. Which would you rather hold, the relatively stable euro, or the rapidly deflating Nuapunt? You might be able to convince the government of the merits of your idea, but you will not convince me to sell my small assets to your plan. I’ll keep my euros and I’m sure plenty will be happy to take them. Instead of pointing to Sweden, maybe you should point to the US$ in Zimbabwe or the € in Montenegro or Kosovo.

    Your own shibboleth seems to be that lower costs would lead to increased employment. Perhaps, but there is a global recession going on, so there may not be the consumers we would require out there. Furthermore, there is a large standard of living issue that you conveniently ignore. Full employment would be great, but living on (what would be on a international scale) chinese wage levels would be pretty nasty.

    • Tim

      Lorcan, great to have you back. I am divided in my thinking between your post and DMcW’s article; you provide an excellent counterpoint.

      Thank you.

    • Robert

      Agree with you on this one Lorcan. DMcW likes to throw this one into the pot every once in a while and I’m not sure I would agree with it!

      How many high-skilled jobs in Ireland are dependent on us being members of the Euro? Lots I’d say and I could just imagine the Polish Prime Minister drooling at the mouth at the thoughts of Ireland leaving the Euro. Furthermore leaving the Euro inevitably poses a further question: Should Ireland remain a member of the EU?

      Yes we could devalue our own currency to protect jobs and control interest rates but at what cost? Do we as a nation value our membership of the EU? For me being a citizen of the EU is a privilege. Unfortunately there are many lunatics in this country who think we should go back to the old De Valera idelogoy of living off the land and shunning inward investment!

      So what would they think if we turned up in Frankfurt saying

      “Jaysus Lads . . . thanks for all the billions and dat . . . but . . err . . .we want to bring the paddy punt back . . . . Sure we could always join the Euro again when things get better”

    • G

      Today, in the English language, a shibboleth also has a wider meaning, referring to any “in-crowd” word or phrase that can be used to distinguish members of a group from outsiders – even when not used by a hostile other group. The word is also sometimes used in a broader sense to mean jargon, the proper use of which identifies speakers as members of a particular group or subculture.

  24. Malcolm McClure

    Lorcan: Good to see you back as a valued contributor.

    You may have missed my suggestion above that a species currency basis for the nuapunt could be an acceptable alternative to the Euro. Those Euros in circulation could be used as collateral to purchase the necessary metal reserves and would remain legal tender during the transition.

  25. DarraghD

    Best thing that can happen this country now is that Lenihan has to make that walk of doom across the corridor to Biffo and tell him that the teachers can’t be paid in 2 weeks time because the cash has run out and let us take it from there.

    I think while we’re sorting out the house, well we may as well sort it out good and proper and while we can’t get anyone to take a chainsaw to the public sector current liability, well maybe then the solution is to show public sector workers what happens when the business goes bust, just like what happens when a private company goes bust.

    Maybe then we will all be able to sing off the same hymn sheet. I genuinely believe we need to run this ship aground so that we can get a proper good look at what state the propellers are actually in, or even find out if they are there at all! Then we can do the surgery good and proper and float the ship again and get back on our merry way.

    • Tim

      DarraghD, no need for that; teachers all over this country have been told this week that their jobs have been lost and their work ends on May 29th. Teachers in the school I work in were informed today that they have lost their jobs and classes for students have to be cut back from September as a result.

      Please, don’t believe the media spin that public sector workers have “secure” employment – they don’t.

    • Deco

      {Best thing that can happen this country now is that Lenihan ….} that Lenihan tells the banks he is not supporting them anymore. That the bankers can do without wages for six months. It is the concept of responsibility. Those who created the mess learn to grow up and stop behaving like a bunch of pretenscious status obsessed adolescents in beemers. The media will take advertising money and launch into them.
      Alternatively Lenihan should just tell the four top layers of the HSE that there are more of a hindrance to the delivery of healthcare than a help, and that it would be cheaper for the state to pay them the dole for doing nothing than giving them massive salaries…..
      And then there is the quangos. Not one has been eliminated and we are one year on from Lisbon I plus 1 day (the day the ESRI admitted that the economy was banjaxed).

      Lenihan is too soft. He picks on pensioners etc…And they know he is a coward, so he backs down. He also fails to grasp the economics of the taxation system. McCreevy understand it perfect – design the tax in such a way as to cause people to generate more tax, when they presumed they were avoiding it. I never thought it would work – but it did. McCreevy wanted people to save too, but elements in Irish society regarded this as reactionary behaviour and castigated him.

      • If McCreevey is that good (I freely confess that I barely know who he is), then why not get him back in to do a job in this critical period? A government of national unity and ability is what’s needed.

  26. did david say teacher’s pay I am still confused did anyone hear him…..teacher’s pay…….teacher’s pay……is that really true ? The coffers are dry……all gone ……imithe …….I am beginning to believe people are chosing to live in the sureal world and not the real one .The ignorance of the reality is mind bending a jiu jitsu of the senses .

    • Tim

      John Allen, see response on your “Blasphemy” post earlier today above. Look at the link…. ; )

      • I agree with Tim insofar as nobody is safe. Absolutely nobody. And Irishperson fighting Irishperson whether here or abroad is just assisting to maintain the status quo.
        I can see Tims viewpoint as a Teacher. For that is what he is. Uniquely, the IMO and INO are in agreement too. The ICTU even called a halt yesterday. Denial is over. The gravy train just hit the stops. Now thats the Union Collective AFU.
        I fundamentally disagree with Tims position on Fianna Fail.
        They have Failed.
        But at least he nailed his colours, as has George Lee.
        Good that recognised MEN (are you there Huffy) are stepping up to the plate.
        Incidentally, Mrs Furry had the temerity last evening on her own doorstep to question a former Fianna Fail TD about their policies. The Furry Household wasn’t aware of this but apparently a FG/Labour Cabal run the HSE. He was aggressive, overbearing and to quote ” if thats the way you feel don’t bother your arse voting”. Until I arrived at the door. Different story then.
        Are we to be bullied or intimidated into voting for more of the same?
        Now Fine Gael. Too soft and living off the fat of the Tiger with no accountability.No sign of them yet on the doorstep but they’re going to get the “Cowardice in the face of the Enemy” treatment.
        The rest are essentially irrelevent unless to make up the numbers in coalition.

        So, again with mind numbing precision, DMcW is 6-8 months ahead of his time. We need the IMF or some other August bunch of meat cleaving financial butchers to wade in here first to dismember what remains of this foolishness so we can move on.

        The video explains what will now happen to me,

  27. Tim – algebra came from the middle east so did architecture so did business actually you could say the computer also came from there too in a round about way , there is still a lot to learn from them……..also ….the tongue Atlantean ( gaelic ) originated from there too and their world made it one of the original astrological languages full of it’s secrets untapped and unopened .

    • Tim

      John Allen, isn’t Iraq the oldest civilisation on the planet? Wasn’t that area once called “Mesopotamia”, with “The Epic of Gilgamesh” being the oldest discovered writing? Interestingly, almost all of the great world religions began in the middle east. If there were a garden of Eden, it would have been there. Islamic banking may be the fiscal Eden from which western man has “fallen”. Can we ever return? Put the genie back in the bottle?

  28. pera

    “There are clearly issues with doing something as radical as this, as it would have to be coincident with a lifting of all state guarantees on interbank lending. The State could still guarantee deposits in the new currency. Many investors who owed the Irish banks or invested in Irish government bonds would get burned. But that is the nature of markets. They would be paid back in the new currency, which would have to find its value.”

    This seems to be moving more and more into the bad state solution which I have half jokingly have mentioned a few times before, but is now starting to look more realistic. Although I saw it more as shifting more and more liabilities on to the government, consolidating all debt private and public into one big debt and then start renegotiating, based on the future earning power of the country, thus keeping all assets free from liquidation. Not sure if skipping the euro is necessary in that case, might be easier to renegotiate debt if the debtors are backed by the euro

    Again the more obvious question is. Who is ireland competing with? China, Poland? is that why it is important to bring the costs down. Because general labor cost (wages taxes, prsi etc…) seem quite low to me in general especially if tax rates are considered. It would have been interesting to see how much an employer in different countries would have to pay in total to make sure an employee got 30k in takehome pay.

    I think it is important to start going into the specifics, before doing something drastic.

    If we disregard Ireland food industry which is mostly exporting to the UK, which export industry is that is currently suffering due to the high value of Euro? (there is less demand in the world which is affecting exporters everywhere, so the question is which of Irelands non food exporters would blossom immediately if the euro was weaker?)

    I can see the point in devaluing and at the same time reneging on the billions of debt that Ireland and its banks have borrowed from abroad in an effort wipe the slate clean, but I dont see the point in a new currency. Sweden has had a long tradition of industry and had manufacturing capacity available when they devalued. I dont know if Ireland has the same.

    As wills has pointed out a few times, Ireland behaved like a ponzi scheme over the past few years. If you have grown the economy 50% with borrowed money, it should come as no suprise that it should contract by 33% (maybe a bit more depending on interest payments) if nothing of value was created with the borrowed money.

    Lastly, there is one element which I am unsure if I can express correctly but which I feel is important to note when David is starting to compare Ireland with Finland and sweden. Having spent most of my time in a similar country, Norway, I have the feeling that the public sector was probably in a better state to help in the recovery than Ireland would be. The public sector in these countries might be bigger, but it is more evenly distributed and they have systems, maybe at times inefficient ones, but somehow I have the feeling that when these governments put efforts and money into infrastructure, more creches, nursing homes, urban renewal etc, this gets translated into more economic activity and jobs sustaining. Somehow, I get the feeling that a similar effort here will not have the same effect, I am sure deco would be able to express the reason for this much better. But somehow I would have the expectation, that a few will benefit, but the economic activity will not be notably affected

    • wills

      Pera, you will find this next comment from me bit strange, but here it goes,.. Irish people who sold their soul to the POnzi Devil are convinced they were creating value and it was real and they’ve invested all self worth, relationships, social tie’s in on this deal with the devil and here is the big problem we all on this island are faced with.
      Unfortunately from what I can ascertain, the number’s that signed up with the Ponzi contract are very substantial, I would guesstimate 80% of the wage earning public sold a piece of their soul to pocket the treasures they deluded themselves into believing they deserved. This
      emotional tie in with the illusory wealth that never was is an explosive combination
      and when you factor in the massive % of POnzi takers one is left but
      with one scenario in any given day, which is,
      a disaster of some sort,,,…

  29. I think the message in David’s article is ADAPT and morph into spider man and then back to human again without cuts and bruises and the speed of it will tell us how successful the decision made was. It makes sense to me and we need to believe in ourselves to Win.It’s about men being men and be seen to do so.
    Unless that happens I can only see the economy growing in the growth of ethnic shops that are springing up overnight everywhere sourcing their cheap products in parts of the world where they come from and this will eventually kill ‘Irish Value Added Products’ and everything about who and what we are .

  30. Tim – I agree with you .However , in my own inquisitive mind I still believe our island is a part of what Atlantis once was before it was distroyed and this is why I wrote the following

  31. matt

    Could somebody explain how a return to the punt would work? Would it be like the introduction of the euro, but in reverse? So we’d have a transition period during which the new punt would be pegged to the euro, after which it would be allowed to freely float (devalue)?
    Also, if the government were to announce such a changeover, wouldn’t anyone with liquid assets in Ireland be very foolish not to transfer them into another eurozone country before the transition – i.e. wouldn’t there be an exodus of cash from Ireland (not so good for our banks’ capitalisation…)?

    • Garry

      My guess is that if this idea was ever considered, it would happen overnight, with no prior warning as the whole point of the effort is to steal money whether thats deposits or money owed.

      So to quote the bard talking about killing Macbeth,… “if it were done, when tis done, then twere best it were done quickly”….

      • Tim

        …. about killing Duncan…….

      • paddythepig

        Indeed, and such a move would steal people’s hard-earned savings, and bail out the irresponsible debtors. I wonder where David McWilliams is keeping his treasure chest, while he writes this article.

        The Euro is not the problem ; Paddy is the problem.

        A devaluation – our second within 16 years – will prove to investors we cannot manage an economy. Any prospective foreign investor being repaid in Paddy Punts will demand a very high premium in the future. Paddy is not willing to put in the work to pay that premium.

        In the absense of foreign investment, Paddy will have to balance the books, and trade successfully with sustainable profitable businesses to pay the day-to-day bills. This will be a big departure for Paddy ; it means hard graft instead of funny money.

        Difficult as it is, the lessons being learnt today will stand the country in good stead in the very long run, providing we can survive in the short to medium term without bating the living bejaysus out of each other.


        • Deco

          {The Euro is not the problem ; Paddy is the problem. }
          I agree. 100% correct.

          Ireland is rotten, corrupt and incompetent. Ireland is fialing. And a critical mass of the population is too oblivious to the problem – just give them their alcohol, and a remote control and everything is well and they will vote for ditherer and his cronies everytime they are asked. Dissent is unpatriotic to these selfish corrupt lazy well connected morons.

          In fact your entire comment should be printed and stuck onto the gates of Leinster House.

          Traditionally when there is a crisis in Ireland, one section invents a policy demand that amounts to screwing more money out of the market, and the tax revenues. We only have to look at the lobbying of Parlon, or IBEC to see this in action.

          In the elections – we do not need to give a good thumping to one political party on it’s own. We need to give a resounding thrashing to an entire political culture. We need to have the political system begging the electorate for support. We need to have them some thoroughly terrified that they will reform everything and still live in fear that we will reject them, and vote in politicians who will leave previous politicians completely pensionless.

          And if that means voting for Ming the Merciless, or whatever nutjobs are out there, we can do this – until we literally bring the system to a complete stop. Until the secrets of the system are burst open and reveal to all. And then we will clean up this country. We need to particularly humiliate FF/GP candidates who are working in the same area as power magnates/ incompetent mininsters. We should do the same to FG/ILP/SF activists who are working in constituencies where these parties provide muppet level opposition. Undermine from below, the incompetence in the system.

  32. Deco

    { A shibboleth is a mantra to which people get attached because it is easier than hard thinking. If enough people repeat the mantra it becomes gospel, and instead of using our heads, we exchange alleged truisms.}
    You know all my life I have been living in a society that is full of this sort of thing. This is it. We have been lying to each other. And now we have a term to desribe this. And this term is something I have never heard mentioned publicly in Ireland. Knowing this will help reform our society.

    And worse, with every year these ‘shibboleths’ got larger and fatter and more delusional. We were told that FF could run the economy, that Irish alcohol consumption was not a problem, that Irish society was civil, that Bono was honourable, that the Irish Times was the paper of record, that Bertie Ahern won 30 grand at the races, that Liam Lawlor was chair of the Dail committee for implementing standards in public ethics, that Ryan Tubridy had talent, that Ireland had the best economy in Europe, that following the Irish soccer time was worth the expense, that the Irish concept of management was an asset, that the problems in the HSE were due to insufficient funds, that BoI/AIB were ‘solid’ companies, that the children of the nation were all cherished equally, etc…Up until now we would have termed the above as BS….but now we have a term….

  33. Deco

    Did the Euro fail Ireland, or did Irish authority fail to use the Euro ?
    The Irish concepts of authority and of managment have both failed…It is easier leave the Euro than fix those problems…because fixing those problems would take a decade…and might start another civil war…

  34. Deco

    {a story about how Limerick was like the third world}
    take out Dell and that is the way it headed….Ireland’s regional impovrished post industrial type city…a mini-Detroit….bread and circuses….clowns like O’Dea on a massive pension…..rotten with crime…awash with drugs….substance abuse the rule rather than the exception….cops scared of criminals….no law and order….gangs roaming the estates at will…..guns everywhere….chronic instutional failure and apathy….class ridden….even worse than Angela’s ashes….100 times worse.

    I think that currently Ireland is in a drift to becomming another Wales….skint….silently in despair…broke…everyone on a welfare scheme of some sort…and trashed out….based on the intellectual content of what the nation is becomming

  35. wills

    To begin, another fighting brave article as far as i’m concerned irrespective of the substance of your comments.
    It does not take a genius to see POnzi Rep and the Rep. of Ireland’s real economy and responsible communities are standing
    astride each other eying each other up assessing the economic abyss the POnzicon’s have sunk Ireland into.
    Ponzicon’s interests rest in figuring out how to re-inflate the property bubble and are beavering away in conjunction with the
    interlocking Ponzi web hub ECB too raise POnzi funds to hold the
    door open on the POnzi property re-inflation option.
    Rep. of Ireland real economy citizens are holding the line in contempt and sickening outrage at the gangsterism of the Ponzicons
    and the utter callous nature to their in your face POnzi ramsacking
    of the taxpayers account with the gov too anchor the POnzi Rep in a PONzi culture for all time by the transferring of all toxic waste from the
    post celtic tiger POnzi property bubble swindle and bitch slap it onto the
    feudal serf real economy workers,.
    Any solution to our political economy saving itself from this perversion of ‘living beyond one’s means’ and it’s toxic waste poisoning
    our children and economic integrity safekeeping our sovereignty and
    living to fight this cultural rot will in my estimations call upon all those
    who are up for the good fight back like David is to be open to any
    measures that will offer a potential remedy, no matter how wacky.
    Cos’ as far as I am seeing it, these POnzi lunatic’s are not going
    down without a good fight and are intent in dragging the rest of us
    down with them when their POnzi ship sink’s to the bottom of the ocean, which it will do.

  36. martino

    After Dell announced they were leaving I had the following thought. Why don’t we, ie. the State, take control of the Dell factory and start producing cheap, generic computers-in effect Dell without the name-and start exporting them? Why couldn’t we do this with other products too? The know-how is there and in many cases the infrastructure is there. With our own currency this would be even more feasible. We could do this with software, pharmaceuticals, food, alcohol, etc. I mean really go for an aggressively competitive light industry export base. A kind of high tech Hong Kong for Europe and America.

    • Tim

      martino, why not, indeed. Since the state can take control of a bank, why not a profitable industry with a skilled workforce already in situ?

      Good point.

    • Deco

      Martino – you were doing fine until you added ‘the state’ after we…the state cannot run anything properly…1985 we had a health service that functioned. It was cheap, the equipment was old, people were not terrified about what they would pick up when going into hosptial, there was no MRSA, no superbugs, no waiting on trolleys. There were dodgy doctors, crazy consultants, and the odd coverup. Few ever got to hold the taxpayer over a barrell and demand exhorbitant wages. Mostly it was run by a bunch of old nuns, and the nurses under them. There was little or NO MANAGEMENT in the hospitals back then. Yes, that is right. In fact it was very decentralized manner with the nurses being in charge a lot of the time. And it worked. It was so successful, that the gombeen mentality in Ireland had to end it. It was abhorent to everything gombeen like in Ireland. I mean if PWC had to do a report, they would have been baffled at how it worked without any executives. But that is the thing. “Management” is over-rated. And bad management is especially over-rated in Ireland.

      The state took over. The state introduced “Irish Management”. Since then there has been one failure after another. That is a fact. Irish management has failed in both public and private sectors. And in the state sector it has failed utterly and completely. We know have 18 Thousand managers in the Health sector. Doing what ? Nobody knows ! Even athiests would prefer if the nuns came back and ran the hospitals again.

      So if you want the state to run Dell, don’t appoint any Irish managers. None. Put nuns, Germans, Canadians, golden retrievers, cardboard cutouts, actionman figures, daffodils, or anything else you can think of in charge. Anything else. The culture that pervades in Irish management is inept. No management would be better than Irish management. But nobody grasps this. There is no honest appraisal of Irish management. Instead we get glowing tributes that are all inaccurate and unfounded.

      Of course it is still possible for the IDA to allow a co-operative to take over the Dell factory. That would be an option. But it would be mired in bureacracy, having to deal with the various quangos. And the gombeens would not like it.

      • martino

        Yes Deco, I see what you mean, ‘Even athiests would prefer if the nuns came back and ran the hospitals again.’, very good!

      • Tim

        Deco, it would not require “management” at all; the workers themselves know what to do, are skilled at what they do and would be very happy to continue doing it.

        What is all this “management-looking-over-your-shoulder-business” for, in the first place? Does a successful farmer have a manager looking over his shoulder? Gosh! How was he able to grow his crops, raise his sheep and cattle and milk his cows without a “manager”?


        • wills

          Tim: It’s all feudal control,. management is the feudal enterprise supervisors.

          • Tim

            wills, it may be worse than that in a way; who here, in business, has a “manager” ruling over their other employees? None, I would suggest; because people who are willing to work, themselves, and know their business well and their employees well, do not need an intermediary. Look at Harney as an example: layers of “managers” between her and the object of her portfolio. I bet she has even tried to get Drumm to address the INO on Friday in her stead, but he refused – quite correctly.

            The day that I end up in hospital, it is the nurse I will trust to do her job well – not Harney and not the “manager”. When you are sick, you need care; not a “pen-pusher”.

            The HSE spends more money on “pen-pushers” than on frontline “care”.


        • Deco

          Tim. Exactly. I was in hospital before the credit crunch. I never had any managers. I did encounter one senior doctor. And I observed this.

          Everybody in front line care knows exactly what they must do. The Front Line care staff in the hospitals DO NOT NEED MANAGEMENT. The entire hierarchy of management in the HSE is absolutely surplus to requirements. It is not needed. The organization needs to be flattened as much as possible. It creates nothinig but morale problems. And it is costing the country an absolute fortune.

          This is a serious structural impediment. It applies to the private sector also. And I think that it has it’s roots in the cultural mores in Ireland that find nepotism and cronyism as inevitable.

          On a related issue, Eddie Hobbs has resigned from the National Consumer Agency over the evidence given to the Tribunals from the ex-Taoiseach’s ex-girlfriend. Hobbs has done us a favour. Nepotism is rife in Irish life, and is generates nothing but incompentence. It contributes to inefficiencies which ratchet up our cost base.

        • G

          Self-employed way to go or workers co-operatives with more democratic control over the means of production.

          ‘management’ is largely unnecessary and is primarily about societal control, begins in school and ends with the grave. There is this argument about ‘management’ improving processes, but the workers knows more than anyone, but you can’t give them power because that may filter into society and then change is a real possibility.

          Layers and layers of management dictating the ‘way things run’ is one giant game of control, which weakens movements and disempowers people, leading to lack of confidence, imagination, innovation.

          Goes someway to explaining why society is the way it is – fat ass of management sitting on people who often know better.

          • That’s the reason why I’m unemployable in Ireland. I refuse to work for any ‘fat ass management’ with half my brains. This principle has served me well over the years.

      • liam

        MRSA is not caused by ‘dirty’ hospitals and the absence of Matron. This is Daily Mail twaddle peddled by newspaper sellers to appeal to the ignorant. The fact remains that standards of clinical care have risen considerably since the 80′s.

        The nuns/Church’s main impact is that they worked effectively for free, and this is also true for care homes for the elderly (which the private sector now charges individuals and the state a fortune for) and education. Be in no doubt that we have benefited greatly from the professionalisation of these services, through both a general raising and harmonisation of standards, though this has inevitably come at a financial cost.

        I think what you’re actually saying is that vital support roles such as management also require professionalism and can’t be deal with by a bunch of public sector administrators ‘turning their hand’ to management.

        • Deco

          { The fact remains that standards of clinical care have risen considerably since the 80’s.}
          Liam – tell that to the people sitting on the trolleys. Tell that to the people how have lost relatives, or who have been operated upon incorrectly, or who have recieved the wrong medication.
          In the 80s the entire system was based on paper records, and things people remembered in their heads.
          The real difference was that there was “care” in in healthcare. All the layers of management have done is created a concerted effort to squeeze that out of the system. Too many managers creates all sorts of nonsense, waste and ineptitude. And this is exactly what has happened now. There are morale problems, apathy and indifference. The unions address this by asking for continual pay rises. They know the institutional set up, and they know that getting rid of the clowns is impossible – because the clowns have been appointed by politicians, and they have their protectors. The difference between these people and the nuns, is that these mangers don’t give a …. They are gombeen parasites on the system. “Help the Party, and the Party will get you a ‘position’ in the state job hierarchy”. That is what is happening. [just look at the headline in today's Indendepent concerning Ditherer's old flame holding a directorship for being useless]. It is just like the Soviet Union. Except all the parties that can do it, are at it. It is socialism for insiders who become bosses(no meritocracy), and capitalism for the sick(you pay or else the service is bad).

          Therefore I am saying – flatten the hierarchies and get rid of 15000 of the 18000 managers in the HSE. The front line workers will manage themselves. They got into it, because they wanted to look after sick people. They were managing admirably in spite of all the nonsense thrown at them until the HSE ‘followed the corporate approach’.

          The HSE is a quagmire. And it is exemplification of what has gone wrong with Ireland Inc at a wider level. David McW might be interested in analyzing it as an example of an institution that can tell us of the flaws that exist in Ireland that need to be fixed. (Hint – don’t read a consultants report – they are only a fudge – better carry out interviews of random staff, and assess what is happening for yourself. Remember the official line is always flawed).

          • wills

            Deco; Very accurately explained..,, MRSA is proof positive a breakdown has occurred in the hospital wards to a significant degree that poses a threat to the patient in care. The 70′s and 80′s and 90′s never saw this completely unacceptable prolem.. The hospital’s are not clean, and it is because of a lack of pride in work which stem’s back to a lack of someone been in charge in a real way and not a team of this and a team of the other passing any real responsibility up or down the chain of command.

          • liam

            Hi Deco, Thanks and I wholeheartedly agree that there is a management problem in the HSE. My point is merely that attendant with the professionalisation of healthcare practise, there should also have been a change in management, to specialists in healthcare delivery, not just public sector generalists. Management is an essential support role in any organisation. And you do a disservice to those in management who’s motivation is equally compelling to those in front-line positions. You don’t have to be a doctor or a nurse to be interested in and capable of improving peoples standard of health.

            You are free to disagree on the standards of clinical practise but I still contend that the healthcare availabel to people today is better than what was available 20 years ago, but delivery is another matter People are not on trollys because the people at the very top of the HSE and ultimately in Government are insufficiently motivated to do the right job.

            Wills, the MRSA and cleanliness thing is bunk. MRSA has evolved to fill an evolutionary niche carved out by the widespread use of antibiotics and antibacterial materials. It is in fact a direct consequence of hospital cleanliness, not the lack of it. Its a problem in every developed country.

            None of these problems will be solved by ‘bringing back the nuns/Matron’ or by firing half the HSE. I think its probably important to identify the problem and its root cause before proceeding to solutions

            Liam out.

          • Deco

            Liam – firing the incompetent layers of useless managers in the HSE will help solve the problem. In fact it is the most critical element the problem will be solved by firing the current incompetent managers in the HSE.

            It is an acknowledged fact that the HSE is top heavy with management.

            The Irish tradition of enduring authority despite obvious underperformance is the one concept which has become completely obsolete.

            We have a cultural problem with respect to authority exemplified by the fact that a trained health specialist like Prof. Drumm spends the entire time looking after and promoting his cronies. I don’t care how many academic qualifications he holds – he is not doing the job properly. People working in factories and callcentres are being sacked for much less every week. We tolerate too much incompetence from people in authority. And this means that we get lots of incompetence. And this is a cultural problem and it must be tackled if we are to perform to some sort of ideal expressed as belonging to Denmark, Canada, etc..

            In consideration of the advances brought about by Information Technology, and health care technology, the “progress” acheived by the HSE is abysmal. Were it not for the Intel chip, and American advances in medicine, and diagnostic equipment, the Irish hospital would have regressed to the state of the 1960s by now. The work ethic has been squeezed out of the system by management incompetence. Harney, Martin, Cowen, Noonan, et al take responsibility.

          • liam

            Top heavy management generally suggests a bigger problem with responsibility than authority.

          • liam

            And anyway, how do you Identify who is incompetent, who is not? How do you determine the ‘optimal’ level of management? Just saying ‘fire the lot of them’ is cathartic but ultimately rather unhelpful.

          • liam

            And anyway, how do you Identify who is incompetent, who is not? How do you determine the ‘optimal’ level of management? Just saying ‘fire the lot of them’ is cathartic but ultimately rather unhelpful.

            Anyway, OT.

          • liam

            And anyway, how do you Identify who is incompetent, who is not? How do you determine the ‘optimal’ level of management? Just saying ‘fire the lot of them’ is cathartic but ultimately rather unhelpful.

            Anyway, OT.

          • liam

            sorry for the multiple posts, some sort fo connectivity problem… the tubes are long and they are thin….

  37. Tim

    Folks, I sent the following as an email to Vincent Browne tonight:

    “Dear Vincent,

    John Maloney said that “no-one had predicted” that the economy would have been this bad, twelve months after Brian Cowen took the office of An Taoiseach.

    This is untrue.

    David McWilliams and George Lee were both predicting the bursting of the bubble.

    Please challenge John Maloney on his statement.

    Kind regards,

    He did not read it on air. I wonder why? I know (from his article yesterday) that Vincent is annoyed with GL because he can do very little on the opposition benches, but why oh why did he not challenge Maloney with the TRUTH?

    • wills

      like your style tim, like water, slowly wearing the rock down, no gunsmoke,. posing the truth prosaically,,.. methodically,,…

      • Tim

        wills, indeed id is like water erosion……… waves crashing every now and then helping me, but I will whittle away, despite the obstacles. Thanks for your help/encouragement.

        Not sure about your “9 pointer” last night, though. Tongue-in-cheek?

  38. Johnny Dunne

    There is an urgency now of getting a real debate going on the value of the euro to Ireland’s future prosperity versus the potential costs ?

    Ireland over the next few years based on recent trends will lose more US multinational companies (MNCs) not necessarily for better tax regimes but relative cost per empoloyee compared to other developed markets. MNCs are leaving Ireland even from the so called ‘high tech’ sector which is dominated by US MNC’s with operations centers based in Ireland collecting license revenue from Europe, Middle East and Africa (EMEA). We are not competitive as an overall economy for MNC’s (cost per head and €:$ or €:£ exchange rates) and we have not been for a while, that’s why employment in productive industries is down the past few years. In 2002 it was 0.88, now it’s 1.33 that’s a 50% increase in costs in USD terms the currency they report in – we look now more expensive than other ‘tax jurisdictions’ such as Singapore or Nevada in the US

    The top line has been misleading by the revenue for US multinationals booking all their EMEA sales through Ireland. This does not seem to be picked up by economists or government policy makers as to the reason why our GDP figures have been relatively robust until recently, now propped up by selling pharmaceuticals back to the US. Economists see the buoyant services exports as harder to replicate ? But we are not delivering services, we are just booking revenue. Any tax effective jurisdiction can have ‘data input’ jobs. Imagine if Microsoft left Ireland for a new jurisdiction. This would leave Ireland Inc with a hole in GDP of well over €10 billion (just less than 10% of exports) and the loss of only 1,000 jobs.

    Consider this announcement in the past month from Xilinx – are these moving due to the Cost per head (CPH) being too high in euro’s versus USD – let’s book EMEA revenue in Singapore ??

    “Technology firm Xilinx is to cut 130 jobs at its operation in Citywest in Dublin.Some of the jobs will be moved to the company’s operations in Singapore, while others will be outsourced.”

    The solution might not be exiting the euro but we need to consider the current impact on our incomes and ability to compete for jobs ?

    • Garry

      Good point Johnny.

      The change to the value of Euro vs dollar/sterling is really crippling exporters whether they are booking revenue or actually making stuff and selling it.

      I dont have a solution, one idea was to have a maximum public wage here to get costs under control. Another could be to allow exporters pay less tax… how to do that without being ‘protectionist’ would be difficult.

      Its much harder to bring costs down when staying with the same units, people dont want a 50% pay decrease but could be fooled into being paid in paddytrinkets..Either way, its not just the exporters costs that have to come down, domestic costs have to come down to be competitive.

      If someone could show how debt could be handled by exiting the euro, then its worth considering. No matter how you look at it, the debt is the elephant in the room, as it grows it cuts off more options.

      All options should be on the table… maybe even having a USD zone inside the country…

  39. Tim

    Folks, I posted this on the last thread, in answer to Macolm’s (very valid) question: it may help some of you to understand my position (with which, many of you disagree, I know…., but that’s okay, Robert and Furrylugs – we are allowed to disagree….).

    Malcolm, I understand your query. In fact, I am pulled in two directions, myself. If you will indulge me while I ramble a bit, I will attempt to articulate my position:

    There are many in FF who, like me, disagree vehemently, with current government policy and have been raising DMcW’s points since “The Pope’s Children”, if not before. We have not been listened to by the parliamentary party and have noticed, over about 6-7 years, that there is a new tendency in HQ to ignore the grass-roots. This is not being accepted silently.

    I have said here before that Joe Behan is the only FF candidate that I was willing to canvass for in the last election – we did a good job, I think: he was elected. I am not disappointed with Joe. He is honest and wears his heart on his sleave. Many in his constituency are disappointed thet he “took off the jersey”, by resigning from FF and will not even speak to him – he told me himself that no-one but Sean Haughy will speak to him in the Dail. That is of little use to anyone, however the electorate may view him. Within FF, you have a chance of promoting your view if you remain “loyal” and within the fold. If you do not, you risk being “shunned”. If one desires to be effective, one cannot suffer shunning – that renders one completely ineffective. That’s the way it IS. Criticise it all you want, but that’s it.

    Now, it is about holding power: literally, having the right number of Dail members voting the way you need them to, in order to remain in power. It is a numbers game.

    Some people (even some on this site, intelligent as they are) say that we should “vote them out”. You know, as well as I do, Malcolm, that that is impossible and a misnomer: one can never vote someone out – only “in”, instead-of.

    Now, who controls when the next General Election will be held?

    In the first instance, the people control it, through the constitution: every five years.

    In the second instance, the sitting government controls it and decides to “go to the people” whenever it sees fit – but it would only do that if it felt it was popular and going to win.

    Contrary to popular opinion, the President does not have the power to dissolve the government UNLESS An Taoiseach requests her to do so.

    What power does the opposition (which George Lee has joined) have:

    NONE! unless it can garner extra votes from the government side of the house in order to win that vote.

    “Force a General Election”? You cannot, unless the current government agrees to call one earlier than at the Constitutionally appointed time, or the Dail vote on some issue defeats the government vote.

    One cannot pass Junior Cert Civics without knowing this, so why do so many people persist?

    FF wil lose this forthcoming local/european election; and the two bi-elections as well, perhaps. But that will not change anything. Of course I am familiar with the phrase: “A leopard cannot change its spots?” But I am evn more familiar with the phrase: “Sit in the long grass”. (Meaning: if FF is not in the government the next time, it will be thereafter. (Can you, as a self-professed historian, name two consecutive “non — FF governments”? You are better informed than I am, if you can).

    So, the party “of choice” over time, has been FF. I am a political activist, seeking to have my views addressed………… what party do you think I should use to channel my views?

    I am not sure if this answers your question adequately, but I tried, Malcolm; because you did.

    • liam


      “Within FF, you have a chance of promoting your view if you remain “loyal” and within the fold. If you do not, you risk being “shunned”. If one desires to be effective, one cannot suffer shunning – that renders one completely ineffective. That’s the way it IS. Criticise it all you want, but that’s it.”

      There is a word for this, it is “oligarchy”. I suggest you re-read what you just wrote and re-examine your reasoning for continuing to support FF.


      • wills

        @Liam; how did you get that typo effect,. i use a macbook. much obliged if you could tip me on it.

        • liam

          html codes. WordPress (which is what our kind host uses) supports most standard html in comments. Now don’t go mad with it mind :)

    • Malcolm McClure

      Thanks Tim: I’ll reply later.

    • Deco

      Tell Joe that there are hoards of people who hold what he has done in very high regard. He has got the respect of the people.

      Joe can look at the entries on this site, or any web log/website discussing today’s Ireland we will see a continual stream of derision and abuse directed at Ditherer, Dempsey, Coughlan, Cullen, etc….That is nothing compared to the contempt thrown at them by the citizenry. I listened to Joe on Prime Time a few months back. He was honest about the deficiencies of expertise in the Dail, and especially in the cabinet. He was saying what everybody knows. Since then he seems to have been shoved off the airwaves.

      But he is on the right side of the argument. That is a good position to be in – even in a country like Ireland where those on the wrong side of the argument persist in their arrogance, and has a grip on the establishment.

  40. liam


    Within FF, you have a chance of promoting your view if you remain “loyal” and within the fold. If you do not, you risk being “shunned”. If one desires to be effective, one cannot suffer shunning – that renders one completely ineffective. That’s the way it IS. Criticise it all you want, but that’s it.

    There is a word for this, it is “oligarchy”. I suggest you re-read what you just wrote and re-examine your reasoning for continuing to support FF.


    • Tim

      liam, do you think that I did not “re-read” it? Please try to understand the rest of the post and comprehend why I, though questionning, remain? BTW, I suspect most other parties take a similar view of those who leave, though I have no ready-example.

      • liam

        Hi Tim. Sure, happy to.

        So what I’m getting here, and correct me if I’m wrong, your suggesting that FF control of major decision making is inevitable, as they will always be in power, now or the next time around, so are therefore the only effective vehicle for change.

        The opposition, (being anyone who is not FF,or ‘of’ FF like the PD’s) if it forms an administration, is an aberration and therefore ineffective, and if you really want to make a difference, you’ve got to take the long view and erode/mould from within (what I have called) the oligarchy.

        Its a compelling argument and it could be argued rooted in a pragmatic vision of how things really are, almost a realpolitik approach.

        Is that about right?

        BTW I am for myself more or less unconcerned as to how any of the parties view the diaspora (though with an eye on the future, an Ireland that would be a pleasure to live in gives me more options). I am far more concerned about the very real and direct effects Irish political shenanigans have on my family and friends who live in Ireland. That’s really where the rubber hits the road for me.

        • Yeah, I’m the same Liam; I’ve no intention of ever going back to Ireland to live but I’d like a better deal for the people who are still (stuck) there; my parents and friends, the people I grew up with, and the wider populace. Plus, the criminals who have raped the place since time immemorial should be brought to justice, whatever party (or not) they are/were in. As someone else mentioned, this sort of corruption and cronyism goes on in every country, in every corner of the globe, not just Ireland and decent people have to keep plugging away in trying to eradicate it. It’ll take many more years, decades or even centuries but the Internet and transparency etc. helps. In other countries they still can’t feed themselves which is a disgrace in this day and age. Let’s hope Ireland never regresses to that.

        • Tim

          liam, yes, that’s about right. Thank you for taking the time to comprehend my post in this benign manner.

          • liam

            Sure thing, I’m here to learn. I hope you will consider my response in a similar spirit. Now I’m sorry if some of this upsets you, I think your probably a nice chap, so don’t take it personal, like.

            The problems I have with this position are thus:

            Last time I checked, Ireland was not a one-party state.

            But, in some way maybe FF is the natural party of government in Ireland. The electoral system and the fact that Ireland has a huge number of TD’s per head of population tends to ensure that political conservatism is dominant and that minority opinion is very much minority. Of course the danger with this, which must now be so plainly obvious is that it also encourages mediocrity in national leadership. Ireland in general and FF in particular produces pot-hole fillers, not statesmen.

            As far as FF’s internal decision making is concerned, I can see why you are annoyed at George Lee. He is automatically now the enemy so anything he says, FF will be compelled to either ignore, attack or do the opposite of in order to save face.

            I don’t want to get all party-political on you but I can’t accept that every major political decision that was made to the benefit of the country was exclusively attributable to FF, thats plainly nonsense.

            But even if you agree with everything I disagree with, and if FF is the only real power in Ireland, how on earth do you explain the utter mess that the country is now in? And how do you justify continued support for those responsible?

            And in fact this is not the first crisis Ireland experienced with FF at the helm. I have vague memories of populist but disastrous fiscal carbuncles in the 70′s and 80′s that FF left the ‘opposition’ to deal with. The moronic electorate forgave them then, and maybe you’re right to assume they will forgive them now. A classic case of repeating the same actions and expecting different outcomes.

            How can one individual witihn the party change anything if as soon as they disagree with the party line, they are shunned? This is the behaviour of an organisation that refuses to evolve to changing circumstances, if we are to believe that it has the interests of the electorate at heart. Judging from their behaviour and applying your pragmatic Realpolitik approach, I can only conclude that they in fact put their own members interests to the fore with everything else a secondary consideration, including the interests of those that they purport to represent (FF is not the only party with this problem). Most important to them are its relationships that have been build up over years with the local industries and lobby groups which help to get their individual members get elected every year. It is a system that motivates its members to protect the status quo. Any radical departure from this can be easily held in check or neutralised. Its what engineers call a self-correcting system.

            I promise you one thing: If you think that continuing to support a party that has consistently proven its ability to run Ireland in to the ground and has pissed away a truly historic period of opportunity will result in a change of policy by them, you are in for one huge disappointment. I admire the fact that you take the long view, this is a rare position to take, but this party is not going to change no matter what the time scales involved are. Why should they? As you say, they are almost guaranteed the support of the electorate no matter what, and this is the central irony of your position: you are part of the problem, not the solution no matter how much you would like to think the contrary.

          • Tim

            liam, you may be surprised to learn that I agree with you in almost everything you say in your post. Only three things I disagree with, and they are all in your final two paragraphs:

            1) The voice of dissent in FF is not shunned, it is the most important voice in the room; the shunning only occurs if you leave the party and/or express the dissent “outside the room” before saying your piece “inside”.

            2) Change is always possible and politics is the art of the possible.

            3) I am not part of the problem. A person who is trying to fix something that is broken is not part of the problem; I am not alone; there is quite a groundswell coming from the grass-roots in the party and that WILL bring change – incrementally, perhaps, in “baby-steps”; but it will come.

            No offense taken; nothing personal – yet! (BTW, I am here to learn too).

          • liam

            Fair enough Tim. If you believe incremental change is possible (and you should know better than I on this), then good luck to you. Baby steps are good. I sincerely hope your energies are not wasted.

            What would you think to the idea that Ireland should have no more than 1 TD per 100,000 of population? Personally, I reckon that’s too may pot-holes for one eejit to fill.. It might force candidates to compete on issues that have impact on that scale, ie. ones that are likely to have national not just local relevance. It would probably also change the two-party civil-war politics dynamic.

    • Deco

      I think is there based on the principle that you have to change from within. Basically trying to improve the competence level.

      The fact is that Tim is supporting a FF TD who is a thorn in the side of the selfish machinations of the FF hierarchy. As such Joe Behan is very useful to the people. He is using FF funds to get elected and then stop criticising FF publicly from within. He is weakening the grip of Cowen and co. He is thereby making them more accountable. Before McGuinness criticised Coughlan, Behan needed to be expelled from FF for saying that Lenihan was not able to do his job properly. Basically somebody needs to be prepared to absorb the ultimate sanction for dissent, so that others will follow. It is a gradual process of increasing the level of dissent at all levels. We need dissent and public discussion about the problems facing us. There is a tendency of “with us or agin us”. This is absolutely stupid. We need more public dissent in Ireland. There was not enough public dissent in the binge years. David, Shane Ross, and Hobbs offered dissent. They did us a great service.

      • Deco

        I meant instigate criticism from within FF in a public manner. A brave thing to do. It is undermining bad policies from a government that is committed to staying in power for five years. Gormless wants it even more than Cowen. So Behan is bringing accountability to arrogant people. A true public service to us all. And Tim, you helped him do this.

      • liam

        FF is incapable of change, see my post above.

  41. Fillie Sophie – I think that some of us , all of us or a few of us should request our host to meet for ‘high tea’ for a chat in a light hearted way and we all listen to each other .It should be fun and it’s the least we should do for now.

  42. Tim – the sharia ( Islamic ) banking law principle gives more protection to the borrower on a principle private residence, including those loans operated by bank of ireland and other irish banks, than the traditional common law rules applied .Thus in the event of a foreclosure those that have requested a ( say ) ‘moslem loan ‘ in ireland need not fear while those that up to recently received a ( say) a ‘christian loan’ do need to fear .After yesterday’s announcement by the Pope we here in Ireland should ponder our future wiser and seek a choice , a renewal , or all failing a new blessing facing any direction you chose.
    A new loan compass should be drawn up to include the coordinates for : Mecca , Rome , Merrion Square , Seannie Fitzie’s Home , Buckinham Palace ,ECB Head Office , Albania , Las Vegas , and lastly but not least …………….Dun Aengus . A few lepracauns should be in view with a pot of gold beside them.

    • Deco

      John Allen – The ‘prevailing’ loan mechanism was working fine until five years ago.
      The real problem is the moral component of the people running the system. And the fact that many of them did not know what they were doing. Due to the fact that they were not experts, but just a bunch of cronies appointed by each other. Nepotism and incompetence. David asked as hard a question that could be asked in his documentaries. And it was difficult ask questions then. IBEC (bankrolled by the banks) were having a massive influence on the media.

      You might also want to include co-ordinates for “Fagan’s pub Drumcondra”, BoI on O’Connell Street(Bureau De Change) and as well include the Man U grounds in Old Trafford….’Was a gift or a’ loan – ‘it was a loan…I needed it for me dawtters’….’whot munny….I don’t remember dat sum o munny….oh that sum…eh I forget…yeah I can’t remember…ah sure….I don’t know where it came from….I won dat munny at de races….yeah now I remember’…’s inspiring quotation from the book of Bertie…

  43. Deco

    David – the real problem I see with your proposal is this – we import all of our fuel. In essence, the price of fuel would not go down. Our wages in real terms would decline. Our fuel bill would rocket. We would not get away with as much inflation as we wanted. And besides it would let all them quangos continue indefinitely.

    Besides are we not just reducing the value of our deposit base in the process ? I mean we have a capital availability crisis right now- and will cutting down the savings of those wise enough to have agreed with your scepticism on the Irish economy, not leave the more intelligent part of the population shortchanged…Even if we devalue the currency Ireland will still have …to many shops, too many shopping centres, too many hotels, too many pubs, too many leisure centres, too many government institutions, too many houses, too many apartments, too many SUVs, too many (bad) banks, etc…….serious malinvestments….and not enough money invested in productive sectors of the economy…we have a list of structural impediments. The Euro places an impediment on us to do something about our structural impediments. It forces us to reform our society or be bankrupt for a generation. Surprisingly enough, the vested interests seem to be pushing us towards terminal bankruptcy…

    • gadfly55

      The private sector debt is 1600billion euro, to be paid back in euro, apart from ongoing import costs to businesses and consumers. We will have to pay back in euro the interest on this debt. Then there is the conversion of 455 billion euro on deposit, most of which would fly out of the country, whether it is foreign or domestic in source. David is demonstrating the effects of heatstroke in Oz in his suggestion, and anyone who can do simple arithmetic can do the sums. Breaking the link with the euro is a fool’s errand, and would destroy the country in ten minutes.

      • Deco

        The pirvate sector debt is 1600 Billion Euros. That is the problem. It is in Euros. Most of it is owed to continental banks. And when we institute the exit from the Euro, we will be left owing Euros. Our Punt 2.0 will be trying to accumulate value paying of Euros. I am getting annoyed because I realise how much effort will be required to fix Ireland after the “Bertie Binge”.

        The way out of this is clear.
        We have fix all our problems. No more dithering fudging or playing to vested interests.
        Work even harder.
        Save every penny.
        Study harder so as to improve your productivity.
        Ireland needs to fix it’s alcohol problem right now because it is diminishing the wealth creation process.
        The state needs to tax the rich massively to pay for the banking farce, because the speculators made the most money from the liberal lending mania.
        Ireland needs to clean up it’s substance abuse problem.
        The Criminal Justice system needs to be made thorough and more effective – the no-go areas in Blanchardstown and Tallaght need to be normalized.
        The quangos need to be eliminated to nothing.
        The state instutions need to get flattened and made more efficient and more open.
        And politicians pensions need to be completely eliminated. Nada.
        Everybody is going to have to accept more PAYE increases (and it should be called PAYE – not another welfare levy for a welfare system that is bankrupt itself).
        Cowen needs to sack the entire cabinet and replace with new ministers. Or even just replace with cardboard cutouts !
        Put Shane Ross in charge of the banks.
        INBS and EBS need to be flushed down the toilet (bye-bye). AIB/BoI/ILP-TSB need to be told to find buyers and stop living off the taxpayer. Get rid of Anglo. These are capitalist enterprises – they are supposed to fail when they are managed by inept idiots. The shareholders should have known. What they were not told can be used as the basis of class action suits on the basis is negligence or willful effort to decieve.
        We also need to completely de-bureacraticise renewable energy production, agriculture, fishing, forestry and tourism. They are mired in restrictions, and interference from competing state institutions. This is stopping people from creating material that acts as the basis of sustainable industry.
        We also need to get real about the fact that the US tax regime is going to get much tougher,and we need to get more competitive in a real sense and not continually be boasting about how wonderful we are.

  44. MarkC

    Great article David. No doubt it will fall on deaf ears.

    It amazes me that we were so enthusiastic, and still are, for the euro. What has it done for us except make going on holiday easier?

    DId prices come down? Nope.
    Did we have the right interest rates for our economy? Nope.
    Did the wrong interest rates create a property boom? Yup.
    Is that the reason we are in such a state today? Yup.
    Can we devalue to help get us out of this mess? Nope.

    And yet, suggesting we drop the euro is heresy!

    The lunatics have well and truly taken over the asylum.

  45. “”One of the things about crises is that they tend to blow the credibility of shibboleths out of the water.

    A shibboleth is a mantra to which people get attached because it is easier than hard thinking. If enough people repeat the mantra it becomes gospel, and instead of using our heads, we exchange alleged truisms. Ireland’s been exposed to enough shibboleths in the past five years to last us a lifetime.”"

    Surely a candidate for ‘bad writing of the year’. If Orwell was correct, and confused language leads inevitably to confused thinking, then we have the explanation for this odd article.

    Were we to leave the Euro:
    1. there would be a stampede (including this writer) for the airports. Many people have little wish to live in Albania, with a weaker currency.

    2. the Yanks would lose interest in us, as part of the point of setting up in Ireland is to have a secure base within the EU

    3. our continued membership of the EU would be nominal only

    4. the currency would be an obvious target for speculators, meaning that the stability of import and export prices for a large economic bloc would be thrown away … for what, exactly?

    5. Euro-denominated debt would become unserviceable for many people.

    6. Any stunt we tried to pull to negate (5) would make us economic pariahs.

    7. A large proportion of state funds would be needed to purchase foreign currency to enable us to do business abroad, and to protect (no doubt in vain) the NewPunt.

    Let’s face it: there is no quick fix for this one. Screwing our friends and allies because Fianna Fail blew the management of this economy is not the way out.

    • wills

      kirghiz: good points. The mechanics to the euro exit into Irish punt will pose challenges and upset certain interests yet it will not alter in anyway our capital in real terms, thus, our new currency will find it’s leg’s at some point and start working as a new exchange currency.

      1; stampede, by the time people decide to move out the new currency shock will be wearing off.
      2; The yanks do not just focus on currency,. and direct inv. here is down to number of factors.
      3; our EU membership is expendable.
      4; currency speculation eeks out the flaws.
      5; only temporarily,..
      6; To exit euro and do it right would show chutzpah..
      7; yep,. we can print run them up,…

  46. Hi David,

    This is your version of Kevin Myres it seems! You dont believe what you preach. Any logical person would not bite the hand that feeds them. Remember the 60s 70s 80s 90s 00s. Any positive boom the eurozone played a huge roll in it.
    1. providing jobs training and skills.
    2. Money
    3. A voice on a larger stage.

    You are an idiot if you think we should float our own currency.

    • severelyltd

      Your comment doesn’t make any sense Goggi. You’ll have to elaborate for me.

      1. I’m sure many of us saw the documentary on Chuck Feeney and how he single handedly build our education system, he should be president for what he has done for this country.
      2. FF spend more time syphoning European money into their own pockets than they spend in the Dail.
      3.We never had a voice. FF sold the country to Europe and the Euro for a song. The sad bit is they still think they got a good deal.

      • G

        Honourary citizen at the very least, was anything done for Chuck?

        The man had vision, linked up with Walsh and smashed the hold, like the Gordion knot, that the old ‘establishment’ had over education and resources, he released tremendous energies but it took billions…………interesting documentary………….

        Education is the key, but you can’t just give money to universities, you have monitor the spending, huge amounts were wasted………..not sure about quality/standard of education either, a lot of talk, white noise, but the turth is a bit different I bet……….

  47. Deco

    Well….there goes the property boom….

    Any comments Mr.Ahern ?? – the cheerleaders of the property porn mania are calling it a 50% drop. During the boom, were told the dynamic would not change, that the tren would continue forever and ever…. As that idiot Hanafin said….we have to go back to sustainable growth now…

    David gave us the dropping a stone analogy in Prime Time in November. I remember him holding his hand and saying …in the next 12 months….property will drop….like a stone…..He was correct once again.

  48. mediator

    Re Euro etc

    The Euro is (and was designed to be) a one way ticket, the problems cited above by many contributors re leaving the Euro are real. The debt this country has drawn down is Euro and will have to be repayed as Euro.

    This is part of the movement towards a one-world system. If Ireland tries to back out we will pay a similar price to that paid when we had the Economic War post independence. If you try and stay outside the global financial system you will be punished for your insolence

    I don’t think that the current generation of Irish people has the backbone, work ethic or spirituality that would be required to face the difficulties associated with leaving the Euro – and there would be difficulties.

    Its time you demonstrated your economic as distinct from media pundit credentials and put some meat on the bones of your idea.
    Could you address some of the problems mentioned re leaving Euro?

    • G

      @ mediator “I don’t think that the current generation of Irish people has the backbone, work ethic or spirituality that would be required to face the difficulties associated with leaving the Euro – and there would be difficulties.”

      bit negative, people can dig deep, necessity demands it at times, people can surprise, sure this younger generation had it a bit easy (not all mind you), sure didn’t we have it hard long enough, think they can meet the challenge, educated, well travelled, urbane……..they have it in their DNA………:-)

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