January 10, 2010

Should we divorce the euro?

Posted in Euro · 198 comments ·

When you think about Lisdoonvarna, what comes to mind? If you are of a certain generation, it’s probably the first music festival you went to. The weekend was immortalised by Christy Moore’s iconic song, Lisdoonvarna, which included the fabulously evocative line: ‘‘Anyone for the last Choc Ice?” For others, Lisdoonvarna is famous for match making.

The arranged marriage was a feature of our society for centuries and, therefore, the ‘matchmaker’ was a significant person in traditional Irish communities.

The matchmaker gauged whether couples were suitable or not. He met the future husband and wife and undertook a general checklist of essential attributes.

Having done this, he deemed whether or not they were suitable. If he was happy with the match, there was a good chance that the marriage would work. In a world of no divorce, it was crucial to minimise the risk of separation.

Joining a currency union is the economic equivalent of a marriage. If a country decides to give up its currency and get into bed with another currency, it would seem ludicrous to entertain this move without being sure that the union was suitable. As we all know, there is a difference between fancying someone and making the thing last.

To avoid single currency arrangements going sour, there is also a ‘matchmaker’ in economic theory. The economic matchmaker goes by the typically incomprehensible name of the ‘optimal currency area theory’. This theory is a checklist of economic attributes which need to line up in order for a monetary union to work.

For a currency union to work for a country, the most important thing is that the country trades overwhelmingly with the other members of the monetary union.

This ensures that all the countries in the union move roughly in the same economic cycle. It is also important that the structures of the respective economies are broadly similar, so that one country doesn’t experience a huge boom, while the rest are just motoring along nicely.

Having similar structures in banking and housing, for example, will imply that a country should not suffer a monumental bust, while the others are merely experiencing a normal recession. Equally, it is important that there is significant movement of people within the currency union – like there is in the US between its states – so that, if a country does slump, its citizens can move to find work in another member country.

In general, for a currency union to work, there should also be a single fiscal policy so that, when one area of the currency slumps, the rest of the union’s taxes go some way to ease the problems in the region in difficulty. This is how the currency unions in the US, Canada and Australia work.

Guess what? None of these attributes was in place when Ireland joined the EU economic and monetary union (EMU) and the euro. So it is clear that we didn’t join for economic reasons. So why did we join? It seems that we were too insecure to behave logically and this national insecurity – particularly among our senior mandarins – prevented us from having a debate.

Could it be that the people who dictate policy in this country are so in awe of the ‘big boys’ in Europe, and so desperate to be in the club, that they signed up for EMU just to be in the big league? Could it be that they didn’t have the confidence to question whether they should be in the marriage in the first place?

The reason we should ask these questions is that it is clear the euro has been a disaster for Ireland, and will ensure our slump lasts considerably longer than it has to. When we look at other countries, we see that, of the three entrants into the then EEC in 1973,we are the only ones using the euro. However, we trade less with other eurozone countries than either Denmark or Britain.

The Danes and the British had the confidence to know that they would still be full members of the EU without the euro. They kept their own currencies because they knew they’d need them at times like this. The Swedes made the same decision. They assessed the risks and concluded that monetary union was not for them.

In fact, when you examine the EU, you see that many countries have opted out.

There are four distinct exchange rate regimes operating with the EU. First, the euro members; secondly, Britain and Sweden, which float their currencies; thirdly, Denmark, Poland, the Czech Republic and Hungary, which are tied informally to the euro but can devalue in a crisis; and fourth, the Baltic States, which have a currency board with the euro – which means that they need to keep euro in the vaults of their central banks so that the local currencies are totally convertible.

Even with these four distinct exchange rate arrangements, the union still works fine.

Ireland doesn’t belong in the euro. That is abundantly clear from the queues of Irish people who choose to shop in the North. Irish people shop in Newry, not Nuremberg. We are locked into an arrangement which means we have to try to be more competitive than Germany. But no one is more competitive than Germany – it is the world’s most successful exporter.

So the question I have for those who rightly suggest that we need to get our wages and prices down by 30 per cent to claw back the competitive losses we suffered since joining the euro is: how are we going to do it? In particular, how are we going to do this without leaving the euro?

What is the alternative to leaving the euro? How high does unemployment have to go for us to be competitive again?

If there is an alternative way to get costs down which doesn’t involve changing the currency, and that doesn’t involve massive unemployment and job losses in the trading part of our economy, I would love to hear it. Irish wages are not that flexible, despite the spin being put out.

Think about it. Irish wages, on aggregate, rose last year when the economy contracted by 9 per cent. If we can’t get wages down when we are in such dire straits, how are we going to grind down wages in the next few years?

I realise that even talking about leaving the euro is heresy to the mainstream in Ireland, who try to dismiss this suggestion as the nuclear option, one which would have dreadful political and economic ramifications for us. To them, the question has to be: what is the alternative?

And, more crucially, if they can point to a welfare state like Ireland with a young population which has managed a 30 per cent cut in real wages so that it traded its way out of a recession, I will accept that it can be done.

Until those questions are answered, there will be significant question marks over the wisdom of Ireland using the euro. We need a break. We can’t keep cutting expenditure when there is no offsetting stimulus coming from a cheaper exchange rate, which allows the trading sector to grow. This is basic economics, the sort of stuff you learn in first year.

We know that there was no way Ireland would have joined the euro had we applied even the most basic criteria for suitability.

Are we expected to remain in this loveless marriage? As we saw in the past decades, divorces are now part of life. Ireland is, today, in a bad marriage – with no divorce.

Like those Catholic fundamentalists who suggested that divorce would threaten the fabric of our society, the euro fundamentalists who run policy in Ireland suggest that, to leave the euro, would undermine the fabric of our economy. Like all fundamentalists, the thing they hate most is a sceptic. Lets hear it for the sceptics.

  1. Lius

    Go sceptics !

    Irish men and women need to wake up and smell the coffee. The European ‘dream’ does just what is says on the tin. The honeymoon is now over and the German French will make us pay dearly for our orgy of borrowing.

    The only defence we could possibly have is our own currency, bring back the PUNT.

    • Johnny G

      I see the problem we face, but, what about me and my new company that has to buy raw materials from outside Ireland. How do I pay for them with a devalued currency???

  2. tony_murphy

    Totally agree with this Article David.

    The powers in the Institute of International and European Affairs (IIEA) probably won’t agree, watch them come out to defend the Euro, just like they pushed Lisbon 2.


  3. By leaving the Euro you are advocating that the State decides (mandarins or otherwise) to let the currency float and obviously outside the value of our currency would fall if we undertook our own quantative easing to pay the public servants what they want and he services provided by the state.

    This does not cover the past debt we owe and of course all the interest to be paid for borrowings in Euro and if the currency is devalued then the cost of that debt sours and as we roll the printing presses on the new PUNTs we will suffer from rampant inflation. The value of the goods we import soar.

    It is not as black and white as you make out. Keep the suggestions going alright, but this is not going to happen and not the solution.

    • frankm

      Look at the experience of sterling, in the early 90s – Norman Lamont was singing in the bath when sterling fell out of ERM and floated freely ; thereafter the UK economy started to grow based on a lower more competitive exchange rate. One of the worse days for the UK economy, turned out to be the best result. Inflation was not an issue and could be kept under control by being able to control its own interest rates. Without an improvement in economic conditions ( based on export growth ) Ireland will take years and years to pay its debt ( and maybe it should renegotiate this debt anyway). I agree with David – joining the euro was a big mistake and became the source of cheap credit which fuelled the boom, hardly likely to be the best option to stick with it now the results are plain to see.

  4. Sounds like a good idea but…if we left the Euro and devalued our currency by 30%, would our national debt – in euros – not increase suddenly by 30% and be even more difficult to pay off?

    • Ruairí

      Our national debt is not astronomical. It is manageable if we change our tack completely on NAMA, LTEVs and socialisation of private debt.
      However, the private debt and mortgage mountain would be affected greatly. But the improvement in competitive capacity would aid in the maintenance of jobs, hence repayment of debt by those who owe it; not by the State, i.e. all of us and our kids and their kids.

  5. Doolin –
    The Aran Islands hold a past history with Clare and Doolin prospered from the visitations made by the locals there in a time before the time we all know it now to be .They brought their music and dance and their search for their loved ones .All families in Aran Islands have a Clare grandmother or a grandmother who was found in Lisdoonvarna at some time by the island buccaneers then.
    The island found it’s natural affinity with Clare and the burren landscape was part of the umbilical chord of the local landscape that once entwined with theirs on their island.They never felt the leaving of their island homeland during their short visits to mainland Clare then.The local currencey was fish , fishing , weaving, currach skills and sailing and their song and dance ….and…meitheal.They had cousins that lived in Doolin and surrounds too .
    In not so recent times Mandarins in Dublin decided that the Aran Islands were part of Galway and thus was annexed .New currency appeared in the form of subsidised transport by sea and air and the local meitheal currency of neighbourly help was threatened by this influx of ‘false gold’.Their fishing industry declined too .Those that benefited were those in Galway and Island economy as an Island was distroyed by these new plastic islanders now settled in Galway City.
    As the their island economy lapsed their music and dance prospered and their natural affinity to Doolin remains their dream and tradition.Doolin was their origin of a life now gone past and the destination of their dream and it’s ancient rhythms on the limestone rocks have insinuated themselves into the rhythm of the human heart.The presence of the Doolin is not outside them .It is within and nothing can separate its inheritance from its vigor and vibrancy in their hearts.The physical presence of their music and dance exercises a discipline of propotion in relation to the external beauty they feel in the presence of Doolin and gives them a grace more than their eyes can visually grasp.

  6. Deco

    I am sceptical about the Euro being the problem….I reckon “we is the problem”….or more specifically the modern Irish tendency to throw money around like a collection of drunken sailors.

    And anyway, the time for getting out of the Euro was before we joined. The real problem was the behaviour of our bankers in using the Euro as a means of getting cheap borrowing….

    I reckon the Euro will divorce the Irish…a bit like the husband who is married to a retail therapy dame….or a woman who is married to an alcoholic….

    Irish consumption culture is the problem. And that hasn’t gone away you know….

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    • Ruairí

      “I reckon the Euro will divorce the Irish…a bit like the husband who is married to a retail therapy dame….or a woman who is married to an alcoholic….”

      Deco, this is on the money. Those who feel leaving the euro might not be a solution, and yes, I agree ti would have been massively better not to have joined so completely, those opinions may have to change to account for events beyond our tinyy remit. The euro may fall apart, even more so than the chances of us being ejected.

  7. Deco

    { Ireland is, today, in a bad marriage — with no divorce. }

    Actually, Ireland is a wreckless selfish wasteful party to the arrangement. As evidenced by the Depfa scandal, Anglo Irish Bank, INBS, etc… Ireland’s gombeen class, and Ireland’s reckless consumers, both driven by Irish “Pride” (arrogance) is the problem. Ireland is the problem with the Euro, along with the other PIGS.

    If Spain hits a crisis – and I am expecting the Spanish financial sector and the Spanish construction sector to crater badly this year, then the Euro could be very soft. The hardworking, cautious, retrained part of the Euro is not the problem. The problem is the PIGS who have corrupt politicians, and corrupt elites who are profitting from the recklessness.

    • wills

      DEco -

      Hubris stalks POnzi Rep. Look at the links i posted yesterday on the lifestyles of these treasonous property developers even now, when their debts unpayable by them are pinned onto the taxpayers forehead for life. And they are getting away with their gold plated range rovers and pink palaces and jet set jaunts.

      They continue too live the high life even now when its established that their business models crashed the economy and sank the banks.

      These guy s are still living the high life to day, not yesterday, to day, right now, over at residence.

      I can see them.

  8. Deco

    David – you postulate that we joined the Euro to play with the “big boys”. This I would term the “Canary Suit approach to national policy” – after Ahern’s famous canary suit that he wore to stand out in when he was chairing the EU meetings with other world leaders. Basically we got in it for pscychological and pride reasons, and not as a result of any intelligent rationale. What mattered was that our leadership showed the sceptics back home that “we have arrived”. (which interestingly enough was a term the Ditherer once used). Beyond the superficial garishness there is a lack of thought in the policy. We jumped in without thinking.

    The canary suit approach to furthering Ireland’s interests needs to be dropped. Out leaders need to stop behaving like idiotic prats who are trying to impress the voters and taxpayers back home. (Or as it is technically called these days “press the right buttons in the focus groups”). And we need to stop allowing ourselves to indulge this sort of behaviour and the assumption that we are a collection of gullible gobsheens who stop thinking rationally when the national pride button is pressed.

    • DarraghD


      It wasn’t just Bertie Ahern who was getting into questionable and barely thought transactions for egotistical reasons and national pride… How many Irish people hoovered up properties to add to their precious “investment portfolio”, without any research into a rate of return or a risk analysis with regard to their borrowed investment???

      At the end of the day, we are clearly a nation of small mickied people who have no inner sense of self, we have no real sense of indentity, we do not know what we are, which is why at an Irish wedding, you see the false sense of attachment and spending power, as people trip over each other to buy more and more drink for people they hardly know, as one wedding desparately tries to out spend and out bling the previous one.

      That is why you see so many BMW’s on the roads, so many people with “investment properties”…

      We are a nation of insecure MUGS, thriving on a false sense of modesty while trying to outspend anyone to the left or the right of us, we do not know what we stand for, as my Grandfather used to say, “we are all just MUGS MUGS MUGS”…

  9. Unless EU offer us some other economic towline, on the lines of what you imply US states get when they get into difficulty, then it makes sense to break ties with the euro for all the reasons you say.

    I’d say it makes sense to go back to the punt and initially make it follow Britain and Sweden exchange rate.
    I wouldn’t join sterling as UK faces a sunami of rising debt.

    A more radical solution would be to have the punt follow the dollar, parity would mean immediate 30-40% devaluation.

    Currently sterling is approx 1.11 to the punt. Parity with sterling would involve a 10-15% immediate devaluation, but would greatly solve the Newry problem and help exporters to UK and in general.

    Euro has been a disaster for us and is currently an anchor threatening to sink us.

    I hope Minister Dempsey has the punt printing presses stored safely with his friends and relatives somewhere:) …Its time to get them out fast.

    Unfortunately at the highest levels of government and Civil Service we do not have the brains to act smartly on any of these matters:)

  10. It’s easy to declare the euro has been a disaster for Ireland and imply that Bertie Ahern and the central bank would have behaved differently to Iceland.

    This however, is not a credible stance.

    Three of 16 countries of the Eurozone were badly misgoverned during the boom – - Ireland, Spain and Greece — and they now have to deal with the consequences.

    Shopping in Newry accounts for about 0.4% of the value of annual exports.

    You write: “For a currency union to work for a country, the most important thing is that the country trades overwhelmingly with the other members of the monetary union.”

    Germany published its latest export data on Friday last, which showed that 41% of goods exports went to other Eurozone countries.

    In 2009, 42% of Irish goods exports went to the Eurozone.

    You avoid considering how a country that has a history of mismanagement of big projects, could exit the euro while avoiding economic chaos; huge capital flight and companies like CRH moving their listings and hqs from Ireland.

    You also avoid addressing the impact of a higher interest rate on mortgages and pressure for wage compensation; debt issues on the sovereign and corporate side.

    Most exports are made by MNCs and the majority of trade is intra-company.

    Ireland is one of the most profitable locations for US companies because of zero patent income tax etc. The negative reputation from the chaos that would follow the launch of a new currency would hardly help to promote R&D.

    As regards, the impact of devaluation on competitiveness on locally owned exporters, it would likely have dissipated before the opportunities to open new markets were grasped.

    Why do you not advocate reform of the broken political system, the public sector and the fee cartels in the private sheltered sectors?

    Reform of all those arrangements which protect insiders and vested interests including land rezoning and providing full transparency on public spending would also be a huge change.

    As for yout figure of a 30% cut in wages and costs, Germany’s unit wage costs have risen in the past year and France’s cost rises have been much higher than Germany’s in the past decade.

    Over time, improvements in the Irish costs base are achievable.

    However, in your scenario, we could achieve a quick devaluation. However, without fundamental reform, we would be back in the same boat of high costs, cartels etc.

    • Deco

      MH – I remember you saying before that you are living in Spain. Watch Spain. Because Spain could erupt into a serious problem this year. A bit like Greece but with a serious critical mass. It could result in the ECB having to defend the Euro with higher interest rates.

      The Irish cost base was ratchetted up by the media who persistently peddled the ‘boom’ myth, while people borrowed endlessly beyond their means. Now Ireland will have to be more restrained. When the Irish consumer adopts a more restrained behaviour and lifestyle, costs will start to decrease. Unfortunately we have a colleciton of clowns in IBEC, the ICTU political establishment, and in Kildare Street who regard this as bad news for them personally. They would rather if the crisis was dealt with via emigration, like in previous eras. Because that is a proven method to control social pressures for reform of the financial and economic system.

      • Bamboo

        Although I was sucked into a buying a property in Spain. Kept it for 6 years but fortunately I was able to see the storm coming in 5 years ago. The last year we spent two months in Spain and started opening up our eyes. Without being smart or pretending to know it all, I don’t know how anybody could NOT see it coming to be honest.
        - You were inundated with flyers of properties for sale.
        - You couldn’t even park your car for a few minutes or someone sticks a flyer under the windscreen.
        - The smallest business premises were turned into estate agent shops like newsagents here.
        - Most people I know in Spain were all in construction or in real estate.

        These were very basic observations without complicated academic economic/financial calculations. Many were enjoying the NOW and its status quo so much that one couldn’t see. I was then offered a so call once in a life-time opportunity to buy property in Bansko/Bulgaria 4 years ago. What a joke!
        Then in 2006 there was another option to sell your own property and upgrade. That was even a bigger joke.

  11. David, David! I must disagree with you that Ireland has to get its wages down!

    It is debt and lack of wherewithal that has sent you down the gurgler, so you’ve got to ensure that labour and capital start to get their FAIR SHARE of GDP in order to to get out of the deep rut. (I was going to say deep something else!)

    I tried to explain this point in my blog today in connection with the US.

    Other countries are similar to the US: the big boys have been stealing the public’s rent and robbing us blind with taxation from our hard-earned incomes.

    If workers get to retain what’s legitimately theirs, all will be well. None of this stuff about taking another hit for the big end of town!

  12. Responses –
    I believe this article will be the most important contribution made by David not for what he has written but for how the responses are calibrated and their fluency to the facts as we know them and the unknowns.It has an Onion appeal with a puff of Garlic and a mechanism for delayering of the foundations we trade upon to find the true Principles we need to start to build up from again.So let the Music play and enjoy the Dance.

    • Ruairí

      I agree John. Of all the articles written, this one is the most solution-oriented (to where we find ourselves) in my opinion.

      This is probably a time for less side-topics (mea culpa frequently) and much more precise posting and referencing.

      This is the month where the public mindset is waking up. This is the month where paypackets have to meet unmeetable bills.
      As you say, let the dance begin.

  13. econarchist

    “If there is an alternative way to get costs down which doesn’t involve changing the currency, and that doesn’t involve massive unemployment and job losses in the trading part of our economy, I would love to hear it. ”

    The answer is simple in theory, but in reality it is not going to happen:

    Ideally, the Irish government, employers, retailers, professions and trade unions would all get together and cut the cost of everything (prices and wages) by about 25%, phased over 12 months. Anyone who would not take part would be named and shamed and would, as a result, lose customers and possibly their jobs.

    This would have the same effect as a devaluation but without leaving the Euro. The average person would lose nothing because their drop in income would be matched by a drop in their cost of living. There would have to be some sort of provisions for people badly effected, for example by their inability to pay their mortgage with a reduced income.

    Of course this won’t happen in Ireland because the people in power do not want to face up to the responsibility of dealing with problems when their own financial circumstances are secure.

    It would also mean admitting that the social partnership of the past fifteen years was a con job because it caused unsustainable inflation. The government were driving up prices by cutting taxes, the unions were doing the same by pushing for increased wages and businesses were doing the same by charging the maximum amount that people were prepared to pay.

    • G

      how can ireland, in this drive for ‘competitiveness’, compete with Chinese workers, compete with London, New York or Frankfurt?

      Time we faced reality. We have no manufacturing base, agriculture is being wound down so that the EU will import cheap products from developing countries, our ‘economy’ was inflated and talked up, based primarily on short term construction/property ‘boom’ (catching up with centuries of underdevelopment) and financial services both of which are bust flushes.

      We kept the corporate tax rate at 12.5% in a desperate attempt to hold the other unreliable pillar of the economy, MNC’s, in the country, corporations who have demonstrated in DELL and elsewhere that they are prepared to move to lower wage economies at the drop of the proverbial hat.

      Fact of the matter is with rising unemployment, a crippled banking sector which is sucking any life out of the economy, deflationary government policies (15-20% shrinkage of the economy) a massively indebted population and absurdly low government revenues, Ireland is tittering on the worst depression of any OECD/Western country – it is the perfect economic storm that was predicted with people committing suicide but not the ones Bertie was on about. The rest who can will do what has always been done, they will bugger off! So much for the old diaspora David, this people will be embittered, family rejects!

      The end of ‘the pain’ is not over, it is only beginning, to think otherwise is flying in the face of the most basic facts. Those who can read the signs are preparing for the inevitable ‘siege’, saving and cutting back, which will exacerbate unemployment as consumption shrinks – so more small businesses close especially when the banks refuse to release liquidity into the system.

      We are wrestling with an alligator with both hands tied behind our back.

      On an aside, I spoke to a Priest friend who recently attended a function with McAleese who had shown up to patronise the inner city poor for their tremendous efforts during the floods.

      He brought along 4 seminarians from the United States who had just flown in the night before. They all lined up to meet the Nation’s symbolic leader. In their broadest American accents, the seminarians indicated they had just flown in the night before and were delighted to me ‘El Presidente’.

      McAleese responded: “thank you so much for your courageous efforts during the floods, it is most appreciated’.

      John Allen may now suggest that McAleese is wound up every morning before breakfast like somekind of action-woman, with platitudes entered via some diabolic machine and off she goes, in service to the ‘National Interest’, shaking hands full of populism!

      ‘……….candle blowing in the wind(ow) of the Aras…………….”

      Not only do we have the worst economy in Europe, at this dangerous juncture we have inept political leadership, with Dempsey off in the sun, seeing no problem with not being here, do we need more examples?

      No vision, no sustainability just people largely on the make, game is up for this shoddy enterprise formerly known as Ireland Inc!

  14. petercice

    I have had a read of this artical with great interest and its obvious that the thinking of david behind this seems very radical to many.
    but an interesting view of this can be braught if you have a look at the following link from Doug Casey from the daily crux which he wrote last week on his long term view of the euro as a currencey
    from this there is also a case to move from the euro on a purely economic sense i can forsee that many of the perifial states within the EU that are currently peg to the euro or have recently joined at some level are currently looking at the option of moving away from the euro currencey that is based on the larger countries such as france and germany

    • Deco

      Doug Casey made a hilarious comment once.
      The US Dollar is an “I owe you nothing” currency….it is bcked by nothing….And the Euro is even more absurd….because the Euro is a “who owes you nothing ?” currency…..

      Now, I am not sure if it can be simplified to that. But it is one hilarious comment.

      • Malcolm McClure

        Examining the watermark on the left hand side of my €50 note, I think I can see an image of the Virgin Mary standing in a niche. Have faith, Deco.


    Ireland imports as much from the UK as it does from the entire EU 25!.If domestic companies are not servicing the indigenous market employment will continue it’s downward spiral.When Irish people speak German as their first language, follow the fortunes of Bayern Munich and read Le Monde, that will be the time to join the euro.Any politican in favour of leaving the euro??.Fat chance!.

  16. StephenKenny

    So are the mainstream starting to get a little clarity on what the options really are? Perhaps they are: ‘Leave the Euro’, or ‘Fix the political system’.

    Clearly, fixing the political system is preferable for the majority of the population, but also equally clearly, it’s the last thing that those in and around the political system, want.

    One thing is for certain: Doing nothing is not going to work – ‘muddling’ is not going to get us through this one.

  17. Deco


    This is the latest from the Icelandic situation. Notice the behaviour of the Icelandic government. This is the government that replaces the previous corrupt administration. The new administration basically wants to finish the country off in a new way, and complete the job started by the other shower.

    The Icelandic President is a real leader of substance. He wants his people to have their say. He knows that politicians lie once they get into power.

    Maybe John Allen might be able to do some research and see if President Grimmson has any Irish relatives. In Ireland you cannot be a public representative unless you are related to somebody who is already a public representative. It is called Dumbocracy……

  18. Art1980

    Thought I’d share a piece that I received back at the end of late October.

    Irish property prices will fall for next 2 years at least – massive oversupply, sales activity is near zero, lack of mortgage credit availability, consumers & potential FTBs fearful of further price falls, and yes of course JOB INSECURITY – unemployment will not peak until 2010/11. So a very bad time to buy.

    Plus estate agents are saying prices -50%, whereas the actual fall in new homes from the peak (a homogenous comparison) is -34% on average. So more to go.

    I was on 4FM with Derek Davis last Sunday week, as well as Lord Mayor Emer Costelloe. She mentioned that those Castleforbes Square (Liam carroll flats that were discussed on Late Late) have been bought by DDDA – story was in press 2 weeks ago – last 51 units for €10m. So 200k a pop! A far cry from the original 2007 €460k prices. Emer said that there are 100 families from Sherriff Street on the waiting list for those flats. So not just negative equity, but single-mums on welfare will be their new neighbours!! (Nothing against them, but not what those Yuppies envisaged when they borrowed 400 grand to buy a 2-bed flat near work).

    Yes ECB rates will be 1.75% to 2% by Xmas 2010, so rates will double. And banks will be charging more for the PRIVILEGE of credit too (now charging +1.5% margin over their cost of funding – was just +0.5% at the peak of the Bubble). I predict that mortgage rates will be 5.75% to 6% by Easter 2012 (thats ECB of 3% or up 2% from here + Banks back to charging +2.25% margin as they did back in 1999/2000). So big red flag there.

    I think after 2012 irish property prices may move sideways for 4-5 years, just as UK did between 1993-97 (look at Nationwide or Halifax Indices). Would be Optimal scenario for Joe Soap or Josephine Public with Neg Eqty as it will allow them time to grow out of their debt.

    Had sad email from a lady working for Pioneer Inv in IFSC. She bought 1st flat in 2003 in D15, then 2nd flat in 2007 in D1 near work and has neg eqty of 130k on one + 175k under water on the other! Both 1-beds – could not give them away. Starter home is now a 3-bed Semi.

    • Deco

      She has to ask herself – what drove her to do such a thing ? I mean yes it is sad. But I remember we got a lesson about this in the previous decade. It was the Eircom Share Collapse saga. Eventually Bertie’s newspaper backer (Sir Anthony) got Eircom at a discount thanks to a general slump in telecoms. The people who bought those shares convinced themselves they were onto a good thing. I am all in favour of people bettering themselves.

      But you don’ get something for nothing. Our society is indoctrinated with the ‘something for nothing’ philosophy. And both right and left push this philosophy to get power and infleunce.

      If she was in positive equity (if such terms existed) would she be looking to give some of the gains to the exchequer ?

      What I am saying is that people need to stop behaving like children and start thinking like grown ups. As an intellectual culture we are patronised every day to behave like kids. And McAleese is a classic example of the type of opportunist that pushes this sort of intellectual subprime. The sceptics are the ones who survive the lemming rush.

  19. Philip

    Exiting the Euro or Indirect Cost dropping assumes we can control all our input costs on this island. Even if our Punt and our controllable costs were zero, we still would not be competitive.

    ireland’s big problem is funnily enough not export performance or indeed cost based competitiveness. Figures in that regard suggest we are doing well. The problem is margin. We churn a lot of cash, but keep little of it. And this is across the board…take milk exports…on one hand we are near the top in volume but on the other we are bottom of the league in margin becuase we work in the low value end of the market – Google it. The same goes for Pharma, Electronics you name it.

    We simply are work hard to achieve little. Value add is not there. The Euro may drop like a stone anyway. Even then, it make no difference to Ireland.

    I think GDP numbers tell us little. I am more interested in the margin performance and how it can be bumped up. We need to grow the top line – we cannot cut the bottom line expenses any more without turning our the lights. This needs brains and vision and a positive attitude to industry and innovation we as a nation seriously lack.

  20. Perhaps :

    A postdoctoral fellow from the University of Cambridge has argued that Iceland’s legal obligation to pay Icesave would face considerable difficulty to prove in a court of law.

    Dr. Michael Waibel of the Lauterpacht Centre for International Law, writing in a letter to the Financial Times, says in part, “The UK would likely face substantial obstacles in court. The chance of winning is no more than 60 per cent, and even then the UK is very unlikely to obtain more than in this settlement.”

    Waibel continues that a prolonged legal battle “is in nobody’s interest,” and that both the UK and the Netherlands need to show a real interest in compromise and fairness.

    In closing, he argues that the current loan agreement runs counter to the advice given by former US Secretary of State and Nobel Peace Prize laureate Elihu Root: “We must always be careful, and especially so in our relations with the smaller states, that we never propose a settlement which we would not be willing to accept if the situation were reversed

  21. Malcolm McClure

    I am not suggesting there is a solid path forward through the quagmire that follows, but at least it deserves to be on the table for discussion.

    Fact: The evidence is all around us that the island of Ireland has suffered almost continuous conflict since partition in 1922.
    Fact: The evidence is all around us that Irish Constitution, introduced in 1937 has never really worked for the people.
    Fact: The evidence is all around us that The Republic of ireland, as established by Dev in 1948 is a failure.
    Fact: The evidence is all around us that our membership of the EU, beginning in 1973, has been a success.
    Fact: The evidence is all around us that our adoption of the Euro, beginning in 2000, has been an abject failure.

    So, standing amidst the ruins of our dreams, what lessons can we draw from the reality of our present situation?

    Most Irish families have members who have worked or been educated for at least a year in the UK. We are familiar with the customs. language and traditions of that melting pot.
    Even England is not the priggish land we seceded from 90 years ago; it is a land of many cultures to which the Irish have made a major contribution. Denying this, die-hard republicans have been living a lie.

    The obvious solution to this is to negotiate a return to the UK as an independent Irish Free State to include the whole of Ireland, whilst retaining our membership of the EU. Of course, this would involve the adoption of Sterling as our national currency.

    This would establish us as an equal partner with an independent Scotland within the UK; it would solve the border question and it would solve the currency question.

    • Fully agree with you Malcom – sterling / UK is our soul mate whether we like it or not – so I think we would a much richer nation if we fully embraced this.

      • Ruairí

        But why give up sovereignty just to enable a currency agreement? That’s a bit OTT? And irrelevant.
        A bit like voting for Lisbon II and believing it would benefit us in ways that Denmark, UK and Scandinavians opt-out of common currency has damaged them?

        This yearning for rejoining the short-lived United Kingdom of Ireland is flawed and excessive to the economic requirements we now face.

    • ThomasFergus

      “Fact: The evidence is all around us that The Republic of ireland, as established by Dev in 1948 is a failure.”

      This is not a fact at all. We became a Republic in 1948 under John A. Costello’s Fine Gael led Inter Party Govt, quite probably due to pressure exerted by Sean McBride’s Clann na Poblachta.

      Other than that, the country has largely been a failure due to the “national question”, an emotional issue that has allowed FF to claim the mantle of the natural party of government while destroying our econonmy and society in the process. Suggesting that we open a debate about rejoining the UK would allow them to once again step into the breach and save us from all the “west Brits” who would sell our souls……and thus getting back into office in a jiffy and re-appointing all their mates to State boards.

      The last thing we need right now is a re-appraisal of our relationship with the UK. At least not until Scotland and possibly Wales break from England and the UK itself breaks up.

      • Malcolm McClure

        Thank you, ThomasFergus, I stand corrected about who established the republic. We seem to agree that the country has been a failure, so perhaps we are ready to discuss radical ways to remedy the situation.

        You suggest that Scotland and Wales might secede completely from the union. That would require them either to introduce the Euro currency, which seems unlikely given our experience, or to soldier on with Sterling, which makes sense because of the familiar border shopping issues that arise between floating currencies.

        it is difficult to envisage how the party spectrum might get realigned. Presumably there would be no further need for unionists or republicans as those issues would have been settled once and for all. Then we could begin thinking in terms of real social democracy versus a gaggle of dinosaur parties.

        • Being of limited academic ability I can only see things in a simple terms (Ruairi – 300 books kept and read is most admirable).

          The question I ask is when we look back at Ireland is – where would we have been had we stayed part of Great Britain – which we may well have they showed a molecule of sense and interned those involved in 1916 rather than execution.

          We would more than likely by have had a fully devolved 32 county Ireland.

          We would have had war memorial parks commemorating the 55,000 (rather than them being airbrushed from history for 70 years) Irish soldiers killed in WW1 and the estimated 30,000 soldiers and civilians killed in WW2.

          We would have had large immigration of American GIs returning to their roots – having being based here in WW2.

          We would have had a culturally explosive 60′s (and probably a nuclear power station – hopefully not explosive!);

          We would have had a boom in the 80′s – with full infrastructure giving us road rail and plane services far superior to those of today.

          We would have had a 0′ies boom without the bust – which would have paved the way for our final parting of the ways from GB – all 32 Counties.

          We would have had a class structure capable of wearing new wealth in a less vulgar manner than the Celtic Tiger Nouveau Riche.

          We would not have exported out problems – employment; no brain drain; no sports drain.

          And we would not have had the hand of God touching his children through his foot soldiers – covered up by the State and Church.

          Maybe I am just totally crackers and beyond self loathing……….

          • Ruairí

            PhilRuss1, those are just the psychology books :-D. A minority.

            With respect though, the Irish war dead would be multiples of those numbers had conscription become a reality here. Whatever about the justification of WWII, WWI was beyond futile and the best way of honouring those dead, or the Holocaust Jews, or the Rwandans etc, is to be brutally honest in our interactions with one another. Calling spades spades. Not allowing populist movements (of any colour) to dampen our thinking. That is why this blog and others like it are essential and cathartic to the intellectual maturation of the irish mindset. It can’t but be filtering into David’s friends and foes’ thoughts and therefore actions.

  22. Should this photo show itself it will reveal the following:

    1 the mountain on the left is the killing fields where Irish Monks and others were slaughtered :

    2 The mountain on the right is the new volcanoe in early 1970′s.

    3 The photo at home is something in-between.


  23. To David McW.

    Perhaps it would have been more fruitful to have examined history of Ireland and its currency post 1979 when we broke from Sterling.

    Apart from a honeymoon period lasting a few months in 79 – the punt / Euro has consistently lagged (and at times massively so) sterling until February 2008.

    Surely we can recall the kicking the punt got in the early 90′s as it was booted around by the currency speculators (they were bigger than us).

    As mentioned by MH facts – Germany has been consistently a top world wide exporter – granted China has taken top position this year – but my youngest made in China Christmas presents are already contributing to the re-cycling industry – they are broken because they are cheap (like our electorate…. ).

    Germany is a quality exporter – and that is where Ireland must punch above its weight (as we do in cricket and rugby – good luck to the Irish Under 19 cricket team about to embark upon their adventure in the World Cup in New Zealand).

    BTW David – if you are looking for an interesting subject to write on then you should look at 150 years of cricket in Ireland – it was the people’s game at the end of the 19th century – I digress.

    Euro was never envisaged as a strong currency – and is only stronger now because the dollar and sterling have been deliberately weakened by their respective governments in their efforts to re-flate their economies.

    I agree with some of Davids article and it was blindingly obvious that the EU was admitting new members too fast – and Ireland will always have to keep an eye on that. However to go out on our own – daft.

    Lets keep it simple: Punch above our weight; make our country the envy of Europe for more than just a fast buck. We have agriculture; we have the sea; we have talent; we have infra-structure; we have potential in our health care; we have multi-nationals; and we have our spirit. We are finally getting to terms with the warts in our society left to us from 20th Century history. There are still social issues such as abortion; drugs etc

    And please can we get our regulatory blueprint sorted – and that is also worthy of an article David – how far down the road are we?

    • Deco

      Phil – you left something important out.

      Straight honest hard work. For some strange reason this has dropped out of the social mores in recent years. Coughlan and her Smart Economy talk is typical of the sort of arrogant nonsense that seems to think that Ireland can get out of this mess without working hard. We need to drop that lazy pretenscious mindset. And get honest in our dealings with ourselves.

      Because Ireland is rotten with lying deceit. You cannot operate a knowledge society when deceit is rampant. It will end up in all sorts of ponzi debacles like ANIB shares, property booms, tribunals, rezoning scandals, etc….

    • Philip

      Punching above our weight is key. But I see this as ways of improving margin rather than working ourselves to death to keep up with the Chinese on the price wars. We are lazy thinkers but physically eager and impulsive.

      Coughlan spouts the knowledge economy without realising that this places huge demand on the gray matter and educational quality of this country. She is right. Every industry has to be knowledge focused – leveraging the latest state of art while adding your own twist – or you are just another labourer and churner of other people’s cash.

      • That was an encouraging factor of the early part of the Celtic Tiger – the willingness to work. However the latter part – we became fat…..

        Coughlan is meaner and leaner now – but jeepers creepers the FF brigade are in need of a serious PR makeover.

        Its about working smart – just as much as working hard. We have to be able to do both.

        • Dilly

          I wouldnt trust her to sit the right way round on a toilet. The FF Cartel needs to be finished off, but, the opposition don’t care, that is why these shysters are still in power.

        • Deco

          In recent years…it could be said that we went around with a load of BS inside our own heads….we are proud…we have arrived….we are something special…it is different here….
          In retrospect some people were working hard….some people were working smart….but an awful lot were just spending hard, drinking hard, and thinking stupid. We trained our selves to do neither. In fact we created a set of social mores that discriminated against anybody who spoke the truth, who worked hard, who read a book, or who did any honest dealing.

          And yes, the gombeens in charge want to make the system is continually rigged against anybody who works honest in this country. The market riggers in IBEC want to make sure that those who work hard get suckered with extortionist prices….

          But we will unravel the rug that is beneath them, through active discussion. And by supporting David McW, Eddie Hobbs, Shane Ross, Matt Cooper and anybody else who is makin an honest, objective and consistent critique of the system.

        • G

          where do people expect this nirvana of the ‘knowledge economy’ to come from?

          Do you expect the over-paid University presidents to come up with it? With theoretical course which most employers find a joke?

          Do you expect the over-paid politicians to implement it (even if they knew what ‘the’ was)? The same people who championed the Celtic Tiger, the economic miracle?

          Do you expect the over-paid bankers to fund it? The Dept. of Finance to green light it? The people that bankrupted us and reduced us to ‘Failed State’ status.

          Do you expect it to materialise during the bust time when it didn’t happen in the boom time?

          There are hurdles at every turn and I haven’t mentioned the cutural, psychological and other barriers.

          Where are the high level meetings regarding the economy and getting people back to work?

          Can a discredited and dubious FAS achieve that?

          Where is the Dept. of Innovation?

          Where is the National Centre for Industrial/Entrepreneurialism Innovation?

          How much did the government put in the innovation ‘fund’ – 500 million? NAMA = €47 billion, bank bailouts more billions – simple maths indicates how serious this issue is being taken.

          The apple refuses to fall from the tree because the tree was never planted, yet people wait on expectantly, talking about something that doesn’t exist.

          • G

            Over paid politicians and bankers – I would pay both more if I thought they were capable of doing a good job.

            Proper effective financial regulation would monitor bankers and we the electorate should monitor the politicians – but of course we don’t cos we always want the ones who give us a little bit more.

            The apple tree analagy: I think we have a tree ok but its got canker and needs drastic pruning and spraying.

          • Deco

            Fair points there. Our state quangos who have various modus operandi to bring about the knowledge economy are themselves operating a bit like the Military Industrial Complex that Eisenhower warned the American people about. They seem to have incompetence built into the institutional framework in such a manner as to create the sort of problems which they are mandated to solve.

            I don’t see how sending a bunch of middle aged alcoholics to NASA for a group pissup in the sunshine state had anything to do with the knowledge economy. The economy part of it consists of a bunch of institutional insiders chasing gargantuan pension schemes like those of Rody Molloy or Ed Walsh in UL.

          • G


            as you may know, especially if you watch the documentary, Why We Fight (which might be available online), Eisenhower was going to warn about the Military-Industrial-Congressional system, but the Congress was dropped and the pharse shortened.

            It was a strange parting speech for Eisenhower to give, a military man, a man who had been involved in all sorts of covert military wars as President, saw Arbenz overthrown etc and yet his parting warning was arguably one of the most important statements of any US president.

            In Ireland, we don’t have a military as such, we do have the industrial-Dail nexus, the features of which have been well outlined on this website, plus the semi-state sector, and agencies like FAS that squandered massive State resources (€1 billion annual budget), money we badly need now (apparently).

            The question remains however, where has all the money gone? Where has the 13 billion overspend on the roads gone? Where has all the revenue generated by the boom gone?

            Money doesn’t vanish like some magic trick.

            I sense the nation is being doubly duped – not only is the war chest empty, now you people must fill it up!

            The people have become lazy, too used to job protection and the good life, in order to compete with India and China, business tells us, we must implement the pain, the austerity, these people never comment on corporate crime, never comment on banking crime, no, but the minimum wage, that is the green giant that must be tackled less the sky falls upon our heads a second time.

            If Martians landed tomorrow and someone spelt all of this out they would wonder where in the hell they had landed! It’s a bit like that story of the Indian Army officer who had to go into an aslyum which had unfortunately found itself located on the Pakistan-Indian border at the moment of partition.

            The officer gathered all the patients and said: “Those in the wing on my left, they now live in India, and those on the wing on my right, they now live in Pakistan. All patients must therefore decide whether they wish to live in either India or Pakistan!”.

            We have arrived at a similar moment, pay for the banksters recklessness for fear the economic sky will fall on our heads, expect to be indebted for generations, expect to be financially raped by the same people in the same institutions in quick time, expect no support/redress from the government, no indication as to how we got here because an inquiry has been blocked (so good chance we will repeat all this), and oh yeah, and this NAMA/Special Vehicle thing (not a Martian space craft by chance), will have the taxpayer cough up for over the rate odds for worthless land and just in case I forgot to mention, the Irish government gave guarantees so generous that it potentially covers foreign depositors, and your natural resources, yes, 80-20 in favour of a private corporation with questionable (we found 700 Gardai to keep the mindless hoardes back, but only a handful for the inner cities, the problems of which could be solved with half a stimulus package – no political will there though, no patriotism speeches, call to duty for our fellow citizens, but plenty of Paul Reynolds with no context on RTE).

            Truly, only in Ireland.

            I wonder what Mary Harney makes of it all, privatisation, the only way going forward, no society, Drumm doing a great job, Irish Maggie…………..

  24. Uroh Krack – should this be about to happen very soon I will be up on Hill of Tara and surrounding ‘hidden tunnels’ with my new metal detector and searching for my new currency in the form of lost treasures from the lost ‘arc of the covenant ‘ buried there and my wealthy jewish neighbours will find me a good price that would be irresistable……bleeep bleep bleep

  25. idij

    While leaving the Euro now might be “a way out”, joining the Euro in the first place was one of the best things we did. It has meant stability and a strong currency for savers.

    It’s not the fault of the Euro that some people, egged on by the government binged on “cheap” (ha! not so cheap now it seems) credit.

    It’s not the fault of the Euro that the public sector mainlined on “benchmarking” to such an extent that they became the highest paid in Europe.

    What’s clear is that the government and some part of the population were behaving as if they still had a banana currency. The fact was that they didn’t. This is their fault, not the Euro’s.

    When Ireland leaves the Euro. I’ll be leaving Ireland (again and for the last time).

    • Deco

      Ireland’s Euro membership exposed the fact that the Irish concepts of management and authority were deeply flawed. Belgium, another country with a history of unaccountability and corruption, did not get caught up in a property boom as a result of Euro membership.

      We need to reform the Irish concepts of management and authority. It is that simple. The complex bit is the bit of making sure that those who created the problem are removed. In politics, in the partnership program, in the trade union movement, in vested interest lobby groups (like IBEC, RGDATA, SFA, etc), in the media, and in the banks, heads must roll. This is not happening. Therefore Ireland will get kicked out of the Euro.

  26. Philip

    Many years ago – nearly 2 decades now – I worked with a group on the deployment of smart cards. These things are not much different from what is used for ATMs etc. One of the strangest situations I came across was when the then telecoms operators was issuing smart cards which held value to make calls from public phones (before the mobile era). They sold loads of cards, but could could not pay back vat on what they collected until the service was consumed (people made calls on the card credit) . What made things awkward was that 30% of the value was never consumed and the company was sitting on this pile of cash that in vat limboland. I remember at the time, they were looking at allowing use in other countries and effectively allowing telecom operators act as banks. Also these cards were capable of being used for things ranging from bus services to car parking and buying goods and services. The mobile phone and roaming tariff model was but a variation of the same thing. Anyway, I believe there were a few words in from bankers and politicians which put paid to a new type of money/ value transfer system – and that was that!

    If there was political will tomorrow, we could implement such a system on mobile phones – where people pay one another in credits using this technology. The Euro could either come or go. Effectively we are talking about a variation of 2nd Life where the webspace is Ireland. The resulting innovations from encouraging such a system would be world leading. But again…would it be allowed to happen?

    For me, I think we are on the verge of a limewire/ paypal/ebay hybrid service that’ll undermine existing modes of monetary exchange. Except there’ll be a lot more than MP3 flyng over it. Call it barter with an infinite memory and a referral system to boot.

    Whatever happened to paying for your roadside parking by mobile phone? I think when a phones are internet / broadband enabled, Google or similar may have a currency of their own.

  27. ah Lisdoonvarna what a racket that was too, over priced B & B’s on the only main street and soft wet burger buns , oh the ‘good olde days’
    Leaving the Euro will not solve ANY of our problems.
    I don’t know where you re worked this article from David, but just looking at our Government this last week , you have O Keffee closing schools on the possibility of a snow storm which hasn’t now happened but he’s sticking to his guns!, and our Transport minister who wouldn’t be out gritting the roads decides to go off to the sun as he reckons he’s ENTITLED to a Holiday !….
    and You think a new currency would solve our problems ? .
    Blowing up The Dail in two weeks time when our expenses hungry politicians return to work with their advisers consultants,secretaries, publicists, assistants and senior civil servants ( who didn’t feel the budget ) ..would be a far better idea …

  28. nev

    Country that would do anything to save its banks’ bondholders, now would pay them with the new devalued currency?
    Not likely to happen, if you ask me…

  29. Philip

    Innovation and Knowledge Economy are unfortunate terms which elicit dewy eyed trekkie commentary rather than say anything useful. From the so called “Get Go” you are presented with ivory tower images of white coat bespectacled enlarged craniums forever reaching higher academic heights to save and cosset all our collective asses in hi tech feathery beds. That’s what Coughlan sees.

    The knowledge economy very well explained to me the other day when I was chatting to a plasterer reading about the latest insulation techniques for retrofitting houses. He advertises on the web and makes a point about ensuring there is no technique he has not heard of from Germany to China. I know a landscaper who is a well known blogger and twitterer and is very well up on his field of horticulture. These are quality people who will give you the best there is.

    Do you want the practicioner of 10 years ago or now.

    Ireland was just left behind in a wake of sooooo last century junk.

    Notice how ordinary it is. Really it’s about living in a world that is forever changing and offering improvement. the game is to keep leveraging that improvement – if you’re let.

  30. wills


    Ireland s ‘controlling interests’ knew the euro offered them ‘untold’ access into the wholesale money markets.

    They knew the euro was a TREASURE CHEST.

    And it has proven to be so for the ‘controlling interests’.

    The concentric circles moving outward from the ‘controlling interests’ shared in the spoils in proportion too their proximity to the magic money making machine access / ECB.

    THey knew.

    Al of them knew the euro was one motha fu2ka treasure chest and they jumped head first in and plundered and pillaged and plundered and pillaged and plundered and pillaged some more until the MMMM stress points came under pressure from some white swan event.

    • wills

      All one has to do is look back through the newspaper archives over the last 10 years and see the ‘controlling interests’ were sponging the dosh up like it was no tomorrow.

      Most people were unsure as to what really was going on and led to believe it was something other than a bank robbery on an untold scale never before seen here, ever.

  31. biskalero


    Mayer De Rothschild.

    I think that statement says it all really.

  32. biskalero

    I think the question that has not been asked is why on earth was this country as well as Iceland pumped with International credit to create the false boom. Financial Terrorism ??? What i mean is you could take a country financially through this process , you just need the right kind of people in place to accept all this credit.

  33. Alf

    Hi David,
    Let’s look at this Punt idea a bit more:-

    Re-float the Punt?

    The Euro zone countries would want to work with Ireland (for their own stability sake) so Ireland should try to negotiate a ‘swap’ with the ECB for Punt bonds at some encouraging rate (It would be in the Euro zone interest to see Ireland leave sensibly) and then proceed to declare the Punt legal tender for all goods and services. Start to pay public sector wages in Punt while simultaneously demanding taxes in it.

    There is no need to touch bank accounts as the Euro is not going anywhere. Allow people to keep savings in Euro bank accounts. But, with the Punt as legal tender, they would need to convert to buy goods and services, pay taxes etc. The Punt would not collapse but instead we would see a gradual move to using it as it found its own level based on the real demand to deal with in it, i.e. the demand for Irish goods and services plus the demand from corporations to pay salaries, individuals to pay tax.

    The economy boomed in the 90′s not due to the Euro but from an attractive corporate tax rate and an educated competitive workforce. The Euro kept the a property bubble growing by keeping interest rates low. Now those rates are set to rise.

    A devalued currency does not have to be all bad. Just look at the US and UK. Instead it would make Ireland instantly more competitive and would attract the one thing Ireland needs right now – investors looking for value. Ireland needs to take some stimulus action, and a devalued currency will make this easier.

    Above all, if Ireland can’t compete then it won’t matter what currency it uses.

    • Alf – there is a lot over simplification here:

      Business’s were crying out for the stability that the Euro gave – and were very appreciative of fixed currencies. I was in business (bust now) which involved considerable foreign exchange transactions – our UK suppliers ended up having to give us Euro price lists – and while Stg was strong it translated into considerable discounts for Euro buyers (that is most Sterling Exporters wished to God they were in the Euro).

      This blaming the low Euro interest rates for our woes (the FF Gov are at it as well) is typical of the Irish – blame others (it was the Brits now its the Eurots).

      We got into the current mess for 2 reasons over which we had full control (we could do nothing about the tumultous financial global storm of 2008 which nearly bankrupted capitalism; and indeed still may have done so).

      Reason 1 – Our Regulator didnt know what was going on in the bank; nor did the politicians; nor did the Banks Boards of Directors (as a generalisation)’.

      Reason 2 – Bertie A’hern over the last 10 years gave away our competiveness through the social partnership deals – and the Unions were only too happy to accept.

      The Euro is good for Ireland and the only we can contemplate leaving is if we do as Malcom says – throw in our lot with Sterling.

      • Alf

        Phil – I’ve oversimplified no doubt. If the goal D McW talks about is to ultimately make Ireland competitive through devaluation then I don’t see how dealing within the Bank of England would be any better than dealing within the ECB. Assuming the British would even want to absorb Ireland’s influence into its decision making. Ireland would not likely gain any more flexibility than it currently has within the budget constraints of the Euro zone.

        Maybe you are you are suggesting a peg of the new Punt to Sterling? A new Punt would likely track Sterling closely.

  34. econarchist

    Leaving the Euro would make perfect sense but is not going to happen soon, at least not before the next general election. None of the political leaders would want to be seen supporting such a move so soon after all their effort to back the Lisbon Treaty in order to be “at the heart of Europe”.

    If Ireland is to leave the Euro, it would have to happen soon because within a couple of years deflation will have done the same job of bringing down costs.

    Irish politicians are just not decisive enough to move that quickly, as can seen from the (lack of) reaction to the recent cold weather. Willie “nobody asked us” O’Dea could not take the initiative to deploy the army. Noel Dempsey did not see the point in returning from holiday, When Batt O’Keefe tried to show how decisive he was by shutting down the schools for nearly another week, he had to do a U-turn because his decision was just a panic reaction and not based on any forecast.

    Brian Cowen, along with Bertie Ahern and others, sleep-walked his way into the current crisis because it’s easier just to ignore problems than to deal with them. So I can’t see him or anyone else doing anything as dramatic as taking Ireland out of the Euro until it’s too late.

    • Deco

      Well…if we did get kicked out of the Euro…then would we still be still at the heart of Europe? ….even though we bought Lisbon 2.0 ?

      Strangely enough whenever I am in the heart of Europe, I never see a signpost for Ireland anywhere. A small packet of Kerrygold in a shop is about as close as I ever come to it.

  35. Original-Ed

    David did point out, some time ago, that no country ever emerged from the type of crisis that we’re in, without devaluing its currency and I’m reasonably sure that that’s what’s driving his thinking. It’s a sobering thought, especially when you consider the reluctance by the top echelons to first of all, accept that there’s a serious problem and secondly, that costs including wages must come down if we’re not to have massive unemployment over the next decade or two. Trying to reduce wages/costs, is so difficult, that it’s effectively a none runner, so we’ll just muddle along with high unemployment in the hope that something will eventually turn up, like the value of the Euro collapse by 30% or more. This is not beyond the bounds of possibility, if Greece or Spain default – but it’s far from certain as things stand.
    If we were to dump the Euro and devalue would the new lower cost environment relative to our European neighbours, the US and Britain be enough carrot to kick the economy into overdrive and generate sufficient wealth to overcome the Euro debt overhang from the tiger period – a classic interdependent problem. The question is, do we have what it would take? I personally doubt it.

  36. Tim

    Folks, maybe the difference between Iceland and Ireland is that the Icelandic people got ANGRY:


  37. huffnpuffpolly

    It is simply ‘pure mule madness’ to suggest leaving the Euro. How convenient it is to say that our problems were all created by the Euro and beyond our control. If we leave now:
    1. The currency speculators will eat us for breakfast.
    2. Our debt will increase overnight.

    We are in ‘hock’ because of decisions taken by those overpaid ‘experts’ who are still in charge. REmember the German ambassador who shook his head at the wages paid to ‘senior’ people. WE, as a people, accept broad cliches which make no sense. WE still accept the cliche that you have to pay top-dollar to get the best people: we don’t have to pay top-dollar to get the best: we have to pay top-dollar for the people who think they are the best. Remuneration committees are peer groups who have a vested interest in keeping up top salaries. Look at senior pay, public and private; the reluctance in public sector to reduce senior pay; judges, senior public servants. The CSO stats. show that senior pay has not only increased more quickly than lowpay in absolute terms, but also in percentage terms.
    There is no doubt that many people had to know we were heading towards disaster. I’m no expert and I sold my house in Oct 2006 and have been renting since. I thought I had missed the market but I actually caught the top.
    Middle and top salaries have to come down. You cannot further increase inequality and think that we can maintain a legitimate society. There is a sense of entitlement throughout Irish society that is scary. Parents seem to think that the child cannot go to college without having his/her own car. Sean Haughey was one of the few people in my class who had his own car and we know where that money came from.
    David, we cannot leave the Euro, so start thinking of some other solution. Our esteemed experts could have used other means to prevent the extreme influences of the Euro, but instead they did everything to further reinforce the worst aspects.
    Our problem is the Haughey and John O’Donoghue attitude of that extreme sense of entitlement without a concomitant sense of public duty and personal integrity. Our sense of self seems to rely entirely on power and status and the huge emphasis on being ‘positive and not rocking the boat’ has engendered an attiutude of ‘let it go, it’s not my problem, even when it is’.
    Most Irish people have learned that if you raise your head above the parapet and ask questions, you cannot expect support from your peers. You will all be labelled ‘trouble-makers’.
    We are like the ‘new rich’ who have no sense of obligation to the society in which we live. The libertarian notion of the individual having the right to do what he/she wants without self-restraint has ruled our world. Our politicians made no effort to reduce expenses over the past year; they’re entitled??. How did two politicians manage to spend so little; George and Maureen?
    I know this is a bit of a rant, but currency speculation would finish us off.

    • Original-Ed


      A very good take on our society. I agree that leaving the Euro would be an extremely risky move, but David’s assertion that no country has ever succeeded in overcoming the fallout from our type of crash, without devaluing its currency, is a fact and has to be addressed. Irrespective of whether the Euro was the cause of our problems or not, we’ve got to solve this current one. There appears to be an attitude among the ruling elite that it’s beyond their capability and they are now intent on getting a much as they possibly can from the system by way of excessive salaries/expenses before it collapses – it’s an everyman/woman for themselves approach.

    • Deco

      Huffanpolly….interesting point….these little cliques of peers who decide the rates of the “top” people on state pay….who deteremine the rates for their pals…who they play golf with….and who they buy drinks for down in the local clubhouse….these people have a lot to answer for.

      Why can’t we pay an EU average salary for our below average, sometimes sober government ministers ???

      I don’t think that the currency speculators will destroy us if we re-institute Punt 2.0 (Somebody said after Dermot Ahern asked for a soccer match replay that this government are big into repeats, Nice 2.0, Lisbon 2.0, Budget 2009 2.0, etc…so they know all about repeats). The problem is that the same clowns who failed to see that massive leverage and borrowing in the property market was fuelling a ponzi scheme, would be tasked with responsibility for Punt 2.0.

      Not even Irish people would trust them gombeens. The Patrick Neary types who told us that the Irish banks were all sound.

      Our institutional tradition of institutional incompetence would finish us before the currency speculators even got a chance.

      If the Dollar is a piece of paper that is effectively an “I owe you nothing”, the Euro is a “who owes you nothing”, then the punt would be a “clowns who told us that Anglo Irish Bank was solid, owe you nothing”. It would have a massive massive credibility problem. It would be a currency backed by Irish Nepotism and the golf club cliques.

      People like you would be forced to take your Euros out of the Irish banking system and move them to the continent to prevent wholescale financial ruin. In fact such a manoevre could quickly turn to a de-capitalization of the Irish economy.

      I have a better idea. Start cutting the salaries of the non-competitive sector. Starting with McUseless, then moving to Clowen, Calamity, Groucho Marx, the Lenihan clan, the uni presidents, the overpaid clowns on RTE, CIE, FAS, ESB, the university bosses, the judiciary, etc…These people are completely overpaid compared to their peers in the UK, never mind the countries that we are most similar in the context of financial mismanagement, our fellow PIGIS….

      In fact there should be a PIGIS average for politicians of corrupt, decadent, decietful countries. Cowen’s salary can be measured against that of other similar chancers like Berlosconi and Zapatero.

  38. Tim

    For anyone interested in Dublin City Council, here is the link to the livecast meeting on right now:


  39. MaxKeiser

    We suffer a Slave mentality here in Ireland, screw the Landlord, screw the boss, screw the customer, the electorate / house buyer. But there comes a point when we are only screwing our-selves.
    Buying almost anything here is just a total rip off.

    Our stroke politicians have also done it again. Little do we realise that TD Paddy Joe who is “all right” case he put a bit of tarmac down ~ in fact did us the greatest dis-service.
    We pay for this tarmac with our sons & daughters.
    But you get the government you deserve…

    It has always been so here.

    I simply can’t take it any more.

    I don’t want to go, but I see little future here – only years of pain paying for others mistakes.

    I am actively looking to immigrate to Germany / China / Hong Kong, ultimately to have my own business.

    I am open to ideas and any comment / advice that any one may have….

    • Deco

      I think we have a “something for nothing” economic system. Basically everybody is looking for something for nothing. And then when they get they think they have acheived social status above the rest of us.

      Perhaps it is a hangover from an aristocratic-servant age ?

      • MaxKeiser

        Yes Deco. lets not forget the nuclear amounts of begrudgery

        Can I ask I you if you were going to leave & start a business.
        What would you do & where would do it?

    • There’s 500,000 Irish – Argentines who would receive you like a God.
      IT is up to scratch and the Northeastern suburbs of BsAs beat anywhere else I’ve been. Exchange rate is 5/1 and everyone lives well but on the cheap. The Anglo/Eire expat community use the Argentine system to good effect but don’t get involved in local politics.The Pampas is black with beef for export and biofuels are taking off.
      Take your pick of corruption. At least in The Silver country you can disappear, make a living and enjoy the sun amongst your own.
      And its 10 hrs back to Madrid followed by a short hop home if angst arrives.
      I know where I’m retiring to.

      • MaxKeiser

        Yes I was in Argentina I was there a few months ago & had an amazing time.

        Great country, people, food & lifestyle.

        Not sure I’d go there to make money though…

        Thanks FurryLungs

        • Ahem…….
          Lugs, Furrylugs…….
          Hirsute Wingnuts.

          BTW, there are guys out there exporting all sorts of stuff to Europe…shoes, bullocks and others operating e-commerce businesses like design.
          Just a thought.

  40. kdechant

    How long do you think the Euro will last in its present form?

  41. Deco

    There was a letter of complaint issued by people on the property pin dot ie website against the government scheme that earned the nickname “the builders bailout”. Basically it was a government scheme to help out Tom “now is a great time to buy a residential property” Parlon and his mates.

    The appeal to the EU Commision by many ordinary citizens has been rejected. It seems that the EU Commision is naive enough to believe the shite that comes from the Irish authorities. Here is the transcript of the letter that I have received from the Head of Unit for the
    Dear Madam/Sir,
    I am writing to you because you sent a complaint to the Commission concerning the
    granting of alleged state aid through the above measure.
    The Commission services forwarded a sample of the complaints received to the national
    authorities and discussed the measure with them.
    On 23 November 2009, the Irish authorities informed the Commission services and
    announced that the measure, previously limited to new properties, would be extended to
    existing properties.
    Given in addition the small number of loans granted under the scheme as initially set up,
    this might serve to meet the concerns you previously expressed. The competent
    departments in the Directorate General for Competition believe that the extension of the
    measure meets the main grounds of the complaints it received.
    In the light and on the basis of this information, the competent departments in the
    Directorate General for Competition do not see sufficient grounds for continuing the
    Should you want to dispute the above findings or learn of any new particulars that might
    demonstrate the existence of an infringement of the state aid rules, I would be grateful if
    you would inform my services as soon as possible. If the Commission services do not hear
    from you within 20 working days from the date of this letter, the complaint will be
    deemed to be withdrawn.

    I will find out if there is any comment on this in the Property pin dot IE website. Effectively this allows the government to throw taxpayers money around at the property market in an effort to prop up prices and bailout the speculator class.

    I am particularly dismayed that the EU Commision chose to allow the Irish government proceed based on a change by the Irish government to crooked legislation. In my submission I pointed out that this was a market distorting device aimed at assisting business interests who had contributed to the election of the governing party. But the EU investigation never even touched the matter.

    I will see what the contributors of the Property Pin think and then proceed. The answer from the Commision is based on assumptions about the trustworthiness of the Irish government, which anybody who ever heard of the phrase Machester Digout, would regard as extremely naive and stupid.

  42. wills

    Posters -

    The market system in ireland is controlled by special interests as revealed by NAMA.

    Making any comments without bearing this in mind is pure fantasy.

  43. Eireannach

    This is my first time to post on DMcW’s blog.
    I found his last blog entry – the one comparing the flood of cheap credit into Ireland with the flood of silver and gold into C16 Imperial Spain. I thought it was instructive. What he didn’t mention was how the Dutch sold products to the Imperial Spanish and became a world power USING Imperial Spain’s gold (they sold them fur pelts from the Baltic Hanseatic League countries, sold them state-of-the-art sail ships and invented the government bond markets and the joint stock company).

    However, I don’t see the point of this blog, that Ireland should leave the euro, since we all know that it’s not going to happen. The ECB is going to recapitalize the Irish banks in exchange for Irish government bonds.

    Looking back in history, when the UK was indebted to the USA after WW2, the US was holding the cards in that relationship and became the dominant superpower. Now the US is indebted to the Gulf Arabs, Japan but especially China. So these countries are rising in relative power, being savers and hence creditor nations. Now, within the EU, the PIGS and Ireland are going into debt to the ECB, so in fact this means the ECB is the new great power centre in the EU.

    The centripetal forces of European economic integration are now in the ascendant, the centrifugal hubris of each nation doing things ‘it’s own way’ has run out of road.

    Just as individuals were hubristic and irrationally exuberant, so were nations. We now know who they were – Ireland, Iceland, Latvia, Hungary, PIGS. It’s ‘payback’ time for the spendthrift party people – after all they were gearing up with other people’s money.

    Being stuck in the euro will force Ireland to change. But first the ordinary people of Ireland need to find themselves in such a financial nightmare maze that they actually bother to understand the system which has succeeded in enslaving them. Leaving the euro just postpones this ‘growing up’ process which is so essential for the future welfare of Ireland.

    Make no mistake, the Irish would never bother understanding the ECB system, they’d just keep plundering it if their Hubris didn’t meet it’s Nemesis.

    2010 – Nemesis is here. Each one of us is ‘accountable’ to the last penny.

  44. Eireannach

    One other thing.

    A few posters mentioned ‘the collapse of the eurozone’. Surely you don’t believe ALL 16 states in the eurozone will return to their original currencies? That’s a pointless, time-wasting ‘alternative history’ exercise. The economies of the original 6 + Austria have basically converged.

    Ireland’s future is in Europe. David frequently castigates Irish who live in Europe as snobs. M. McWilliams, c’est dommage que tu ne t’interesse pas à nos voisins outre manche. On est en train de dévéloper une espace commun pour éviter les conflits du passé.

    I find it disappointing that David points up our ‘shared culture’ with the British Empire lands of the US, Canada and Aus-NZ. We ought to learn continental languages and get stuck into Europe – what an amazing continent! Full of opportunity and cultural variety. Instead we have lazy-ass posters on here planning to emigrate to Australia – shame.
    We have friends in Europe, and they’r moving here in large numbers.

    Ireland is no longer maritime, it’s continental. If we want proof have a look in your wallet…at your Frankfurt cash.

    • wills

      Welcome on board, the euro i contend is merely a paper note with a dumb symbol.

    • Malcolm McClure

      Eirennach: Welcome, and to your valued contributions. We need a few more Europhiles here to balance the books.

      You claim “Ireland is no longer maritime, it’s continental.” Presumably you suppose that the hike in Lidl and Aldi prices in Ireland compared with say Belgium is due to some factor other than the cost of sea freight? In this blog, au contraire, we have long assumed that we are held to ransom by the extortionate sea-freight and port costs that affect both our import and export trades. Also by the choke points along the main routes in UK leading to the ferry ports. What has the EU ever done to help Ireland actually become part of an equitable continental economic community?
      Extolling the advantages of exile and of learning european languages is no substitute for providing a level playing field, so that Irish denizens can make an honest living close to home.

    • Ruairí

      ” (1). I find it disappointing that David points up our ’shared culture’ with the British Empire lands of the US, Canada and Aus-NZ. (2) We ought to learn continental languages and get stuck into Europe — what an amazing continent! Full of opportunity and cultural variety. (3) Instead we have lazy-ass posters on here planning to emigrate to Australia — shame.”
      @ eireannach: – as a people, why can’t we do all three? Point number 2 depends somewhat on state assistance in developing structures that get us and our produce and people integrated into europe. That hasn’t been happening to a great enough extent (despite joining the euro, this is part of David’s argument re governmental due diligence). Of ocurse we can all learn the languages of Europe but surely much better to be state-championed through our education system. If we are to succeed at the levels required.
      Point 3 is a tad cheerleading of your own current situation perhaps. No one who seeks work in Oz, leaving Ireland, is lazy. No one who works in Oz is lazy, period. That’s baseless. But ps welcome and I like the european insight and contexts.

  45. Amen, re that Irish Times article, Tim!

    But ‘get angry’ with the tax system that rent-seekers have set up for you that steals from your wages while they are permitted to privatise your publicly-generated land rent.

    Here, in Australia, they are even privatising our roads and airports! What happened to the principle of ‘the freedom of the highways and biways’? I certainly do ‘get angry’ when I see people who can’t afford to pay forced to turn off our freeways before the toll points.

    The Irish once did get angry and took Henry George to their hearts – but now it seems no one’s heard of him. [sigh!]

  46. Eireannach

    @Malcolm McClure

    I’m from Dublin and I currently live in Dublin. When I say Ireland is continental I mean that now, post-Lisbon, the main centres of power that govern our civic life are the Commission in Brussels, the ECB in Frankfurt, the Parliament in Strasbourg and the Oireachtas.

    2 of these are French-speaking, 1 German-speaking and 1 English-speaking. We need to reconfigure our identity around this new reality. I’m always annoyed when DMcW indulges in twee Oirish digressions about Christy Moore, macroom bars, choc ices and so on. We don’t need nostalgia at a time like this. We need a compass pointing to Brussels and Frankfurt that tells us ‘due North’ as far as our future is concerned.

    Britain is entering a period of deep crisis because it is dawning on the public that Brussels and Frankfurt are these emerging power centres ‘that will rule over them’. The public are still atavistically pulled backwards to British Empire conditioning where the continental powers were rivals in a great game. Yet after decades of British comedy being based on sniggering at continentals, they now sense that something world-historical is emerging RE: the EU and the ECB.

    Wills, you will of course have noted that the ECB building is 100 metres from the original office of the Rothschild family dynasty. Check out Niall Ferguson’s excellent BBC documentary ‘the Ascent of Money’ for an account of the Rothschild domination of the government bond market.

    If bond traders don’t want Ireland to leave the eurozone, then we simply can’t without being made an example of and as Morgan Kelly points out, we’d have a run on bank deposits too.

    So it’s not going to happen. So learning European languages now has to happen to afford mobility in our ‘new home’ called the EU. But as always, Ireland is Paddy-last to concede that the eurozone is a world historical merger by the central bankers. It’s not going to stop because some libertarian Irish who still live with a British Empire/American delusion of ‘independence’ or ‘sovereignty’ or ‘freedom to choose’ or whatever word you want.

    We’ve been signing Treaties in Europe for decades. Better to read their provisions that dream of returning to the British Empire days of clipper ships and ‘independence’. We are all interdependent now.

    • tony_murphy

      Thanks for your input Eireannach

      From reading it, I take it that we should all bend over to the EU and ECB whenever they ask us to

      Are Irish people on an equal footing with the French, Germans in this new interdependent world?

      How is FDI attracted into Ireland where currency and tax are controlled by EU (tax harmonization will come – I’d bet it’s going to come as payback time for NAMA in a year or two)

      Sometimes you got to make bold decisions. The Euro was and is a disaster. In the “boom” years interest rates were not controllable to dampen house prices – although knowing Fianna Fail, it probably won’t have mattered much. Now when Ireland needs a competitive currency, it’s got the Euro, which is anything but competitive and there is nothing that can be done about it.

      The long term interest of Ireland are outside of the Euro IMO

      • Eireannach


        No we are most certainly not on an equal footing with France and/or Germany. This is what a corporate merger is all about, the big share holder calls the shots. There are deeply held world-historical reasons why the international bankers and political and corporate elites are forming a continent-wide merger. We need to orient from the starting point of a realization that this is not a process we can stop, as the second Lisbon Treaty referendum demonstrated.

        FYI I voted no to the Lisbon Treaty, but that was then, this is now. Lisbon is law. It is done.

    • Bamboo

      As far as I know, in the early 90s, FAS has invested millions to encourage language students to learn a foreign language to work in the Irish based call centers. These students went abroad for six months to learn the language funded by FAS. Unfortunately these students liked it so much over there that they decided to stay there. So this was quite a fiasco and naturally not in the public domain.

      • Deco

        Hilarious. But it is also a policy born out of the 1980s, when young people were prepared so that they would leave the country and not wait around pushing up the live register or advocating reform of the system or the business culture. They were already too foreign for our gombeen element, even before they left the country !!!

    • Malcolm McClure

      Eirennach: I tend to become somewhat alarmed by the voice of youth, fearlesly marching forward into the Brave New World. If you haven’t read Huxley’s novel, it is worth skimming soon, as his vision looks like happening 400 years earlier than he foresaw.

      Advances in biotechnology combined with eugenics and the European superstate could soon establish the caste system that Huxley envisaged. This would be ruled by the multilingual technocrats mixing unintelligible gutteral sounds with MBA technospeak in their pronouncements. Most of us would subsist on non-generative sex and soma and would happily shuffle off this mortal coil at the age of 60.

      Your advocacy of a land ruled by Mustapha Mond (brilliant name) needs all sorts of checks and balances before it will recommend itself to the average Irish voter.

      • Eireannach

        @Malcolm McClure

        We are now past the point where the Irish voter matters to the European project. It will indeed be a kind of scientific ‘directorate-ship’ rather than dictatorship. Many EU directives already exist and are binding for member states. The most profound is a 20% reduction in CO2 emissions by 2020.

        Social systems under environmental stresses and strains tend to emphasize the common good over individualism. Individualism, as I mentioned, belongs to John Locke and the British Enlightenment, and like Athenian individualism, was built on an underclass of subaltern slaves.

        We Europeans have lost this army of slaves working on our behalf. We will witness a big drop in our incomes and living standards. But we can freely educate ourselves to be healthier, maybe even happier, with a lower GNP, as is the case in much of the world.

        This process is world historical. I don’t rate my own ego enough to have a ‘view’ or ‘opinion’ of it, it’s much deeper than that. What I can say, though, is spoiled brat Europeans who ‘don’t agree with it’ or whatever are wasting valuable time to adjust to this new emerging reality that we will all be living in. Some of us will thrive and some fail, as with every world historical change in the past.

        • Malcolm McClure

          Eirennach: Goodbye, democracy. Auf wiedersehen, neutrality. So long, individualism. Hasta luego, cultural identity. Farewell, privacy. Adieu, religion. Ciao, meritocracy. etc. etc.

          Holy cow! Your year in India sees to have made you receptive to the desirability of Huxley’s caste system. The Indian Empire probably created the most efficient bureaucracy the world has ever seen, and India still reaps those benefits. But did you never meet any Untouchables. Did you never experience the unrivalled arrogance of the Brahmins, the fundamentalism of the Sikhs or the spaced out Gurus? Surely in your year there you experienced other than buttoned-down Indian preppies?

          • coldblow

            Holy cow indeed. I hope this brave nw world exists in Eireannach’s mind only and not in any objective reality I’m ever likely to bump into!

      • coldblow

        Malcolm, you nailed the literary reference here. I’m keeping an open mind about the EU, ie not letting my inner scepticism keep the door barred. Will Hutton has convinced me that the european project cannot be dismissed out of hand. But the ice is closing back over the air hole. What does it stand for? From one end David Quinn has raised issues in the Irish Catholic, from another we have the ECB giving their blessing (apparently) to NAMA. The eurocrats might be sincere in their beliefs, but so were economists re the free market (in its constituted form) and so are Al Qaeda etc etc, One of the joys of growing older and broadening your knowledge is the realisation that so many people you had believed knew what they were talking about actually don’t.

        Ireland never got involved in Europe out of ideals but out of self-interest (or rather, vested interests). David’s approach is correct: to play the EU system so long as it is in our favour, kiss it goodbye if not.

        By the way, in the context of some of this discussion, I read Huxley’s book in Dutch (bought it in the church in Edam for 1 euro) and it’s a good translation. Who is ‘de Wilde’ – ‘the Savage’? Learning a language is all well and good but it takes an awful lot of time. As an English speaker you are at a huge disadvantage. Try for example practising your Swedish in Sweden – you’ll probably get a reply in English. How would a Dutchman and and a German communicate? Although they speak basically dialects of the same language my money is on the answer being: in English.

        I was already thinking of getting Sky Sports and now I’m warming more to the idea.

        • Based on my experience I never had any problem practicing Swedish in Sweden. In fact people were delighted that I was making an effort.
          As for Dutch and German. In business settings English is the language, as you would expect, as most people speak it as their best second language. However, in social settings nearly all Dutch people try to speak some German. I should know as I worked with many Dutch people in Germany. Of all of the foreigners in my American company the Dutch and Swedish were the most likely to try to speak German. They hadn’t all studied it for years at school either. The difference was their attitude.

  47. Tim

    This is becoming very interesting.

    Let’s keep at it!

  48. Eireannach


    Fair enough RE: Australia, or indeed anywhere in Anglosphere. We need all the alliances and opportunities we can. I guess I just visualized guys from the C class in school during the Celtic Tiger years speculating in property with what was in fact mainly CONTINENTAL EUROPEAN PEOPLE’S MONEY (!!!) while watching oh-so-British games on TV like cricket and rugby. Did many of these guys decide to hedge for the future by ‘investing’ in French, German, Spanish language courses ‘for a rainy day’? How many – I’d love it the CSO had statistics on that. About 0.05% I reckon.

    Why won’t they learn a continental language? For the isometrically opposite reason that the Baltic states learn English – because we have options. It just so happens that those options are in the former colonies of the British Empire.

    Which neatly brings me back to my distinction between ‘history’ – David and his macroom bars – and ‘destiny’ – Irish kids in school with learning Polish or Latvian loan words while playing top trumps or hop-scotch.

    Polish workers in Ireland, our kids in school with exotic school friends, our ‘mandarins’ or ‘Europhile’ cheese-and-wine visionaries – they all see something David overlooks, which is the Ireland he knew lives on only in his memory. We are increasingly interwoven with the European project and Ireland as we knew it will never return.

    Populist pandering to those who’d love to return to the punt and macroom bars and whatever else is just that. We’ve signed Lisbon, it’s done. Onward into Europe. This meta-crisis CAN become a meta-opportunity.

    I started here:

    • Dilly

      I just cannot see this “one size fits all” policy working for Europe. We are not the USA.

      Thanks for the link by the way, it will come in handy.

    • Deco

      Eireannach. I am going to tell you something that will have you wanting to control your enthusiasm.

      Europe, at an aggregate level is also broke. Certain regions are very thrifty and totally solvent. And other bits, like the PIGS are corrupt and insolvent to a degree that is unspeakable in official coverage in EU institutions. And then we have Rumselds ‘unknown unknowns’. Countries like Austria and Sweden (not in the Eurozone, but very Europhile) have banking systems that are seriously leveraged to Eastern European property markets, and have no idea how badly stretched they have become. I agree with you that the Brits are in extremly serious trouble. In fact Britain can only go in one direction, downwards into a spiral of economic crises. However, what nobody ever says is that every Labour Administration since 1945 has left Britain in a financial mess on being kicked out of office. The UK Labour policy framework has a tendency to cause Britain to get into very serious trouble after 4 years in action. Thatcher was ruthless, but Callaghan was reckless before her. This is the pattern that has existed since 1945.

      The rate of unemployment in Europe is now higher than the rate of unemployment in Brazil. The unemployment rate in Europe in 2009 was higher than in 1999. In 1999 it was higher than in 1990. And in the founding six members it was higher in 1990 than in 1980. And it higher in 1980 than it was in 1970. There is something about the European project that is not working. But I am sceptical about the American model of financial leverage on steriods, debt mania, impulsiveness, and consumerist excess as being any better. We tried that here in Ireland in the ‘closer to Boston than Berlin’ policy episode, and we are now in a serious financial mess. There is a way to surviving in the Euro area, and we never grasped it because it was far too conservative for the impulses that were bursting forward in our society. From now on every policy decision will be difficult.

      • G

        Two failing systems, some protections in EU how anyone survives on £60 English dole is beyond me.


        Some 21 million unemployed and rising.

        800,000 homeless in France, 100,000 in Paris alone.


        47 million Americans go to bed hungry
        15 million Americans are out of work (and rising)
        10 million Americans homes are threatened with foreclosure
        47 million Americans don’t have any health care

        “All these things are happening in our country and we’re acting like a latter-day version of the Roman Empire, reaching for empire while inside we rot.” – Rep. Dennis Kucinch

        • Deco

          One fifth of children in the US depend on food stamps. The US is providing for it’s children. But the question must be asked ‘why so many people depend on food stamps ?’ Food in the US is plentiful, cheap and everywhere. But some people can still not afford it.

          I agree with Kucinch analysis of the imperial policies and the process that is officially called “hollowing out” which is decimating American society at enormous social cost to the individual.

          • G

            The much maligned New York Times actually ran a rather interesting series of stories on this topic, with some photos which really bring the human side home. US is a Failed State, we are in ‘wonderful’ company!

            Living on Nothing but Food Stamps
            CAPE CORAL, Fla. – After an improbable rise from the Bronx projects to a job selling Gulf Coast homes, Isabel Bermudez lost it all to an epic housing bust – the six-figure income, the house with the pool and the investment property.
            Now, as she papers the county with résumés and girds herself for rejection, she is supporting two daughters on an income that inspires a double take: zero dollars in monthly cash and a few hundred dollars in food stamps.
            With food-stamp use at a record high and surging by the day, Ms. Bermudez belongs to an overlooked subgroup that is growing especially fast: recipients with no cash income.
            About six million Americans receiving food stamps report they have no other income, according to an analysis of state data collected by The New York Times. In declarations that states verify and the federal government audits, they described themselves as unemployed and receiving no cash aid – no welfare, no unemployment insurance, and no pensions, child support or disability pay.
            Their numbers were rising before the recession as tougher welfare laws made it harder for poor people to get cash aid, but they have soared by about 50 percent over the past two years. About one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card.
            “It’s the one thing I can count on every month – I know the children are going to have food,” Ms. Bermudez, 42, said with the forced good cheer she mastered selling rows of new stucco homes.

            photos in the series – http://www.nytimes.com/slideshow/2010/01/03/us/FOODSTAMPS_index.html

            other articles in the series – http://topics.nytimes.com/top/news/us/series/the_safety_net/index.html

      • Eireannach

        The entire EU project has been characterized by ‘creative destruction’ of national economic sectors and even ‘destructive creation’ like the insane building crazes of Ireland and Spain.

        However, Lisbon is law. We have arrived. The centripetal forces pushing for a federal Europe are truly titanic – central banks, corporations, bureaucracies. Private sector powers AND public sector powers.

        If we are going to make a fairer society with more employment opportunities it will be within the EU frame of reference. We could have local currencies in the future, but the euro will remain the unit of account.

        No power on Earth – not the US, not Russia, not China, not the UN – will stop the European business and bureaucratic elites from creating the merger that is the EU.

      • MaxKeiser

        Deco I undersatand that the Germans have enough cash (savings) to bail out the entire UK & French Economies!

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