Why I'm thinking of voting yes this time to Lisbon

Amberman

democrates wrote: »

Markets can work and must work, I don't believe in extremes though, be it the central command model with minimal individual freedom or the purist market model espoused by the Cato institute et al in which freedom itself (money=choices) becomes increasingly concentrated with the wealthy elite.

As for interest rates I accept that since joining the Eurozone Ireland has been on the opposite cycle to the EU aggregate. As to the general case that interest rates have been too low for too long it is only fair to observe that they are set in response to market conditions, and feeds back into them, so we saw the ~trillion dollar yen carry trade (based on aggregate closing positions at the Chicago Merc.) spring up from Japans 0% policy and unwinding that exposure looked like a big issue when that rate began to inch upward.

It is also interesting to note that house prices are now excluded from many inflation calculations so that the full economic reality faced by households is not reflected in monetary policy, however the artificially low rates suited the money markets just fine and allowed them to further exacerbate asset price inflation. Central banks tend to be too cosy with the private banks.

So granted interest rates have been too low for too long but I see those policies as corrupt, in favour of the few at the expense of the many.

I agree that "irrational exhuberence" had a role, it caused the credit crunch. The ninja loans of gangster capitalists Greenspan also warned about ("developments of particular concern") percolated throughout the international financial system via collateralised debt obligations and credit default swaps. The brilliant idea promoted by hedge funds of spreading risk throughout the system backfired badly when it provided a means to pump in vast amounts of hidden risk. "Only when the tide goes out will we see who's been swimming naked" as the oracle observed.

So the credit crunch was a direct result of market action in concert with investor-friendly central banks, but also the inaction of regulators. The SEC among other regulatory authorities now stand accused of being asleep on the job, which I think is giving the benefit of the doubt that they weren't influenced by vested interests. What was needed to prevent this mess was more regulatory intervention, not less.

Now I'm well aware that some market fundamentalists think that more banks should have been let fail, they seem to positively salivate at the prospect of seeing the weak perish and the strong survive. The blood lust, anger, and absolute lack of care for the well being of others sets them apart from the majority of human beings. Many are just immersed in the ideology of anarcho-capitalism, others appear to be clinical psychopaths.

Letting the market run it's course and allowing more banks to fail would clearly intensify the already dire consequences for the wider economy and the welfare of the many. Most people would prefer a salary cut to losing their job, your get it over with quickly but more severely argument is hardly appealing. I'm never surprised when the well heeled prescribe painful corrections for the less well off, and I'm always amused at middle-class believers who like to talk the talk of predators when they are in fact among the working stock prey.

I'm glad government intervention is finally bringing some humanity into the equation, those who don't like it can whistle dixie.

The carry trade came from ill conceived government intervention to stop a stock and housing slump and prevent bad debts from disrupting the system. It didn’t work...it acted as a drain on growth but you appear to welcome it here? Why?
You understand that government intervention is corrupt when interest rates are lowered, but see more intervention now as benevolent?
A better solution is to get rid of all central banks. A lack of regulation didn’t cause this problem as you seem to think. It was regulation that caused it...specifically forcing banks in the US to lend to individuals through legislation that Fannie and Freddie carried out.
You seem to want companies to be bailed out who have made bad decisions. What about poor homeowners who fell foul of aggressive lending practises? Who is bailing them out?
The cost of bailing out weak banks is that the costs of poor decisions go unpunished. This sends a terrible signal. Good companies are then denied capital to create jobs, take over failed assets at market rates, bad companies limp onwards with flawed business models that suck capital from the system and we all pay for it in the end through a longer, deeper recession and higher taxes for our children.
Thats just selfish.
PS – Im not well healed...I’m poor, by any measure you care to use. I sold my house in 2006, got out of debt and bought some gold. I gave up my fantastic salary 3 years ago and now work for low wages....only a few thousands euros a month. The entire system is completely corrupt and favours not the middle classes, but the uber wealthy. You are being robbed by these bailouts.
You seem to think government intervention will fix the problem....but you are precisely wrong. It will make it worse, more prolonged and more painful, but people are desperate to believe that the government cn make it all better....it cant...but they are happy to shift the debt onto future generations to avoid the pain that they should rightly face now, just for the chance that it might make it better.
Ofcourse the ratings agencies and the government regulators were ineffective. Their wages are a fraction of what smart people can get playing for the other side of the equation. They have no hope of out gaming much smarter, bigger and better funded organisations.
I think you just don’t understand it. The government can’t fix this problem.
More debt cannot solve the problem of too much debt.

Scofflaw

As for interest rates I accept that since joining the Eurozone Ireland has been on the opposite cycle to the EU aggregate.

First, I'm not actually convinced that Ireland was on some kind of counter-cycle to the rest of the EU - most EU countries boomed while we boomed, but from a higher base and in a structurally different way. Most of them are now going into recession with us, although much less sharply. Indeed, the correlation seems to have been that the more GDP was put into social investment, the smaller the boom and the less sharp the current fall - the French, for example, are blowing their own trumpet with a fair degree of schadenfreude, whereas the UK is looking into a deep trough.

Second, absolutely nothing in low interest rates required us, the public, to borrow money to buy and build houses. We could have borrowed money and invested it in business startups - but those of us who did that had it made pretty clear to us that we were fools to do so instead of getting into the property game.

So this idea that had we only had control over our interest rates we'd have been alright doesn't wash - and even less so the corollary that the problem was the low interest rates foisted on us. We chose what to borrow for, and we borrowed not wisely but too well. Nor, of course, is there any indication that our FF-led government would have favoured high interest rates in any case - I reckon they'd have followed the surge of cheap credit elsewhere.

cordially,
Scofflaw

Scofflaw

Speaking briefly with my Mod hat on, and recognising that I'm as guilty as the next person, this thread needs to come back on topic - it's not a general discussion of the economic mistakes of the last decade.

mea culpa,
Scofflaw

Amberman

Last point, then I'll shut up. I didn't say Ireland was counter cyclical. You are right about the coordinated boom...but monetary policy from the central bank was far too accomodative for Irelands position.

One size sometimes will, but doesnt necessarily always, fit all.

That is all.

K-9

Scofflaw wrote: »

Second, absolutely nothing in low interest rates required us, the public, to borrow money to buy and build houses. We could have borrowed money and invested it in business startups - but those of us who did that had it made pretty clear to us that we were fools to do so instead of getting into the property game.

So this idea that had we only had control over our interest rates we'd have been alright doesn't wash - and even less so the corollary that the problem was the low interest rates foisted on us. We chose what to borrow for, and we borrowed not wisely but too well. Nor, of course, is there any indication that our FF-led government would have favoured high interest rates in any case - I reckon they'd have followed the surge of cheap credit elsewhere.

Have to agree there. This seems to be one of the arguments used to say joining the Euro was one of the problems that led to the recession.

Plenty of people warned about our reliance on property. Lower interest rates in themselves wasn't a big part of the problem, the use of them was.

sink

Attributing the housing bubble to low inflation is akin to attributing motorways to excess speeding. The solution is not to hike up interest rates or to tear up the motorways, but to moderate our borrowing and our speed. It takes a bit of personal responsibility which we should be capable of as adults.

I wonder if the people who complain about the 'nanny state' are the same as those who abdicate their responsibility to the government and expect the government to make all their financial decisions.

Amberman

K-9 wrote: »

Lower interest rates in themselves wasn't a big part of the problem, the use of them was.

Meh...hair splitting.

Breaking news....most people are of average intelligence and slaves to peer pressure and ego satisfaction!

Weak willed fat people will likely get fatter if I make sure there is always a bowl of their favourite ice cream nearby 24/7. Its not the ice creams fault, and its really not the fat persons fault either...not really. Its the fault of the person who ensures they always have access to the ice cream. When the ice cream is removed, the fat person doesnt eat as much of it and they become less fat. See how that works?

People, in general, are sheep. You can only blame them if you've been surprised by their "sheepishness"...but a quick look at any asset bubble in history shows this isnt so. Their actions are highly predictable as a group.

Not to mention lenders slide down the credit worthiness curve....they knew people were much more sheepish down there...and leming like too.

K-9

Amberman wrote: »

People, in general, are sheep.

Apparently, so are regulators.

As Scofflaw pointed out, France didn't have the same problem.

Scofflaw

Amberman wrote: »

Meh...hair splitting.

Breaking news....most people are of average intelligence and slaves to peer pressure and ego satisfaction!

Weak willed fat people will likely get fatter if I make sure there is always a bowl of their favourite ice cream nearby 24/7. Its not the ice creams fault, and its really not the fat persons fault either...not really. Its the fault of the person who ensures they always have access to the ice cream. When the ice cream is removed, the fat person doesnt eat as much of it and they become less fat. See how that works?

And if you put it in front of me, I won't eat it - which is why I'm not fat and your analogy doesn't work.

I accept that our government adopted pro-cyclic policies that exacerbated the effects of cheap credit - however, that still doesn't put the ball back in the ECB's court. It still leaves it being a case of how we in Ireland dealt with the low interest rates, either in person or through the government we chose.

cordially,
Scofflaw

ShooterSF

Look Ireland is but a speck on the world's financial market. All we can really do is damage control and wait for the big players to push through this depression. Any delusions to the contrary are way off. The E.U in it's current shape seen some of the best global economic times and there is nothing to suggest that in it's current form it can't again.
TBH our membership of the Euro has killed us more than anything as we usually sink our currency along with the UK in times like this. Further integration therefore in the long run could leave us worse off to protect ourself from future recessions. Even if saying Yes somehow helped us out of this climate a little sooner, is a short term gain worth the risk of a long term loss (assuming the OP is against the treaty itself)?

Do you really think the world's banks and businesses are paralysed waiting to see what happens with an EU treaty? A treaty that is meant to adjust voting and tidying up here and there (whether it does or not is a different issue). I doubt Lisbon would have any effect on how they run their day to day business so why should they care if a couple of politicians are unhappy with each other.

Also if they were waiting surely both results would be bad. As neither allow for status quo they will have to wait for the vote and then wait to see what effects either has before becoming active again, further delaying a recession. Surely in this instance where the world economy is tied to the EU's structure a postponement of any vote would make more sense and allow business to fire ahead knowing what the short-term future of the EU is.

Amberman

Scofflaw wrote: »

And if you put it in front of me, I won't eat it - which is why I'm not fat and your analogy doesn't work.

cordially,
Scofflaw

The analogy doesn't work....for you....but it works for weak willed ft people...which you arent. You also arent typical of people who fell for the low interest rate/property specualtion trap, as you've already said...thats why I prefaced it with "average people".

Average people scooped up the cheap credit Scofflaw. This is in the realms of observation. How can you even argue with this? Is it their fault? No, they are like the weak willed fat person. Not all people will eat the ice cream, but a certain type will and always does. Its the same story in large and popular debt driven booms...not everyone falls for it, but enough ALWAYS do to turn them into bubbles.

You cannot blame individual behaviour if it is predictable and has been seen many times before, which it has. You're hardly typical, so it doesnt apply to you.

France is different due in large part to their tenancy laws and attitudes to debt. They have much longer tenancy agreements and far better tenancy protection in France and debt is frowned upon in a way that we cant imagine in Ireland. Thats why they arent facing the housing realted issues we are, but they have different problems.

One size interest rate DOESNT fit all the Eurozone all the time. To say it does is as wrong as to say that it never fits any country.

iseethelight

turgon wrote: »

I know off topic, but maybe it serves as an example of the no side tripe I was referring to in post #2.

When importing stuff in anywhere, import tax must be payed. However thanks to the EU we no longer pay import tax within the common market, which means one can avoid the "rip of republic" to a certain extent. But yet this guy is criticizing the EU for making us pay import tax??? It just makes no sense.

My post had nothing to do with the payment of import taxes but pointless eu checks on sealed products,which means that its only viable for business's to import them.
FYI there is no import tax for personal imports up to the value of €175.

My point was to illustrate how much influence the eu has on us, which most people don't realise untill i have to mop up the problem and tell them they can't have their perfectly safe product.

Scofflaw

Amberman wrote: »

The analogy doesn't work....for you....but it works for weak willed ft people...which you arent. You also arent typical of people who fell for the low interest rate/property specualtion trap, as you've already said...thats why I prefaced it with "average people".

Average people scooped up the cheap credit Scofflaw. This is in the realms of observation. How can you even argue with this? Is it their fault? No, they are like the weak willed fat person. Not all people will eat the ice cream, but a certain type will and always does. Its the same story in large and popular debt driven booms...not everyone falls for it, but enough ALWAYS do to turn them into bubbles.

You cannot blame individual behaviour if it is predictable and has been seen many times before, which it has. You're hardly typical, so it doesnt apply to you.

Even with those provisos and conditions, it still applies to the Irish government, I'm afraid, and even though I suppose we could say that our fatal lack of willpower meant we elected representatives who would give us the ice-cream, where does that leave us?

Are you saying that we're unable to change? That we're condemned to eternally repeat the housing bubble any time interest rates dip below 5%? See, if we're able to change, then we could have done so before the music stopped - we still have nobody to blame but ourselves.

Amberman wrote: »

France is different due in large part to their tenancy laws and attitudes to debt. They have much longer tenancy agreements and far better tenancy protection in France and debt is frowned upon in a way that we cant imagine in Ireland. Thats why they arent facing the housing realted issues we are, but they have different problems.

Strikingly less severe ones, and ones that may not have anything to do with the credit bubble - which points out, again, that government policy and social expectations can make a structural difference to the economy in such a way that our downturn would be a good deal less severe than it is.

Amberman wrote: »

One size interest rate DOESNT fit all the Eurozone all the time. To say it does is as wrong as to say that it never fits any country.

Well, clearly low interest rates can never be of benefit to Ireland, since it appears we are congenitally unable to cope with the resulting bonanza. At least, ordinary Irish people can't do it, apparently, on account of their lack of will power.

I'm a little worried by the trend of the argument, as you can perhaps tell. Perhaps we would be better off if the other member states simply took over running our country until our will-power improves?

cordially,
Scofflaw

Scofflaw

iseethelight wrote: »

My post had nothing to do with the payment of import taxes but pointless eu checks on sealed products,which means that its only viable for business's to import them.
FYI there is no import tax for personal imports up to the value of €175.

My point was to illustrate how much influence the eu has on us, which most people don't realise untill i have to mop up the problem and tell them they can't have their perfectly safe product.

As a matter of interest, then, what are these pointless EU checks on sealed products? Are we talking about food products, perhaps?

interested,
Scofflaw

nesf

ShooterSF wrote: »

TBH our membership of the Euro has killed us more than anything as we usually sink our currency along with the UK in times like this.

Nope, it wouldn't work for us because we're too small. We'd have similar currency problems to what Iceland went through. I'd also recommend checking up on how bad Sterling is doing because at the moment it's having a really rough time in the markets.

Tbh our membership of the Euro is the only reason we don't have a currency crisis right now and it has brought many more benefits to boot and that's the only sensible neutral economic analysis of the situation that you're going to get. In fact just look at Denmark at the moment and it's desire to join the Euro if you want an example of a country without serious economic difficulties finding it hard on the outside because of its size.



I would strongly recommend anyone who wants to discuss the economic impact of EU and Euro membership to visit the Economics Forum.

K-9

Amberman wrote: »

The analogy doesn't work....for you....but it works for weak willed ft people...which you arent. You also arent typical of people who fell for the low interest rate/property specualtion trap, as you've already said...thats why I prefaced it with "average people".

Average people scooped up the cheap credit Scofflaw. This is in the realms of observation. How can you even argue with this? Is it their fault? No, they are like the weak willed fat person. Not all people will eat the ice cream, but a certain type will and always does. Its the same story in large and popular debt driven booms...not everyone falls for it, but enough ALWAYS do to turn them into bubbles.

You cannot blame individual behaviour if it is predictable and has been seen many times before, which it has. You're hardly typical, so it doesnt apply to you.

France is different due in large part to their tenancy laws and attitudes to debt. They have much longer tenancy agreements and far better tenancy protection in France and debt is frowned upon in a way that we cant imagine in Ireland. Thats why they arent facing the housing realted issues we are, but they have different problems.

One size interest rate DOESNT fit all the Eurozone all the time. To say it does is as wrong as to say that it never fits any country.

Which explains why our Regulators failed. They warned about 100% Mortgages, 6/7 times income affordability ratios etc.

Instead of warning, they should have stepped in.

You seem to say this was going to happen with lower interest rates. I accept that.

I blame the regulators, not the Euro.

Interest rates are at all time low rates, how come there is no bubble?

iseethelight

Scofflaw wrote: »

As a matter of interest, then, what are these pointless EU checks on sealed products? Are we talking about food products, perhaps?

interested,
Scofflaw

Yes
But be clear most of the stuff I get defintely represents a risk
some would be perfetly safe but has to be taken

Out of interest as I am a public servant dealing allmost exclusively with EU law-perhaps I should be paid directly by the EU?

Scofflaw

iseethelight wrote: »

Yes
But be clear most of the stuff I get defintely represents a risk
some would be perfetly safe but has to be taken

Out of interest as I am a public servant dealing allmost exclusively with EU law-perhaps I should be paid directly by the EU?

That rather depends - are you mostly implementing checks on food products coming in from outside the EU or inside?

cordially,
Scofflaw

iseethelight

Scofflaw wrote: »

That rather depends - are you mostly implementing checks on food products coming in from outside the EU or inside?

cordially,
Scofflaw

outside

Scofflaw

iseethelight wrote: »

outside

Then what you're implementing is the agreed EU-wide legislation that both protects Ireland and allows for the free movement of food products within the EU. If it were not for the EU, your job would be to implement such checks both on food from outside the EU and food from the rest of the EU - and there would be similar checks in every EU market on Irish food.

Which is better?

cordially,
Scofflaw

Hitman Actual

iseethelight wrote: »

My point was to illustrate how much influence the eu has on us, which most people don't realise until...

You neglect to mention that this "influence" works for consumers as well: how about the cheap flights in the first place, due to EU legislation opening up the market? Or in other area's such as cheaper broadband due to competition, or reduced mobile roaming charges, one of the more recent EU legislation acts. They're just a few quick ones off the top of my head. The fact is, a lot of EU legislation is geared towards making goods/services, etc, cheaper for the consumer. "Rip-off Ireland", as you mentioned in your initial post, is of our own making, and would be a hell of a lot more extreme if it wasn't for the EU "influence" you so deride.

iseethelight

Scofflaw wrote: »

Then what you're implementing is the agreed EU-wide legislation that both protects Ireland and allows for the free movement of food products within the EU. If it were not for the EU, your job would be to implement such checks both on food from outside the EU and food from the rest of the EU - and there would be similar checks in every EU market on Irish food.

Which is better?

cordially,
Scofflaw

That indeed is an excellent point,however Ireland has many agreements with countries outside of the eu
Also countries such as Norway and Switzerland have recipocal agreements with the eu

Amberman

Scofflaw wrote: »

Even with those provisos and conditions, it still applies to the Irish government, I'm afraid, and even though I suppose we could say that our fatal lack of willpower meant we elected representatives who would give us the ice-cream, where does that leave us?

The government isn't elected to make sure you don't make stupid investment allocation decisions...even if monetary policy contributes to the likliehood of them occuring, which it did in this case.

Are you saying that we're unable to change? That we're condemned to eternally repeat the housing bubble any time interest rates dip below 5%? See, if we're able to change, then we could have done so before the music stopped - we still have nobody to blame but ourselves.

There have been bubbles since there were tulips. They are an integral part of a capitalistic society. Asset prices over shoot during a boom relative to traditional anchors of value, then undershoot during the bust.

Irish house prices are only one example, I can think of 30 bubbles in the last 20 years. We arent special becuase we have a bubble, nor are we particularly stupid, we are averagely stupid. They depend on human nature and are facilitated in many cases by overly lax monetary policy and loose lending standards. The reason we dont have a boom now is that although the cost of capital looks low, the availability of it acts as a rationing device, so crazy brained specualtors cant get it and more sensible people are getting it. We arent in an orderly market right now.

In the case of Irelands bubble, the laxness in monetary policy came directly from a systemic issue, in monetary policy, ie, membership of the Euro and from being subject to a central banks one size fits all interest rate. That rate may have been appropriate for Germany as it struggled, but it wasnt appropriate for Ireland, as it roared. Mal investment was bound to happen. Since we cant open tshirt or widget factories and compete with Chinese wages, we pumped up stock and property prices instead.

This bubble was exacerbated by the repackaging of debt on global markets and some fancy derivtives. Since banks became brokers of debt and not holders of it (as far as they were aware...but they held other institutions debt, just not their own, unless it was the very last tranches of it that they couldn't shift once the error became evident), they didnt care who they lent money to...so everyone got some. They were also to blame....but politicians couldn't stop the party....And even if they could...was it their job?

People simply cannot abdicte responsibility for doing stupid things. Im sorry. If you got burned in the property market, look to yourself...no one else. Prices were outrageous! If you paid it, more fool you.

It wasn't all about far from optimal interest rates, but this was a big part, to be sure. I cant believe I'm actually having a debate about this point.

Well, clearly low interest rates can never be of benefit to Ireland, since it appears we are congenitally unable to cope with the resulting bonanza. At least, ordinary Irish people can't do it, apparently, on account of their lack of will power.

It isnt a matter of rates being high or low, but a matter of fitting or not fitting the local situation. Right now Ireland needs far higher interest rates, but it isnt getting them. This will bring another set of problems.

Perhaps we would be better off if the other member states simply took over running our country until our will-power improves?

Why...they are as failure prone as the Irish. They have, are and will make the same asset allocation mistakes as Irish people.

iseethelight

Hitman Actual wrote: »

You neglect to mention that this "influence" works for consumers as well: how about the cheap flights in the first place, due to EU legislation opening up the market? Or in other area's such as cheaper broadband due to competition, or reduced mobile roaming charges, one of the more recent EU legislation acts. They're just a few quick ones off the top of my head. The fact is, a lot of EU legislation is geared towards making goods/services, etc, cheaper for the consumer. "Rip-off Ireland", as you mentioned in your initial post, is of our own making, and would be a hell of a lot more extreme if it wasn't for the EU "influence" you so deride.

I do not deride
however perhaps i've been a little guilty in viewing things only from my perspective

indeed i do see the eu as overall an excellent thing however i am unsure whether i wish to give them any more power

my previous post may look as if i want to leave by quoting Norway and Switzerland I definately don't

Scofflaw

iseethelight wrote: »

That indeed is an excellent point,however Ireland has many agreements with countries outside of the eu
Also countries such as Norway and Switzerland have recipocal agreements with the eu

True - although Norway and Switzerland are EEA rather than purely bilateral. However, if we were to replace the EU rules with a series of 27 bilateral treaties - sorry, replace all the EU deals with the rest of the world with bilateral treaties - would you say the situation you deal with would grow more or less complex?

After all, the EU has the clout to make the same deal with nearly everywhere, whereas Ireland on its own doesn't - so if these were bilateral deals instead, they would vary rather a lot, depending on what we were able to negotiate with the other countries in return for our access to their markets.

If that situation were more complex, would it not also be more costly? Bilateral deals aren't cost-free exercises either, quite aside from the added complexity in customs. How many bilateral deals would Ireland need to take the place of the largely uniform regime the EU has negotiated?

cordially,
Scofflaw

iseethelight

Scofflaw wrote: »

True - although Norway and Switzerland are EEA rather than purely bilateral. However, if we were to replace the EU rules with a series of 27 bilateral treaties - sorry, replace all the EU deals with the rest of the world with bilateral treaties - would you say the situation you deal with would grow more or less complex?

After all, the EU has the clout to make the same deal with nearly everywhere, whereas Ireland on its own doesn't - so if these were bilateral deals instead, they would vary rather a lot, depending on what we were able to negotiate with the other countries in return for our access to their markets.

If that situation were more complex, would it not also be more costly? Bilateral deals aren't cost-free exercises either, quite aside from the added complexity in customs. How many bilateral deals would Ireland need to take the place of the largely uniform regime the EU has negotiated?

cordially,
Scofflaw

see my previous post this is not what i want however it would not take 27 treaties just 1 with the eu and existing agreements with row would follow as agreed with eu

Hitman Actual

iseethelight wrote: »

I do not deride
however perhaps i've been a little guilty in viewing things only from my perspective

Fair enough, I misinterpreted your post.

Scofflaw

Amberman wrote: »

The government isn't elected to make sure you don't make stupid investment allocation decisions...even if monetary policy contributes to the likliehood of them occuring, which it did in this case.

There have been bubbles since there were tulips. They are an integral part of a capitalistic society. Asset prices over shoot during a boom relative to traditional anchors of value, then undershoot during the bust.

Irish house prices are only one example, I can think of 30 bubbles in the last 20 years. We arent special becuase we have a bubble, nor are we particularly stupid, we are averagely stupid. They depend on human nature and are facilitated in many cases by overly lax monetary policy and loose lending standards. The reason we dont have a boom now is that although the cost of capital looks low, the availability of it acts as a rationing device, so crazy brained specualtors cant get it and more sensible people are getting it. We arent in an orderly market right now.

In the case of Irelands bubble, the laxness in monetary policy came directly from a systemic issue, in monetary policy, ie, membership of the Euro and from being subject to a central banks one size fits all interest rate. That rate may have been appropriate for Germany as it struggled, but it wasnt appropriate for Ireland, as it roared. Mal investment was bound to happen. Since we cant open tshirt or widget factories and compete with Chinese wages, we pumped up stock and property prices instead.

Those really aren't the only choices, though, are they? We have a good deal of expertise in fields where we wouldn't have been competing with Chinese wages. We didn't use it - instead indigenous companies starting in the tech sector were starved of capital that was instead going into the property bubble. Not that I'm bitter...

Amberman wrote: »

This bubble was exacerbated by the repackaging of debt on global markets and some fancy derivtives. Since banks became brokers of debt and not holders of it (as far as they were aware...but they held other institutions debt, just not their own, unless it was the very last tranches of it that they couldn't shift once the error became evident), they didnt care who they lent money to...so everyone got some. They were also to blame....but politicians couldn't stop the party....And even if they could...was it their job?

People simply cannot abdicte responsibility for doing stupid things. Im sorry. If you got burned in the property market, look to yourself...no one else. Prices were outrageous! If you paid it, more fool you.

It wasn't all about far from optimal interest rates, but this was a big part, to be sure. I cant believe I'm actually having a debate about this point.

We're not really debating whether cheap credit allowed the bubble - we're arguing about whether that cheap credit could have been used differently. We both know it could have been, and could have been encouraged to be - instead of tax breaks for seaside property developments, we could have had a huge expansion of the BES scheme. Instead of building yet another bungalow in every field in Ireland, we could have had tax breaks for offshore wind farms. We could have had a bubble in alternative energy instead of property, because the only requirement for a bubble asset is that it is perceived as a sure and rising bet (cf Tulipmania or the South Sea Bubble) - and now we'd have a load of broke wind energy companies selling their infrastructure cheap instead of people selling their third house in Leitrim for feck-all. We could have raised the taxes and put the money into social infrastructure - better public transport and health. Instead, we threw the whole lot into houses that we still don't even need, and pay rises we can no longer afford.

Simply saying that this was 'irrational exuberance' doesn't get us off the hook. Simply saying that lack of control of our interest rates forced us to squander the resulting cheap credit doesn't really wash either.

Amberman wrote: »

It isnt a matter of rates being high or low, but a matter of fitting or not fitting the local situation. Right now Ireland needs far higher interest rates, but it isnt getting them. This will bring another set of problems.

Why...they are as failure prone as the Irish. They have, are and will make the same asset allocation mistakes as Irish people.

Perhaps, but looking around Europe, I think we can see that Ireland is taking one of the steepest falls - so it is a question not of kind but of degree.

cordially,
Scofflaw

Scofflaw

iseethelight wrote: »

see my previous post this is not what i want however it would not take 27 treaties just 1 with the eu and existing agreements with row would follow as agreed with eu

In essence, then, we'd negotiate a deal with the EU that, however good it is, really couldn't be better than the open access we currently have, and we'd allow the EU to dictate the terms of our trade with the rest of the world?

How would that be better than the current situation, though? After all, we have one deal with the EU - open access - and one deal with the rest of the world, which we currently get to decide on.

cordially,
Scofflaw

K-9

Amberman wrote: »

Right now Ireland needs far higher interest rates, but it isnt getting them. This will bring another set of problems.

Why?