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Should Ireland leave the Euro??
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i wish we left the euro. I rem I was against it in the beginning but I was only 22 at the time and nobody listened. I made my opinions known to many at the time....in fact they made me work loadsa extra hours ensuring the IT systems functioned with the euro.
It always seemed odd to me that we did most of our trade with the UK but wouldn't go with sterling over the euro. I guess the "Republican Party" wouldn't have liked it.
But i only work in IT what would I know compared to bertie, Mccrevey,O'Malley (I haven't forgot about you Des), Cowan....ah well......0 -
not very sustainable but at least we have time to deal with that problem
switching currency would be like jumping of cliffanyways as has been show earlier in thread (with data and figures) Irish exports are still strong and there has been a bigger drop of in importsconsidering most of our trade is with EU...0 -
King of Kings wrote: »i wish we left the euro. I rem I was against it in the beginning but I was only 22 at the time and nobody listened. I made my opinions known to many at the time....in fact they made me work loadsa extra hours ensuring the IT systems functioned with the euro.
It always seemed odd to me that we did most of our trade with the UK but wouldn't go with sterling over the euro. I guess the "Republican Party" wouldn't have liked it.
But i only work in IT what would I know compared to bertie, Mccrevey,O'Malley (I haven't forgot about you Des), Cowan....ah well......
the punt was pegged to the pound
since that was removed and then we joined euro
we moved from being 60% to 120% as wealthy per capita
btw you really should get your facts straight
http://www.cso.ie/statistics/botmaintrpartners.htm
in millions
Great Britain and Northern Ireland - 15,864.3
Other EU Countries - 37,976.3
USA - 16,674.3
Rest of World - 15,879.5
we do more trade with US that UK
and more than twice more with other EU states than UK0 -
SkepticOne wrote: »You say Ireland still owes debts to the ECB in Euros. What would happen is that Ireland would tell the ECB that it now owes that debt in the equivalent of Punts.0
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SkepticOne wrote: »How sustainable do you believe that 400 million a week is at present? What happens when we can no longer service it because we are uncompetitive within the Euro?0
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the punt was pegged to the pound
since that was removed and then we joined euro
we moved from being 60% to 120% as wealthy per capita0 -
who pays to run Ireland then? 'cause we can't. And if we could then we wouldn't have to worry about leaving the Euro0
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SkepticOne wrote: »One thing that always irritated me during the boom is these statistics saying we're the third richest country per capita in the world or whatever. I would have hoped people would have stopped using them at this stage.
fine we ranked fairly high and above UK in alot of charts
take the HDI one0 -
Practically, it would be extremely difficult
For example, lets say you're a civil servant in the Dept of Finance and you know the govt is going to leave the Euro, what's the first thing you're going to do?0 -
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SkepticOne wrote: »The 2009 report where Iceland is third in the world, well above Ireland?
The still have a decent standard of living there as shown by David McWilliams himself on last documentary, by the cost of anything that needs to be imported there went thru the roof, leading to businesses closing (like mcdonalds) and job losses
ill put it to you this way, despite the huge downturn
given a choice would you rather be on the dole in UK or Ireland?0 -
I think its unlikely that Ireland would leave the Euro, but that Ireland needs a restructuring of its political and economic system as a result of this crisis. It needs to be used as a lesson for the future.
I did consider if Ireland could leave the Euro and had a (crazy) theory that Ireland could have a "parallel" floating currency used for pensions, social welfare payments, taxes, for internal usage, but it could not be exchanged international, it would not have "pure" legal tender status, merely acceptance as a medium of exchange. Its status would be similar to that of Scottish and Northern Irish currency, and its backing would be the properties repossessed and under the trust of the Central Bank of Ireland/NAMA. I am aware that it would depreciate, but the depreciation would be controlled, and interest rates would compensate for that. There are parallels from economic history for this, such as the Rentenmark introduced by Germany after the 1923 hyperinflation.
. It is right wing of me to state the following, but we cannot continue to run an expensive government and social welfare system at boom time levels within a currency union. We cannot continue to tax and spend at boom time levels within a currency union. If we do, we will not only run out of our own money, but someone elses. We also run out of confidence in our economy, our leadership, our system, and that is a burden Ireland should not inflict on future generations.
The political system being revamped -
(a) 40% of votes are on a National Level for the Oireachtais.
(b) 60% of votes are on a Constituency Level.
(The explanation for this, it partially removes the most pernicious effects of parish pump politics)
The economic system being revamped -
(a) Encourage savings for the long term, rather than spending. Hong Kong is within a currency board, pegged to the US Dollar. Guess what, Hong Kong is the ONLY place I have ever seen prices drop, and between 2001 and 2008, they dropped, without adversely affecting living standards and economic growth.
(b) Build up Budget and trade surpluses for the long term, in order to provide a shield when bad times like this "hit"
(c) Have the former Central Bank act like a currency board, and allocate a certain amount of the tax revenue to be used as a "set aside reserve" fund for pensions, property taxation, etc. If house prices started going out of control again, an interest levy on loans would be made - say 2% on top of the ECB interest rate. This would be given back as a rebate in bad times. It would need to be seperately administered, but it would have the effect of "smoothing" out the madness of peaks and troughs, and enable the financial discipline required within a currency union to take effect.
The Euro introduced a discipline on economies to engage in sensible economic policies, rather than populist bull**** based on artificially high wages, high costs, high indirect taxation, amongst other bolloxology. Unfortunately, Ireland behaves like a truculent Southern European. It is institutionally corrupt at the top with its elite. After seeing the likes of Padraig Flynn, Jackie Healy Rae, Ray Burke, Charles Haughey, Gerry Collins, Michael Lowry, Beverley Cooper Flynn, and these were/are our leaders, I wonder if the racist comments by the likes of Robert Kilroy Silk had some foundation in reality.
"A land of peasants, priests and pixies"
It seems to be in the West of Ireland (sorry, I am very balanced in my views towards the West of Ireland, having a chip on both shoulders). Within East, there is a modicum of cynicism towards the system. Distrust for the establishment haunts Ireland once again, just as it always has.
I don't like quoting right wing double barrelled spawn such as the above, and I know Ireland is better than that.
The above are possibilities, very rough ideas, but some of it is worth a look.0 -
McWilliams was right about the housing bubble.Ireland will leave the Euro.This process will begin in about 5 years and will be the eventual solution to the economic disaster Ahern/Cowan & Co lead this nation into.Those guys done more damage to this country than 800 years of London rule.How the hell are they still enjoying the Mercs and perks??!!0
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SkepticOne wrote: »If Ireland left the Euro then all loans to Irish operations of banks would be re-denominated in the new currency as would savings. This is part of the process of switching currency. These banks might like to continue owing them the euro amount but they would have no standing in Irish law to go after you for anything but the amount in the new currency.
This would be classified - quite rightly - as defaulting on the terms of the loan agreement. If the Government or a business takes out a loan in US Dollars, then the loan gets paid back in US Dollars. Likewise, with Sterling, the Euro etc. etc.
It is a great pity you can't just switch the currency you pay back in. It'd have been fierce handy to have switched your mortgage to Icelandic Kronor just before it collapsed in value.0 -
This would be classified - quite rightly - as defaulting on the terms of the loan agreement. If the Government or a business takes out a loan in US Dollars, then the loan gets paid back in US Dollars. Likewise, with Sterling, the Euro etc. etc.
It is a great pity you can't just switch the currency you pay back in. It'd have been fierce handy to have switched your mortgage to Icelandic Kronor just before it collapsed in value.0 -
SkepticOne wrote: »I think the thing that you would want is not to be on the dole in the first place.
me? not at all
i see the need for assistance if you loose a job
just not the current implementation, a system with "half life" be good
anyways what i was trying to say, despite the deep recession for the most part were still doing better than people in other countries
thanks to being able to borrow alot and being tied to more solid economies like germany and france
you propose to throw that away ane let us sink
to put it into perspective
we have a dirty room(s) in the house, we both agree they are dirty
* i want to clean them rooms out
* you want to knock down the house and rebuild the rooms0 -
SkepticOne wrote: »Euros owed to banks operating in Ireland under Irish regulations (it doesn't matter if they are foreign owned) would be re-denominated into the new currency as would savings. I am open to correction on this but I don't think there's a any fundamental problem with this legally. It is not terribly different to what happened when we joined the Euro, the only difference being that in the above scenario the Euro would continue to be a currency in other countries. The banks would not be happy with this but I don't think there's a lot they could do.
your forgetting that when we joined the euro the punt (and other currencies) were pegged and the rate set in stone few years before the switch
it doesnt work the other way around
money and wealth would drain out of this country faster than a balloon popping causing its own issues
also any new currency would have to carry and extremely high interest rates to attract buyers, how would businesses/people go about getting loans when they are in double digits then? not to mention inflation on everything that needs to be imported
around this time last year half a trillion drained from US economy in 1 day via electronic accounts0 -
SkepticOne wrote: »Euros owed to banks operating in Ireland under Irish regulations (it doesn't matter if they are foreign owned) would be re-denominated into the new currency as would savings. I am open to correction on this but I don't think there's a any fundamental problem with this legally. It is not terribly different to what happened when we joined the Euro, the only difference being that in the above scenario the Euro would continue to be a currency in other countries. The banks would not be happy with this but I don't think there's a lot they could do.
I probably didn't express it well but I was actually referring to loans, such as Government or corporate bonds which are bought and sold on the international financial markets. If the Government or any company has sold Euro denominated bonds (to fund all the debt it is clocking up) then the legal agreement will be to redeem the bond in Euro (or Dollars or whatever currency the bond was issued in). One side unilaterally changing the terms of its agreement without rightly be regarded as defaulting on the agreement.
As to whether this is a good idea - look at Iceland. Icelandic banks found they would have major problems covering their UK and Dutch branches in the financial crisis. There was a phone call between the British and Icelandic Finance Ministers about this and during this the Icelandic Finance Minister said something like "I don't know if we can honour the debts of the (UK) bank branches, but we'll try". The British took this to mean that Iceland couldn't cover the debts and using anti-terrorism legislation, they moved in and unilaterally shut down the Icelandic banks UK branches. After that Iceland went into melt-down as who in their right minds would want to trade with them after that?0 -
I probably didn't express it well but I was actually referring to loans, such as Government or corporate bonds which are bought and sold on the international financial markets. If the Government or any company has sold Euro denominated bonds (to fund all the debt it is clocking up) then the legal agreement will be to redeem the bond in Euro (or Dollars or whatever currency the bond was issued in). One side unilaterally changing the terms of its agreement without rightly be regarded as defaulting on the agreement.As to whether this is a good idea - look at Iceland. Icelandic banks found they would have major problems covering their UK and Dutch branches in the financial crisis. There was a phone call between the British and Icelandic Finance Ministers about this and during this the Icelandic Finance Minister said something like "I don't know if we can honour the debts of the (UK) bank branches, but we'll try". The British took this to mean that Iceland couldn't cover the debts and using anti-terrorism legislation, they moved in and unilaterally shut down the Icelandic banks UK branches.After that Iceland went into melt-down as who in their right minds would want to trade with them after that?
The one thing people mention is McDonalds. I would suggest that is not a great loss to the country. The guy who owns the franchises there is staying in business but sourcing locally. If anything that will be of benefit to the country.0 -
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SkepticOne wrote: »They would stay in the original currency - dollar, euro, sterling etc, unless the country defaults.
So an immediate effect of launching a new currency which would almost certainly decline (markedly) in value against the Euro, dollar etc. is that the national debt would increase (as measured in terms of the new currency).
This would mean the state would need to devote more of its tax revenues to servicing this debt. This, in turn, would require either cuts in public services (if you keep taxes constant) or increases in taxes (if you keep public services constant).
However, this is the choice we currently face with the Euro. If we haven't got the courage to face these choices with the Euro, no one will take seriously the idea that we would face them with a new currency.
PS The example of Iceland was to show what could happen if there is even the possibility that you wouldn't honour your debts.0 -
So an immediate effect of launching a new currency which would almost certainly decline (markedly) in value against the Euro, dollar etc. is that the national debt would increase (as measured in terms of the new currency).
This would mean the state would need to devote more of its tax revenues to servicing this debt. This, in turn, would require either cuts in public services (if you keep taxes constant) or increases in taxes (if you keep public services constant).
However, this is the choice we currently face with the Euro. If we haven't got the courage to face these choices with the Euro, no one will take seriously the idea that we would face them with a new currency.
PS The example of Iceland was to show what could happen if there is even the possibility that you wouldn't honour your debts.
Joining the euro was the best decision this government has made
we are now economically tied to stable countries with sensible policies like France and Germany, i was reading this earlier today > http://www.guardian.co.uk/business/2009/nov/06/france-christine-lagarde-model-stage
the approach taken by France to this crisis is well worth noting
there are people here that would see us tied to the British pound again or worse have a worthless Zimbabwe like currency (ironically they are using gold and dollars http://www.chinadaily.com.cn/world/2009-02/19/content_7491397.htm )
such a move would be highly destructive0 -
Joining the euro was the best decision this government has made
we are now economically tied to stable countries with sensible policies like France and Germany, i was reading this earlier today > http://www.guardian.co.uk/business/2009/nov/06/france-christine-lagarde-model-stage
the approach taken by France to this crisis is well worth noting
there are people here that would see us tied to the British pound again or worse have a worthless Zimbabwe like currency (ironically they are using gold and dollars http://www.chinadaily.com.cn/world/2009-02/19/content_7491397.htm )
such a move would be highly destructive
Being in the Euro FORCES us to address the real issues of cost/competitiveness of the Irish economy. REAL pay cuts are required across the board. There's no ducking and diving our way out of it. Irish workers are simply not worth what they've been paid for the last few years. Those who bought property recently are now snookered, but that was their free choice and let's be honest-there was a collective blind-eye-turning going on for years, even when the likes of McWilliams was saying the property bubble would end in tears. Nobody wanted to know.
The standard of living in Ireland needs to fall to come into line with the rest of the Eurozone! It's too high for a country with nothing special going for it.0 -
yeh all we have to do is deflate
yes its gonna be painful but it would be a change from being wealthiest to being wealthy, i.e less german cars and houses in bulgaria
devaluation and defaulting would be devastating, think riots and society pretty much falling apart
for an example see Russia in the 90s, and before someone jumps in we dont have the oil and other vast natural resources/land like the Russians do, in order to recover like they did
ive been to the country then, it wasnt pretty, the standard of living plummeted and most people were reminiscing of the old communist days which were bad but at least had stability and security and lower crime0 -
out problem is not lack of exports, unlike UK Ireland is still a net exporter0
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Amhran Nua wrote: »Actually our problem is exactly lack of exports. 90% of our exports are FDI related, and represent €50 billion capital flight from the economy annually, give or take. Still, devaluation would be a very bad idea as we import far too much. Our membership in the Eurozone and its relationship to countries like France and Germany isn't really important in that regard, since they don't set our economic policies, but it is important in that control of the currency is taken out of the hands of the lads in the Oireachtas. Imagine how much trouble we'd be in if Lenihan had his hands on every economic lever.
whats wrong with FDI? what do you have against companies coming here and creating jobs?? yes companies like Google come here to avoid paying taxes elsewhere, but id rather 12% tax on alot of companies than 30% tax on no companies
why dont you refer to the data and tables i posted earlier to backup my statements? you talk about one side of the equation but not the other
our exports have fallen but imports have fallen by larger amount, overall thats a positive thing
our main exporting partner is NOT UK which is down in 3rd position (our main trading partners are EU(ex UK), US and the UK )
unlike UK (or US) we are a net exporter
just because UK are on a fools quest to make themselves poorer by printing over 200 billion pounds, or US doubling the money supply in a year, doesn't mean we need to go down with their ships, all that money printing didnt help UK one bit and will only lead to another bubble (which is already happening see the stock and commodity markets overheating)
our relationship with germany/france/rest of eurozone is very important, they are the ones paying our bills now, they are also the place where a large chunk of our exports go
and yes you right i would not trust Cowen with control of a currency, as I mentioned earlier currencies work only because theres trust0 -
whats wrong with FDI? what do you have against companies coming here and creating jobs??unlike UK (or US) we are a net exporter0
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Amhran Nua wrote: »FDI is a stepping stone, not an end result, see for reference Dell and €50 billion capital flight from the economy. Its fine as far as it goes but don't mistake it for the destination.
Of which 90% are FDI related, its that simple. Our domestic industries are a shadow of what they should be.
yes it is a stepping stone I agree with you (well put), and its better than nothing (which is what we had few decades back)
we should use this money while we can to grow domestic industries, as I said many times small Irish firms face hidden surcharges on things like corpo tax bringing it to about 20% while large companies pay 12%, but these are political issues
devaluing or defaulting or/and and breaking ties with our main trading partners will only result in all of these companies leaving town leaving us with nothing0 -
we should use this money while we can to grow domestic industries, as I said many times small Irish firms face hidden surcharges on things like corpo tax bringing it to about 20% while large companies pay 12%, but these are political issuesdevaluing or defaulting or/and and breaking ties with our main trading partners will only result in all of these companies leaving town leaving us with nothing0
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whats wrong with FDI? what do you have against companies coming here and creating jobs?? yes companies like Google come here to avoid paying taxes elsewhere, but id rather 12% tax on alot of companies than 30% tax on no companies0
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