Should Ireland leave the Euro??

ei.sdraob

SkepticOne wrote: »

Nothing wrong with FDI per se, but we need to realise that they artificially push up various indicators. A company could set up in Ireland, import an almost finished product, package it and export it. An example of this would be a pharmaceutical company that imports blister packs containing pills into Ireland where they put them into the cardboard boxes. They would employ a few people in Ireland and pay the 12% corporation tax. They would push up the GDP figure, push up the import and export figures, but are they really part of the Irish economy?

they are employing people, they are paying taxes

thats better than nothing

SkepticOne

ei.sdraob wrote: »

they are employing people, they are paying taxes

thats better than nothing

Of course it is better than nothing but that is not the point.

Earlier you said "out problem is not lack of exports, unlike UK Ireland is still a net exporter".

What we need to grow is exports from indigenous companies where the wealth builds up in Ireland.

ei.sdraob

SkepticOne wrote: »

Of course it is better than nothing but that is not the point.

Earlier you said "out problem is not lack of exports, unlike UK Ireland is still a net exporter".

What we need to grow is exports from indigenous companies where the wealth builds up in Ireland.

and you want to help the economy by giving an advantage to few small companies and killing all other business with your devaluation proposal

hows this for a simple idea

stop interfering in markets, thats what got us here in first place

SkepticOne

ei.sdraob wrote: »

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 nothing

You are trying to conflate devaluing with defaulting. We are quite capable of defaulting without devaluing. In some respects devaluing would put Ireland on a more competitive footing far faster than the slow process of wage negotiations and redundancies that we're now seeing with less destruction of existing businesses thereby bolstering public finances although, of course, there are downsides.

ei.sdraob

SkepticOne wrote: »

You are trying to conflate devaluing with defaulting. We are quite capable of defaulting without devaluing. In some respects devaluing would put Ireland on a more competitive footing far faster than the slow process of wage negotiations and redundancies that we're now seeing with less destruction of existing businesses thereby bolstering public finances although, of course, there are downsides.

if you devalue you still have the debt problem and it gets worse

if you default the debt problem goes, but now no one would touch the country with a stick

the two are related and often go hand in hand, since most of the countries debt are in euro denominated contracts...

we both agree on the problem, you just fail to see how destructive your option would be

SkepticOne

ei.sdraob wrote: »

and you want to help the economy by giving an advantage to few small companies and killing all other business with your devaluation proposal

Business that export would receive a boost but businesses that import to sell to Irish consumers would suffer. But these importers will suffer anyway as people are thrown onto the dole due to our lack of competitiveness. One advantage of more expensive imports is that eventually indigenous Irish companies would start producing substitutes for at least some of these and then some of these would go on to become exporters in their own right.

stop interfering in markets, thats what got us here in first place

It could also be argued that the Euro removed something that was previously determined by the market, the rate of exchange and as such constitutes an interference in the market.

SkepticOne

murphaph wrote: »

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.

This I would regard as a possible positive consequence of being in the Euro. It is bringing about a necessary conflict in Irish society.

SkepticOne

ei.sdraob wrote: »

if you devalue you still have the debt problem and it gets worse

if you default the debt problem goes, but now no one would touch the country with a stick

the two are related and often go hand in hand, since most of the countries debt are in euro denominated contracts...

we both agree on the problem, you just fail to see how destructive your option would be

If we could deflate the economy in a matter of months on a fair basis then that would be the way to go. However this would bring a lot of the same problems you attribute to devaluing. The fact is we lived beyond our means for a period of many years and now we have to suffer the consequences. I see defaulting as just as likely if not more so, if we stay in the Euro but fail to get competitive, and it looks like we are failing to do that. What is happening is that companies are folding or moving abroad rather than make the necessary adjustments here. That is revenue lost to the government who are unable to rein in public spending.

ei.sdraob

SkepticOne wrote: »

Business that export would receive a boost but businesses that import to sell to Irish consumers would suffer. But these importers will suffer anyway as people are thrown onto the dole due to our lack of competitiveness. One advantage of more expensive imports is that eventually indigenous Irish companies would start producing substitutes for at least some of these and then some of these would go on to become exporters in their own right.It could also be argued that the Euro removed something that was previously determined by the market, the rate of exchange and as such constitutes an interference in the market.

eventually is the keyword and "if" is another one, until then the country quite literary falls apart

how would you produce substitutes for mountains of coal we need for power plants and tankers of oil needed for cars, heating and plastics?

rates of exchange can be manipulated as UK are doing, we joined up into a union with our biggest exporting partner the eurozone and this has already turned out to be a wise move and allows us to tap into credit at a fairly bad time

View

SkepticOne wrote: »

It could also be argued that the Euro removed something that was previously determined by the market, the rate of exchange and as such constitutes an interference in the market.

In practise, the Irish pound's was always linked to either the British pound (pre-'79) or the Deutsche Mark (post-'79). As such, the market usually didn't bother about the Irish pound too much. When it did, it was usually because we'd gotten ourselves into a financial mess like the current one, and all the financial traders, smelling blood in the water, circled in for the kill.

The largest part of an "interference in the market", to my mind, ususally boils down to the government making stupid policy decisions, screwing up its finances and then compounding the error by lacking the courage to correct their mistakes.

ei.sdraob

to anyone proposing devaluation and printing money
read this below
the UK is now a bigger basket case than Ireland

http://www.telegraph.co.uk/finance/comment/liamhalligan/6521350/This-financial-mess-isnt-even-the-end-of-the-beginning-for-UK-wealth.html

some quotes:

The Bank has already created £175bn of such "funny money" since March – some 99.7pc of which, in a bizarre example of circular financing, has been spent on government securities. So our central bank prints money and gives it to the Government, which in turn gives it to the banks. This is the economics of Zimbabwe and the Weimar Republic.

Last week, the Bank announced that QE would carry-on – with another £25bn being "injected" into the economy. But heavy hints were dropped that this is the end.
The Bank had to hint this. The UK's international creditors are getting nervous. Despite the on-going "deflation" propaganda, there is growing concern that Britain's money-printing will cause not only inflation to spike, but a sterling crisis too.

Britain faces a 2009/10 fiscal shortfall equal to 13pc of GDP – the biggest in our peacetime history – with little sign of improvement. The Government will borrow some £200bn on taxpayers' behalf every year until 2012/13 at least – eight times above "normal" levels. In just four years, an extra £32,000 will be added to the existing sovereign debt burden of every British household.

In an admirably frank report last week, the International Monetary Fund singled out the UK as "uniquely vulnerable" to spiralling debt service costs as we deal with the mess left by Brown's fiscal incontinence

In 2007, Britain spent 4.2pc of its tax revenues on debt interest. By 2014, we'll spend almost 10pc of receipts on servicing government loans, before we even start paying them back, as our national debt sky-rockets from 40pc to more than 100pc of GDP.

Just the increase in annual debt service will equal what the Government currently spends on public transport.

extragon

Ireland leaves the Euro, resulting massive loss of confidence in Irish economy, governance etc. and a considerable overshoot in devaluation of the new currency. Expect 20% inflation, and high interest rates, quickly eroding any temporary improvement in competitivity. Expect a third world style two tier economy with all serious savings and business still being denominated in euros. And don't forget the political implications of damaging confidence in the currency of France and Germany as well. It's not just us who'd be hurt.

I suspect that the more reasoned advocates of this policy see all of this, and that their objective is to return Ireland to the sterling zone - which would be the only way out of this mess. Many people, I suspect, would, for cultural reasons, wish for Ireland to return to its historic role as an annex to GB - and, by extension, the US - and hate our continental ambitions of escaping from the "anglosphere."

ei.sdraob

yeh spot on

as per my post above
its a good thing our government (unlike UK) has no say in money printing anymore
as it would have been used to printy money to pay they PS and welfare (since the government has no balls and never says NO) and resulted in a Zimbabwe situation very quickly


having the euro forces the government to address the issues at hand
having own currency would only allow the government to manipulate statistics and perform obscene economical stunts like devaluation in order to make everything seem rosy until the next election, as is happening in UK now

recedite

ei.sdraob wrote: »

how would you produce substitutes for mountains of coal we need for power plants and tankers of oil needed for cars, heating and plastics?

Invest in renewables. Last week the wind was supplying up to 1/3 of our electricity needs. Money spent at home on R&D for wind and wave energy as well as the actual installations creates jobs. Money spent on oil is a drain on our economy, although it does give the arabs some amusemement while they dream up new ways to fritter it away, so it's not completely wasted.

murphaph

recedite wrote: »

Invest in renewables. Last week the wind was supplying up to 1/3 of our electricity needs. Money spent at home on R&D for wind and wave energy as well as the actual installations creates jobs. Money spent on oil is a drain on our economy, although it does give the arabs some amusemement while they dream up new ways to fritter it away, so it's not completely wasted.

You can't make everything out of wind. Let's assume Ireland could get 100% of it's ELECTRICITY from renewables overnight-we'd still need to import millions of tonnes of oil as the technology is not developed enough to use electricity to power vehicles. I totally agree that we should focus our energy (sorry) on developing as much renewable energy as possible but Ireland will always be an island off the coast of Europe with few natural resources and we need things made of plastic/steel etc. that we simply don't have nor ever will have and so it will always need to be imported.

ei.sdraob

recedite wrote: »

Invest in renewables. Last week the wind was supplying up to 1/3 of our electricity needs. Money spent at home on R&D for wind and wave energy as well as the actual installations creates jobs. Money spent on oil is a drain on our economy, although it does give the arabs some amusemement while they dream up new ways to fritter it away, so it's not completely wasted.

I agree with you there, the Germans used the low rates to become a leader in renewable while we build houses

But theres a gaping hole in your suggestion in the context of devaluation


if you devalue your currency, how will you pay for R&D and them turbines (that are not manufacture here)

why would engineers stay here and earn Cowen's Zimdollars when they can go to the continent and earn money in a solid currency?

how would the materials needed for this technologies be paid for?

and dont forget our cars still need oil, and you need oil etc to manufacture and construct windmills


anyways windpower is unpredictable and unreliable, it can never power whole country with an isolated grid
if you want value for money and be good to environment build a nuke plant, you get more reliable power for your buck, and it creates jobs too..

recedite

ei.sdraob wrote: »

I agree with you there, the Germans used the low rates to become a leader in renewable while we build houses

But theres a gaping hole in your suggestion in the context of devaluation


if you devalue your currency, how will you pay for R&D and them turbines (that are not manufacture here)

why would engineers stay here and earn Cowen's Zimdollars when they can go to the continent and earn money in a solid currency?

how would the materials needed for this technologies be paid for?

and dont forget our cars still need oil, and you need oil etc to manufacture and construct windmills


anyways windpower is unpredictable and unreliable, it can never power whole country with an isolated grid
if you want value for money and be good to environment build a nuke plant, you get more reliable power for your buck, and it creates jobs too..

Do manufacture them here; thats the whole point.Heres one manufacturer http://www.maassen.ie
There is a Scottish company called Proven making wind turbines which are considered some of the best in the world precisely because the R&D was and is being carried out under very demanding climactic conditions (the clue is in the name). We could be exporting sought after marques, the equivalent of BMWs and Mercs. All it takes is some imagination.
Also our green electricity could be exported to fetch a premium price, while we import nuclear electricity during the calm periods. All it takes is an interconnector. Demand for petrol can be reduced by using fuel efficient cars. Achieve this with a small monetary incentive for same (bands for low road tax) while simultanaeously applying a small disincentive to imported fuels (carbon tax).Nothing too radical. Now for the good news; the Greens are quietly implementing all this while Lenihan huffs and puffs about NAMA.

ei.sdraob

recedite wrote: »

Do manufacture them here; thats the whole point.Heres one manufacturer http://www.maassen.ie
There is a Scottish company called Proven making wind turbines which are considered some of the best in the world precisely because the R&D was and is being carried out under very demanding climactic conditions (the clue is in the name). We could be exporting sought after marques, the equivalent of BMWs and Mercs. All it takes is some imagination.
Also our green electricity could be exported to fetch a premium price, while we import nuclear electricity during the calm periods. All it takes is an interconnector. Demand for petrol can be reduced by using fuel efficient cars. Achieve this with a small monetary incentive for same (bands for low road tax) while simultanaeously applying a small disincentive to imported fuels (carbon tax).Nothing too radical. Now for the good news; the Greens are quietly implementing all this while Lenihan huffs and puffs about NAMA.

look you just dont get it do you?

ill put it in a very simple manner:

your idea is good and valid BUT not in the shadow of devaluation/default


when your currency is worthless due to devaluation:

* you loose smart people who move to wherever they get paid more
* anything that needs to be imported to build your product (machinery, aluminum, energy, expertise in the case of windmills) becomes very expensive
* your company can not get a loan it needs to expand business since no investor would touch a country which devalued and defaulted, your just to high risk
* when theres no hard currency to pay welfare and public sector, society falls apart and there are other priorities other than green hippie projects, see what happened in Russia in the 90s

recedite

murphaph wrote: »

but Ireland will always be an island off the coast of Europe with few natural resources and we need things made of plastic/steel etc. that we simply don't have nor ever will have and so it will always need to be imported.

Substitute the word Asia for Europe there and you have a good description of Japan, except the bit about not being able to manufacture or export anything. They never moan about living on an island the way we seem to.
Another thing about the Japan; they have settled into the idea that constant economic growth is unsustainable. The ultimate goal is actually economic stability. This is a concept our finance ministers have never understood.

ei.sdraob

recedite wrote: »

Substitute the word Asia for Europe there and you have a good description of Japan, except the bit about not being able to manufacture or export anything. They never moan about living on an island the way we seem to.
Another thing about the Japan; they have settled into the idea that constant economic growth is unsustainable.

Japan import humongous amounts of oil to fuel its industries

Japan embraces pragmatic technologies like nuclear (despite being subjected to horrors of nuclear bombing and having earthquake prone land)



oh and devaluation hasnt worked to well for them as the money drained away in the carry trade, they are now one of the most indebted nations in world

recedite wrote: »

The ultimate goal is actually economic stability. This is a concept our finance ministers have never understood.

another hole in your logic

how does one achieve economic stability by actively ****ing around with currency via devaluation? the euro is the most stable currency now

recedite

I get it alright. The Euro is great because theres this huge pile of cash controlled by the ECB.It's been stashed there by the Germans etc.. for a rainy day, and since we joined the club we have been grabbing handfuls of it and it'll be ages before they even notice.

ilovelamp2000

ei.sdraob wrote: »

Joining the euro was the best decision this government has made

Eh ?

Since joining it in 2001 our economy has gone down the tubes. Obviously it's not the only reason for our problems but it along with the other aspects of monetary union are a fairly substantial reason as to why we're in this situation.

Brian Lenihan admitted as much recently when he said the bubble was caused by the availability of cheap credit and labour.

ei.sdraob

recedite wrote: »

I get it alright. The Euro is great because theres this huge pile of cash controlled by the ECB.It's been stashed there by the Germans etc.. for a rainy day, and since we joined the club we have been grabbing handfuls of it and it'll be ages before they even notice.

we can achieve your green proposals under the euro too

devaluation will only make it harder since people would have bigger things to worry about, like the economy melting down

the germans did it (build windmills and solar) while we build houses

tho once again there are bigger priorities now than windmills, if theres a need the market will take care of it and its doing that already

ei.sdraob

Rosco1982 wrote: »

Eh ?

Since joining it in 2001 our economy has gone down the tubes. Obviously it's not the only reason for our problems but it along with the other aspects of monetary union are a fairly substantial reason as to why we're in this situation.

Brian Lenihan admitted as much recently when he said the bubble was caused by the availability of cheap credit and labour.

wow just wow, that dip**** will blame everyone but himself and his party

ill put it you you this way


is it the fault of mcdonnalds that they sell cheap food and people get fat,
or is it the fault of person who decides to eat solely in mcdonnalds and then gets fat?

instead of having a balanced diet....

you see the analogy? substitute Ireland for the fat man above and fast food joint is cheap credit


why did Germany and other countries take that cheap credit and spend it wisely on things like renewable's and encouraging local industry and are now out of recession.

while we went crazy on a shopping/building spree

murphaph

Rosco1982 wrote: »

Eh ?

Since joining it in 2001 our economy has gone down the tubes. Obviously it's not the only reason for our problems but it along with the other aspects of monetary union are a fairly substantial reason as to why we're in this situation.

Brian Lenihan admitted as much recently when he said the bubble was caused by the availability of cheap credit and labour.

So indiscipline was the cause, not the availability of cheap credit. Ireland needs to grow up and stop blaming it's woes on /the vikings/the normans/the brits/the civil war/the north/the weather/the punt/sterling/the Euro and accept responsibility for our personal decisions and the decisions our ELECTED government make on our behalf.

Amhran Nua

Rosco1982 wrote: »

Brian Lenihan admitted as much recently when he said the bubble was caused by the availability of cheap credit and labour.

Typical enough statement for the man though - cheap credit was a result of lax legislation from the Irish government, otherwise why wouldn't Germany etc have had their own credit bubbles, as for labour, the doors to the accession states only opened in 2004, the bubble collapsed in 2006.

caseyann

Simply put yes

Dump the euro bring back the punt :cool:

recedite

ei.sdraob wrote: »

we can achieve your green proposals under the euro too

devaluation will only make it harder since people would have bigger things to worry about, like the economy melting down

the germans did it (build windmills and solar) while we build houses

tho once again there are bigger priorities now than windmills, if theres a need the market will take care of it and its doing that already

Stop calling them "windmills" You are making me look like an obsessive Don Quixote. I only mention wind turbines as one example of the many ways in which our country might try to dig itself out of the hole we find ourselves in. But how did we get into the hole? Well, after we found that big pile of cash the Germans left lying around, we had no need to work anymore. So we gave our jobs away to those losers in the ridiculous "low-cost" economies. Eventually though we'll have to pay it all back, and if we can't, thats when the s**t hits the fan. Economic instability to put it mildly.
Apparently the japanese don't have the dole;they don't need it.

ei.sdraob

recedite wrote: »

Stop calling them "windmills" You are making me look like an obsessive Don Quixote.

thanks to your beloved "Greens" we are gonna piss away 54 (or more) billion € at NAMA, they could have brought down this government instead instead of selling out their principles

how many windmills would that buy eh? :rolleyes: or research? or paid for startups??

anyways you still havent answered how devaluation would help achieve green goals


and edit FYI: for price of NAMA we could buy and erect 40000 x1 MW wind turbines, thats 40,000MW capacity (Ireland uses 6000MW peak)
****ing greens i hope they are reading this

View

Rosco1982 wrote: »

Eh ?

Since joining it in 2001 our economy has gone down the tubes.

We joined the Euro on its launch date of January 1, 1999. The notes and coins went into circulation on January 1, 2001.

Rosco1982 wrote: »

Obviously it's not the only reason for our problems but it along with the other aspects of monetary union are a fairly substantial reason as to why we're in this situation.

Our problems arise largely from mismanaging our economy. The inflation rate, for the period 1997-2009 for various Eurozone states, was:

Germany +20%
France/Eurozone Average +25%
Italy +30%
Ireland +50%

(Based on Eurostat figure's of HICP - standardised inflation rate, rounded to nearest whole number)

Gee, I wonder why people don't want to buy our exports?