Anyone read Mcwilliams new book and agree with his alternative to the current mess?

ei.sdraob

SkepticOne wrote: »

I think it is a fair point that currency risk is introduced, but I don't think we eliminate it by being in the Euro. Being in the Euro means our currency moves in a way that may have little or nothing to do with what is happening in Ireland. It may move in a slow and cumbersome manner but still faster than businesses can adjust through the renegotiation of wages and other costs. With a floating currency there is at least some opportunity for the currency to find an appropriate level through the normal market mechanisms.

what normal market mechanisms? we already widely interfere in markets

paying PS a shid load than they deserve?
someone say NAMA?

in light of recent events how would you impose such a dramatic paycut on everyone and everything, when a section of society are holding the country ransom?

Rujib1

SkepticOne wrote: »

I think it is a fair point that currency risk is introduced, but I don't think we eliminate it by being in the Euro. Being in the Euro means our currency moves in a way that may have little or nothing to do with what is happening in Ireland. It may move in a slow and cumbersome manner but still faster than businesses can adjust through the renegotiation of wages and other costs. With a floating currency there is at least some opportunity for the currency to find an appropriate level through the normal market mechanisms.

Why on earth would we leave the euro, just to devalue and gain competitiveness.
Let there be a new national wage agreement. You know like the ones we had under bumbling Bertie, which celebrated our mythical tiger status by awarding ourselves hefty pay increases and increases in publiv expenditure.
EXCEPT, this time have an agreement which reflects the reality of our time.
Impliment McCarthy ......... every last bit of it. No faffing around.

Job done. Competitiveness restored. Still in euro.

But hey, that takes bottle and leadership, and cop on. That went out with the flood.

As for McWilliams ......... biggest con since Eddie Hobbs.

Now who could do the job that needs doing ............. Margaret Thatcher.

Scofflaw

SkepticOne wrote: »

I think it is a fair point that currency risk is introduced, but I don't think we eliminate it by being in the Euro. Being in the Euro means our currency moves in a way that may have little or nothing to do with what is happening in Ireland. It may move in a slow and cumbersome manner but still faster than businesses can adjust through the renegotiation of wages and other costs. With a floating currency there is at least some opportunity for the currency to find an appropriate level through the normal market mechanisms.

So a problem with the euro is that it floats, but that wouldn't be a problem with a floating currency?

The problem with a floating Irish currency is that "an appropriate level" may also have little or nothing to do with what is happening in Ireland, and may not even slightly resemble the level we would like it to be at.

About half our exports these days go to the euro zone - which protects those exports against currency risk. A floating Punt Nua isn't going to protect our exports against any currency risks at all.

cordially,
Scofflaw

SkepticOne

Scofflaw wrote: »

So a problem with the euro is that it floats, but that wouldn't be a problem with a floating currency?

But it doesn't float according to conditions in Ireland but to conditions in the eurozone as a whole.

The problem with a floating Irish currency is that "an appropriate level" may also have little or nothing to do with what is happening in Ireland, and may not even slightly resemble the level we would like it to be at.

Actually that is the situation with the euro at present. If a number of countries in the eurozone do well, other things being equal, this would tend to have the effect of strengthening the euro, but it has nothing to do with circumstances in Ireland or another country that isn't experiencing that boom. In fact the tendency will be to drive those other countries further under.

About half our exports these days go to the euro zone - which protects those exports against currency risk. A floating Punt Nua isn't going to protect our exports against any currency risks at all.

I think the issue of currency risk is a fair one. The only way to completely eliminate it is to join a currency union and then do all your trading within those countries that are part of that union although I don't believe that is realistic either.

Flamed Diving

SkepticOne wrote: »

But it doesn't float according to conditions in Ireland but to conditions in the eurozone as a whole. Actually that is the situation with the euro at present. If a number of countries in the eurozone do well, other things being equal, this would tend to have the effect of strengthening the euro, but it has nothing to do with circumstances in Ireland or another country that isn't experiencing that boom.

Why does the good performance of a countries economy "tend to" lead to the strengthening of its currency?

SkepticOne wrote: »

In fact the tendency will be to drive those other countries further under. I think the issue of currency risk is a fair one. The only way to completely eliminate it is to join a currency union and then do all your trading within those countries that are part of that union although I don't believe that is realistic either.

Yes, but we can also seek to minimise currency risk, and this is what sound policy makers do. It isn't a choice between one extreme or the other.

What are these slightly lower interest rates you were suggesting?

What do they do to ensure a currency collapse doesn't occur, in the case of the Punt falling too far?

What of the many, many other issues that affect Irish competitiveness that cannot be changed with a quick fix?

SkepticOne

Rujib1 wrote: »

Why on earth would we leave the euro, just to devalue and gain competitiveness.

In the longer term we would have control over monetary policy. At present too much of a burden is placed on politicians to use fiscal methods with the consequences that we are now seeing.

Scofflaw

SkepticOne wrote: »

In the longer term we would have control over monetary policy. At present too much of a burden is placed on politicians to use fiscal methods with the consequences that we are now seeing.

So...again...although the politicians are no good at fiscal methods, their control over monetary policy would have good consequences?

amused,
Scofflaw

ei.sdraob

SkepticOne wrote: »

In the longer term we would have control over monetary policy. At present too much of a burden is placed on politicians to use fiscal methods with the consequences that we are now seeing.

LOL

look at the UK, the money printing machines (actually thats too expensive they just add digits to accounts nowadays) are under the control of the government and are printing money to pay for .... government debt

yeah I can see that working out great in Ireland :rolleyes:

SkepticOne

Scofflaw wrote: »

So...again...although the politicians are no good at fiscal methods, their control over monetary policy would have good consequences?

amused,
Scofflaw

Before Ireland joined the Euro, an independent central bank controlled monetary policy for Ireland. Britain still had the politicians controlling monetary policy up until I think 1997 but this is an exception and certainly not what is being suggested. With respect I'm a bit surprised that you would think that control would go back to the politicians when before Ireland joined the Euro.

Flamed Diving

Why does the good performance of a countries economy "tend to" lead to the strengthening of its currency?

What are these slightly lower interest rates you were suggesting?

What do they do to ensure a currency collapse doesn't occur, in the case of the Punt falling too far?

What of the many, many other issues that affect Irish competitiveness that cannot be changed with a quick fix?


The questions that SkepticOne cannot answer are piling up, folks.

Scofflaw

SkepticOne wrote: »

Before Ireland joined the Euro, an independent central bank controlled monetary policy for Ireland. Britain still had the politicians controlling monetary policy up until I think 1997 but this is an exception and certainly not what is being suggested. With respect I'm a bit surprised that you would think that control would go back to the politicians when before Ireland joined the Euro it was handled by an independent central bank.

Given what we've seen in terms of the banking and regulatory sector in the last decade (we still have a central bank, after all, and a financial regulatory authority which shares personnel with it), I'm not sure why you're surprised. What exactly did either the Central Bank or the Financial Regulator (who comes under the Central Bank's authority) do to mitigate the effects of the decade-long bubble or otherwise interfere with the government's pro-cyclic policies?

cordially,
Scofflaw

ei.sdraob

SkepticOne wrote: »

Before Ireland joined the Euro, an independent central bank controlled monetary policy for Ireland. Britain still had the politicians controlling monetary policy up until I think 1997 but this is an exception and certainly not what is being suggested. With respect I'm a bit surprised that you would think that control would go back to the politicians when before Ireland joined the Euro.

in theory the central bank in UK is not in government control but in practice it is, almost all of the 220 billion pounds in quantitative easing (aka printing of money) was used to buy government debt

the Queen meet with Mervin King (head of their bank) and it sure as hell wasn't to talk about the weather



on more thinking maybe this is why DMcW is proposing this, there could be some history with himself and the Central bank in Ireland for whom he worked before, maybe himself and other lost their jobs thanks to the move to the euro

SkepticOne

Scofflaw wrote: »

Given what we've seen in terms of the banking and regulatory sector in the last decade (we still have a central bank, after all, and a financial regulatory authority which shares personnel with it), I'm not sure why you're surprised. What exactly did either the Central Bank or the Financial Regulator (who comes under the Central Bank's authority) do to mitigate the effects of the decade-long bubble or otherwise interfere with the government's pro-cyclic policies?

The reason I'm surprised is that you appeared not to have known that our monetary policy was not handled by politicians prior to joining the euro since you thought that it would be handed back to them if we left the euro.

I take your point about these institutions not doing much to counter the government's policies, however the real tool needed was taken away from them and we do know that interest rates dropped considerably upon Ireland's entry to the euro as they were relatively high up to that point to deal with overheating of the Irish economy.

ei.sdraob

SkepticOne wrote: »

The reason I'm surprised is that you appeared not to have known that our monetary policy was not handled by politicians prior to joining the euro since you thought that it would be handed back to them if we left the euro.

I take your point about these institutions not doing much to counter the government's policies, however the real tool needed was taken away from them and we do know that interest rates dropped considerably upon Ireland's entry to the euro as they were relatively high up to that point to deal with overheating of the Irish economy.

ah yes the fatman argument

its the fault of the fastfood joint that the fatman became fat because he couldnt stop eating cheap food, and he was to busy to put any food aside for a hungry day

how come other small economies who also joined the euro are not so ****ed?

how come the Germans and others invested the money wisely in renewables??

theres nothing wrong with low rates, as long as the money is used wisely

stevedublin

I think the main issue people/workers have with pay cuts/layoffs etc. is that it reduces their ability to pay off DEBT.
If Ireland drops out of the Eurozone and devalues the Punt Nua, then people still have to pay the debt they took out (e.g. mortgages, car loans etc.) in the old currency (Euros usually), so from a debt point of view the workers in debt have effectively taken a pay cut anyway.
Hence devaluing makes little difference over a paycut to an individual in debt. The same logic would apply to Irish businesses (I think).

SkepticOne

ei.sdraob wrote: »

ah yes the fatman argument

its the fault of the fastfood joint that the fatman became fat because he couldnt stop eating cheap food, and he was to busy to put any food aside for a hungry day

how come other small economies who also joined the euro are not so ****ed?

how come the Germans and others invested the money wisely in renewables??

The interest rates are suited to the eurozone as a whole, I think we can agree on that. So there are going to be some countries for which that interest rate is suitable and others for which it is not suitable, hence they respond differently.

nesf

SkepticOne wrote: »

The interest rates are suited to the eurozone as a whole, I think we can agree on that. So there are going to be some countries for which that interest rate is suitable and others for which it is not suitable, hence they respond differently.

How much do you know about macro-economic forecasting? i.e. what's used to work out interest rate targets/inflation forecasts.

SkepticOne

Flamed Diving wrote: »

Why does the good performance of a countries economy "tend to" lead to the strengthening of its currency?

I think the normal theory is that a competitive country with a positive trade surplus will generate demand for its currency and this will drive up its value. Similarly a trade deficit will have the opposite effect. I don't think this is particularly controversial.

Note that I'm not saying that this is the only factor, just that it is a factor. I'm sure most people are aware that the likes of printing money or a government buying up another countries currency directly will have an effect.

What are these slightly lower interest rates you were suggesting?

I don't think this is a reasonable question. I don't think it is possible to know in advance what the correct interest rate should be though you could well have an idea that it should be higher or lower than it currently is.

What do they do to ensure a currency collapse doesn't occur, in the case of the Punt falling too far?

I don't think a particular level should be aimed at. Artificially trying to maintain a level is what leads to currency crises, e.g. Black Wednesday already mentioned.

What of the many, many other issues that affect Irish competitiveness that cannot be changed with a quick fix?

No one is denying that these other factors don't exist and should not be dealt with, so I'm not sure of the relevance of this question.

SkepticOne

nesf wrote: »

How much do you know about macro-economic forecasting? i.e. what's used to work out interest rate targets/inflation forecasts.

I'm open to correction but I think logically you can't have an interest rate policy that simultaneously works for a group of economies and at the same time be suited to each economy individually.

nesf

SkepticOne wrote: »

I'm open to correction but I think logically you can't have an interest rate policy that simultaneously works for a group of economies and at the same time be suited to each economy individually.

Depends on a host of factors but yes a one-size-fits-all approach isn't going to be as good as individual interest rates however you can't have two countries using the same currency with different interest rates so it's one or the other.

The reason I ask is because we're getting into "how to model" territory with this particular strand of the debate and this will get quite technical very quickly.

SkepticOne

nesf wrote: »

Depends on a host of factors but yes a one-size-fits-all approach isn't going to be as good as individual interest rates however you can't have two countries using the same currency with different interest rates so it's one or the other.

Which is, of course, the point I was making.

nesf

SkepticOne wrote: »

Which is, of course, the point I was making.

Indeed however it begs another question: will two economies start slowly converging in economic cycles when under a common interest rate regime?

SkepticOne

nesf wrote: »

Indeed however it begs another question: will two economies start slowly converging in economic cycles when under a common interest rate regime?

My own opinion on this (and it is separate from the other arguments) is that some economies, let us call them core economies, will converge further and others (peripheral) will diverge further. It will have both effects. I can't find any literature to support this but the argument would be that if the core economies are sufficiently integrated then monetary policy will be operated in order to smooth out booms and busts. However in countries that are not sufficiently integrated to start with, this same policy will have the effect of exaggerating booms and busts and these exaggerated booms and busts will be 180 degrees out of phase with the those of the core economies. Thus, Ireland may be undergoing a massive boom while Germany is having a minor slump etc.

Note that this speculation of mine is peripheral to any arguments being made to the advisability of Ireland staying in the Euro.

nesf

SkepticOne wrote: »

My own opinion on this (and it is separate from the other arguments) is that some economies, let us call them core economies, will converge further and others (peripheral) will diverge further. It will have both effects. I can't find any literature to support this but the argument would be that if the core economies are sufficiently integrated then monetary policy will be operated in order to smooth out booms and busts. However in countries that are not sufficiently integrated to start with, this same policy will have the effect of exaggerating booms and busts and these exaggerated booms and busts will be 180 degrees out of phase with the those of the core economies. Thus, Ireland may be undergoing a massive boom while Germany is having a minor slump etc.

Note that this speculation of mine is peripheral to any arguments being made to the advisability of Ireland staying in the Euro.

Yeah but without empirical evidence you're just guessing. No offence meant.

SkepticOne

nesf wrote: »

Yeah but without empirical evidence you're just guessing. No offence meant.

I fully accept that and no offence is taken. Do you think that membership of of a common currency brings about convergence in economies? How do you get around the problem that I have raised in the above post?

nesf

SkepticOne wrote: »

I fully accept that and no offence is taken. Do you think that membership of of a common currency brings about convergence in economies? How do you get around the problem that I have raised in the above post?

Are the problems you raise real? Relationships between countries do change with currency/interest rate union, evidence for this varies but one of the clearest examples I've seen is the change in import elasticities between countries:

A country's imports varies with economic growth, in a shrinking economy imports fall and vice versa. What changed in the Eurozone was this relationship. Ireland exports more to Germany now than it did when the countries were using different currencies, for the same percentage shrinking of the German economy. In other words, the amounts of exports we lose when the German economy shrinks is less than it was when we had different currencies. This is a fundamental change in relationship between the two countries and indicative of how you can't continue thinking of the relationship between the two countries in the same way you would with two independent countries currency wise.

nesf

Article in the latest Economist on default possibilities in the Euro Zone (and a side mention of the troubles of leaving it): http://www.economist.com/displaystory.cfm?story_id=15016124

SkepticOne

nesf wrote: »

This is a fundamental change in relationship between the two countries and indicative of how you can't continue thinking of the relationship between the two countries in the same way you would with two independent countries currency wise.

I don't think there are no converging effects, what I would wonder though is whether these are sufficient to overcome what I believe to be a divergent tendency due to a common interest rate policy.

Would you agree the same interest rate in an overheating economy as an economy in recession is likely, other things being equal, to bring about a divergence of some sort?

Flamed Diving

SkepticOne wrote: »

I think the normal theory is that a competitive country with a positive trade surplus will generate demand for its currency and this will drive up its value. Similarly a trade deficit will have the opposite effect. I don't think this is particularly controversial.

Note that I'm not saying that this is the only factor, just that it is a factor. I'm sure most people are aware that the likes of printing money or a government buying up another countries currency directly will have an effect.

Well this is what I was going to come back with, but I think you should weaken the "tends to" element of your analysis. Currency movements happen for good as well as bad reasons, in both directions.

SkepticOne wrote: »

I don't think this is a reasonable question. I don't think it is possible to know in advance what the correct interest rate should be though you could well have an idea that it should be higher or lower than it currently is.

Not only is it a reasonable question, it is a crucial one. Having significantly lower rates than the Eurozone will lead to capital outflow. Having them too high, well, that is apparently the problem now, right? So this is something you would want to be spot on with.

SkepticOne wrote: »

I don't think a particular level should be aimed at. Artificially trying to maintain a level is what leads to currency crises, e.g. Black Wednesday already mentioned.

So the government shouldn't mind if the Punt falls 20%? 40%? 70%?

Let's say it falls 20%, which will not only have a devastating effect on banks and businesses with debts in Euro, but will (as Scofflaw pointed out) wipe out any forecasted benefit from competitiveness.

I think the government should give a damn about the level their currency takes, especially after just floating it on the market. Why do you keep ignoring the Euro debts of local businesses? This is by far the biggest hole in your logic. If your plan was implemented, the economy would be finally killed off.

SkepticOne wrote: »

No one is denying that these other factors don't exist and should not be dealt with, so I'm not sure of the relevance of this question.

Leave Euro = Improve competitiveness. Yet many of the reasons people don't invest here are not tied to this decision meaning that your policy may have little or no positive effect, with all the bad outcomes listed above. The exchange rate is likely to be lower down on the list than some of the more structural problems Ireland has. That's why it is relevant.

Flamed Diving

CURRENCY BOARD OR CENTRAL BANK?
Lessons from the Irish Pound's Link with Sterling, 1928-79
Patrick Honohan

http://homepage.eircom.net/~phonohan/BNL.pdf

For those interested in Ireland's currency history written by the current Central Bank governor.

nesf

SkepticOne wrote: »

I don't think there are no converging effects, what I would wonder though is whether these are sufficient to overcome what I believe to be a divergent tendency due to a common interest rate policy.

Would you agree the same interest rate in an overheating economy as an economy in recession is likely, other things being equal, to bring about a divergence of some sort?

It's an open question which is my point and one that would need to be answered before any real debate on leaving the Eurozone can begin.

SkepticOne

nesf wrote: »

It's an open question which is my point and one that would need to be answered before any real debate on leaving the Eurozone can begin.

You would think there would have had to be some sort of consensus on the issue before embarking on the experiment.

nesf

SkepticOne wrote: »

You would think there would have had to be some sort of consensus on the issue before embarking on the experiment.

There could be no such consensus, it had never been tried before on this scale. There was a lot of debate about whether it would even last 2-3 years!

SkepticOne

nesf wrote: »

There could be no such consensus, it had never been tried before on this scale. There was a lot of debate about whether it would even last 2-3 years!

I would not expect there to be much empirical evidence for the reasons you outline, but I would have expected there to be some sort of consensus based on theoretical considerations, some sort of reasoning based on fairly well established principles.

nesf

SkepticOne wrote: »

I would not expect there to be much empirical evidence for the reasons you outline, but I would have expected there to be some sort of consensus based on theoretical considerations, some sort of reasoning based on fairly well established principles.

It's hard to have a theoretical framework for something that's never happened when you're dealing with chaotic systems.

recedite

SkepticOne wrote: »

...and a large part of the cause of this has been inappropriately low euro interest rates during a massive housing bubble..However staying in a currency union suited for much stronger economies could also be considered fiddling, interfering with the normal market processes.

Now that the bubble has burst, we only have to lower our wage costs to harmonise with the European monetary union. The benefits of living in a stable economy are not far away, so why pull out now when we are nearly there? (this despite the meddling of the Irish government over the last few years with benchmarking and other inflationary policies)
The remit of the ECB is to keep eurozone inflation at or below 2% so that business can operate in a stable predictable environment.
The idea that the euro is too "strong" for us is like saying it is too good...theres no such thing.

Flamed Diving

recedite wrote: »

The idea that the euro is too "strong" for us is like saying it is too good...theres no such thing.

What do you think people mean when they say this?

recedite

SkepticOne wrote: »

Would you agree the same interest rate in an overheating economy as an economy in recession is likely, other things being equal, to bring about a divergence of some sort?

Its a good point.However you have to consider that the impetus for that initial wild swing was only a once-off effect (our interest rate reduction to eurozone levels). At this stage the pendulum has swung, and both Ireland and Germany have gone into recession. Now the dampering effect of currency union comes into play, taking the momentum out of any wild swing in our economy which is out of sync with the core economies. In my opinion, the next phase is one in which we all return to modest growth simultaneously.The overall stability will have increased in direct proportion to the increase in size of the eurozone. Similarly the strength of the currency will have increased. The euro will float in an even more "cumbersome" manner.

View

Personally, I think people are viewing the issue incorrectly when they talk of an "Irish economy" and a "German economy" (etc.).

With the advent of the Euro, there is A Eurozone economy. The "Irish economy" and the "German economy" do not exist as independent units detached from the Eurozone economy. As such, the pre-Euro view, that continues to be used, of these economies as being separate form each other is just wrong. It is akin to talking of the "Clare economy" and the "Kildare economy" as though they had separate with nothing to do with each other.

Consequently, I suspect we need to do a mental "flip" to place the idea of a Eurozone economy at the centre of our thinking and all issues related to the budget, should be viewed with the question "How does this improve our relative position within the Eurozone?"

To see what, I mean, consider the inflation from Eurostat which applied to the period 1997-2008. During this time, according to Eurostat, inflation in Ireland ran at double the Eurostat average. As such, we were well on our way to a finacial crisis even if if there was no global crisis to worry about.

nesf

View wrote: »

Personally, I think people are viewing the issue incorrectly when they talk of an "Irish economy" and a "German economy" (etc.).

With the advent of the Euro, there is A Eurozone economy. The "Irish economy" and the "German economy" do not exist as independent units detached from the Eurozone economy. As such, the pre-Euro view, that continues to be used, of these economies as being separate form each other is just wrong. It is akin to talking of the "Clare economy" and the "Kildare economy" as though they had separate with nothing to do with each other.

Consequently, I suspect we need to do a mental "flip" to place the idea of a Eurozone economy at the centre of our thinking and all issues related to the budget, should be viewed with the question "How does this improve our relative position within the Eurozone?"

To see what, I mean, consider the inflation from Eurostat which applied to the period 1997-2008. During this time, according to Eurostat, inflation in Ireland ran at double the Eurostat average. As such, we were well on our way to a finacial crisis even if if there was no global crisis to worry about.

Eh, fiscal policy varies wildly between Eurozone economies which complicates it a lot more than you make out. Clare and Kildare are subject to the same income tax rates, VAT rates etc. Ireland and Germany aren't.

ei.sdraob

View wrote: »

To see what, I mean, consider the inflation from Eurostat which applied to the period 1997-2008. During this time, according to Eurostat, inflation in Ireland ran at double the Eurostat average. As such, we were well on our way to a finacial crisis even if if there was no global crisis to worry about.

few points on this:

* the EU & ECB did warn us for years, but the party answer was "to go and commit suicide" to anyone who was "ruining" the orgy, or just ignored

* Property assets are not included in any inflation measure, if they were then alarm bells would have been ringing much louder, its insane to think that the biggest thing a person would buy in their life is not included in inflation figures

SkepticOne

nesf wrote: »

Eh, fiscal policy varies wildly between Eurozone economies which complicates it a lot more than you make out. Clare and Kildare are subject to the same income tax rates, VAT rates etc. Ireland and Germany aren't.

In fairness it is not realistic to capture every nuance in a post on a message board without writing essays on the subject. What I took from View's post (not that I agree with it) is that we should adopt more of a eurozone perspective than a merely national one, not that the differences in taxation and other local issues were of no consequence. To certain extent it should be taken as read that the person raising the point is aware that it is not the sole consideration.

SkepticOne

View wrote: »

Consequently, I suspect we need to do a mental "flip" to place the idea of a Eurozone economy at the centre of our thinking and all issues related to the budget, should be viewed with the question "How does this improve our relative position within the Eurozone?"

To see what, I mean, consider the inflation from Eurostat which applied to the period 1997-2008. During this time, according to Eurostat, inflation in Ireland ran at double the Eurostat average. As such, we were well on our way to a finacial crisis even if if there was no global crisis to worry about.

Yes, to a large extent we should have seen that our excess of inflation above the euro average would lead to consequences. However, how realistic is it to expect our politicians to think this way? What makes economic sense does not always make political sense. To combat inflation would have meant unpopular fiscal measures and threats of revolt from backbenchers. The opposition parties during that time were not particularly vocal about needing to raise taxes or cut spending during a period when the government was in surplus. That is the way governments think.

I have never voted for Fianna Fail and I'm not planning on changing my voting the next time around and I hope they are kicked out, but we can't expect a fundamental change in thinking in this respect with a new government either unfortunately.

seclachi

How does he plan to implement such a scheme ? Its ludicrous.

If Cowen turned around tomorrow and said we were doing it, then there would be a massive run on the banks for money before it came in, causing them to implode. If he gave zero notice people would riot. The new currency would be created with one purpose, to be devalued, anybody with half a brain could see that. So on day one he might say €1 = new£1, but by day two it would be €1=£2, so people will hang on to there euro notes. If he fixed the exchange rate for a few years (which would be the only possibility) then we may well be out of recession then and it would have all been pointless.
How would we stop people from just using the euro anyway ? As far as I can see when we joined the euro we made a one way choice, theres no getting out now, not without insane consequences.