Why don't we leave the EU? Join the Swiss in EFTA

BlitzKrieg

That's what sank the ship

I think you will find that the advancement of naval war was what sank the bismarck irregardless of anything to do with the ship's design. The notion of capital battleships had been confirmed as outdated a month into world war 2 when the royal oak was sunk in scapa flow by a u-boat.


Not a comparable scenario to the current economic situation (unless some advancement elsewhere has made the notion of currency obsolete?)

Scofflaw

BlitzKrieg wrote: »

I think you will find that the advancement of naval war was what sank the bismarck irregardless of anything to do with the ship's design. The notion of capital battleships had been confirmed as outdated a month into world war 2 when the royal oak was sunk in scapa flow by a u-boat.


Not a comparable scenario to the current economic situation (unless some advancement elsewhere has made the notion of currency obsolete?)

I suspect that any amount of ship analogies can be thrown about without ever telling us anything useful about the euro. At the end of the day, the euro isn't actually a ship.

cordially,
Scofflaw

SkepticOne

Scofflaw wrote: »

I suspect that any amount of ship analogies can be thrown about without ever telling us anything useful about the euro. At the end of the day, the euro isn't actually a ship.

cordially,
Scofflaw

That's why I said that it was an unfortunate analogy for a euro-supporter to have brought up.

sirromo

baalthor wrote:

The post gives reasons why a country should not join the euro.

Would you agree that we would have been better off if we had never joined the euro in the first place?

baalthor wrote:

We have joined so the anti-euro people need to provide convincing arguments demonstrating why we should unilaterally leave.

Have you read any of David McWilliams articles on the subject? Read this article

David McWilliams wrote:

Anyone with a basic understanding of economics knows that we can’t deflate our way to growth. The problem is a lack of demand. People are hoarding money. There is plenty of money in Ireland, but as we are hoarding, this money on deposit doesn’t translate into cash spending.

David McWilliams wrote:

What can we do about this? The obvious answer is to leave the euro, reinstitute our own currency, allow it to plummet to reflect the real competitive position of our ruined, feeble economy and start again. The vast majority of economists and commentators say this is not possible. In fact, they ridicule those who suggest that this might be worth entertaining.

Let me just remind you that the vast majority of economists and commentators believed the “soft landing” mantra. New ideas go through a cycle. First they and their proponents are ridiculed, then they are violently attacked and only then are they accepted as a universal truth. I suspect the same will happen to the idea of leaving the euro.

There are clearly issues with doing something as radical as this, as it would have to be coincident with a lifting of all state guarantees on interbank lending. The State could still guarantee deposits in the new currency. Many investors who owed the Irish banks or invested in Irish government bonds would get burned. But that is the nature of markets. They would be paid back in the new currency, which would have to find its value.

The new currency would fall rapidly, giving our trading sector a significant boost and making Ireland cheaper overnight for people to do business in. Clearly, the government deficit would have to be addressed through strict spending targets.

As the Central Bank would do what the US, UK, Australia, Canada and Sweden are doing now and print money, the liquidity trap that we are in would evaporate. Clearly inflation would rise rapidly, and the State would need to introduce CPI-linked bonds to refinance itself.

But lots of successful countries have done that in the past — Sweden, Finland and Israel come to mind.

David McWilliams wrote:

Unemployment would fall rapidly as it has done in practically every country which has embarked on such a policy. The Asian Tigers, after their collapse in 1997, are the best example of this rapid re-employment phenomenon. One look at the Asians or the Scandinavians should put paid to arguments about what small open economies can do.

maggy_thatcher

David McWilliams wrote:

Unemployment would fall rapidly as it has done in practically every country which has embarked on such a policy.

Except for the fact that every bank in the country would be bankrupt, forcing every banker to be laid off (unless someone has figured out a way to stop a run on the banks yet?). After the banks are shut-down, many other businesses start to crumble along side them (which was the reason the bail-outs occurred over the past years), leaving mass unemployment and no money to start up anything again.

ConsiderThis

maggy_thatcher wrote: »

Except for the fact that every bank in the country would be bankrupt, forcing every banker to be laid off (unless someone has figured out a way to stop a run on the banks yet?). After the banks are shut-down, many other businesses start to crumble along side them (which was the reason the bail-outs occurred over the past years), leaving mass unemployment and no money to start up anything again.

Most banks here are already bankrupt, whether they trade in Euros or Punts. The currency they trade in has no bearing on their financial position.

What is interesting now is the unfolding current situation, where Greece has had its credit rating reduced to junk status by Standard & Poors, and where Portugal & Spain & Ireland are not far behind, will put the Euro under incredible strain, and it may be that this unfolding situation may herald the end of the euro.

sirromo

maggy_thatcher wrote:

Except for the fact that every bank in the country would be bankrupt, forcing every banker to be laid off (unless someone has figured out a way to stop a run on the banks yet?). After the banks are shut-down, many other businesses start to crumble along side them (which was the reason the bail-outs occurred over the past years), leaving mass unemployment and no money to start up anything again.

Did this happen in the countries he listed above - Sweden, Finland and Israel?

I know you used the word 'fact' figuratively rather than literally but if you are really so sure that the scenario above is inevitable then why do you think an experienced economist like David McWilliams would have overlooked it?

Regardless of whether you think leaving the euro is a bad idea, you have to admit that our membership of the euro is making our recovery much more difficult than it would otherwise be.

maggy_thatcher

sirromo wrote: »

Did this happen in the countries he listed above - Sweden, Finland and Israel?

Sweden, Finland and Israel didn't change currencies when they devalued, which is different. In our case, the Euro would still be a valid currency, just not the one that we used...as such, (almost) anybody who has euros in savings accounts would take them out of the banks to keep them safe and secure, while they naturally appreciate in value against the local currency. Nobody has come up with a way to prevent this from happening.

sirromo wrote: »

I know you used the word 'fact' figuratively rather than literally but if you are really so sure that the scenario above is inevitable then why do you think an experienced economist like David McWilliams would have overlooked it?

The only reasons I can think he overlooked it is either because it runs contrary to his agenda, or he has no savings himself?

sirromo wrote: »

Regardless of whether you think leaving the euro is a bad idea, you have to admit that our membership of the euro is making our recovery much more difficult than it would otherwise be.

Much more difficult, no...a little more difficult, maybe. I live my life under a principle of if I can't afford it, I don't get it. Unfortunately, many people in this country (the government included) don't do that, and continue to not do that, and until this is rectified, we're doomed to make the same mistakes over and over again.

DaBrow

Greece looks like whatever it does, they are doomed as a country.

When they go under; we will follow them along with many of the eurozone... If we stay

I know there are people whom don't want to leave the euro for fear of further ruin as they claim, but let's be honest....

How can we get any worse?

The euro is prolonging recession and making us more vulnerable to defaulting massively on our current debts; they have said that Ireland looks like the next victim on the list.

Flamed Diving

Our debts are Euro-denominated. If we left the Eurozone, a devaluation would seem very likely, whether we plan to or not. The % change in the devaluation vs the Euro would be equivalent to a % increase in our debt. For example, if the Punt devalued by 30%, our debt would increase by 30%.

Let me know if you require help in understanding this.

DaBrow

Flamed Diving wrote: »

Our debts are Euro-denominated. If we left the Eurozone, a devaluation would seem very likely, whether we plan to or not. The % change in the devaluation vs the Euro would be equivalent to a % increase in our debt. For example, if the Punt devalued by 30%, our debt would increase by 30%.

Let me know if you require help in understanding this.

At the rate we are going, it looks like if we want to recover... We'll have to take the risk of leaving on our own accord before we are pushed out.

I doubt though you are an accountant or economist...

David McWilliams has been right before on topics like these; the boom was unsustainable and a crash was waiting to happen... I'm more inclined to believe him on leaving the euro than someone towing the government line of sticking with it.

K-9

DaBrow wrote: »

At the rate we are going, it looks like if we want to recover... We'll have to take the risk of leaving on our own accord before we are pushed out.

I doubt though you are an accountant or economist...

David McWilliams has been right before on topics like these; the boom was unsustainable and a crash was waiting to happen... I'm more inclined to believe him on leaving the euro than someone towing the government line of sticking with it.

Of course you are willing to believe him!

Think I posted this already but how and ever:

David McWilliams - - a short-termist like his Celtic Tiger villains?

DaBrow

K-9 wrote: »

Of course you are willing to believe him!

Think I posted this already but how and ever:

David McWilliams - - a short-termist like his Celtic Tiger villains?

Like those guys are in touch with how bad a state the country is in?

They give Brian Lenihan too much undeserved credit

Flamed Diving

DaBrow wrote: »

At the rate we are going, it looks like if we want to recover... We'll have to take the risk of leaving on our own accord before we are pushed out.

So you are comfortable with our foreign debt suddenly increasing by, say, 30%? You are fully aware of the implications? You are aware of previous historical precedents? Would you outline any of these, instead of speaking in vague terms?

DaBrow wrote: »

I doubt though you are an accountant or economist...

No, I am not an economist (yet) or accountant (why accountant?) Have you any formal qualifications in economics/finance? Or do you simply hang on the every word of a single journalist?

I suppose I should point out that I am well aware of his background, just to save you the Wikipedia search. But to be regarded as an economist, don't you have to be, uh, performing research? Publishing papers? Working for a firm as an economist? George Hook isn't a rugby coach, he is a rugby pundit and broadcaster. Same difference, chief.

David McW is a journalist now, not an economist.

DaBrow

Flamed Diving wrote: »

So you are comfortable with our foreign debt suddenly increasing by, say, 30%? You are fully aware of the implications? You are aware of previous historical precedents? Would you outline any of these, instead of speaking in vague terms?



No, I am not an economist (yet) or accountant (why accountant?) Have you any formal qualifications in economics/finance? Or do you simply hang on the every word of a single journalist?

I suppose I should point out that I am well aware of his background, just to save you the Wikipedia search. But to be regarded as an economist, don't you have to be, uh, performing research? Publishing papers? Working for a firm as an economist? George Hook isn't a rugby coach, he is a rugby pundit and broadcaster. Same difference, chief.

David McW is a journalist now, not an economist.

A Journalist whom bases his articles on economic factors and a banking background, he is the only person whom has had accurate predictions.

George Lee is another person who has been on the ball aswell.

RandomName2

DaBrow wrote: »

Greece looks like whatever it does, they are doomed as a country.

When they go under; we will follow them along with many of the eurozone... If we stay

I know there are people whom don't want to leave the euro for fear of further ruin as they claim, but let's be honest....

How can we get any worse?

The euro is prolonging recession and making us more vulnerable to defaulting massively on our current debts; they have said that Ireland looks like the next victim on the list.

I seem to remember in the last year or so Ireland being singled out as a particular basket-case of Europe (due to lack of regulation, corruption, and anti-europeanness and whatever-you're-having-yourself)

At least we can finally get over the idea that every country in the eurozone is prosperous and that eu membership automatically generates wealth.

Unfortunately the eu has very lose standards when it comes to amalgamation of members to both the single currency and union. It might be a good idea to sort out the perennial promblem states before looking as far afield as Ukraine, Turkey and (for god's sake) Iceland.

Portugal, Spain, Ireland, Latvia, Italy and Greece are all pretty screwed at the moment. Unfortunately it will further the call for further suprantional management.

Hope Greece doesn't bring down the euro. It's actually quite a nice currency and simplifies international markets no end.

Flamed Diving

DaBrow wrote: »

A Journalist whom bases his articles on economic factors and a banking background, he is the only person whom has had accurate predictions.

George Lee is another person who has been on the ball aswell.

George Lee is not an economist. Another broadcaster, I'm afraid.

The only? Or the only you have heard of? As much as it pains me, have you heard of Prof. Morgan Kelly or Dr. Alan Ahearne?

I presume you must have heard of Ahearne, at least. The fact is, many economists were warning of the government's actions in overheating the economy, it's just that the vast majority of those who did, are not attention-grabbing media whores.

The Corinthian

DaBrow wrote: »

I doubt though you are an accountant or economist....

I think one of the things that this thread has demonstrated is that you are neither. Have you any academic qualifications in economics?

At least, this is the only reason I can think of (outside blatant dishonesty) that you would cherry pick your facts so laughably. On which note, (tenth time asking) why do you repeatedly cite price levels when it suits you, salary levels when it suits you, but never combine them to give a truthful picture?

People like McWilliams, Lee or Coleman are ultimately journalists. None of them have worked as economists for years and have been journalists, in many cases, longer than they have been economists. I would be more impressed if you could name some actual economists and their views instead.

Not that any of this matters, because the EU and Euro are a question not of economics but of nationalism and jus sanguinis for you. You made that abundantly clear earlier in this thread.

RandomName2 wrote: »

Hope Greece doesn't bring down the euro. It's actually quite a nice currency and simplifies international markets no end.

It won't. It would take a lot more than Greece dropping out to do that.

Personally, I think Greece should drop out, largely because they should never have been in the Euro in the first place, given that they entered using false economic reporting. Subsequently they lived on borrowed money, while other countries carried out balanced fiscal polices which ultimately caused the whole thing to blow up when there was a downward credit shock. It is hardly surprising that the Germans are not terribly interested in bailing out Greece and their press have been running numerous articles recently examples of Greek mismanagement, such as how Greek pensions have been increased generously over the last decade, while German ones have remained static.

It should be noted that of all the PIIG's countries, Greece has been the only one that has been specifically cited as a weak link. While the deficits and debts of other EU nations, including the UK, have been cause for worry, there has been no serious suggestion that any of the others are in anywhere near the same situation as Greece.

Ultimately, if they drop out it will result in the Euro taking a hit in value, but ultimately it is better than the insecurity of not knowing if Greece can get their act together over the next few years. It will also have the advantage of lowering the value of the Euro against other currencies, which is naturally good for Ireland.

K-9

DaBrow wrote: »

Like those guys are in touch with how bad a state the country is in?

They give Brian Lenihan too much undeserved credit

Those guys warned about the bubble for years.

sirromo

maggy_thatcher wrote:

Sweden, Finland and Israel didn't change currencies when they devalued, which is different. In our case, the Euro would still be a valid currency, just not the one that we used...as such, (almost) anybody who has euros in savings accounts would take them out of the banks to keep them safe and secure, while they naturally appreciate in value against the local currency. Nobody has come up with a way to prevent this from happening.

Maybe you're right, I don't know enough about economics to be able to predict fully what will happen if we leave the euro, I defer to people who are more knowledgeable on the subject.

I just can't bear the thought of Ireland going through another generation of economic stagnation and I fear that this is what we will have in front of us if we remain in the eurozone. Maybe leaving the euro is not a realistic option but the alternative of expecting wages to fall naturally in as short a time and by enough to make us competitive again seems even less realistic. I honestly can't see how we can regain our competitiveness without devaluing our currency.

I've a feeling as well that many of the people who want us to hold onto the euro are motivated more by their emotional attachment to the idea of a common currency than they are to the idea of us making difficult decisions to get our economy back on its feet.

The politics of economic recovery has to over-ride the feel-good politics of euro-idealism. We need to do whatever it takes to prevent Ireland again becoming the economic failure that it once was. I'd much rather see Ireland being a competitive country with a future outside of the EU than becoming an impoverished and uncompetitive province of an under-performing European economy. I'm sure there are some europhiles who might feel differently.

maggy_thatcher wrote:

The only reasons I can think he overlooked it is either because it runs contrary to his agenda

I think it's very unlikely that David McWilliams has an agenda, and if he has, I can't see how it is furthered by him arguing for an exit from the euro.

maggy_thatcher wrote:

Much more difficult, no...a little more difficult, maybe. I live my life under a principle of if I can't afford it, I don't get it. Unfortunately, many people in this country (the government included) don't do that, and continue to not do that, and until this is rectified, we're doomed to make the same mistakes over and over again.

That doesn't answer the question though. In hindsight would you not agree that we would have been better off if we had never adopted the euro in the first place? Remember what Poland's former finance minister said about peripheral members of the eurozone losing competitiveness during the decade of the euro and how this provided an important lesson for non-euro members i.e. our competitors?

DaBrow wrote:

I know there are people whom don't want to leave the euro for fear of further ruin as they claim

I suspect that many of the people predicting ruin if we leave the euro would have been the same people who predicted we could be kicked out of the EU if we voted no to the Lisbon treaty.

Flamed Diving wrote:

So you are comfortable with our foreign debt suddenly increasing by, say, 30%?

Our debt will probably increase by 30% anyway if we continue down the path we're on and if we can't manage to cut unemployment. At least a devaluation will lead to a fall in unemployment and that will lead to a reduction in government borrowing and spending and an increase in tax revenues.

Flamed Diving

sirromo wrote: »

Our debt will probably increase by 30% anyway if we continue down the path we're on and if we can't manage to cut unemployment. At least a devaluation will lead to a fall in unemployment and that will lead to a reduction in government borrowing and spending and an increase in tax revenues.

A devaluation will increase the cost of servicing our debt, overnight. Employment takes time. Lots of time. It tends to lag GDP increases by 18 months. There is a time difference here. Do you understand?

How it would lead to a reduction in government borrowing is anyones guess. You seem to have it all upside-down. When the government borrows money, it generally tends to be from abroad, and almost all of it in Euro. If we were to devalue our currency that means that it would become more expensive to borrow foreign money. The cost of running government deficits (and paying our existing debt) would increase, in percentage terms, by the absolute value of the devaluation. This is a fact. Not for debate.

Question, have you ever studied the effects of historical currency devaluations? Do you understand the history of any governments attempts to value a new currency, especially a country which owed a large amount of foreign-denominated debt? Would you care to share your knowledge, in your own words?

DaBrow

The Corinthian wrote: »

I think one of the things that this thread has demonstrated is that you are neither. Have you any academic qualifications in economics?

At least, this is the only reason I can think of (outside blatant dishonesty) that you would cherry pick your facts so laughably. On which note, (tenth time asking) why do you repeatedly cite price levels when it suits you, salary levels when it suits you, but never combine them to give a truthful picture?

People like McWilliams, Lee or Coleman are ultimately journalists. None of them have worked as economists for years and have been journalists, in many cases, longer than they have been economists. I would be more impressed if you could name some actual economists and their views instead.

Not that any of this matters, because the EU and Euro are a question not of economics but of nationalism and jus sanguinis for you. You made that abundantly clear earlier in this thread.

You have contributed nothing but slander and trolling behaviour... I'd say your presence is no longer required.

K-9 at least engages respectfully... You try to manipulate people and that is why I refuse to engage with you further.

maggy_thatcher

sirromo wrote: »

That doesn't answer the question though. In hindsight would you not agree that we would have been better off if we had never adopted the euro in the first place? Remember what Poland's former finance minister said about peripheral members of the eurozone losing competitiveness during the decade of the euro and how this provided an important lesson for non-euro members i.e. our competitors?

No. Joining the euro allowed us to internalize practically all of our foreign debt, so that as the euro rises in value, our debt doesn't increase. It also reduces business costs for organizations with offices in both Ireland and the continent (e.g. foreign exchange conversion costs, trying to predict the cost of how much things cost, etc.).

A good example of how not having the same currency for input as well as output is Airbus Industrie -- the cost of building their aeroplanes is primarily in euro, as that's where their factories are located, but they sell them in USD, as that's the international standard for aircraft sales...as a result, how much money they make on each aircraft fluctuates depending on the exchange rate between EUR and USD. We'd be in a similar boat if we had opted out of joining the Eurozone.

Personally, I'd be in favour of a global currency that all countries used; with a world bank managing it, but I know that the world isn't quite ready for that.

dogbert27

DaBrow wrote: »

You have contributed nothing but slander and trolling behaviour... I'd say your presence is no longer required.

K-9 at least engages respectfully... You try to manipulate people and that is why I refuse to engage with you further.

I believe Corinthian has contributed a lot to this discussion but none of it has been slanderous or trolling behaviour.

You'd say his presence is no longer required? I think you're getting confused as to who is the mod and who is just a registered user!

If you believe Corinthian is trying to manipulate people then I think you may be suffering from a bout of paranoia.

He's asked you a simple question 10 times without you giving an answer.

The only conclusion that can be made to somebody not answering a question asked 10 times of them is that they a) don't know the answer or b) know that they are wrong and are refusing to admit it.

Scofflaw

DaBrow wrote: »

You have contributed nothing but slander and trolling behaviour... I'd say your presence is no longer required.

K-9 at least engages respectfully... You try to manipulate people and that is why I refuse to engage with you further.

Accusations of trolling are not allowed in the forum, whether true or not, for good and obvious reasons. In this case the accusation is untrue as well as a breach of the forum charter - in fact, your persistent refusal to deal with issues raised by The Corinthian and others puts your behaviour close to the agenda-driven trolling/soapboxing we've seen far too much of in this particular forum.

moderately,
Scofflaw

bonkey

Flamed Diving wrote: »

For example, if the Punt devalued by 30%, our debt would increase by 30%.

Actually, it would increase by more.

Lets say that teh nuPunt starts at a value of 1 euro, and our debt is one billion euro.

We devalue by 30%, so one nuPunt is not worth 70c.
1 Euro now costs around 1.42 nuPunts.

So if we owed 1bn euro previously, which became 1bn nuPunts, we now owe around 1.42bn nuPunts....because that's still only the 1bn euro we owe.

So a 30% decrease in value would be a 42% increase in debt.

In effect, as our currecy goes to 7/10 of its old value, the effect on debt is 10/7.

A 50% decrease in value (1/2) would be a 100% increase in debt...it would take 2bn nuPunts to make up 1bn euro (2/1).

sirromo

maggy_thatcher wrote:

No. Joining the euro allowed us to internalize practically all of our foreign debt, so that as the euro rises in value, our debt doesn't increase. It also reduces business costs for organizations with offices in both Ireland and the continent (e.g. foreign exchange conversion costs, trying to predict the cost of how much things cost, etc.).

And yet after 10 years of euro membership we've ended up with a massive foreign debt and we've seen a major increase in the cost of doing business in Ireland.

maggy_thatcher wrote:

Personally, I'd be in favour of a global currency that all countries used; with a world bank managing it, but I know that the world isn't quite ready for that.

Do you not think Helmut Kohl had a point when he warned about the problems of trying to operate a currency union without having political union?

Are you in favour of a world government?

Flamed Diving wrote:

A devaluation will increase the cost of servicing our debt, overnight.

It will increase the cost of servicing our debt but it will also increase our potential for servicing that debt in the future. It will also help us to avoid falling further in debt. It will be a sharp and painful shock but it will be worth it if we can boost our economy and reduce unemployment.

The biggest problem that countries like Greece have is not that their debts are so massive. Their biggest problem is that they don't have the income or the long-term income-growth prospects that would enable them to service those debts. Getting into debt is not a good thing but not having the income to pay back those debts is an even worse thing.

Flamed Diving wrote:

Employment takes time. Lots of time. It tends to lag GDP increases by 18 months.

According to David McWilliams, unemployment would fall rapidly:

David McWilliams wrote:

Unemployment would fall rapidly as it has done in practically every country which has embarked on such a policy. The Asian Tigers, after their collapse in 1997, are the best example of this rapid re-employment phenomenon. One look at the Asians or the Scandinavians should put paid to arguments about what small open economies can do.

Flamed Diving wrote:

How it would lead to a reduction in government borrowing is anyones guess.

Lower unemployment will mean that we won't have to spend as much money supporting people on the dole. It would also mean an increase in tax revenues.

Flamed Diving wrote:

The cost of running government deficits (and paying our existing debt) would increase, in percentage terms, by the absolute value of the devaluation. This is a fact. Not for debate.

But the cost of the government deficit would fall if there is a fall in unemployment.

Flamed Diving wrote:

Question, have you ever studied the effects of historical currency devaluations?

No, I have never studied the effects of historical currency devaluations. My understanding of the effects of a currency devaluation comes directly from reading David McWilliams articles.

Flamed Diving wrote:

Do you understand the history of any governments attempts to value a new currency, especially a country which owed a large amount of foreign-denominated debt? Would you care to share your knowledge, in your own words?

Can you point to a single country in history that has managed to overcome the kind of severe economic crisis that we're in without devaluing? If you know of one, would you mind sharing your knowledge of how a country can deflate its way to growth?

And while you're at it, and as you seem to be so knowledgeable on the subject, I'm sure you will have no problem answering this question by the journalist David McWilliams:

David McWilliams wrote:

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

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

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

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

Well?

Flamed Diving

sirromo wrote: »

And yet after 10 years of euro membership we've ended up with a massive foreign debt and we've seen a major increase in the cost of doing business in Ireland.




Do you not think Helmut Kohl had a point when he warned about the problems of trying to operate a currency union without having political union?

Are you in favour of a world government?




It will increase the cost of servicing our debt but it will also increase our potential for servicing that debt in the future. It will also help us to avoid falling further in debt. It will be a sharp and painful shock but it will be worth it if we can boost our economy and reduce unemployment.

The biggest problem that countries like Greece have is not that their debts are so massive. Their biggest problem is that they don't have the income or the long-term income-growth prospects that would enable them to service those debts. Getting into debt is not a good thing but not having the income to pay back those debts is an even worse thing.




According to David McWilliams, unemployment would fall rapidly:






Lower unemployment will mean that we won't have to spend as much money supporting people on the dole. It would also mean an increase in tax revenues.




But the cost of the government deficit would fall if there is a fall in unemployment.




No, I have never studied the effects of historical currency devaluations. My understanding of the effects of a currency devaluation comes directly from reading David McWilliams articles.




Can you point to a single country in history that has managed to overcome the kind of severe economic crisis that we're in without devaluing? If you know of one, would you mind sharing your knowledge of how a country can deflate its way to growth?

And while you're at it, and as you seem to be so knowledgeable on the subject, I'm sure you will have no problem answering this question by the journalist David McWilliams:



Well?

I'm going to leave this discussion, as I can see it going absolutely nowhere.

Thanks.

sirromo

Flamed Diving wrote:

I'm going to leave this discussion, as I can see it going absolutely nowhere.

I don't no nothing about economics or sums or big words but I would have expected you to at least attempt a response to the simple question posed by that second-rate journalist David McWilliams.

Don't let the economics profession down.

maggy_thatcher

sirromo wrote: »

And yet after 10 years of euro membership we've ended up with a massive foreign debt and we've seen a major increase in the cost of doing business in Ireland.

Neither of which was because of the euro - our "massive foreign debt" was the second lowest in the EU15 just 5 years ago - so we've piled it on since then. The major increase in the cost of doing business in Ireland is primarily due to the very high minimum wage in Ireland which drives inflation.

sirromo wrote: »

Do you not think Helmut Kohl had a point when he warned about the problems of trying to operate a currency union without having political union?

Are you in favour of a world government?

Eventually, yes. The sooner we can get our petty squabbles out of the way and have what's good for humanity the better. Unfortunately, I don't see that happening anytime soon as people seem to like building walls between other people.