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The Fiscal Stability Union Treaty

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    #32
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    View wrote: »
    ALL EU Treaties (and many international treaties) allow for fines to be legally imposed on us - this is nothing new.

    What the treaty does is - if you mismanage your economy - you'll in future get the equivalent of an "on the spot" speeding fine (and have to appeal it in court if you think it was handed out unfairly) whereas the current system is like our old system where you were brought to court months after your speeding offence and the court had to hand down the speeding fine to you then.

    Obviously though if you manage your economy properly the issue of fines is not going to arise for you.

    The question is though, how much more pain are we going to have to endure before we are at the stage where we can manage our economy "properly"?

    Will it take 5 more years of austerity, 10 more years, maybe 20 years????


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    #33
    View
    Registered Users Posts: 3,872 ✭✭✭View


    gerryo777 wrote: »
    The question is though, how much more pain are we going to have to endure before we are at the stage where we can manage our economy "properly"?

    Will it take 5 more years of austerity, 10 more years, maybe 20 years????

    That largely depends on us, doesn't it? The treaty doesn't get into specifying timescales for us to address our current problems.


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    #34
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    View wrote: »
    That largely depends on us, doesn't it? The treaty doesn't get into specifying timescales for us to address our current problems.
    Exactly, so we can tell them that in 50 years we will be able to comply with the 0.5%.


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    #35
    oscarBravo
    Technology & Internet Moderators Posts: 28,803 Mod ✭✭✭✭oscarBravo


    gerryo777 wrote: »
    Exactly, so we can tell them that in 50 years we will be able to comply with the 0.5%.
    Because it's a good idea to keep borrowing unsustainably for 50 years?


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    #36
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    oscarBravo wrote: »
    Because it's a good idea to keep borrowing unsustainably for 50 years?

    Most countries have to borrow money at certain times.

    Unsustainable is what we did last week, we borrowed €3.29 billion and at the end of this month we will give €3.2 billion to unsecured secondary bondholders in anglo.

    That's unsustainable.(or pure madness)!


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    #37
    oscarBravo
    Technology & Internet Moderators Posts: 28,803 Mod ✭✭✭✭oscarBravo


    gerryo777 wrote: »
    Unsustainable is what we did last week...
    I don't think you're understanding the meaning of "unsustainable".

    What we did last week can't be either sustainable or unsustainable, by definition. Sustainability refers to the feasibility of continuing to do something in the long run.

    Our structural budget deficit is unsustainable. You are arguing for maintaining a large structural deficit for 50 years. How do we pay for that deficit?


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    #38
    View
    Registered Users Posts: 3,872 ✭✭✭View


    gerryo777 wrote: »
    Exactly, so we can tell them that in 50 years we will be able to comply with the 0.5%.

    Fair enough - if you can persuade the other member states to keep loaning us massive amounts of money for 50 years.

    I think you'll find they won't do so though and might even dust off the current provisions allowing for sanctions against a member state that makes no effort to bring its finances into line with EU law.


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    #39
    SeanW
    Registered Users Posts: 8,826 ✭✭✭SeanW


    Since this is the Fiscal Union pact, why not call it the F.U. treaty ... that would an accurate description in more ways than one.


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    #40
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    View wrote: »
    Fair enough - if you can persuade the other member states to keep loaning us massive amounts of money for 50 years.

    I think you'll find they won't do so though and might even dust off the current provisions allowing for sanctions against a member state that makes no effort to bring its finances into line with EU law.

    It was done for Germany after WW2.
    Do you know when they expect us to be at the 0.5% rate of GNP?


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    #41
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    oscarBravo wrote: »
    I don't think you're understanding the meaning of "unsustainable".

    What we did last week can't be either sustainable or unsustainable, by definition. Sustainability refers to the feasibility of continuing to do something in the long run.



    Our structural budget deficit is unsustainable. You are arguing for maintaining a large structural deficit for 50 years. How do we pay for that deficit?

    'So paying off anglo's bondholders for the next 10-15 years is not "in the long run"?'

    I'm arguing for no such thing.
    I'm arguing for time to get our finances in order, how long will that take do you think?


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    #42
    View
    Registered Users Posts: 3,872 ✭✭✭View


    gerryo777 wrote: »
    It was done for Germany after WW2.
    Do you know when they expect us to be at the 0.5% rate of GNP?

    There is a difference in scale it should be pointed out. Germany after WW2 was in already in default for a decade+, in ruins and in a highly strategic geopolitical position. None of which fortunately applies to us.

    I haven't checked about the rate you mention.

    The Excessive Deficit Procedure that is open for Ireland is due to run until 2015 at which point our deficit should be under the SGP 3% target although we'll be a long way from the 60% of GDP borrowing target.


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    #43
    McDave
    Registered Users Posts: 2,398 ✭✭✭McDave


    gerryo777 wrote: »
    It was done for Germany after WW2.
    Do you know when they expect us to be at the 0.5% rate of GNP?
    The official 'Fiscal Compact' line is 0.5% of GDP. Having said that, the better determinant for us actually is GNP.

    At any rate, we should be down at that level as soon as we can possibly manage. We have to balance our budget at all costs. We've lost far too much ground with the insipid economic 'thinking' of those Ahern-era loony tunes.


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    #44
    oscarBravo
    Technology & Internet Moderators Posts: 28,803 Mod ✭✭✭✭oscarBravo


    gerryo777 wrote: »
    ...paying off anglo's bondholders for the next 10-15 years...
    [citation needed]
    I'm arguing for time to get our finances in order, how long will that take do you think?
    It depends what our pain threshold is. Based on reaction to a €100 property tax, I'd say it will take about a century or so.


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    #45
    daltonmd
    Registered Users Posts: 1,246 ✭✭✭daltonmd


    Deleted


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    #46
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    oscarBravo wrote: »
    gerryo777 wrote: »
    Exactly, so we can tell them that in 50 years we will be able to comply with the 0.5%.
    Because it's a good idea to keep borrowing unsustainably for 50 years?
    A structural deficit of >0.5% is by no means inherently unsustainable.


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    #47
    oscarBravo
    Technology & Internet Moderators Posts: 28,803 Mod ✭✭✭✭oscarBravo


    later12 wrote: »
    A structural deficit of >0.5% is by no means inherently unsustainable.
    Our current deficit is inherently unsustainable. A 0.6% deficit, not so much.

    My concern with the idea of postponing fiscal sanity for 50 years is that it's more likely to involve the former than the latter.


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    #48
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    oscarBravo wrote: »
    Our current deficit is inherently unsustainable. A 0.6% deficit, not so much.

    My concern with the idea of postponing fiscal sanity for 50 years is that it's more likely to involve the former than the latter.
    But you're doing it again. You're associating fiscal sanity with a deficit of <.5% GDP. Why then, Ireland was fiscally quite sane during the recent Celtic Tiger period? Of course not.

    I don't agree with everything gerryo777 is saying, but I disagree even more vehemently with this silly, whimsical 0.5% metric which is repeatedly thrown around as some sort of synonym for fiscal sustainability.


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    #49
    oscarBravo
    Technology & Internet Moderators Posts: 28,803 Mod ✭✭✭✭oscarBravo


    later12 wrote: »
    But you're doing it again. You're associating fiscal sanity with a deficit of <.5% GDP.
    Well, no. I'm associating fiscal insanity with our current structural deficit.

    The wider point is that the structural deficit is the inevitable result of narrowing the tax base through vote-buying exercises over a period of several government terms. If you can propose an inter-governmental measure for preventing that insanity, I'd love to hear it.


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    #50
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    oscarBravo wrote: »
    Well, no. I'm associating fiscal insanity with our current structural deficit.
    I'm referring to the '50 years' comment. The other poster made a comment about satisfying the 0.5% margin in 50 years, whereas you then referred to "postponing fiscal sanity for 50 years". The 0.5% measurement is essentially meaningless in terms of fiscal sustainability and prudence.

    During the latter stages of the Celtic Tiger, we ran fiscal surpluses. It means very little now. People need to stop associating such arbitrary metrics with "fiscal sanity" and "sustainability".
    The wider point is that the structural deficit is the inevitable result of narrowing the tax base through vote-buying exercises over a period of several government terms. If you can propose an inter-governmental measure for preventing that insanity, I'd love to hear it
    It was my understanding that the Yes side were of the opinion that Artcles 9 and 11 of the Treaty did exactly that.

    If even the Yes side do not believe that the Fiscal Treaty can achieve such sustainability, I believe we may have a problem.


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    #51
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    later12 wrote: »
    But you're doing it again. You're associating fiscal sanity with a deficit of <.5% GDP. Why then, Ireland was fiscally quite sane during the recent Celtic Tiger period? Of course not.

    I don't agree with everything gerryo777 is saying, but I disagree even more vehemently with this silly, whimsical 0.5% metric which is repeatedly thrown around as some sort of synonym for fiscal sustainability.

    Not sure - if the "structural deficit" can be tied down in the right way (an open question), it may be useful.

    cordially,
    Scofflaw


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    #52
    gerryo777
    Closed Accounts Posts: 2,216 ✭✭✭gerryo777


    later12 wrote: »
    But you're doing it again. You're associating fiscal sanity with a deficit of <.5% GDP. Why then, Ireland was fiscally quite sane during the recent Celtic Tiger period? Of course not.

    I don't agree with everything gerryo777 is saying, but I disagree even more vehemently with this silly, whimsical 0.5% metric which is repeatedly thrown around as some sort of synonym for fiscal sustainability.

    Check post 41.
    I never called for '50 years', I called for time to get our finances in order!
    The EU have not specified how long we will have to meet the 0.5% target.


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    #53
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    Scofflaw wrote: »
    Not sure - if the "structural deficit" can be tied down in the right way (an open question), it may be useful.

    cordially,
    Scofflaw
    Democratic accountability is a great idea, but one negative externality arising from accountability is the need for a Government to constantly take the path of least resistance in economic policy.

    This means that sometimes bad choices are made in stead of wiser,sustainable choices (as we all know).

    And when a Government is locked into a <0.5% structural deficit target (of very questionable economic merit in itself, but lets leave that aside), there is a danger that it will do all in its power to achieve that target my inflating the denominator in a way that may not be sustainable, rather than making hard choices like wage and expenditure restraint - which lets face it, have not recently been our forte.

    Under the present arrangement, I think there may be a spillover consequence in the 0.5% target which actually encourages desperate Governments to do some very naughty things in order to achieve the target, rather than focus on sound long term economic policy.

    And this brings us back to something the treaty lacks - a systemic and credible way to bring about EA economic policy convergence.

    The lack of a unified economic policy in a monetary union has far more to do with the debt crisis than simple deficit figures.


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    #54
    mike65
    Closed Accounts Posts: 88,978 ✭✭✭✭mike65


    The Dutch government has collapsed over austerity, the Czech government is teetering (unstable) on austerity, the French are about to elect a president who is a tax and spend candidate and therefore not embracing austerity.

    What's the point of this referendum?


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    #55
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    mike65 wrote: »
    The Dutch government has collapsed over austerity, the Czech government is teetering (unstable) on austerity, the French are about to elect a president who is a tax and spend candidate and therefore not embracing austerity.

    What's the point of this referendum?

    ESM access.

    cordially,
    Scofflaw


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    #56
    McDave
    Registered Users Posts: 2,398 ✭✭✭McDave


    mike65 wrote: »
    The Dutch government has collapsed over austerity, the Czech government is teetering (unstable) on austerity, the French are about to elect a president who is a tax and spend candidate and therefore not embracing austerity.

    What's the point of this referendum?
    Either the Dutch form a new administration or they have an election. An election which I think would cost Wilders.

    What's happening in Holland is just politics. It's not IMO a major declamation on 'austerity'. The Dutch understand fiscal prudence. Fiscal stability won't suffer on their account.

    As for France, I wouldn't count on Hollande upsetting the Euro apple cart.

    So, full steam ahead with the referendum, establish controls on budget deficits, see through the German elections. Then we'll see a resolution of the banking element of the crisis.

    It's all to play for.


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    #57
    Vinegar Hill
    Registered Users Posts: 180 ✭✭Vinegar Hill


    The Romanian government fell today as well. Although not part part of the Eurozone it's fall is blamed on the EU austerity. Another vote on the government in Czech is due today as well.


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    #58
    McDave
    Registered Users Posts: 2,398 ✭✭✭McDave


    Vinegar Hill wrote: »
    The Romanian government fell today as well. Although not part part of the Eurozone it's fall is blamed on the EU austerity. Another vote on the government in Czech is due today as well.
    With respect, what happens in the likes of Romania or Hungary, and even the Czech R, doesn't amount to a hill of beans in this crazy Eurozone.

    Countries like Romania are quite simply on the fringes - inside the EU but quasi-permanently outside the core. They've so far to come it hardly matters. They haven't even reached the level of 'austerity' yet.


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    #59
    KINGVictor
    Registered Users Posts: 1,184 ✭✭✭KINGVictor


    McDave wrote: »
    With respect, what happens in the likes of Romania or Hungary, and even the Czech R, doesn't amount to a hill of beans in this crazy Eurozone.

    Countries like Romania are quite simply on the fringes - inside the EU but quasi-permanently outside the core. They've so far to come it hardly matters. They haven't even reached the level of 'austerity' yet.

    Well said.

    I am more concerned that the poster copied another website word for word without any attribution: Source below

    http://www.guardian.co.uk/business/2012/apr/27/eurozone-crisis-live-downgrade-spain


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    #60
    golden lane
    Registered Users Posts: 1,364 ✭✭✭golden lane


    no country cannot afford to borrow.....the interest paid means there is less to spend on social needs......

    but as borrowing seems to be the norm to sustain social........borrowing will rise, because social needs are always rising.......

    when there is a boom, social needs are not only taken care of..they are increased.....so when the recession comes....there is no alternative except to borrow.......

    and when, as happened in ireland.....borrowing carried on to sustain a boom during a normal recession.....the government was forced to guarentee that borrowing......a disaster in the making.........that is the situation now......

    the disaster in the euro country's was caused by trying to sustain an impossible standard of living...and an unaffordable social bill....

    that bill has to fall.......and imo opinion the only way to do it....simply but painfull, is rising inflation and less government spending.......the lending countries wont like that...it will destroy the euro...


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    #61
    Vinegar Hill
    Registered Users Posts: 180 ✭✭Vinegar Hill


    KINGVictor wrote: »
    Well said.

    I am more concerned that the poster copied another website word for word without any attribution: Source below

    http://www.guardian.co.uk/business/2012/apr/27/eurozone-crisis-live-downgrade-spain

    If you would be so kind as to show where I copied that from the Guardian, I would appreciate it. You provided a link and nothing else. The fact of the matter is that it was not.


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