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So we dont have to pay back German Bondholders
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You surprise me Scofflaw. When someone makes an argument for Ireland's interest based on moral justification, you tend to come down on the side of what is legally and technically correct. But when someone makes an argument for Ireland's interest based on what is legally and technically correct, you come down on the side of what is morally justified.
Actually, my point was that a court would come down on that side because it's where the responsibility lies, making a legal argument that relied on the idea that external costs were imposed on Ireland very weak. Ireland created the possibility of contagion in the first place through lax financial regulation that it saw as a competitive advantage against other EU countries.But regardless, its not a question of what the just policy should be - its a question of if the ECB is legally allowed to set that policy or to use its powers to force a particular policy to be taken. Even if you think Ireland deserved everything it got, its not for the ECB to make fiscal or political policy - something the ECB has cited itself to resist doing more than the minimum. The ECB should set its own policies in its own area of power, it should not use those powers with the objective of influencing democratically elected governments decisions any more than governments should their powers to try and force the ECB to take certain policies.
Again, that's not the ECBs decision to make - if they based a defence on that argument they would be admitting they were making fiscal and economic policy choices about what was Ireland's best interest over the heads of the democratically elected Irish government.
If the ECB were correct - and they don't have to be correct, only credible - then a contagion-induced bank panic across the eurozone would have undoubtedly inflicted costs on Ireland far larger than the potential €6-8bn in savings we could have made by burning bondholders at the stage the ECB intervened.
Is that a basis on which the ECB should make a decision? Evidently not on the sole basis of Ireland - but the policy would have been unjustified if the savings across the eurozone were smaller than the costs to Ireland. My point is that the costs to Ireland alone would be larger than the savings made by Ireland, making the alternate policy decision self-evidently short-sighted and irresponsible.Legally, no they don't have the right to set conditions that differentiate between particular countries or set particular fiscal conditions or to force particular policy options. The conditions they set must be applicable and consistent across all member states.
Sure, but even a consistent policy doesn't produce identical outcomes if the circumstances in different countries aren't the same. As to particular policy options, see the response to later12. If there's evidence of forcing particular policy options, it's not contained in the material either of you are citing.@Later12
Lorenzo Bini Smaghi was doing this quite publicly in the case of Greece, where he proclaimed that the ECB would destroy the Greek banks if the Greek state defaulted on any debt.
An action and a goal which are both within their remit, I'm afraid.
cordially,
Scofflaw0 -
Actually, my point was that a court would come down on that side because it's where the responsibility lies, making a legal argument that relied on the idea that external costs were imposed on Ireland very weak. Ireland created the possibility of contagion in the first place through lax financial regulation that it saw as a competitive advantage against other EU countries.
No, the court will only make a judgement on if the ECB exceeded its power under the treaties which formed it. It will not decide if ECB was right or wrong, only if its actions were legal or illegal.
So whatever the moral justification, it will only matter what is legal.If the ECB were correct - and they don't have to be correct, only credible - then a contagion-induced bank panic across the eurozone would have undoubtedly inflicted costs on Ireland far larger than the potential €6-8bn in savings we could have made by burning bondholders at the stage the ECB intervened.
Is that a basis on which the ECB should make a decision? Evidently not on the sole basis of Ireland - but the policy would have been unjustified if the savings across the eurozone were smaller than the costs to Ireland. My point is that the costs to Ireland alone would be larger than the savings made by Ireland, making the alternate policy decision self-evidently short-sighted and irresponsible.
You're right, they don't have to be correct because the question is not if the ECB was correct - its if they were legally entitled to threaten to use their powers to force a separate member state to go along with the ECBs own preferred policy - a policy that has blatantly failed, for what its worth.
This isn't a policy evaluation exercise - its a test of the ECBs legal powers and the mutual independence of the ECB and member state governments. The ECB is very shrill in its complaints about being influenced by member states, but it appears it is not shy about bullying member states when it thinks it can get away with it.Sure, but even a consistent policy doesn't produce identical outcomes if the circumstances in different countries aren't the same. As to particular policy options, see the response to later12. If there's evidence of forcing particular policy options, it's not contained in the material either of you are citing.
Then too bad for the ECB. It has a duty to maintain financial stability, not to threaten to destroy it. The ECB was caught in a bad position prior to November 2010 but that was a problem for the entire Eurozone to solve. It was not a problem for Ireland to solve. That the ECB bullied Ireland into accepting all the costs for a wider Eurozone problem is arguably in breach of its powers - and thats the basis of the case that can be made.An action and a goal which are both within their remit, I'm afraid.
Nope, that's the point of legality that needs to be tested.
I complained about it at the time, but no one likes Greece, and no one wanted to stand up for them. But its about time Ireland stood up for itself and asked the ECJ to examine if the ECB is empowered to make threats like the above to individual member states. All of the small member-states would benefit from a muzzle being put on the ECB, so it would win Ireland allies and supporters in a meaningful sense.
Now, I dont think Ireland will - the government is far too gutless and compromised to operate in Ireland's interests. But its what they *should* do.0 -
No, the court will only make a judgement on if the ECB exceeded its power under the treaties which formed it. It will not decide if ECB was right or wrong, only if its actions were legal or illegal.
So whatever the moral justification, it will only matter what is legal.
You're right, they don't have to be correct because the question is not if the ECB was correct - its if they were legally entitled to threaten to use their powers to force a separate member state to go along with the ECBs own preferred policy - a policy that has blatantly failed, for what its worth.
Well, no - the McCarthy article that started this hare running was based on exactly such 'apportionment of blame' principles, seeking to establish that the ECB was liable for the 'damage' done to Ireland:All EU institutions are subject to legal provisions laid down in the treaties and can be brought before the European Court of Justice. The ECB's statute contains the following, at Article 35.1: "The acts or omissions of the ECB shall be open to review or interpretation by the Court of Justice of the European Union in the cases and under the conditions laid down in the Treaty on the Functioning of the European Union."
The latter treaty states, at Article 340: ". . . the European Central Bank shall, in accordance with the general principles common to the laws of the member states, make good any damage caused by it or by its servants in the performance of their duties."
And in the question of "damage caused" liability and the extent of damage caused by one policy rather than another is vital.This isn't a policy evaluation exercise - its a test of the ECBs legal powers and the mutual independence of the ECB and member state governments. The ECB is very shrill in its complaints about being influenced by member states, but it appears it is not shy about bullying member states when it thinks it can get away with it.
And I'm afraid you'll find that there's nothing in the Treaties that prevents it doing so. The independence of the ECB from EU institutions and Member State governments is enshrined in the Treaties:In accordance with Article 130 of the Treaty on the Functioning of the European Union, when exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and this Statute, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.
There is no corresponding duty of the ECB not to influence Member State policy - indeed, they have the duty to do so whenever they think the actions of a Member State might damage the stability of the euro.Then too bad for the ECB. It has a duty to maintain financial stability, not to threaten to destroy it. The ECB was caught in a bad position prior to November 2010 but that was a problem for the entire Eurozone to solve. It was not a problem for Ireland to solve. That the ECB bullied Ireland into accepting all the costs for a wider Eurozone problem is arguably in breach of its powers - and thats the basis of the case that can be made.
It's a very weak basis, as I've said already. If the ECB credibly believes that the damage done to the eurozone by Ireland adopting policy A (burn bondholders) is greater than the damage to Ireland of not adopting policy A, then the ECB obviously has the duty to try to prevent Ireland adopting policy A.
This is standard central bank stuff, and the reason for central bank independence in the first place. Otherwise, you wind up in the situation where governments will almost inevitably seek short-term stability-damaging solutions and there's nobody with a remit to say "no, you can't do that". Central banks have been independent for the last couple of decades precisely so that they can say "no, you can't do that" to their governments - and the version of that when you have a European central bank is that the European central bank is the central bank that says to the Irish government "no, you can't do that".
Also, "all the costs of a wider European problem" is kind of an interesting point - the costs to Ireland of the ECB's requirement for us to repay bondholders from their intervention in November 2010 has, as I said, been credibly estimated at no more than €6-8bn. If you actually believe that's the whole cost of the 'wider European problem' then that's amazingly cheap.Nope, that's the point of legality that needs to be tested.
I complained about it at the time, but no one likes Greece, and no one wanted to stand up for them. But its about time Ireland stood up for itself and asked the ECJ to examine if the ECB is empowered to make threats like the above to individual member states. All of the small member-states would benefit from a muzzle being put on the ECB, so it would win Ireland allies and supporters in a meaningful sense.
Now, I dont think Ireland will - the government is far too gutless and compromised to operate in Ireland's interests. But its what they *should* do.
And, as I said, the ECB need only show that they credibly believed the potential damage caused to the eurozone by Ireland's policy decision would outweigh any benefit to Ireland. I think that they can show that, and that they can further probably even show that the damage caused to Ireland alone by such a policy would have been greater than the benefit.
I'm not sure here what part of their remit the ECB are supposed to have been exceeding. They have central bank powers, they have a duty to maintain the stability of the euro, and as far as I can see they don't have limits that say that when some member state has put themselves in a position where either they take a small hit or the eurozone takes a huge hit, they have to ignore the greater group good for the smaller individual benefit because the individual state concerned will be butthurt about it. Quite the contrary.
cordially,
Scofflaw0 -
I can anticipate a few explanations being offered by the ECB, but that is a defence which borders on the quaint.But what is being presented is not about whether "certain economic policies are adhered to" by the government, but whether a plan created by the government is adhered to.
Sovereign governments must be in a position to implement and adhere to and change public policy as they see fit, taking into account the best interests of the people.
Threatening a Government with financial calamity unless it implements and adheres to a policy - whatever its original genesis - is an unacceptable level of meddling in the affairs of a sovereign, which is not provided for in the ECB's Statute setting out its goals and tasks, and which is contrary to its remit according to its own interpretation of where fiscal authority ought to lie.
I think it's a bit premature to pre-judge what the Court of Justice would be likely to rule in the event of it being asked to review the ECB's behaviour.And I'm afraid you'll find that there's nothing in the Treaties that prevents it doing so. The independence of the ECB from EU institutions and Member State governments is enshrined in the Treaties:
However, what we can say is that the ECB acted in a totally inappropriate way by threatening the Government in this way and involving itself in fiscal policy so directly.
Now one might argue that fiscal policy indirectly affects the monetary transmission mechanism. Absolutely true. But to bring that to its logical conclusion, anything that affects the sovereign's fiscal health can affect monetary policy; why not just have the ECB framing public policy on education, the health service and turfcutting as well? I think we can all agree that a certain stage, the ECB has to accept its limited role and the obvious place to start doing that is leaving competence over fiscal policy to those who, according to the ECB, are entitled to it: Governments.0 -
I can anticipate a few explanations being offered by the ECB, but that is a defence which borders on the quaint.
It's a comment on the evidence presented on the thread and the sources, not an ECB defence!Sovereign governments must be in a position to implement and adhere to and change public policy as they see fit, taking into account the best interests of the people.
Threatening a Government with financial calamity unless it implements and adheres to a policy - whatever its original genesis - is an unacceptable level of meddling in the affairs of a sovereign, which is not provided for in the ECB's Statute setting out its goals and tasks, and which is contrary to its remit according to its own interpretation of where fiscal authority ought to lie.
I think it's a bit premature to pre-judge what the Court of Justice would be likely to rule in the event of it being asked to review the ECB's behaviour.
However, what we can say is that the ECB acted in a totally inappropriate way by threatening the Government in this way and involving itself in fiscal policy so directly.
Now one might argue that fiscal policy indirectly affects the monetary transmission mechanism. Absolutely true. But to bring that to its logical conclusion, anything that affects the sovereign's fiscal health can affect monetary policy; why not just have the ECB framing public policy on education, the health service and turfcutting as well? I think we can all agree that a certain stage, the ECB has to accept its limited role and the obvious place to start doing that is leaving competence over fiscal policy to those who, according to the ECB, are entitled to it: Governments.
And the flip side of that argument is that governments, because they must be "in a position to implement and adhere to and change public policy as they see fit, taking into account the best interests of the people", are free to tell the ECB to shove it on matters of monetary policy wherever that might impact any other policy matter, which I think you'll agree is virtually anything and everything. In that case, what's the point of having an ECB?
cordially,
Scofflaw0 -
The Government could not realistically or credibly reject the ECB's stipulation on fiscal policy on pain of ruination of its jurisdiction's financial system. That would have been a wholly irresponsible thing to have done, even if the Government felt the ECB was bluffing.And the flip side of that argument is that governments, because they must be "in a position to implement and adhere to and change public policy as they see fit, taking into account the best interests of the people", are free to tell the ECB to shove it on matters of monetary policy wherever that might impact any other policy matter, which I think you'll agree is virtually anything and everything.
That's a very interesting question.what's the point of having an ECB?0 -
Well, no - the McCarthy article that started this hare running was based on exactly such 'apportionment of blame' principles, seeking to establish that the ECB was liable for the 'damage' done to Ireland:
And in the question of "damage caused" liability and the extent of damage caused by one policy rather than another is vital.
Which is only important in the calculation of the damage - not in the determination that the ECB acted illegally to force the Irish government to take a policy which the Irish government believed to be against Irelands interest. That is the key point. ECB policies will always lead to winners and losers: setting an interest rate across the EU will be beneficial for some member states, damaging to others - the treaty doesnt allow those negatively impacted by ECB interest rate policy to claim damages for their loss. Only where the ECB acts illegally.
McCarthy puts the potential damage in the scale of tens of billions and disagrees with Coffeys calculation which only focuses on direct costs. Part of the damage was that by directly and deliberately linking bank debt to individual sovereigns, the ECB damaged Ireland's ability to raise debt as it had been signaled to the market that Ireland would face huge, unknown, contingent liabilities. The ECB hung the Irish sovereign with the anchor of bad Irish banks which had previously been the ECBs own problem.
"Burning the bondholders" would have remove that contingent liability. Its interesting that the deal celebrated in June hinged on the promise that the ECB policy of Irish bank debt=Irish sovereign debt was reversed...in theory.
Additionally, *even* if the damage done to Ireland was found to be minute ( and I'm entertaining that only for the sake of debate) an ECJ finding that the ECB had exceeded its powers in dealing with Ireland would have tremendous political value - the entire dynamic of Ireland as being some feckless criminal being ungrateful for the aid received from the long suffering ECB would be thrown on its head as Ireland would be able to leverage the finding that the ECB had illegally acted against Ireland. It couldnt overplay it of course, but it would definitely change the dynamic whereby a fools like Barroso and Rehn feels like they can berate Ireland like a spoilt child.
That would be worth much more than the imaginary friends the green jersey strategy is relying on.And I'm afraid you'll find that there's nothing in the Treaties that prevents it doing so. The independence of the ECB from EU institutions and Member State governments is enshrined in the Treaties:
There is no corresponding duty of the ECB not to influence Member State policy - indeed, they have the duty to do so whenever they think the actions of a Member State might damage the stability of the euro.
The ECB has a set of defined powers and areas of responsibility. Fiscal policy is not one of them. The powers granted to it can only be used to meet its defined responsibilities. It does not have the right to arbitrarily set its own objectives and expand its own remit beyond the terms of the Treaties - the Germans would tell you that.
The ECB must be consistent in its dealings with member states, small and large. Victimization of particular member states goes against the entire legal basis of the EU. Nobody would agree to surrender their monetary policy to the ECB if they believed that larger states would get unfair and illegal preference.There is no corresponding duty of the ECB not to influence Member State policy - indeed, they have the duty to do so whenever they think the actions of a Member State might damage the stability of the euro.
If the ECB has a *duty* to force member states not to take policies which are harmful to the eurozone, then why was the ECB not threatening to burn down Irish banks back in 2003 given the fallout of the Irish banking debacles since then? Surely by your definition of their duties we should be taking them to the ECJ for not stopping us back then? Its their *duty* afterall. Right?
Look, I get that you think Ireland is at fault for its own woes, and I agree. But you're in danger of verging into parody with your determination to prove "Ireland = Wrong" at all times and under all conditions.0 -
In Scofflaw's defence, there is a ridiculous amount of Euroscepticism and nationalistic rallying to the cause of the poor downtrodden sovereign characterising a lot of the discourse on the eurozone crisis as it applies to Ireland.
There is therefore some value in the role of playing devil's advocate. It tests reasoning to weed out the parts where patriotic blame repellant has replaced rational thought.
However, I do think you have to accept that this is not one of those cases. There was a clear and unambiguous intrusion into Irish fiscal governance by an institution which does not have fiscal authority within its competence ; and doing so in a particularly intimidating way.
The facts are fairly straightforward here. The possibilities for any more of this devil's advocate sort of reasoning - I am hoping that you (Scofflaw) don't genuinely believe the threat was acceptable - seem to be distinctly limited and lacking in credibility.0 -
In Scofflaw's defence, there is a ridiculous amount of Euroscepticism and nationalistic rallying to the cause of the poor downtrodden sovereign characterising a lot of the discourse on the eurozone crisis as it applies to Ireland.
There is therefore some value in the role of playing devil's advocate. It tests reasoning to weed out the parts where patriotic blame repellant has replaced rational thought.
However, I do think you have to accept that this is not one of those cases. There was a clear and unambiguous intrusion into Irish fiscal governance by an institution which does not have fiscal authority within its competence ; and doing so in a particularly intimidating way.
The facts are fairly straightforward here. The possibilities for any more of this devil's advocate sort of reasoning - I am hoping that you (Scofflaw) don't genuinely believe the threat was acceptable - seem to be distinctly limited and lacking in credibility.
I don't agree.
What the ECB did was perfectly reasonable given their powers.
There is not the clear distinction between fiscal and monetary powers that you strain to highlight.
Besides the ECB can readily claim that the fiscal measures they supported were in our best interests and, after all, it was we ourselves that introduced and implemented them.0 -
The Government could not realistically or credibly reject the ECB's stipulation on fiscal policy on pain of ruination of its jurisdiction's financial system. That would have been a wholly irresponsible thing to have done, even if the Government felt the ECB was bluffing.
That's too limited to address the point - the argument you put forward gives all governments that facility at all times.That's a very interesting question.
Not terrifically, I think - it's addressed by the historical debate over the role of central banks. If one accepts that a central bank is a necessary thing - and judging by their ubiquity, that's generally accepted - then the ECB becomes a natural part of a shared currency. Its independence likewise stems from that debate.
cordially,
Scofflaw0 -
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It should have been quite clear that I meant that Governments should have such power within the law. The Treaties excplicitly prohibit governments from influencing the ECB'S monetary policy. You're taking a very straightforward comment about Governmental control over fiscal policy and attempting to manipulate it as Jesuitically as possible to suit your argument. I'm happy to specify - government should retain control over fiscal policy, within the confines of what the law allows.That's too limited to address the point - the argument you put forward gives all governments that facility at all times.
I was mostly being facetious. Nobody seriously denies the need for a central bank. If anything my comment was intended to underline the opinion that we need more of a Central Bank, one that has all of the normal tools the trade in its kit and enjoys a broader remit than price stability, but not one that strays directly into fiscal governance.Not terrifically, I think - it's addressed by the historical debate over the role of central banks. If one accepts that a central bank is a necessary thing - and judging by their ubiquity, that's generally accepted - then the ECB becomes a natural part of a shared currency. Its independence likewise stems from that debate.0 -
Good loser wrote: »I don't agree.
That's nice.What the ECB did was perfectly reasonable given their powers.
But not given their responsibilities and legal limitations. Cops are not judges. The ECB is not a government. It has zero fiscal authority. It has zero banking authority.There is not the clear distinction between fiscal and monetary powers that you strain to highlight.
There is - the ECB will tell you as much themselves.Besides the ECB can readily claim that the fiscal measures they supported were in our best interests and, after all, it was we ourselves that introduced and implemented them.
That's not their decision to make.0 -
Good loser wrote: »I don't agree.
What the ECB did was perfectly reasonable given their powers.
There is not the clear distinction between fiscal and monetary powers that you strain to highlight.
Besides the ECB can readily claim that the fiscal measures they supported were in our best interests and, after all, it was we ourselves that introduced and implemented them.
Essentially, this. I'm not simply playing devil's advocate - although, being me, there's inevitably a strong element of that - but while both later12 and Sand seem convinced there's a very clear case, I just don't see it.later12 wrote:However, I do think you have to accept that this is not one of those cases. There was a clear and unambiguous intrusion into Irish fiscal governance by an institution which does not have fiscal authority within its competence ; and doing so in a particularly intimidating way.
The facts are fairly straightforward here. The possibilities for any more of this devil's advocate sort of reasoning - I am hoping that you (Scofflaw) don't genuinely believe the threat was acceptable - seem to be distinctly limited and lacking in credibility.
Hmm. I think you're mixing up two things, though, acceptability and legality. The evidence that the ECB made an intrusion into government decision-making is clear and unambiguous. That the ECB does not have any explicit power to do such a thing is also, I think, entirely unarguable - no part of the ECB's statutes says "can bully governments where it feels this is necessary".
That they therefore don't have the power to do it, though, is not an argument that stands up any better than a pencil on its point - it looks theoretically credible in a very very narrow way, but falls over immediately.
The acceptability of the threat is a separate issue, as Sand is keen to remind us - it's not a legal argument.
So, yes, I would genuinely say that if you asked me to bet on the judgement of the CJEU, I think it would find that the ECB had not acted outside its powers as established by the Treaties (so would diehard eurosceptics, of course, but for opposite reasons). I think the preferred fiscal policy of the Irish government - to burn bondholders, if that was indeed the preferred policy, something I've never been very convinced of - credibly threatened the monetary stability of the euro, and under those circumstances I don't see that the ECB were doing anything other than their duty as they saw it.
In turn, the idea that the fiscal policies of Member States don't impact the sphere of monetary policy that the ECB is responsible for, and the idea that one can therefore base a case on carefully drawing an imaginary line around the monetary sphere and declaring any stepping over that boundary as unlawful, is, I think, patently absurd, despite later12's and Sand's reliance on the fiction of such a distinction. Nor does later12's reductio ad absurdum of that to a point where the ECB sets education policy hold weight either - it is very clear that the specific fiscal policy of the Irish government in this instance had a huge bearing on the stability of the eurozone, whereas education policy equally clearly does not.Sand wrote:If the ECB has a *duty* to force member states not to take policies which are harmful to the eurozone, then why was the ECB not threatening to burn down Irish banks back in 2003 given the fallout of the Irish banking debacles since then? Surely by your definition of their duties we should be taking them to the ECJ for not stopping us back then? Its their *duty* afterall. Right?
How would the ECB have stopped them then? The Irish banks required no ECB support at that time, and the Irish Central Bank and Financial Regulator were telling the ECB everything was rosy in the part of the garden they were responsible for weeding. The ECB, in that sense, is the ESCB, and regulatory control was retained at the national level. That's now changing, but because that was the choice of the national governments, it doesn't seem credible to take a case based on the fact that your own choices worked out badly.Sand wrote:Look, I get that you think Ireland is at fault for its own woes, and I agree. But you're in danger of verging into parody with your determination to prove "Ireland = Wrong" at all times and under all conditions.
I hear you, and I accept that these somewhat polarised debates tend to lead to a rather over-egged pudding. And it's certainly true that the attempts of a vocal minority (as far as I can see from polls) to blame everything on anyone else but us leads to a sometimes excessively emphatic reaction on my part.
But it really is important that we in Ireland recognise the massive Irish regulatory failures that led us to where we are, and it's not as if I'm inventing such failures - see the Honohan report and the other similar documents, which detail failures reaching to levels of absurdity and well beyond parody. What we're arguing about here only covers something like 10% of the cost of the Irish bank bailout - yes, I appreciate that McCarthy disagrees with Coffey's analysis, but McCarthy has a dog in the fight and, equally or more importantly, is far far less of a numbers guy than Coffey - but it tends to spread out in a generalised way until the ECB becomes, through "a ridiculous amount of Euroscepticism and nationalistic rallying to the cause of the poor downtrodden sovereign", responsible for the entirety of our downfall.
So, to answer later12's question, no, I don't regard the ECB threatening the Irish government as acceptable, but I regard the Irish government having got us into a position where the ECB felt it had to do such a thing as even less acceptable and by a very very very long margin.
Finally, the ECB was set up to be a strong player - of what value is a weak central bank? - and I think people should take that into account rather than being shocked because it does things our own very tame and compliant central bank doesn't.
cordially,
Scofflaw0 -
That's not really addressing the point. Whether the policy was wise or not is almost totally irrelevant. The ECB should not be abusing its position in order to threaten sovereigns in this way; fiscal policy is outside of the ECB's remit, even in the stated opinion of the ECB.Good loser wrote: »Besides the ECB can readily claim that the fiscal measures they supported were in our best interests0 -
Not at all. I just don't think there is adequate information to state whether or not the ECB acted contrary to its own Statute or the European Treaties. That's a review for the Court of Justice, not an anonymous internet poster. What an anonymous internet poster can say, with some degree of substantiation based on the ECB's perception of its role vs the Government's role, is that the ECB behaved in an inappropriate fashion.Hmm. I think you're mixing up two things, though, acceptability and legality.
Good. For it is. And nobody said that at all.In turn, the idea that the fiscal policies of Member States don't impact the sphere of monetary policy that the ECB is responsible for, and the idea that one can therefore base a case on carefully drawing an imaginary line around the monetary sphere and declaring any stepping over that boundary as unlawful, is, I think, patently absurd.
But given the dichotomy of roles that exist, the ECB and MS governments need to draw the line at the fiscal/ monetary divide, even where there is an indirect effect.0 -
That's not really addressing the point. Whether the policy was wise or not is almost totally irrelevant. The ECB should not be abusing its position in order to threaten sovereigns in this way; fiscal policy is outside of the ECB's remit, even in the stated opinion of the ECB.
Except where it has a very large potential impact on monetary stability.later12 wrote:Not at all. I just don't think there is adequate information to state whether or not the ECB acted contrary to its own Statute or the European Treaties. That's a review for the Court of Justice, not an anonymous internet poster. What an anonymous internet poster can say, with some degree of substantiation based on the ECB's perception of its role vs the Government's role, is that the ECB behaved in an inappropriate fashion.
Or not. It wouldn't sway the judgement of the CJEU or indeed the likely decisions of the Irish government as to whether to pursue such a case either way, of course.later12 wrote:Good. For it is. And nobody said that at all.
But given the dichotomy of roles that exist, the ECB and MS governments need to draw the line at the fiscal/ monetary divide, even where there is an indirect effect.
So a single national government can do something 'fiscal' that has a huge impact on monetary stability across the eurozone, and the ECB can't do anything about it? Nope, can't support that view, I'm afraid.
The ECB is there to defend monetary stability for, what, 370m people? It cannot realistically be called on to do that job if it hasn't even any right to think of preventing individual governments from destabilising the system.
cordially,
Scofflaw0 -
The ECB was established to maintain price stability and maintain the stability of the financial system. If any member acts in a manner which jepardizes the stability of the financial system and consequently the financial wellbeing of all citizens within the membership area then the ECB is obligated to act to ensure that financial stability is restored and maintained. A court challenge claiming that the imposition of terms or conditions on individual members to achive this goal is somehow illlegal would have no prospect of success.
On the contrary, the fact that we and indeed everybody else are now aware that many of the acts which lead to Ireland running up a high level of debt with the ECB are currently under criminal investigation would, on a European level, raise more the question as to whether the ECB should have been more forceful and expeditious in exercising it's powers and responsibilities vis a vis Ireland.0 -
Essentially, this. I'm not simply playing devil's advocate - although, being me, there's inevitably a strong element of that - but while both later12 and Sand seem convinced there's a very clear case, I just don't see it.
Hmm. I think you're mixing up two things, though, acceptability and legality. The evidence that the ECB made an intrusion into government decision-making is clear and unambiguous. That the ECB does not have any explicit power to do such a thing is also, I think, entirely unarguable - no part of the ECB's statutes says "can bully governments where it feels this is necessary".
That they therefore don't have the power to do it, though, is not an argument that stands up any better than a pencil on its point - it looks theoretically credible in a very very narrow way, but falls over immediately.
The acceptability of the threat is a separate issue, as Sand is keen to remind us - it's not a legal argument.
So, yes, I would genuinely say that if you asked me to bet on the judgement of the CJEU, I think it would find that the ECB had not acted outside its powers as established by the Treaties (so would diehard eurosceptics, of course, but for opposite reasons). I think the preferred fiscal policy of the Irish government - to burn bondholders, if that was indeed the preferred policy, something I've never been very convinced of - credibly threatened the monetary stability of the euro, and under those circumstances I don't see that the ECB were doing anything other than their duty as they saw it.
In turn, the idea that the fiscal policies of Member States don't impact the sphere of monetary policy that the ECB is responsible for, and the idea that one can therefore base a case on carefully drawing an imaginary line around the monetary sphere and declaring any stepping over that boundary as unlawful, is, I think, patently absurd, despite later12's and Sand's reliance on the fiction of such a distinction. Nor does later12's reductio ad absurdum of that to a point where the ECB sets education policy hold weight either - it is very clear that the specific fiscal policy of the Irish government in this instance had a huge bearing on the stability of the eurozone, whereas education policy equally clearly does not.
How would the ECB have stopped them then? The Irish banks required no ECB support at that time, and the Irish Central Bank and Financial Regulator were telling the ECB everything was rosy in the part of the garden they were responsible for weeding. The ECB, in that sense, is the ESCB, and regulatory control was retained at the national level. That's now changing, but because that was the choice of the national governments, it doesn't seem credible to take a case based on the fact that your own choices worked out badly.
I hear you, and I accept that these somewhat polarised debates tend to lead to a rather over-egged pudding. And it's certainly true that the attempts of a vocal minority (as far as I can see from polls) to blame everything on anyone else but us leads to a sometimes excessively emphatic reaction on my part.
But it really is important that we in Ireland recognise the massive Irish regulatory failures that led us to where we are, and it's not as if I'm inventing such failures - see the Honohan report and the other similar documents, which detail failures reaching to levels of absurdity and well beyond parody. What we're arguing about here only covers something like 10% of the cost of the Irish bank bailout - yes, I appreciate that McCarthy disagrees with Coffey's analysis, but McCarthy has a dog in the fight and, equally or more importantly, is far far less of a numbers guy than Coffey - but it tends to spread out in a generalised way until the ECB becomes, through "a ridiculous amount of Euroscepticism and nationalistic rallying to the cause of the poor downtrodden sovereign", responsible for the entirety of our downfall.
So, to answer later12's question, no, I don't regard the ECB threatening the Irish government as acceptable, but I regard the Irish government having got us into a position where the ECB felt it had to do such a thing as even less acceptable and by a very very very long margin.
Finally, the ECB was set up to be a strong player - of what value is a weak central bank? - and I think people should take that into account rather than being shocked because it does things our own very tame and compliant central bank doesn't.
cordially,
Scofflaw
I agree with your point on regulatory failures we had a weak Irish regulator. However weak regulation was not confined to Ireland at all.
It has been regulatory weakness of the behalf of the central bank that has been identified as being at faultalso though.
One regulator stated
“As with other regulators worldwide, the Central Bank used audited financial statements as a primary tool in its supervision of regulated firms.” Despite receiving “clean” audit reports, they were “under-providing for impairment”.
There were technical flaws in EU regulation and it is now to be decided whether they are covered legally for setting up regulation that forced losses to go unrecognised for years.
It was not simply weakness in regulation on the Irish side or even sovreign reguation anywhere or it would be a sovreign issue rather than the international problem that it is.
Countries with good national regulators where somewhat protected from bad international regulation.
The central bank also failed in it's supervision of the regulated firms and the mechanisms and rules they created.
On the one hand the ECB was not forceful enough in ensuring it did the duties it was meant to vis a vis Ireland...and in turn perhaps Ireland was too dependant and our regulator weak.
I agree the ECB was not forceful enough in its protection of the Banking system in Europe from criminal activities and erm accounting 'flaws'.
I see that as one of it's huge failings.
It was a poor system.0 -
poeticseraphim wrote: »I agree with your point on regulatory failures we had a weak Irish regulator. However weak regulation was not confined to Ireland at all.
It has been regulatory weakness of the behalf of the central bank that has been identified as being at faultalso though.
One regulator stated
“As with other regulators worldwide, the Central Bank used audited financial statements as a primary tool in its supervision of regulated firms.” Despite receiving “clean” audit reports, they were “under-providing for impairment”.
There were technical flaws in EU regulation and it is now to be decided whether they are covered legally for setting up regulation that forced losses to go unrecognised for years.
It was not simply weakness in regulation on the Irish side or even sovreign reguation anywhere or it would be a sovreign issue rather than the international problem that it is.
Countries with good national regulators where somewhat protected from bad international regulation.
The central bank also failed in it's supervision of the regulated firms and the mechanisms and rules they created.
On the one hand the ECB was not forceful enough in ensuring it did the duties it was meant to vis a vis Ireland...and in turn perhaps Ireland was too dependant and our regulator weak.
I agree the ECB was not forceful enough in its protection of the Banking system in Europe from criminal activities and erm accounting 'flaws'.
I see that as one of it's huge failings.
It was a poor system.
I think that somewhat understates (and somewhat misstates) the case - the design of the euro and the regulatory functions of the ECB was adequate only so long as nothing at all (or only very minor and obvious things) went wrong, which is frankly appalling design for a currency designed to serve 370m people.
I've said it before at length on these forums, but briefly the design of the euro and the ECB not only lacked any crisis provisions, but further lacked nearly all of the regulatory and supervisory constraints at the European level to make detecting a crisis possible in the first place.
The ECB largely didn't actually have the supervisory/regulatory functions many people think it failed to use. What it did have functioned primarily through the ESCB and system of national financial regulators rather than the central ECB, and that meant that while the Irish CB and FR were saying everything was just hunky-dory in Ireland, that was what the ECB had to act on.
The crisis has seen the ad hoc evolution of a crisis mechanism for the euro, as well as responses in the form of proposals for single European banking regulation, but the evolution of the response has seen a lot of political horse-trading and public argument as well as necessarily being constrained into legality by a constant stream of constitutional challenges both at the national and European level.
"A poor system" hardly begins to cover the ludicrousness of the situation - yet it's only one of the deeply absurd outcomes of the crisis. To me the deepest absurdity is perhaps the scrambling across Europe to fix and reform a political system which is, in most countries, largely as adequate as it will ever be, and which appears broken primarily because it delivered its results in terms of an economic paradigm which nobody is yet admitting is not fit for purpose.
cordially,
Scofflaw0 -
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Unless there is a deliberate attempt to influence monetary policy as per Article 130 of the TFEU, then I'm afraid that is my opinion, yes.So a single national government can do something 'fiscal' that has a huge impact on monetary stability across the eurozone, and the ECB can't do anything about it? Nope, can't support that view, I'm afraid.
I don't think it credible that the Treaties or the Statute were intended to put the European Central Bank in a position where it could strong-hand the MS governments to adapt specific domestic fiscal policy issues by threatening to stop executing its duties; there might be an implication of wrongdoing there in the eyes of the Court, I don't know.
Leaving that aside, from a democratic viewpoint, suggesting the legitimacy of a heavily unaccountable institution enjoying that level of authority as to actually do so is patently ridiculous, to the point of being offensive. To take it to its logical conclusion, its power would dwarf that of the MS governments and the European Council.
But you seem to be talking out of both sides of your mouth on this:The ECB largely didn't actually have the supervisory/regulatory functions many people think it failed to use. What it did have functioned primarily through the ESCB and system of national financial regulators rather than the central ECB, and that meant that while the Irish CB and FR were saying everything was just hunky-dory in Ireland, that was what the ECB had to act on.
So on the one hand, you're saying that the ECB do have an implied responsibility and authority to interfere in strategy as long as it relates to or impacts upon monetary policy. On the other hand, as Sand said, this has to include financial supervision, threatening as its mismanagement does, the currency's very existence.
I'm not sure how you can expect to have it both ways here.0 -
Unless there is a deliberate attempt to influence monetary policy as per Article 130 of the TFEU, then I'm afraid that is my opinion, yes.
I don't think it credible that the Treaties or the Statute were intended to put the European Central Bank in a position where it could strong-hand the MS governments to adapt specific domestic fiscal policy issues by threatening to stop executing its duties; there might be an implication of wrongdoing there in the eyes of the Court, I don't know.
You've provided evidence of neither a requirement for specific national policies nor of a threat to stop executing its 'duties', though. The ECB doesn't have a duty to support insolvent banks, and does have the right to put conditions on bank support. The ECB stated as a policy that it would not allow eurozone banks to fail though its own inactions/actions, but that's a policy goal related to stability, not a duty of the ECB. In the event that the ECB regarded allowing the Irish banks to collapse into insolvency as less destabilising than the implementation of senior bondholder writedowns, they would have to go with the former rather than the latter, although both policy outcomes are potentially incredibly damaging.Leaving that aside, from a democratic viewpoint, suggesting the legitimacy of a heavily unaccountable institution enjoying that level of authority as to actually do so is patently ridiculous, to the point of being offensive. To take it to its logical conclusion, its power would dwarf that of the MS governments and the European Council.
No, that's to take it to its absurd maximum, but I take your point. I don't expect the ECB to be able to intervene in fiscal policy as a general rule, and the way the current reforms are shaping, it doesn't seem likely they'll be given any such task - but somebody had to do what was done at the time with the powers available at the time.
That doesn't make it something desirable in the long run - the 'European semester' and the other regulatory/supervisory/integration arrangements, hedged about as they are with more democratic safeguards, are obviously highly preferable.But you seem to be talking out of both sides of your mouth on this:
So on the one hand, you're saying that the ECB do have an implied responsibility and authority to interfere in strategy as long as it relates to or impacts upon monetary policy. On the other hand, as Sand said, this has to include financial supervision, threatening as its mismanagement does, the currency's very existence.
I'm not sure how you can expect to have it both ways here.
And I'm not sure what your confusion is, to be honest. The ECB has a remit to provide stability for the euro, but lacked the necessary regulatory/supervisory tools to prevent a national government deciding to destabilise the euro. What they did have at their disposal was/is the conditionality of their support for national banks, which is well within their remit, and which they used as a lever to prevent the implementation of a destabilising policy.
In other words, my views reconcile because they're both based on the idea that the eurozone needed far larger constraints on national action in crisis conditions than existed, but did not have such powers explicitly written into the treaties. That left the system in a position where during the crisis the formal remit and the informal powers would likely be combined in unorthodox ways - in this case, the ECB threatening the Irish government with a withdrawal of support for its banking system if it persisted in what the ECB viewed as a fundamentally destabilising policy.
I support the idea, if you like, that the ECB should be put back into its appointed but expanded box, and the de facto powers it has exercised during the crisis replaced with safeguards and mechanisms to prevent the requirement of such exercises by a legal-accountability-only body like the ECB. Admittedly, I don't see that the reforms proposed can be entirely successful in doing so, watered down as they have been in some respects.
cordially,
Scofflaw0 -
Interesting piece by Colm McCarthy in the Sindo today, he's even moved to the front page. Can't see it online yet. Its about these letters the Irish Times wrote about on Friday
Letters show extent of pressure put on Lenihan for bailout
http://www.irishtimes.com/newspaper/frontpage/2012/0901/1224323462647.html?via=mr
McCarthy is saying that they plus all others contacts between the state and the ECB should be released. He says they might establish if the ECB exceeded its powers while putting conditions on Ireland's bailout. There should be a full inquiry into the ECBs behavior by the European Parliament. Conditions were placed on Ireland which were not demanded of other countries in similar positions. The ECB used Ireland's distressed state to ensure 100% payouts for bondholders. He ends by calling for a judicial review at the European Court of Justice.
Pretty heavy stuff, not sure what kind of case we'd have but Com McCarthy isn't exactly one for conspiracy theories or wild accusations. The contacts should definitely be released for the sake of accountability and transparency imo.
What ye think?0 -
At this stage, I don't know what to think anymore.
It's just a total mess both at national level and at ECB/EU level.
All I see is spin, lies, spin and more lies topped off with incompetence from various institutions that we are supposed to have confidence in.
Politically and socially, if this all collapses in a heap, it is going to be an almighty mess across Europe.
Unfortunately, I don't really have any more constructive economic comments to add to this, other than it's interesting that it's being revealed.0 -
Conditions were placed on Ireland which were not demanded of other countries in similar positions.
Out of interest, what 'other countries in similar positions'?
cordially,
Scofflaw0 -
I didn't say requirement, I said 'strong-arm'; since we're being as literal as possible here, I suppose that matters a good deal.You've provided evidence of neither a requirement for specific national policies nor of a threat to stop executing its 'duties', though.
The evidence of such strong arming I'm using is the Stephen Collins's article in the Irish Times which says that "[Mr Trichet] said that continuing ECB support was contingent on the [four year] plan being implemented".
That is unacceptable. The ECB cannot be allowed to hold such direct influence over fiscal policy by requiring that a sovereign Government would be threatened with an ultimatum that it must adhere to a specific fiscal policy, in this case the four year plan.
(1) The Eurosystem cannot support insolvent banks ; a fortiori that anyone would say it has a "duty" support them is obviously false ; furthermore nobody proposed that.The ECB doesn't have a duty to support insolvent banks, and does have the right to put conditions on bank support.
(2) The Eurosystem does have the right to put conditions on bank support, I have already said that it has, in fact, an obligation to do so. But the conditionality has to fall on the financial institution, not the sovereign.
By the way, that doesn't necessarily mean that the Eurosystem or the ECB cannot influence sovereigns indirectly. For example, the ECB are quite entitled to advise Eurogroup Governments on matters of policy. Or more intrusively, for example, it would be quite legitimate (and probably did happen, in the case of Germany) were the ECB to refuse to lower interest rates because of individual MS's inability or refusal to adapt to the then Stability & Growth Pact objectives.
The crucial point here is that the deficits did affect the ECB's inflation outlook and its rate setting decisions could be interpreted quite justifiably as only having been an indirect or incidental application of pressure on Governments.
It would be quite another thing entirely for M. Trichet to have telephoned Herr Schröder and said "listen pal, the refinancing rate isn't coming down until you cut public expenditure here and here and here". That would quite clearly have been overstepping the mark by intruding into the fiscal policy of a sovereign Government in a direct and a threatening way
No; the example I gave of the ECB dictating the law on turfcutting was the absurd maximum ; the suggestion I am giving of the ECB's power dwarfing the powers of the European Council and individual MSs is not. Because there are, in that situation, many credible policy decisions which impact upon monetary policy, and according to you the ECB is within its powers to threaten Governments (and why not, then, the European Council) with dire or calamitous consequences unless its wishes are respected.No, that's to take it to its absurd maximum
For example, by your position, it would have been perfectly legitimate, during discussions on the Treaty on Stability, Co-Ordination & Growth for the Governing Council of the ECB to have sauntered into the Boardroom in Brussels with a high knee action, demanding that certain obligations are inserted into the Treaty, or else collateral requirements for the ECB's support of financial institutions will be increased. That could be perfectly legitimate in your book, isn't that correct.
I'm not sure whether you mean nationalised banks or NCBs here; we don't know the nature of the MoU that exists between the NCBs and the ECB; that is never disclosed.And I'm not sure what your confusion is, to be honest. The ECB has a remit to provide stability for the euro, but lacked the necessary regulatory/supervisory tools to prevent a national government deciding to destabilise the euro. What they did have at their disposal was/is the conditionality of their support for national banks, which is well within their remit, and which they used as a lever to prevent the implementation of a destabilising policy.
Article 25 of the ECB's own Statute seems to suggest that the ECB did not lack recourse to regulatory or supervisory activities, had it wished it.25.1. The ECB may offer advice to and be consulted by the Council, the Commission and the competent authorities of the Member States on the scope and implementation of Union legislation relating to the prudential supervision of credit institutions and to the stability of the financial system.
25.2. In accordance with any regulation of the Council under Article 127 (6) of the Treaty on the Functioning of the European Union, the ECB may perform specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.0 -
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later12 wrote:I didn't say requirement, I said 'strong-arm'; since we're being as literal as possible here, I suppose that matters a good deal.
The evidence of such strong arming I'm using is the Stephen Collins's article in the Irish Times which says that "[Mr Trichet] said that continuing ECB support was contingent on the [four year] plan being implemented".
That is unacceptable. The ECB cannot be allowed to hold such direct influence over fiscal policy by requiring that a sovereign Government would be threatened with an ultimatum that it must adhere to a specific fiscal policy, in this case the four year plan.
ECB support for banks is supposed to be subject to conditionality - I don't see how one can avoid the fact that conditionality means setting conditions, and I can't see how one limits those conditions to 'monetary policy' alone when fiscal policy impacts monetary stability. Nor do I see that this can really be any surprise, even if it's unpalatable - it's surely an implication of a shared currency that one member government can't act to screw it up by themselves.
cordially,
Scofflaw0 -
Was paraphrasing McCathy:
From the article.
The same ECB displayed no alarm when far larger European Banks became necessary, without any fiscal conditionality in 2011. Presumably he means Spain.
And are the circumstances identical? As far as I know, senior bondholders will not be required to take losses in a bailout of Spanish banks - or, rather, not be allowed to have losses forced on them by the Spanish government - which seems to me, rightly or wrongly, to replicate the policy in force for Ireland, despite the recent change in viewpoint of the ECB.
cordially,
Scofflaw0 -
And are the circumstances identical? As far as I know, senior bondholders will not be required to take losses in a bailout of Spanish banks - or, rather, not be allowed to have losses forced on them by the Spanish government - which seems to me, rightly or wrongly, to replicate the policy in force for Ireland, despite the recent change in viewpoint of the ECB.
cordially,
Scofflaw
McCarthy didn't name the countries or go into specifics. Guess we need to know exactly what happened to find out.0 -
McCarthy didn't name the countries or go into specifics. Guess we need to know exactly what happened to find out.
Heh - so McCarthy is making the case that Ireland was treated differently from other countries but doesn't actually say what countries or how...mind you, he doesn't really say what basis a case against the ECB could be take either.
It would be nice to think that professional media commentators would have to offer somewhat better backing for their claims than anonymous posters in an internet forum, but it often seems the reverse is true.
amused,
Scofflaw0 -
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I think that somewhat understates (and somewhat misstates) the case - the design of the euro and the regulatory functions of the ECB was adequate only so long as nothing at all (or only very minor and obvious things) went wrong, which is frankly appalling design for a currency designed to serve 370m people.
I've said it before at length on these forums, but briefly the design of the euro and the ECB not only lacked any crisis provisions, but further lacked nearly all of the regulatory and supervisory constraints at the European level to make detecting a crisis possible in the first place.
Now we are getting to the crux of the issue. I am not neglecting Patrick Honohan's or Lenihan's role in the mess nor Ahern and co. Honohan in particular ws woefully weak. But the lack of regulation and procedure to deal with the activities in the years that led up to the crisis culminated in the ECB pumping ridiculous money into Irish banks just pre-bailout.
I disagree that the ECB had no regulatory role...they have they regulated the convergance of banks in the lead- up t the Euro..they put a legally binding regulatory minimum reserve on credit institutions http://www.ecb.int/press/pr/date/1998/html/pr981204_2.en.html
In letters belonging to Lenihan between himself and the ECB it becomes clear that there was is a factioning of thought in the EU on what the de facto policies of the ECB actually was / is and that is still the case. Infact it seems that Honohan sometimes did not really understand his own role in relation to that of the government at times. They have a primary aim of price stability through keeping inflation low (but i actually think the definition of price stability as keeping inflation low is flawed and may sometimes lead to incorrect price signals in an economy and over lending but anyway. But they also do have to comply with the Statutue of the ESCB. One article states that lending to institutsions must be collateralized.
A mistake was to think that the EU regulations on sovreign debt for countries joining the EU were enough but there were weaknesses. The repo auction system used by banks in the Eurozone is meant to be conditional by banks offering collateral in terms of adequate assets.The banks must be able to offer proof of collateral to participate in Euro repo auctions. Membership requirments for the EU regarding sov debt are meant to prove that assets offered as collateral to the ECB are good. Well obviously they were not.
And securities are not limited to countries of issues but also in other member states. But banks still offer these securities in repo auctions as collateral..and thus banks authorised to borrow from the ECB compromised their collateral.
Banks in general all over the world like to try to move weaker assets off their balance sheet. It makes things look better than ther are....So this has led to the ECB and EU policy of getting countries to allocate national funds to servicing debt etc or scale back expenditure.
Everyone knows this level of debt is not serviceable.
Convergence criteria regulation which had to be met to join the Euro was not implemented with equal strictness in every country so whether they mean anything is questionable.
Collateralized borrowing using criteria for joining the EU as proof has been ridiculous.
They relied heavily on credit ratings and EU regulations allowed and sometimes even caused 'accounting error'.A poor system" hardly begins to cover the ludicrousness of the situation - yet it's only one of the deeply absurd outcomes of the crisis. To me the deepest absurdity is perhaps the scrambling across Europe to fix and reform a political system which is, in most countries, largely as adequate as it will ever be, and which appears broken primarily because it delivered its results in terms of an economic paradigm which nobody is yet admitting is not fit for purpose.
I agree.0 -
Heh - so McCarthy is making the case that Ireland was treated differently from other countries but doesn't actually say what countries or how...mind you, he doesn't really say what basis a case against the ECB could be take either.
It would be nice to think that professional media commentators would have to offer somewhat better backing for their claims than anonymous posters in an internet forum, but it often seems the reverse is true.
amused,
Scofflaw
He's surmising from the letters we are not allowed see. If we were treated the same then there should be no problem releasing these contacts between the Gov and the ECB at that time. This is not happening so people have to wonder whats in them. He is asking if the ECB were acting within their legitimate mandate to demand whatever was demanded of Ireland. If they were not then Ireland should take action. The Gov should release them asap.0 -
He's surmising from the letters we are not allowed see. If we were treated the same then there should be no problem releasing these contacts between the Gov and the ECB at that time. This is not happening so people have to wonder whats in them. He is asking if the ECB were acting within their legitimate mandate to demand whatever was demanded of Ireland. If they were not then Ireland should take action. The Gov should release them asap.
Why should we have been treated the same way as other nations though? The cases and contemporary conditions were all different.0 -
Was paraphrasing McCathy:
From the article.
The same ECB displayed no alarm when far larger European Banks became necessary, without any fiscal conditionality in 2011. Presumably he means Spain.
Well the excuse for the difference on the streets of Spain is twofold..number one their debt is smaller as % of GDP than ours and they made no bank garantee.
I don't agree with certain countries getting diff conditions but there you go.
They have so far not been given 'different conditions' in detail as i know ....just a vague idea.
But i think yes if other countries are considered separately we should be.
And it is clear from the treatment of Greece and target failures that countries are being treated differently.
But as far as i know there is no official different deal for any other countries just vagueness and dissent.
Incidently there was once an idea that countries leave the Eurozone temporally and get their house in order to rejoin....these countries were to be Italy potugal and Greece..they were to leave and re -later later. At one time it was the reported preferred opinion in Germany apparrantly. But not Ireland and Spain. I have wondered why not Ireland and Spain.
Anyway it is an interesting idea..probably not workable0 -
antoobrien wrote: »Why should we have been treated the same way as other nations though? The cases and contemporary conditions were all different.
This is true.
But that is not the way the EU works.
EU countries must all sign up to the same deal...otherwise the EU implementing separate conditions in each country is seen as direct sovereign interference i think.
And if countries do it separately it increases the power of the EU ...it is then governing regions it is not a treaty that sovereign nations sign up to.
But i agree diff countries should have diff conditions and they need them.But if one country gets more favourable conditions ..the others will not stand for it. Not to mention that bigger countries would be in a better position.
But it seems clear different countries will need different conditions.0 -
poeticseraphim wrote: »But that is not the way the EU works.
EU countries must all sign up to the same deal...otherwise the EU implementing separate conditions in each country is seen as direct sovereign interference i think.
If we were talking about an EU wide rescue deal or some kind of treaty instead of just an Irish rescue (in 2009) then yes I'd agree with you. However, it was not an EU wide deal and AFAIK everyone did have to "buy in" in some form (if only to give approval to the actions taken).poeticseraphim wrote: »And if countries do it separately it increases the power of the EU ...it is then governing regions it is not a treaty that sovereign nations sign up to.
But i agree diff countries should have diff conditions and they need them.But if one country gets more favourable conditions ..the others will not stand for it. Not to mention that bigger countries would be in a better position.
But it seems clear different countries will need different conditions.
And this is the crux of the issue - how do we deal with different situations and keep it "fair" to each member state. It may well be that the best and fairest thing at the time was what was done, and that circumstances do not allow this approach to be used again.
Personally I don't think that we can or should blindly apply the same measures to each case, when it seems clear (now) that the measures taken had the opposite effect (e.g. bank guarantee was supposed to placate investors, instead it make our debt look shakier than it really was.0 -
He's surmising from the letters we are not allowed see.
And which he hasn't seen either, therefore.If we were treated the same then there should be no problem releasing these contacts between the Gov and the ECB at that time. This is not happening so people have to wonder whats in them. He is asking if the ECB were acting within their legitimate mandate to demand whatever was demanded of Ireland. If they were not then Ireland should take action. The Gov should release them asap.
"Treated the same" as who, though, and in what way? What other country was soaking up €150bn of ECB money because they'd decided not to let a single one of 'their' banks go to the wall?
In those terms, later12's objections make far more sense than McCarthy's putative case - the ECB was not happy about so large a share of its capacity (twice its capital base!) being taken up by a single country's banking system, without that country having any stated agreement on its responsibilities to the bank, and not only in a position to destabilise the remainder of the system for its own advantage, but with a track record of doing so. That's something that would be the case with any lender, I think.
cordially,
Scofflaw0 -
And which he hasn't seen either, therefore.
Therefore he is speculating as to their contents using the information available to him. A reasonable thing to do. It is in the analysis section after all."Treated the same" as who, though, and in what way? What other country was soaking up €150bn of ECB money because they'd decided not to let a single one of 'their' banks go to the wall?
In those terms, later12's objections make far more sense than McCarthy's putative case - the ECB was not happy about so large a share of its capacity (twice its capital base!) being taken up by a single country's banking system, without that country having any stated agreement on its responsibilities to the bank, and not only in a position to destabilise the remainder of the system for its own advantage, but with a track record of doing so. That's something that would be the case with any lender, I think.
cordially,
Scofflaw
Ireland is the only country that was forced to include unsecured and unguaranteed debts of bust banks at the insistence of the ECB. He's saying the ECB don't have the authority to do that.0 -
Okay well at this stage I'll only be repeating myself. I'm not sure how it isn't clear that it is inappropriate that an institution so unaccountable might claim to enjoy such enormous powers over sovereign governments in their implementation of fiscal policy, or any type of policy which might indirectly affect monetary policy.I don't see how one can avoid the fact that conditionality means setting conditions, and I can't see how one limits those conditions to 'monetary policy' alone when fiscal policy impacts monetary stability.
But just to put the question to you again - do you think it would be a legitimate use of their power for the ECB to threaten the European Council to word treaties a certain way, or agree certain treaties in accordance with the wishes of the ECB, on pain of suffering monetary policy decisions undesirable to the member states/ EC* should they reject such pressure by the ECB?
*so long as such decisions did not adversely affect the ECB's main tasks and goals, obv.0 -
Okay well at this stage I'll only be repeating myself. I'm not sure how it isn't clear that it is inappropriate that an institution so unaccountable might claim to enjoy such enormous powers over sovereign governments in their implementation of fiscal policy, or any type of policy which might indirectly affect monetary policy.
And I've agreed that it's inappropriate - that was part of the point about the failure of the euro to have any crisis mechanisms. Clearly an institution like the ECB should not have to resort to strong-arm tactics to prevent a member government destabilising the common currency - not only because it's not the right institution to do so, being politically unaccountable, and not only because strong-arm tactics are obviously unpalatable even in emergencies, but because the situation should not have arisen at all.But just to put the question to you again - do you think it would be a legitimate use of their power for the ECB to threaten the European Council to word treaties a certain way, or agree certain treaties in accordance with the wishes of the ECB, on pain of suffering monetary policy decisions undesirable to the member states/ EC* should they reject such pressure by the ECB?
*so long as such decisions did not adversely affect the ECB's main tasks and goals, obv.
Obviously they should resist such pressure. But we're not discussing an example of any such thing, but of strong-arm tactics being used in an emergency to prevent a single national government from destabilising the shared currency. And that should also be impossible, but impossible by virtue of being unnecessary, as a result of being replaced by mechanisms that do the same job in a more accountable way.
By analogy, what you're putting forward is that I agree with vigilante justice as a rule and in place of the rule of law because I don't adequately condemn an occasion on which someone was shot by an armed citizen in self-defence. I do not agree with the ECB making fiscal policy, or even fiscal policy interventions as a general rule, but I do not see that they had much choice or other options in this instance - something I regard as an outcome of the failure to design crisis mechanisms into the euro.
cordially,
Scofflaw0 -
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Therefore he is speculating as to their contents using the information available to him. A reasonable thing to do. It is in the analysis section after all.
Sorry - my scientific background makes it impossible for me to equate "analysis" with "speculation"!Ireland is the only country that was forced to include unsecured and unguaranteed debts of bust banks at the insistence of the ECB. He's saying the ECB don't have the authority to do that.
But which other countries have suggested burning senior bondholders in their bust banks, exactly, in order to be told not to do it?
cordially,
Scofflaw0 -
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Without wanting to read to much into that analogy, I find it interesting that you put the Government into the role of the private citizen and the ECB into the role of the civil authority.
By analogy, what you're putting forward is that I agree with vigilante justice as a rule and in place of the rule of law because I don't adequately condemn an occasion on which someone was shot by an armed citizen in self-defence.
I'm not deliberately intending to misrepresent your position, and I appreciate that you have clarified it. Regardless of whether there is an implicit bar on this sort of behaviour by the European Central Bank, what is rather more clear is that there is no procedure for the ECB to judge between an emergency and a non emergency situation when making such threats.
Given the fact that we know the ECB are willing to use this method in order to bend the ear of Governments, it is hugely important that this question be reviewed by the CJEU so that even if what happened is perfectly legal, it could be either proceduralised or prohibited outright. I don't see how anyone with a shred of concern for accountability in governance is not calling for that, which makes the general air of animosity and even indignation at Colm McCarthy's suggestion of judicial review all the more difficult to understand.
It is hard for some of us to avoid the conclusion that just as there is an emotionally based disdain for the EU, Euro, and European integration in real life as on this website, so too does there seem to be a persistent, highly emotional defense against every utterance which criticizes the EU or its institutions, regardless of its merit.0 -
I take issue with the last paragraph as a "Europhile" poster. I already said that if they acted ultra vires then they ought to be accountable. However, I have seen nothing to proffer a valid justification to sue them as the thread suggests; other than opening how they should act or what they should do. It doesn't mean they acted unlawfully.
Without wanting to read to much into that analogy, I find it interesting that you put the Government into the role of the private citizen and the ECB into the role of the civil authority.
By analogy, what you're putting forward is that I agree with vigilante justice as a rule and in place of the rule of law because I don't adequately condemn an occasion on which someone was shot by an armed citizen in self-defence.
I'm not deliberately intending to misrepresent your position, and I appreciate that you have clarified it. Regardless of whether there is an implicit bar on this sort of behaviour by the European Central Bank, what is rather more clear is that there is no procedure for the ECB to judge between an emergency and a non emergency situation when making such threats.
Given the fact that we know the ECB are willing to use this method in order to bend the ear of Governments, it is hugely important that this question be reviewed by the CJEU so that even if what happened is perfectly legal, it could be either proceduralised or prohibited outright. I don't see how anyone with a shred of concern for accountability in governance is not calling for that, which makes the general air of animosity and even indignation at Colm McCarthy's suggestion of judicial review all the more difficult to understand.
It is hard for some of us to avoid the conclusion that just as there is an emotionally based disdain for the EU, Euro, and European integration in real life as on this website, so too does there seem to be a persistent, highly emotional defense against every utterance which criticizes the EU or its institutions, regardless of its merit.0 -
Without wanting to read to much into that analogy, I find it interesting that you put the Government into the role of the private citizen and the ECB into the role of the civil authority.
Given it was the third or fourth analogy I tried, I wouldn't suggest you read that much into it either! The problem with the other analogies, in which those roles were sometimes reversed, is that they contained too much that was particular to the analogous situation itself.I'm not deliberately intending to misrepresent your position, and I appreciate that you have clarified it. Regardless of whether there is an implicit bar on this sort of behaviour by the European Central Bank, what is rather more clear is that there is no procedure for the ECB to judge between an emergency and a non emergency situation when making such threats.
Clearly, then, there needs to be, something I've argued is the the case.Given the fact that we know the ECB are willing to use this method in order to bend the ear of Governments, it is hugely important that this question be reviewed by the CJEU so that even if what happened is perfectly legal, it could be either proceduralised or prohibited outright. I don't see how anyone with a shred of concern for accountability in governance is not calling for that, which makes the general air of animosity and even indignation at Colm McCarthy's suggestion of judicial review all the more difficult to understand.
It is hard for some of us to avoid the conclusion that just as there is an emotionally based disdain for the EU, Euro, and European integration in real life as on this website, so too does there seem to be a persistent, highly emotional defense against every utterance which criticizes the EU or its institutions, regardless of its merit.
Essentially, what FreudianSlippers said. That there's a case for review to determine if the ECB acted ultra vires, I'd agree, and haven't objected to, either - but I don't see that such a case has any real chance of success, as I said originally, because I don't see that anyone, let alone McCarthy, has put forward any strong evidence that the ECB has acted ultra vires.
Without wishing to be insulting, it equally seems to me that any suggestion that things are not as proposed, and that there isn't a clear and unarguable case against the ECB for Ireland to take, is being painted as the result of bias, when in fact it's the result of such a case being far from particularly clear or unarguable. Or, more pithily (and thus more offensively, for which I apologise in advance), I can't help but feel you're accusing me/us of bias because you lack a better argument.
The real case against the ECB seems to be purely that its actions cost Ireland money, and the hope that those actions were ultra vires is being proffered as a route to compensation - that's the wrong way round to approach such an argument, since it determines first the object of the case, and then seeks to assemble a route to that object. I can see why that appeals in journalism or political rhetoric, but it rarely makes for a good legal case, since the strength of the belief in the rightness of the outcome is often mistaken for the strength of the legal argument itself, something I think is the case here.
cordially,
Scofflaw0 -
Given it was the third or fourth analogy I tried, I wouldn't suggest you read that much into it either! The problem with the other analogies, in which those roles were sometimes reversed, is that they contained too much that was particular to the analogous situation itself.
Clearly, then, there needs to be, something I've argued is the the case.
Essentially, what FreudianSlippers said. That there's a case for review to determine if the ECB acted ultra vires, I'd agree, and haven't objected to, either - but I don't see that such a case has any real chance of success, as I said originally, because I don't see that anyone, let alone McCarthy, has put forward any strong evidence that the ECB has acted ultra vires.
Without wishing to be insulting, it equally seems to me that any suggestion that things are not as proposed, and that there isn't a clear and unarguable case against the ECB for Ireland to take, is being painted as the result of bias, when in fact it's the result of such a case being far from particularly clear or unarguable. Or, more pithily (and thus more offensively, for which I apologise in advance), I can't help but feel you're accusing me/us of bias because you lack a better argument.
The real case against the ECB seems to be purely that its actions cost Ireland money, and the hope that those actions were ultra vires is being proffered as a route to compensation - that's the wrong way round to approach such an argument, since it determines first the object of the case, and then seeks to assemble a route to that object. I can see why that appeals in journalism or political rhetoric, but it rarely makes for a good legal case, since the strength of the belief in the rightness of the outcome is often mistaken for the strength of the legal argument itself, something I think is the case here.
cordially,
Scofflaw
Release the contacts between the Gov and the ECB then lets see. Everything else is em Speculation.0 -
I don't think Scofflaw has them.Given it was the third or fourth analogy I tried, I wouldn't suggest you read that much into it either! The problem with the other analogies, in which those roles were sometimes reversed, is that they contained too much that was particular to the analogous situation itself.
Clearly, then, there needs to be, something I've argued is the the case.
Essentially, what FreudianSlippers said. That there's a case for review to determine if the ECB acted ultra vires, I'd agree, and haven't objected to, either - but I don't see that such a case has any real chance of success, as I said originally, because I don't see that anyone, let alone McCarthy, has put forward any strong evidence that the ECB has acted ultra vires.
Without wishing to be insulting, it equally seems to me that any suggestion that things are not as proposed, and that there isn't a clear and unarguable case against the ECB for Ireland to take, is being painted as the result of bias, when in fact it's the result of such a case being far from particularly clear or unarguable. Or, more pithily (and thus more offensively, for which I apologise in advance), I can't help but feel you're accusing me/us of bias because you lack a better argument.
The real case against the ECB seems to be purely that its actions cost Ireland money, and the hope that those actions were ultra vires is being proffered as a route to compensation - that's the wrong way round to approach such an argument, since it determines first the object of the case, and then seeks to assemble a route to that object. I can see why that appeals in journalism or political rhetoric, but it rarely makes for a good legal case, since the strength of the belief in the rightness of the outcome is often mistaken for the strength of the legal argument itself, something I think is the case here.
cordially,
Scofflaw
Release the contacts between the Gov and the ECB then lets see. Everything else is em Speculation.0 -
FreudianSlippers wrote: »I don't think Scofflaw has them.
I know. :rolleyes:
The Irish Gov or the ECB should be publishing all contacts for that period. Shameful that its not.0 -
I know. :rolleyes:
The Irish Gov or the ECB should be publishing all contacts for that period. Shameful that its not.
Why? Should we be allowing large international speculators like Soros and Abramovich access to insight on the likely factors influencing the ECB and EU governments in their decision-making?
Wouldn't that allow the speculators to bet even more heavily for/against the Euro or for/against certain country's debts?0 -
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