Should Ireland Leave the Euro Currency

carfax

Hi all, new to this forum but been on boards.ie a few years.

I'm young enough (32) and not politically motivated in any way, but I would consider myself to be someone that has paid more than their fair share of taxes to the exchequer.

Something that has been bugging me for the past few years is the lack of really mature debate or discussion around the question of whether or not Ireland should leave the Euro currency. I do personally believe it would be by far the best solution in terms of our economy, but of course I'm open to having my mind changed on the issue.

Not sure if there have been any other threads here on the issue but if anyone can post links I would be interested to read up....I am hoping to turn this discussion into a college project so I hope contributors don't mind.

Here's an article from last May that might help get the ball rolling;
http://www.irishexaminer.com/ireland/news-feature-should-ireland-exit-the-euro-zone-231729.html

Cheers.

srsly78

All the debts are in euros, most of these analyses seem to ignore that bit. Imagine paying back your euro mortgage with (devalued) punts...

Any move to redenominate debts would be a default. So you might as well tell the rest of the world to fook off, then see how much business they want to do with you after that.

ArmaniJeanss

The article seems poor, little more than 'things are really bad in the health service and education so lets the leave the Euro' without any indication as to how such a move will make things better.

Its like a pub debate - "Lets leave the Euro and we can have control over our own currency". To what effect though, whats our list of policies with this new currency? To inflate away problems or do we want to keep low interest rates and 'austerity' (i.e., only spending what we can afford). Are we putting in exchange controls, are we planning on leaping into another currency union with Sterling or the Dollar perhaps? No-one ever seems willing to expand on how we can get from 'Leave the Euro' to 'things will be better'.

spank_inferno

Did Ireland manage its own currency well?

Werent there a few devaluations required over the years?

carfax

spank_inferno wrote: »

Did Ireland manage its own currency well?

Werent there a few devaluations required over the years?

That's kind of my point....I believe a devaluation is needed, its an essential part of capitalism and will lead to growth. Most of the capital that was previously here has fled the country so the vast majority of what we have here is debt, and we need to reduce that.

The reason I'm interested in seeing politicians starting to talk about this is because I would like an alternative to possibly vote for at the next election....And that alternative party/ politician would need to put a full plan together that was based in the real world.

As it is I simply see no way that future generations will pay off the current national debt (and there's no way it will be paid in our lifetime).....I honestly believe that at some stage the next generation of business people and PAYE workers will get sick and tired of servicing the previous generation's debt for little or no return so we're going to have to, as a nation, default or get write downs at some point, and that too is a natural part of capitalism and what is needed for growth imho.

Cheers for the feedback, any links to articles that back up staying in the Euro and how that we are going to get growth back into the country would be greatly appreciated.

FWIW I'm not an economist, nor have I ever really been very interested in this type of stuff until recently, so apologies if what I'm saying is a pile of you know what , I'm just trying to soak up as much information as possible on the topic right now.

srsly78

People said the same thing in the 80s: "we will never be able to repay this debt". And they were kinda right, countries don't repay their national debts. Instead they just roll them over and grow their economies. During our Celtic Tiger period Ireland did not reduce it's debt, however our debt to GDP ratio fell dramatically.

So all we need is another massive boom and we are sorted :P

FoxT

Devaluations are a double edged sword.

- Labour costs will fall if wages remain static. This may attract inward investment & promote employment, provided that the labour force has the required skillset, or can be retrained .

- Export costs will fall if prices remain static.This may boost exports, and hence, employment. However, pirces will not remain static over time, because....

-... Import costs will rise. We import a large % of our energy/fuels for example.

- rising import costs will lead to
- Fall in standard of living for everybody
- inflationary pressure as people demand higher wages to compensate for the drop in their living standards

The national debt will increase to the extent that our currency is devalued, and Govt borrowing costs will increase also because
1 - the national debt will have risen as a % of GDP, and tis will add to the perceived risk of the loans
and
2 - walking away from the euro now runs the risk of having a negative impact on capital market sentiment.

I am not an economist - but from the above I can se ethat there are many moving parts here & a return to the punt is not at all an obvious solution.

Staying in the Euro has its problems too. The euro today is dysfunctional, and I dont know if the political will is there across all (is it 28 now?) countries to focus on fixing it. Fixing it will result in a loss of sovereignty for ALL euro zone countries. Governments will be forced to stick to borrowing rules, for example , which has not been done up to now.

IMO the solution is to stick with the euro but demand that it be managed properly, even at the cost of a certain amount of sovereignty. Leaving is too risky, staying as we are is too fragile..
-FoxT

Geuze

spank_inferno wrote: »

Did Ireland manage its own currency well?

Werent there a few devaluations required over the years?

Note that Ireland has never had its own, independent currency.


Until 1979 = fixed link to sterling IR£1 = £1 stg

1979-1999 = in the ERM

1999 onwards = in EMU

So there is no question of "going back to have our own currency", as we never had one.

johnnyskeleton

carfax wrote: »

That's kind of my point....I believe a devaluation is needed, its an essential part of capitalism and will lead to growth. Most of the capital that was previously here has fled the country so the vast majority of what we have here is debt, and we need to reduce that.

Devaluation takes wealth from savers and gives it to spenders. The only reason to wish for devaluation is if you are a frustrated spender who doesn't have enough loans to spend and want to scoop up other people's wealth to buy crap.

No thanks to that.

Amirani

I think a justifiable argument can be made quite easily for the benefits of maintaining control of monetary policy. However, Ireland is long past making that decision. Whatever the merits of that position, I feel it's far outweighed by the negative outcomes that would arise as a result of leaving the Eurozone.

This was a lot more topical back in 2011, and UBS produced a report that is worth a read. The full research paper and summary can be found here: http://www.creditwritedowns.com/2011/09/eurozone-breakup-consequences.html

I don't think a successful Eurozone exit can be achieved without sovereign default. Despite what a lot of populist commentators are saying right now, sovereign default is not a good idea for Ireland. I'm fairly certain (and the UBS report would back this up) that our economic situation would dis-improve massively. Certainly far past the point that devaluation of the Punt would be any use at all.

On your point about unsustainable debt, I agree. Ireland's current debt level is unsustainable. However, this problem isn't going to be solved by exiting the Eurozone.

el pasco

carfax wrote: »

Hi all, new to this forum but been on boards.ie a few years.

I'm young enough (32) and not politically motivated in any way, but I would consider myself to be someone that has paid more than their fair share of taxes to the exchequer.

Something that has been bugging me for the past few years is the lack of really mature debate or discussion around the question of whether or not Ireland should leave the Euro currency. I do personally believe it would be by far the best solution in terms of our economy, but of course I'm open to having my mind changed on the issue.

Not sure if there have been any other threads here on the issue but if anyone can post links I would be interested to read up....I am hoping to turn this discussion into a college project so I hope contributors don't mind.

Here's an article from last May that might help get the ball rolling;
http://www.irishexaminer.com/ireland/news-feature-should-ireland-exit-the-euro-zone-231729.html

Cheers.

It could be done but you need to have a proper plan first and economy sorted
Secondly devaluation is NOT an option as you'll turn the Punt into the Lira over night
You have to have a strong currency and be very strict with your budgeting

Sheldons Brain

Leaving the Euro is much easier if you increase the value of your currency. This is not as fanciful as it seems, Ireland does not have a trade deficit, it has a debt problem.

nesf

carfax wrote: »

That's kind of my point....I believe a devaluation is needed, its an essential part of capitalism and will lead to growth. Most of the capital that was previously here has fled the country so the vast majority of what we have here is debt, and we need to reduce that.

As someone else has already pointed out, the debt is denominated in Euro. It won't magically transform into Punt Nua debt which we could devalue and no sane creditor would agree to change it to Punt Nua for this and other reasons.

Devaluation wouldn't solve the debt problem anyway, just put a band-aid over it.

Sand

If anyone should leave the Euro its Germany. Any other country leaving the Euro would face extreme costs that would heavily outweigh any benefit over the short to medium term. Germany would also face costs but they don't seem to notice the benefits of the Euro to them so probably wont notice the costs of exit either. In any case those costs would be offset by capital flows to a new DM. The Euro would devalue (but not critically) and as all debt is in Euro the relief would be real.

If anything has become apparent from the last couple of years its that Germany and most of the rest of the Eurozone have highly divergent views on economic policy. The ECB bought the politicians time last 2012 but absolutely no progress has been made in addressing those differences since - indeed, as predicted by realistic individuals back in the summer of 2012, the grand deal for Ireland has turned out to be a lot less grand as Germany and Co have rowed back from it extremely quickly.

Either the project progresses to a fully federal Europe - which is highly resisted across Europe, particularly Germany - or we mitigate the damage done by the Eurozone mistake by at least ensuring the Eurozone consists of countries with more broadly similar economic aims. There is no prospect of the former, the latter is remote but it has the benefit of being possible.

Oh and for the OP - Ireland deciding to arbitrarily leave the Eurozone would be economic suicide. It takes time to plan a new currency - everything from vending machine coin slots to monetary policy. In the meantime, every single Irish Euro would be transferred to a German bank account leading to mass capital flight and ruin. We might not like the rollercoaster we are on, we may have wished we had not got on, but we are on, and we are in for the duration.

Sand

That boat as a desirable policy option sailed in about 2010, maybe early 2011. Blame the green jersey brigade which determined that Irish policy response to the crisis could be summarised as "No insider left behind". All the private bank debt, even the ECB related promissory notes have been converted into Irish sovereign debt thanks to an uninformed political leadership which couldn't grasp that markets can actually tell the difference between a bank and a country.

You never ever ever ever want to see the words Irish, sovereign, debt and default spoken in that order by a news anchor. That doesn't mean it wont happen (the green jersey brigade really have taken all the Celtic Tiger debts and gone to Vegas on it) but its not a desirable outcome.

Muahahaha

Dare I say to as it's probably unpalatable to many in Ireland but what if we whole scale adopted Sterling ? The UK is our biggest trading partner so from that perspective it makes sense. If the UK were to leave the EU when they have their promised referendum on it in 2017 maybe then would it not be in Ireland's best interests to also leave and form an alliance with them, including adopting sterling ?

I'm no expert either but on the face of it I'd put a lot more faith in the Bank of England and the London School of Economics to pull them out of this mess a fair bit quicker that the ECB will, if at all. In fact I just read last week that UK house prices have now recovered to within 7% of their peak in 2007 so I guess some sort of economic recovery is already well underway across the water while we just seem to bump from pillar to post with Enda hoping and praying that Angela gives him some sort of deal before the next election.

_Kaiser_

Muahahaha wrote: »

Dare I say to as it's probably unpalatable to many in Ireland but what if we whole scale adopted Sterling ? The UK is our biggest trading partner so from that perspective it makes sense. If the UK were to leave the EU when they have their promised referendum on it in 2017 maybe then would it not be in Ireland's best interests to also leave and form an alliance with them, including adopting sterling ?

I'm no expert either but on the face of it I'd put a lot more faith in the Bank of England and the London School of Economics to pull them out of this mess a fair bit quicker that the ECB will, if at all. In fact I just read last week that UK house prices have now recovered to within 7% of their peak in 2007 so I guess some sort of economic recovery is already well underway across the water while we just seem to bump from pillar to post with Enda hoping and praying that Angela gives him some sort of deal before the next election.

I've been saying for a long time that we'd be better throwing our lot in with the UK than relying on the completely ineffective bureaucracy of the EU, but unfortunately you'll get all the nationalist types who will outright reject such a proposal "just cause"/"800 years" and other such historical nonsense. It's the same mentality that rejects everything SF says "just cause" they're SF - no matter how valid the particular message may be.
The reality is we have a lot more in common with the UK than we do with most of Europe (not least being language, culture, history and a desire not to be left carrying the can for the mistakes of the EU banking system).

Simply put, the states that make up the EU are too culturally and economically different to ever function as a coherent whole. This is likely to get even worse as it expands to include countries like Turkey. Had it stayed as a trade body only in its earlier EEC form things may have been different but I think Sand has a point above in regards to Germany leaving instead.

As it is I expect the EU to limp along for another while yet controlled by self-serving politicians and unaccountable bureaucracy while an increasingly resentful (Euro-wide) electorate seethes until the next crisis exposes (again) how deeply-flawed the whole experiment was.

dissed doc

Muahahaha wrote: »

Dare I say to as it's probably unpalatable to many in Ireland but what if we whole scale adopted Sterling ? The UK is our biggest trading partner so from that perspective it makes sense.

UK (incl NI) accounts for 16% of exports, and EuroArea 43%.

The USA is a bigger trading partner than the UK (incl NI) is. Why not join the dollar?

Why do people keep pushing this myth of the UK being Ireland's trade partner? EUrozone is the biggest, then the US, then the rest of the world, and *then* the UK. Lol, westbrits just can't let go maybe.

Muahahaha

dissed doc wrote: »

UK (incl NI) accounts for 16% of exports, and EuroArea 43%.

The USA is a bigger trading partner than the UK (incl NI) is. Why not join the dollar?

Why do people keep pushing this myth of the UK being Ireland's trade partner? EUrozone is the biggest, then the US, then the rest of the world, and *then* the UK. Lol, westbrits just can't let go maybe.

Sorry wasn't trying to mislead,I think I've read in the Irish media on more than one occasion that the UK is our largest trading partner. It's probably sloppy journalism where a myth takes on a life of its own.

Is the US being our largest trading partner actually a reality or are the figures distorted by multinationals sending profits to Irish subsidiaries to wash through the tax system ?

AlmightyCushion

Muahahaha wrote: »

Sorry wasn't trying to mislead,I think I've read in the Irish media on more than one occasion that the UK is our largest trading partner. It's probably sloppy journalism where a myth takes on a life of its own.

Is the US being our largest trading partner actually a reality or are the figures distorted by multinationals sending profits to Irish subsidiaries to wash through the tax system ?

US multinationals here don't send money back to the US. If they did they'd pay a lot of tax on it to the federal government so they don't repatriate it. Apple even issued a bond because it was cheaper than paying the tax they'd have to pay on the repatriated funds. Repatriated funds don't count towards our imports and exports.

Here is a list of countries we export to and import from. While the UK is a big trade partner for us, the EU is definitely larger. It's not shown there but we export nearly as much to Belgium as we do to the UK.

Sheldons Brain

n fact I just read last week that UK house prices have now recovered to within 7% of their peak in 2007

If you join Sterling that's what you get, inflation and high property prices. We need to get out of that mentality.

dissed doc

Muahahaha wrote: »

Sorry wasn't trying to mislead,I think I've read in the Irish media on more than one occasion that the UK is our largest trading partner. It's probably sloppy journalism where a myth takes on a life of its own.

Is the US being our largest trading partner actually a reality or are the figures distorted by multinationals sending profits to Irish subsidiaries to wash through the tax system ?

Well to be fair I was just going on exports. The eurozone is by far the biggest export market (accounting for more than the UK and US combined).

So join the pound and leave the largest export market for Ireland (and the largest economy in the world....?)/. Unless we have some cheap industrial base (hahaha!!) to take advantage of by having an undervalued pound (not bloody likely!!!), it would be immensely stupid to leave the Eurozone or the EU, IMO.

It gets quotes in the media because it is sloppy journalism , and as we well know, you get more actual journalism from the Weekly World News than the IT or Indo.

View

carfax wrote: »

Something that has been bugging me for the past few years is the lack of really mature debate or discussion around the question of whether or not Ireland should leave the Euro currency.

There is a fairly simple reason for this.

Just as member states of the EU have commited to the creation & continued usage of the "Common Market" Free Trade Area, so also they have commited themselves to the Euro being the currency of the Union.

As such adoption of & continued use of the Euro is a mandatory part of membership of the EU for all bar two member states who have the option to adopt it should they so choose (which in practise differs only slightly from the other member states as the other member states adopted it or will adopt it largely on their own timescale).

Within the next 15 years or so, and despite the crisis throwing everything off track, we can probably expect the Euro to have been adopted by 90% of the EU's member states with the last ones looking increasingly isolated for not having done so.

Hence, as not many people favour us leaving the EU, not many are going to debate us deliberately breeching EU law by leaving the Euro.

Good loser

carfax wrote: »

Hi all, new to this forum but been on boards.ie a few years.

I'm young enough (32) and not politically motivated in any way, but I would consider myself to be someone that has paid more than their fair share of taxes to the exchequer.

Something that has been bugging me for the past few years is the lack of really mature debate or discussion around the question of whether or not Ireland should leave the Euro currency. I do personally believe it would be by far the best solution in terms of our economy, but of course I'm open to having my mind changed on the issue.

Not sure if there have been any other threads here on the issue but if anyone can post links I would be interested to read up....I am hoping to turn this discussion into a college project so I hope contributors don't mind.

Here's an article from last May that might help get the ball rolling;
http://www.irishexaminer.com/ireland/news-feature-should-ireland-exit-the-euro-zone-231729.html

Cheers.

That guy Kinsella is a loose cannon. Wouldn't pay the slightest heed to his opinions. Although at the recent economics conference in Limerick Cormac Lucey, not for the first time, advocated leaving the euro. No idea whether he dealt with the numerous and well founded objections outlined in the thread.

carfax

Good loser wrote: »

That guy Kinsella is a loose cannon. Wouldn't pay the slightest heed to his opinions. Although at the recent economics conference in Limerick Cormac Lucey, not for the first time, advocated leaving the euro. No idea whether he dealt with the numerous and well founded objections outlined in the thread.

There are a few economists that have discussed it...Mc Williams was writing about it constantly in the Business Post a couple of years back.

Cheers for all the feedback everyone, really helpful for my project and very interesting stuff all round.

I don't have much time but just want to point out a couple of things that ring through to my mind:
1. Italy and Lira was given as an exmaple of a bad situation for Ireland but Italy (although the currency was traditionally very weak) were big producers and exporters of various products before they joined the euro.

2. Who we import to and export from right now is in a way irrelevant because if we have control of our own currency we can adapt to various importers and exporters.

The only thing I am personally certain of after reading everyone's comments is that the Euro will not remain in its current form. I believe the comment about Germany leaving the Euro is very well informed and makes a lot of sense to me (as somebody who doesn't really have a clue about the in depth stuff on this).

I suppose I'm only really concerned with Ireland and in that sense I believe its better for Ireland to simply take control of its own fate, but thinking on an EU scale its better for the EU to take control again instead of dragging this out for another 5 years with doubts constantly there about the future of the currency (I think the Union will be here for the foreseeable future and I am all for Ireland playing a strong part in that).

Please keep the comments and links to articles coming.

BillG

This debate is quite irrelevant. The Euro can only go two ways. Either it comes apart at the seams because of the build up of pressures caused by the dysfunctional system that supports it or we head into a Federal European State. There has been no successful currency union in history that has not been followed closely by a successful political union all other currency unions have failed. This is fact, look it up.

The real question is whether Ireland wants to be in a Federal European State ruled from Brussels if it does, great, if not then get out.

carfax

BillG wrote: »

The real question is whether Ireland wants to be in a Federal European State ruled from Brussels if it does, great, if not then get out.

And that's exactly the debate and big issue for the next general election, if not sooner....but no political party or independent politician seems to have acknowledged/ had the courage to talk about that yet, at least not that I have seen.

Scofflaw

BillG wrote: »

This debate is quite irrelevant. The Euro can only go two ways. Either it comes apart at the seams because of the build up of pressures caused by the dysfunctional system that supports it or we head into a Federal European State. There has been no successful currency union in history that has not been followed closely by a successful political union all other currency unions have failed. This is fact, look it up.

The real question is whether Ireland wants to be in a Federal European State ruled from Brussels if it does, great, if not then get out.

No currency union in history has been the same as the euro, though, as those economists drawing parallels first admit, then ignore.

There are certainly federalising measures required to improve the euro, but they don't amount to full federation, so the choice is not the false federal Europe/out dichotomy that people like to present.

While you can liken the process of European integration to 'boiling a frog', with full federation presumably being the final death of the frog, that argument conflates people and nation-states, and presupposes without discussion that the death of the nation-state is necessarily a bad outcome for the people - but the people control the speed of integration, so the dissolution of nation-states will only come about when it is desired by the people, which, from a democratic perspective, makes it a good outcome, however little it may be desired by some.

cordially,
Scofflaw

Bullseye1

Sco could you explain what measure are required to make the Euro more stable and what effect it would have on individual countries in particular our own.

Geuze

Better banking supervision would help. Would that be the same as a banking union?

Of course, some say that a monetary union will never work without a fiscal union.

[Jackass]

There is definitely a decent argument that can be made for leaving the Euro, but I think the overriding reason not to is that it's a short term view point and also it is removing us from a sort of communal effort.

I'm of the opinion that the problem with Europe is that we need more integration, not less. I feel like the credit problem had a lot to do with limping in, or half assed commitment to integration, without having a fiscal union and also not having a communal support system (everyone bailing eachother out etc., rather than having a one for all, all for one sort of arrangement).

Certainly our own monetary control could drastically help our situation, devalue our currency, increase trade and exports and thus employment and productivity, but as we know, economic theory doesn't always translate in reality. One of the biggest problems with taking this approach would be that devaluing our currency could potentially increase the value of our debts, which again is very short sighted given the magnitude of our debt. Places like Iceland got away with it because they allowed their banks to fail, so were therefore debt free when devauling their currency.

My personal preference would be to look for deeper integration and debt fogiveness, i.e. a communal EU rescue fund being available to all within the Euro zone without being punished, but this is offset by the communal approvement of fiscal policy. i.e. communal responsibility for errors. I think this checks and balances type approach would allow for much more consoltation on fiscal spending, less allowance for domestic politicaly motivated policy (good for Government but bad for the country - i.e. benchmarking) and would make for much more balanced economies across the euro zone. A government can't be told what to do, but must get some sort of concensus on what they do do. (i.e. Corporation tax can be taken off the table as anything we are willing to move on).

Sand

[Jackass] wrote: »

There is definitely a decent argument that can be made for leaving the Euro, but I think the overriding reason not to is that it's a short term view point and also it is removing us from a sort of communal effort.

I'm of the opinion that the problem with Europe is that we need more integration, not less. I feel like the credit problem had a lot to do with limping in, or half assed commitment to integration, without having a fiscal union and also not having a communal support system (everyone bailing eachother out etc., rather than having a one for all, all for one sort of arrangement).

Certainly our own monetary control could drastically help our situation, devalue our currency, increase trade and exports and thus employment and productivity, but as we know, economic theory doesn't always translate in reality. One of the biggest problems with taking this approach would be that devaluing our currency could potentially increase the value of our debts, which again is very short sighted given the magnitude of our debt. Places like Iceland got away with it because they allowed their banks to fail, so were therefore debt free when devauling their currency.

My personal preference would be to look for deeper integration and debt fogiveness, i.e. a communal EU rescue fund being available to all within the Euro zone without being punished, but this is offset by the communal approvement of fiscal policy. i.e. communal responsibility for errors. I think this checks and balances type approach would allow for much more consoltation on fiscal spending, less allowance for domestic politicaly motivated policy (good for Government but bad for the country - i.e. benchmarking) and would make for much more balanced economies across the euro zone. A government can't be told what to do, but must get some sort of concensus on what they do do. (i.e. Corporation tax can be taken off the table as anything we are willing to move on).

Unfortunately that just isn't on the menu of options. Germany has made it amazingly clear again and again over the past 5 years (indeed since the creation of the Euro) that they will never agree to fund the debts of other states in the Eurozone. And the other states have made it fairly clear that they will not accept (honestly at least) the fiscal checks required for a communal fiscal policy.

If anything a rollback from integration is more politically likely than is further integration - the last couple of years have been toxic with lazy stereotypes abounding in serious discourse by elected politicians and media. The encouraging signs are that there seems to have been a bit of a palace coup over at the ECB and some sane people seem to be considering the needs of the Eurozone rather than just Germany.

clairefontaine

Sand wrote: »

Unfortunately that just isn't on the menu of options. Germany has made it amazingly clear again and again over the past 5 years (indeed since the creation of the Euro) that they will never agree to fund the debts of other states in the Eurozone. And the other states have made it fairly clear that they will not accept (honestly at least) the fiscal checks required for a communal fiscal policy.

If anything a rollback from integration is more politically likely than is further integration - the last couple of years have been toxic with lazy stereotypes abounding in serious discourse by elected politicians and media. The encouraging signs are that there seems to have been a bit of a palace coup over at the ECB and some sane people seem to be considering the needs of the Eurozone rather than just Germany.

If they further federalise its somewhat of an inevitability,but I doubt Germany wants that because Germany is having its cake and eating it.

What I mean is this, if you take the US as a federal model, and one which some in the US disagree with, those who want to disband the Fed for example. So, everyone in the US pays three levels of tax, federal, state and municipal. The Fed then redistributes part of that money back into the states via funding projects etc. So for example, NY State puts in much more money in taxes than it gets back, while a state like Louisiana gets more than it puts in.

So if the EU further federalised, which I'm not sure is a great idea tbh, simply then you would have another layer of federal taxes which would then be redistributed, and that would be the case regardless of what debt Ireland owed to the ECB. And Ireland would be one of those countries that gets more than it puts in. Obviously Germany would be the inverse.

Icepick

No
We can't take advantage of the benefits of our own currency and would suffer all the disadvantages.

The proponents of leaving the euro make Ireland sound like a free, rapidly growing country, a true Celtic Tiger if you will.
But in fact Ireland is a socialist paradise with a bloated and overpaid public sector and rapidly ageing population.

Scofflaw

Sand wrote: »

Unfortunately that just isn't on the menu of options. Germany has made it amazingly clear again and again over the past 5 years (indeed since the creation of the Euro) that they will never agree to fund the debts of other states in the Eurozone. And the other states have made it fairly clear that they will not accept (honestly at least) the fiscal checks required for a communal fiscal policy.

If anything a rollback from integration is more politically likely than is further integration - the last couple of years have been toxic with lazy stereotypes abounding in serious discourse by elected politicians and media. The encouraging signs are that there seems to have been a bit of a palace coup over at the ECB and some sane people seem to be considering the needs of the Eurozone rather than just Germany.

Largely, I suspect, because the money that was being provided by Germany has largely been signed off on by Germany, so it's no longer to the same extent paying the piper and calling the tune.

cordially,
Scofflaw

Scofflaw

Bullseye1 wrote: »

Sco could you explain what measure are required to make the Euro more stable and what effect it would have on individual countries in particular our own.

Well, there's a thesis right there. I've started at least three posts in response to this, and each time the internet gods have eaten them.

One of the first points I'd have to make is to question whether the euro is particularly unstable. One could argue that, on the contrary, it seems to have extraordinary resilience and stability. A multinational currency, maintained by agreement amongst multiple nations of very different sizes and outlook, many of them traditional enemies, through a crisis generally seen as one of the two or three most severe in the last hundred years, and in which the nations within the currency have had very different experiences - and not only is it still in existence, but its value against the global reserve currency, the dollar, has varied by no more than 10c over that period, while its main interest rate has varied by only 4% - I'm not sure one can really describe that as 'unstable'.

Certainly there are positively acres of newsprint devoted to writing and rewriting its prospective obituary, but that increasingly seems to me primarily to echo the rather narrow sectoral interests of the Anglosphere money boys. True, there's a left-wing argument against "saving the euro at the expense of the people", but that critique has been directed at every currency in every recession ever, and is anything but unique to the euro.

So, in that sense, I'd probably argue that the question is not really answerable in the form given - the euro isn't unstable in the first place, so it's hard to think of things that would make it more stable.

And would that even be something that was wanted? Has the problem been too great a stability for the euro itself, while the eurozone countries have bounced up or down around it?

Again, it's hard to argue that a yo-yoing euro would have been an improvement in any way, so I think the question really being asked is how to make the eurozone more stable - and presumably more stable in terms of better crisis prevention and management? And when we say "eurozone", we're talking about the national economies that make up the eurozone - so are we looking for outcomes that are more stable there, or more equitable? Are we looking for a way to prevent financial system implosions within the eurozone? Is that even possible, when the eurozone financial system is connected intimately to the global financial system?

cordially,
Scofflaw

SupaNova2

Scofflaw wrote: »

So, in that sense, I'd probably argue that the question is not really answerable in the form given - the euro isn't unstable in the first place, so it's hard to think of things that would make it more stable.

This, the hype and doom surrounding the euro is just tedious. The euro does exactly what it says on the tin, target inflation just below 2%. Its stability since its birth has seen it grow in stature as a reserve currency, this I suspect is part of the reason for the constant anglo-saxon media hate. That and lazyness. Sound bytes emitted by Nobel prize winners Krugman and Stiglitz are simply echoed. Real analysis is fairly sparse.