Bollitics - Ireland, the Euro and the future of the EU

[mjmooney]

Now that the UK owns Ireland again maybe we can set some ground rules to stop you misbehaving again

- You will not send across to the mainland the following, Graham Norton, Louis Walsh, Colin Farrell, Rachel Allen

- Westlife and Boyzone will be returned to serving in McDonalds

- St Patricks day can stay but it will not be inflicted on any other country and the colour green will be banned on that day

- You may come across to Cheltenham, BUT there is no way you will be allowed to drink

- Guiness will be accepted as a decentish pint but nothing more than that

- Magners will be banished to what it was first developed as, i.e. ginger hair dye

- RyanAir and BA will be run by people who are not egotistical rocket polishers with no respect whatsoever for the paying public

- Gerry Adams will be made to inhale helium before speaking

There may be more, it really depends on how you behave. Now run along and play with your cousin from the North .

Ha ha, agree with most of that! Apart from the Rachel Allen bit though. I'd do her until it was a bloody stump.

This. She's the Irish Nigella - extremely tasty but unbearably smug and irritating as soon as she starts to speak.

[peterms]

This article is a good statement of the situation, and explains why the "there is no alternative" line is just a political position, not an objective truth.

Ireland should 'do an Argentina'

The Irish people expected to pay in austerity cuts for their banks' sins have another option. Reject the ECB and IMF, ditch the euro

When a firefighter or medical team make a rescue, the person is usually better-off as a result. This is less clear when the rescuer is the European Central Bank (ECB) or the IMF.

Ireland is currently experiencing a 14.1% unemployment rate. As a result of bailout conditions that will require more cuts in government spending and tax increases, the unemployment rate is almost certain to go higher. The Irish people are likely to wonder what their economy would look like if they had not been rescued.

The pain being inflicted on Ireland by the ECB/IMF is completely unnecessary. If the ECB committed itself to make loans available to Ireland at low interest rates, a mechanism entirely within its power, then Ireland would have no serious budget problem. Its huge projected deficits stem primarily from the combination of high interest costs on its debt, and the result of operating at levels of economic output that are well below full employment – both outcomes that can be pinned largely on the ECB.

It is worth remembering that Ireland's government was a model of fiscal probity prior to the economic meltdown. It had run large budget surpluses for the 5 years prior to the onset of the crisis. Ireland's problem was certainly not out of control government spending; it was a reckless banking system that fueled an enormous housing bubble. The economic wizards at the ECB and the IMF either couldn't see the bubble or didn't think it was worth mentioning.

The failure of the ECB or IMF to take steps to rein in the bubble before the crisis has not made these international financial institutions shy about using a heavy hand in imposing conditions now. The plan is to impose stiff austerity, requiring much of Ireland's workforce to suffer unemployment for years to come as a result of the failure of their bankers and the ECB.

While it is often claimed that these institutions are not political, only the braindead could still believe this. The decision to make Ireland's workers, along with workers in Spain, Portugal, Latvia and elsewhere, pay for the recklessness of their country's bankers is entirely a political one. There is no economic imperative that says that workers must pay; this is a political decision being imposed by the ECB and IMF.

This should be a huge warning flag for progressives and, in fact, anyone who believes in democracy. If the ECB puts conditions on a rescue package, it will be very difficult for an elected government in Ireland to reverse these conditions. In other words, the issues that Ireland's voters will be able to decide are likely to be trivial in importance relative to the conditions that will be imposed by the ECB.

There is no serious argument for an unaccountable central bank. While no one expects or wants parliaments to micromanage monetary policy, the ECB and other central banks should be clearly accountable to elected bodies. It would be interesting to see how they can justify their plans for subjecting Ireland and other countries to double-digit unemployment for years to come.

The other point that should be kept in mind is that even a relatively small country like Ireland has options. Specifically, they could drop out of the euro and default on their debt. This is hardly a first best option, but if the alternative is an indefinite stint of double-digit unemployment, then leaving the euro and default look much more attractive.

The ECB and the IMF will insist that this is the road to disaster, but their credibility on this point is near zero. There is an obvious precedent. Back in the 2001, the IMF was pushing Argentina to pursue ever more stringent austerity measures. Like Ireland, Argentina had also been a poster child of the neoliberal crew before it ran into difficulties.

But the IMF can turn quickly. Its austerity programme lowered GDP by almost 10% and pushed the unemployment rate well into the double digits. By the end of the 2001, it was politically impossible for the Argentine government to agree to more austerity. As a result, it broke the supposedly unbreakable link between its currency and the dollar and defaulted on its debt.

The immediate effect was to make the economy worse, but by the second half of 2002, the economy was again growing. This was the start of five and a half years of solid growth, until the world economic crisis eventually took its toll in 2009.

The IMF, meanwhile, did everything it could to sabotage Argentina, which became known as the "A word". It even used bogus projections that consistently under-predicted Argentina's growth in the hope of undermining confidence.

Ireland should study the lessons of Argentina. Breaking from the euro would have consequences, but it is becoming increasingly likely that the pain from the break is less than the pain of staying in. Furthermore, simply raising the issue is likely to make the ECB and IMF take a more moderate position.

What the people of Ireland and every country must realise is that if they agree to play by the bankers' rules, they will lose.

[Zatman]

There will probably be an election in new year but I know for some strange reason that Fianna Fail will somehow stay in power. They really are Teflon or its rigged .

If they were Americans the bankers and politicians would be rotting in prison

[LondonLax]

Well unfortunately a large chunk of Ireland's debt is to UK government owned banks so we would feel the pain most if they defaulted on their debt.

Osbourne knows it hence why he is bending over backwards to loan them money.

[drat01]

Well unfortunately a large chunk of Ireland's debt is to UK government owned banks so we would feel the pain most if they defaulted on their debt.

Osbourne knows it hence why he is bending over backwards to loan them money.

Listening just a point made was it's not just the Republic who would be affected also, the North has a lot of inter-dependency on the republic and trade so again not in the UK interest to let them be screwed

[peterms]

Well unfortunately a large chunk of Ireland's debt is to UK government owned banks so we would feel the pain most if they defaulted on their debt.

Osbourne knows it hence why he is bending over backwards to loan them money.

Apparently they have already written off lots of this debt. Also, with the complex web of cross-lending that goes on, I suspect it's far from straightforward to see exactly who would lose what in the event of a default.

There's also the point that what's happened is that the currency is worth 80% of what it was. Merkel and others have apparently said that bondholders must recognise that their investment has taken a hit, but they won't have it; they want to keep any profits they have made, but they want us to cover any losses they should make.

The big question, and it won't go away, is why we should pay in unemployment and cuts so that bondholders can escape completely. Of course the answer is, well, we shouldn't.

Good article here on this.

[drat01]

This is the Xmas tree at Dublin airport apparently

Courtesy of Ross noble

[CarewsEyebrowDesigner]

The Irish system was simple. Cut your tax to bribe big companies into setting up in Ireland, then spend the money on houses. Far more houses than you actually need.

Take a drive around just Dublin (even if the roads are gash). You will come across endless apartment buildings and houses, newly built, just standing there completely void of life. It's pretty creepy.

I'd default if I were them but the effects may piss off the main trading partners.

[Corcaigh]

Cowen addressing the nation any moment now, could this be it?

[snowychap]

Awol makes his first stop after the bank on payday.

[peterms]

Awol makes his first stop after the bank on payday.

Not wanting to entrust his wealth to a bank deposit box, AWOL decides to keep his bullion about him at all times.

[Peever]

Similar situation that we had to deal with ehre in Canada when the US took its bailout for its banks and auto industry. Canada sent over between 30-40 billion to aid in the package because our economies are so intertwined. Though to be fair the only real reason Canada went down the tubes was because of the US. We had our share of lay offs etc with the crisis but prior to this gongshow we had little if any national debt. Majority of the country was on a big boom and things were looking swell. Thanks to our neighbours though we got dragged down a bit with them. Fortunently we have something everyone still needs and thats oil which really help us out during the tough times. Its not perfect here yet, but were well on our way.

[Awol]

Nope, sorry to disappoint.

Here:-

[JulieB]

It's an absolute disgrace. The Irish banks have taken full advantage of their govt's guarantee & continued their high risk operations regardless!

They appear to have learnt absolutely ziltch since the collapse of Lehmans'

With the news that one UK bank is to pay one of their CEOs £8M per annum...it's just appalling what's been allowed to happen, with the

governments simply standing idly by, waiting to bail them out,..... while these mega financial instruments carry on regardless wrecking the whole global system....because they're simply too big to regulate.

[Awol]

Cowen refusing calls to step down and hold an election before he sells his country to the EU.

If I was Irish it would be rioting time now. Force them to wait, they're not skint yet and are funded through till mid 2011 so there is no excuse for not allowing them to vote and give the bailout a mandate...or otherwise.

It's no exaggeration to say the Irish have a few weeks to save their independence, so if any still care then get out into the streets and fight for it!

[tonyh29]

It's no exaggeration to say the Irish have a few weeks to save their independence, so if any still care then get out into the streets and fight for it!

we didn't when our sovereignty was sold down the river , why should we expect the Irish to be any different ?

seems the left only want a riot when they think it will hit them in the pocket ... Hypocrisy don't you just love it

[Gringo]

seems the left only want a riot when they think it will hit them in the pocket ... Hypocrisy don't you just love it

* What has this to do with left / right

* You don't think it will hit the people of Ireland in the pocket

* Where does hypocrisy get into this - you're in the wrong thread.

[tonyh29]

* why not read the whole post instead of jumping in

[Zatman]

Their is a protest in Dublin city centre on Saturday so i expect the Shinners to turn it violent

[drat01]

Of course there should be protest from the electorate of Ireland based on what they are seeing, but to see the EuroSceptics making this as some sort of crusade for the abandonment of the EU and the Euro is laughable.

The whole central idea of single currencies occur in all aspects of business. Most of the deals I get involved with are dollar based deals and that is the way that business works in many areas. I see that there is no clamour for a removal of this as a way of working. The fact that the Euro and the EU are there, avoid the isolation impact that we saw when Lamont and his cronies screwed up the UK economy before. The world has moved on massively and the interlinking between countries economies actually call for more integration rather than less. The whole idea of the artificial man made borders is slowly but surely being eradicated as the world becomes more and more one economy led.

Ireland will get sorted, the impacts of them not are not worth it for the rest of the world - look at the impacts on various markets yesterday. The people will be given more of a say hopefully in many more countries and the backlash against the money men will intensify, and rightly Gvmts will have to remove their influence or more realistically reduce it. Look at the UK and the impact that the finance sector has on this Gvmt?

Unlike in the UK though, I suspect the Irish press and media are not so right wing orientated so reporting of protest may well be more based on facts than the rhetoric of the people who actually contributed the most to the problems the world faces