Ireland should leave the euro

pjoz

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Interesting piece in the FT.
FT.com / Comment / Opinion - Ireland should leave the euro

"Ireland’s government has avoided immediate disaster by mustering just enough votes to pass its emergency budget. But now it must decide what to do next. Here, £6bn ($9.4bn) in new austerity measures are unlikely to be enough to put it back on the right path. Instead a more radical option should be seriously considered: leaving the euro.

Sovereign default, massive bank recapitalisations, and sharply falling real wages are all given as reasons why peripheral euro area countries should hang on to monetary union. Yet, in Ireland’s case, all three are going to happen anyway"

In conclusion

"For most countries the drawbacks of leaving the eurozone clearly outweigh the benefits. In Ireland, the calculation is much less clear. Ireland is by far the best candidate in the euro for abandoning monetary union and soon returning to a path of sustainable growth. Its leaders, and its people, should consider the option seriously"


What do people think the chances are of such a debate happening?
 


Sync

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Zero. No party that's relevant to the battle for government is going to push for Ireland leaving the Euro or otherwise pulling back from Europe. FF, FG and Lab are firmly europhile. The only ones that aren't are SF and no one's willing to entertain the idea of going into power with them.
 

Cassandra Syndrome

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Cue Fanatical Eurotrons demonising pjoz on account of this suggestion of heresy.....
 

A view from England

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Yes it should. The Government should act to stop currency flight, bring back the Punt, devalue by 30% and arrange payback of debts at cost. The bondholders should be burned. All over in a week. Pain for a year, then back to normal, outside of the Euro. Link Punt to Sterling or Dollar for stability.
 

Ulster-Lad

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YES, Ireland should leave the Euro but as pointed out FF/FG/LAB are all EuroTrons. They have too much invested in it to even consider it.
 

USER1234

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This is what the 5th or sixth thread on this subject in the last few weeks but apart for a few of the more far out posters here nobody takes this idea seriously as the damage of us leaving the Euro would be much more than our current problems!!!
 

A view from England

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This is what the 5th or sixth thread on this subject in the last few weeks but apart for a few of the more far out posters here nobody takes this idea seriously as the damage of us leaving the Euro would be much more than our current problems!!!
Such as?
 

Cassandra Syndrome

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This is what the 5th or sixth thread on this subject in the last few weeks but apart for a few of the more far out posters here nobody takes this idea seriously as the damage of us leaving the Euro would be much more than our current problems!!!
Why?

The Euro destroyed this country. Thankfully it is on the verge of collapse. Just let the market do its job and we will not know ourselves when we get to the other side of this collapse, when there is very limited statism and we the people are running the country and we have a stable savings induced economic growth with our own debt free currency backed by commodities of relative scarcity.
 

A view from England

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A view from England

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Why?

The Euro destroyed this country. Thankfully it is on the verge of collapse. Just let the market do its job and we will not know ourselves when we get to the other side of this collapse, when there is very limited statism and we the people are running the country and we have a stable savings induced economic growth with our own debt free currency backed by commodities of relative scarcity.
Shrinking Euro Union Seen by Creditors Who Cried for Argentina - Bloomberg
 
G

Gimpanzee

Pegging
What is Currency Pegging? « Questions4Thoughts

Don't forget, Ireland would be in control. But, and it is a big but, there would have to be currency control prior to coming out of the Euro so people did not take their money out of the banks and wages etc would all drop significantly. However the pain would be relatively short lived.
Pegging to sterling or dollars or euros wouldn't be sustainable. We haven't got the financial muscle to be able to maintain it in an environment where the world is lurching from one economic crisis to the next. There is no easy solution. We need to get in phase with the eurozone - something that we didn';t bother doing when it would have been much easier to do. That won't be easy now and will also require the sort of pain you mention above but ultimately it will provide the stability that pegging can never provide.
 
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scrap borrowing + stay in the euro

Hope i'm on the right forum here.... I empathise with Cael's comments and i hope some of you would take the time to crit the very rough idea i've sketched out below.....

I think an exchange of ideas and critical thinking are the most important actions we should be taking.

we've reached the saddle point of information saturation.

we have to change from 'to comment' to 'to critic' or face the fragmentation of intellectual capital; thought.

no more hurlers on the ditch.




The fundamental issue at stake is control over the money supply. Money itself has no intrinsic value. Its value is that of a means of exchange.

The government could issue a state 'credit' card indexed and backed by the resources held by NAMA. Those 'credits' could then be used as a means of exchange for goods and services within the domestic economy facilitating the transfer of econmic resources (activity / work)

If the interest charged on 'credits' were zero, supply would be dictated by the the value of assets held by NAMA and the creation or addition of new resources in the economy. Distinct from currency, these 'credits' would not be traded as goods in themselves (price=inflation), and would exist only as a means of exchange to facilitate transfers within the domestic market. No debt is generated by this model. Precedent has been set by existing corporations such as TESCO.

The domestic market would operate as a sub-economy without necessitating leaving the euro as those 'credits' would be indexed to the assets held by NAMA which have in turn been valued in euro. 'Credits' could ultimately be exchanged for tax credits at the end of the fiscal year. So long as 'credits' in the economy exceed tax credits, the model will perpetuate as the demand for tax credits equates to the demand for 'credits'.

Simultaneously, Ireland would be insulated from any coming currency war / flucuations.

'Credits' would equate to a cross between food stamps and greenbacks.

NAMA is a clean,fully capitalised, soverign CORPORATION.

By issuing 'credits' backed up in full by property assets, the floor of that market will be set.

what do you think?
 
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i forgot to add...

if we raised the coporate tax rate we could appease our european financiers and probably dispel many of the doubts regarding such a plan. ultimately, corporations could then exhange domestic 'credits' for tax credits.....
 

kerdasi amaq

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Hmm, it'll take circumstances beyond the control of the elected morons in Kildare Street to compel them to do the right thing. Say the total collapse of the Euro, to get them to re-introduce the Punt.
 

Padraigin

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Interesting piece in the FT.
FT.com / Comment / Opinion - Ireland should leave the euro

"Ireland’s government has avoided immediate disaster by mustering just enough votes to pass its emergency budget. But now it must decide what to do next. Here, £6bn ($9.4bn) in new austerity measures are unlikely to be enough to put it back on the right path. Instead a more radical option should be seriously considered: leaving the euro.

Sovereign default, massive bank recapitalisations, and sharply falling real wages are all given as reasons why peripheral euro area countries should hang on to monetary union. Yet, in Ireland’s case, all three are going to happen anyway"

In conclusion

"For most countries the drawbacks of leaving the eurozone clearly outweigh the benefits. In Ireland, the calculation is much less clear. Ireland is by far the best candidate in the euro for abandoning monetary union and soon returning to a path of sustainable growth. Its leaders, and its people, should consider the option seriously"


What do people think the chances are of such a debate happening?


Every economist who has looked at the numbers has advised immediate default. While Ireland could hang on and manage to pay the sovereign debt (assuming no new borrowing by the Irish government), it is utterly impossible and would destroy Ireland's economy completely if any attempt were made to repay the bank guarantee on top of the sovereign debt.

Yet that is what the Debt Enslavement Deal does. It merges the bank guarantee with the sovereign debt and then charges punitive interest.

Nobody outside the ruling elite of this country can figure out why the Irish have not already declared a default. The Irish economy is strong enough - now - to generate more than enough income to support a return to the punt, and the current tax revenues (with no new taxes being imposed) are enough to keep government services at or about their current level. With the "bonus" of not having to service the merged debt, the Irish government would in fact have more money at its disposal after default than it does now.

The unseemly haste in which the Debt Enslavement Deal was rushed through is a clear indication that everyone knew that no sane government or people would agree to such terms if they were given time to consider other options. The EU and IMF knew that the Irish would reject the deal if openly debated or discussed, so they are trying hard to cram it down our throats without any vote or referendum. Our sovereignity and our country's wealth were given away in a back room, closed-door deal and in haste by a traitorous government scared to death of what might be exposed if certain banks were to close and bank records reviewed.

Listen carefully to the arguments given by Tweedledum and Tweedledee (FF and FG) as to why the Irish people should be forced into paying reparations to foreign banks under the Debt Enslavement Deal.

Why should the Irish people agree to pay these reparations to foreign banks?????

SO THAT THE IRISH GOVERNMENT CAN BORROW MORE MONEY!!!

This is insane. We need to do what the economists say we should do - default now while we still have a viable economy. The fact that our government would then have to live within its means - and stop borrowing money that the Irish taxpayers have to repay - is a good thing.
 

westie12

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Every economist who has looked at the numbers has advised immediate default. While Ireland could hang on and manage to pay the sovereign debt (assuming no new borrowing by the Irish government), it is utterly impossible and would destroy Ireland's economy completely if any attempt were made to repay the bank guarantee on top of the sovereign debt.

Yet that is what the Debt Enslavement Deal does. It merges the bank guarantee with the sovereign debt and then charges punitive interest.

Nobody outside the ruling elite of this country can figure out why the Irish have not already declared a default. The Irish economy is strong enough - now - to generate more than enough income to support a return to the punt, and the current tax revenues (with no new taxes being imposed) are enough to keep government services at or about their current level. With the "bonus" of not having to service the merged debt, the Irish government would in fact have more money at its disposal after default than it does now.

The unseemly haste in which the Debt Enslavement Deal was rushed through is a clear indication that everyone knew that no sane government or people would agree to such terms if they were given time to consider other options. The EU and IMF knew that the Irish would reject the deal if openly debated or discussed, so they are trying hard to cram it down our throats without any vote or referendum. Our sovereignity and our country's wealth were given away in a back room, closed-door deal and in haste by a traitorous government scared to death of what might be exposed if certain banks were to close and bank records reviewed.

Listen carefully to the arguments given by Tweedledum and Tweedledee (FF and FG) as to why the Irish people should be forced into paying reparations to foreign banks under the Debt Enslavement Deal.

Why should the Irish people agree to pay these reparations to foreign banks?????

SO THAT THE IRISH GOVERNMENT CAN BORROW MORE MONEY!!!

This is insane. We need to do what the economists say we should do - default now while we still have a viable economy. The fact that our government would then have to live within its means - and stop borrowing money that the Irish taxpayers have to repay - is a good thing.
+1
 

Brehon

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would it be possible for ireland to have a duel currency system?
One for the government i.e. the euro, another for rest of economy that is free-floating, not pegged to another currency that exporters could use and is devalued for that purpose?
There is probably enough research material in this idea for 2 or 3 doctorates but of the top of head it might work?
 

DownTheyGo

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I note from Lenihan's talk this morning, he said it's time to end talk and discussion about the possibility of Ireland defaulting - "Ireland will not default on foreign debt". This is a good thing, right? Everything else he has said or told us has been a lie too.
 

Nermal

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What a crap article...

The necessity of defaulting is not a reason to leave the Euro, as default is possible without doing so.

Ditto devaluation, same effect can be achieved internally with spending cuts and wage restraint.

Finally the article lists the ramifications of leaving: bank runs, capital and multinational flight.

So that's a tally of zero reasons in favour of doing so and rather a lot against.
 


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