Ireland's Suicide Pact with the EU

Sonny

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COUNTERPUNCH November 18, 2010

When the Cure is Worse Than the Disease
Ireland's Suicide Pact with the EU
By MIKE WHITNEY

Ireland could be the next Lehman Brothers. That's what has the markets worried. If Irish leaders refuse to accept a bailout from the EU's new European Financial Stability Facility (EFSF), then bondholders will be forced to take haircuts on their investments which will leave banks in Germany and France short of capital. Bonds yields will rise sharply slowing activity in the credit markets. An Irish default will trigger hundreds of billions of dollars in credit default swaps (CDS), which will push weaker counterparties into bankruptcy and domino through the financial system. Contagion will spread to Portugal, Greece, Spain and Italy widening bond yields and forcing governments to increase their borrowing at the ECB. Business activity will sputter, unemployment will rise, and growth will shrink. It will be a second financial meltdown.

Mike Whitney: Ireland's Suicide Pact with the EU
 
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Paul Carr

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It's an informative article but I don't agree.

The decision by Jack Lynch in 1979 to join the European Exchange Rate Mechanism and thus leave the sterling area was THE BEST DECISION EVER TAKEN BY AN IRISH TAOISEACH. It was a rare example of an Irish Taoiseach thinking medium to long-term, not short-term, when making a decision. We then had an economic hang-over of sorts in the early to mid 1980s.

Our present problems are not caused by the euro. They have been caused by an series of governments that followed the unceasing mantra of forever cutting taxes, in particular income taxes, corporate taxes, capital and labour taxes. This depleted the tax base and meant that since 2000 the government had to depend on the revenue of volatile and temporary property-related transactions, the self-serving bubble.

Read Mary Harney's Boston versus Berlin speech from 2000 to get an idea of what the mentality of recent governments have been.

Not only did recent governments , elected by the people of the Republic of Ireland, cut regulation and oversight of our banks' lending and borrowing, they bragged about it.

The people of Ireland wanted a Financial Wild West. We got it.
 
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onlyasking

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Our present problems are not caused by the euro.

Not only did recent governments , elected by the people of the Republic of Ireland, cut regulation and oversight of our banks' lending and borrowing, they bragged about it.

The people of Ireland wanted a Financial Wild West. We got it.
The 'financial wild west' was cheered on by almost all of the same forces that cheered on every single diminution of our sovereignty in every single EU referendum, including our joining of the Euro.

Other states beyond the Euro are being brought low by their banking crises and the economic woes of their trading partners ultimately damaged by the Euro, but our woes are due almost entirely to the out-workings of our insane property frenzy driven by lunatic interest rates unimpeded by sensible domestic taxation policies.

It is beyond question that we would not be remotely in as disastrous a place as we are now if we hadn't once more been good little EU children when joining the Euro, with its inherent insanity of one-size-fits-all interest rates which tie all to what's best for Germany and France.
 

Paul Carr

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onlyasking said:
The 'financial wild west' was cheered on by almost all of the same forces that cheered on every single diminution of our sovereignty in every single EU referendum, including our joining of the Euro.

Other states beyond the Euro are being brought low by their banking crises and the economic woes of their trading partners ultimately damaged by the Euro, but our woes are due almost entirely to the out-workings of our insane property frenzy driven by lunatic interest rates unimpeded by sensible domestic taxation policies.

It is beyond question that we would not be remotely in as disastrous a place as we are now if we hadn't once more been good little EU children when joining the Euro, with its inherent insanity of one-size-fits-all interest rates which tie all to what's best for Germany and France.
As far as the Euro is concerned, there is no France or Germany. There is no Republic of Ireland. There is Euroland, that is, all the countries that use the euro as their currency. In this regard, our businesses are at no more of an advantage or disadvantage than businesses in France and Germany. We use the same currency. We enjoy the same interest rates.
 

deiseguy

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We need to send a MAD memo to the EU/ECB "play nice or we will default see how much that will cost". I saw a chart on one of the business channels the other night which seemed to indicate foreign banks were into us for over €700 billion between everything. That in the context of the total EU GDP is relatively small but if it is not controlled at least some major EU banks will be hit hard. They are here because they want to be here they "want" us to accept a restructuring (there is no bailout on offer) we need to get some of our terms into the agreement and whatever agreement is reached should allow us some scope to grow our way out of this situation. Lenihan needs to draft a press release for release at 22.30 GMT on Sunday (just before far eastern markets open) saying that the IMF/EU negotiators have been escorted to Dublin Airport and are being put on the first plane out of the country. Show it to them and promise to follow through unless the conditions of the loan are fair.
 

Fergalino

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"Enjoying the same interest rates" is why we have borrowed for and built 100's of thousands of homes nobody wants and why we are facing collapse.
Wrong. Why were these houses not built in Germany, France, Belgium, Netherlands ...???

Because those countries have a tax regime which penalises property speculation. If you buy a house in Belgium, for example, you pay about 21% tax on the price of the house. If you sell it within five years you pay a huge tax on the capital gains. Thus, no one buys houses for speculation. Also, you pay about 0.4% of the value of the house EVERY YEAR in tax which goes to fund local authorities. This means that you cannot simply "sit" on property hoping it will go up in value. The only people that buy property are those that want to live in property. That is, in other words, normal people. Not speculators. in Ireland, we fed the monster. We gave tax INCENTIVES for speculators.

And these countries didn't seek to buy elections by constantly increasing PS wages and costs, and reducing personal taxes. By doing this we fueled the bubble. People spend fortunes on houses when you have low interest rates AND, at the same time, allow individuals access to a lot of money.

What we should have done is withdraw loads of money from individuals' pockets through public sector wage constraints and high taxes (which would have reduced spending power of private sector workers). We should have pumped up property taxes to deflect spending in that sector. We should have used the extra tax revenues 1) to create a world class education system which would have given our children and grandchildren a fighting chance to make a future for themselves, 2) fix our heath system 3) pay for infrastructure. All of this would have deflected money from the private property sector, thus preventing the property bubble. We would have had long term growth, rather than explosive short term election winning growth. At the same time, private sector industry would have had access to low interest rate financing.

and the sad thing is ... all of this is not rocket science. Why, oh why did we not see sense???
 

McDave

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It's an informative article but I don't agree.

The decision by Jack Lynch in 1979 to join the European Exchange Rate Mechanism and thus leave the sterling area was THE BEST DECISION EVER TAKEN BY AN IRISH TAOISEACH. It was a rare example of an Irish Taoiseach thinking medium to long-term, not short-term, when making a decision. We then had an economic hang-over of sorts in the early to mid 1980s.

Our present problems are not caused by the euro. They have been caused by an series of governments that followed the unceasing mantra of forever cutting taxes, in particular income taxes, corporate taxes, capital and labour taxes. This depleted the tax base and meant that since 2000 the government had to depend on the revenue of volatile and temporary property-related transactions, the self-serving bubble.

Read Mary Harney's Boston versus Berlin speech from 2000 to get an idea of what the mentality of recent governments have been.

Not only did recent governments , elected by the people of the Republic of Ireland, cut regulation and oversight of our banks' lending and borrowing, they bragged about it.

The people of Ireland wanted a Financial Wild West. We got it.
+1
 

McDave

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"Enjoying the same interest rates" is why we have borrowed for and built 100's of thousands of homes nobody wants and why we are facing collapse.
Affordable interest rates enable responsible people to make worthwhile investments. In the round, we weren't responsible and abused the facility. We're now paying the price. And we've got no-one to blame except ourselves.
 

Edo

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Wrong. Why were these houses not built in Germany, France, Belgium, Netherlands ...???

Because those countries have a tax regime which penalises property speculation. If you buy a house in Belgium, for example, you pay about 21% tax on the price of the house. If you sell it within five years you pay a huge tax on the capital gains. Thus, no one buys houses for speculation. Also, you pay about 0.4% of the value of the house EVERY YEAR in tax which goes to fund local authorities. This means that you cannot simply "sit" on property hoping it will go up in value. The only people that buy property are those that want to live in property. That is, in other words, normal people. Not speculators. in Ireland, we fed the monster. We gave tax INCENTIVES for speculators.

And these countries didn't seek to buy elections by constantly increasing PS wages and costs, and reducing personal taxes. By doing this we fueled the bubble. People spend fortunes on houses when you have low interest rates AND, at the same time, allow individuals access to a lot of money.

What we should have done is withdraw loads of money from individuals' pockets through public sector wage constraints and high taxes (which would have reduced spending power of private sector workers). We should have pumped up property taxes to deflect spending in that sector. We should have used the extra tax revenues 1) to create a world class education system which would have given our children and grandchildren a fighting chance to make a future for themselves, 2) fix our heath system 3) pay for infrastructure. All of this would have deflected money from the private property sector, thus preventing the property bubble. We would have had long term growth, rather than explosive short term election winning growth. At the same time, private sector industry would have had access to low interest rate financing.

and the sad thing is ... all of this is not rocket science. Why, oh why did we not see sense???
Ah stop talking common sense - TT is reflective of a great deal of Irish people who are desperately looking for someone else or something else to blame rather than admit we f**ked it up ourselves.

We are adults here - if you give an adult a box of matches to light a fire - you would expect an adult to be able to build and control that fire and ultilize it for the purpose it was built - not burn the house down.

Or are the Irish too immature and too stupid to be allowed to do this? - because that is the implication from such an attitude in regard to the interest rate issue - we had this discussion back in 1999-2000 - there is no excuse.
 
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Is there any point....?

Is there any point voting in Irish politics now since our laws and budgets are decided in Europe? :|

There's a debate about abolishing the Senate... what about abolishing the Dail?

Even when it had considerably more power a few years ago it was merely a platform where:


  • People complained about money not being spent in certain areas.
  • Opposition Parties took up the call (hoping to gain from dissent)
  • Fianna Fail spent more money in those areas that there was a fuss made about. There were no hard decisions made... which meant a landslide Fianna Fail victory. Poor poor Labour/Fine Gael... outspent by government.


Maybe we aren't losing much after all :(
 

forest

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Wrong. Why were these houses not built in Germany, France, Belgium, Netherlands ...???

Because those countries have a tax regime which penalises property speculation. If you buy a house in Belgium, for example, you pay about 21% tax on the price of the house. If you sell it within five years you pay a huge tax on the capital gains.
I would support such taxes and think they should be looked into

I was watching something on France 24 the other night about ireland and they blamed the irish fixation with land and property for our economic situation

Something I feel needs to be addressed
 

Paul Carr

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Fergalino said:
Wrong. Why were these houses not built in Germany, France, Belgium, Netherlands ...???

Because those countries have a tax regime which penalises property speculation. If you buy a house in Belgium, for example, you pay about 21% tax on the price of the house. If you sell it within five years you pay a huge tax on the capital gains. Thus, no one buys houses for speculation. Also, you pay about 0.4% of the value of the house EVERY YEAR in tax which goes to fund local authorities. This means that you cannot simply "sit" on property hoping it will go up in value. The only people that buy property are those that want to live in property. That is, in other words, normal people. Not speculators. in Ireland, we fed the monster. We gave tax INCENTIVES for speculators.

And these countries didn't seek to buy elections by constantly increasing PS wages and costs, and reducing personal taxes. By doing this we fueled the bubble. People spend fortunes on houses when you have low interest rates AND, at the same time, allow individuals access to a lot of money.

What we should have done is withdraw loads of money from individuals' pockets through public sector wage constraints and high taxes (which would have reduced spending power of private sector workers). We should have pumped up property taxes to deflect spending in that sector. We should have used the extra tax revenues 1) to create a world class education system which would have given our children and grandchildren a fighting chance to make a future for themselves, 2) fix our heath system 3) pay for infrastructure. All of this would have deflected money from the private property sector, thus preventing the property bubble. We would have had long term growth, rather than explosive short term election winning growth. At the same time, private sector industry would have had access to low interest rate financing.

and the sad thing is ... all of this is not rocket science. Why, oh why did we not see sense???
Since 1997, we've essentially had an incompetent government. To cover for its incompetence, it basically adopted the Reaganite/Thatcherite dogma of 'No Government is Good Government'. Using that cover, taxes were cut. It was cut, cut, cut; labour taxes, corporate taxes, income taxes, capital taxes, you name it. There was no such thing as raising taxes, except maybe consumption taxes which affect disproportionately the poor. We thought that the best way to help the poor was to cut their income taxes (aside from consumption taxes which remain amongst the highest in the EU 27).

We felt that there was no such thing as a social contract between the Government and the people that elect the Government). We have retained a distrust of government post-1916. People, of course, distrusted the British government when they were here, reluctant to pay them taxes et cetera. That continued after the Free State was born. The distrust was just transferred from one entity to another.

These so-called revolutionaries did not bring us a revolution at all.

It seems to me we are coming down to a stark choice. Either we're going to leave the Euro or we're going to look at ourselves in the mirror in order to ask ourselves some tough questions. I suggest we take the second course.

If this country leaves the Euro, this country will be set back 30 years. I also fear it will re-ignite the troubles in Northern Ireland.

We have to address the cronyist/parish pump/constituency pump corruption of Irish politics.

In the first instance, we need to get rid of PR-STV and adopt an open-list Party list electoral system like they have in Sweden.

In my view, we need a new Constitution. We need a Second Republic. De Valera's Constitution, its amendments notwithstanding, doesn't cut it for me.

I think we should move the capital of the Second Republic from Dublin to Galway.

The Second Republic should be characterized by a spirit of 'can do', not 'can't do'.

I recall a photo from the early 1980s of the French President Francois Mitterand and the German Chancellor, Helmut Kohl. They held hands. They were commemorating the fallen of World War 1 and 2. They were saying 'Never again!'.

We need to do the same in the Republic of Ireland. We too need to say 'Never Again'. We need to condemn the violence of the 1916 uprising, that is, our violence, not the violence of the British troops. We started it. We need to condemn all violence because there is never any justification for it.

Furthermore, it is time to take the battle to the Conservatives in this country. By Conservatives, I mean Sinn Fein, Fianna Fail and Fine Gael, the parties of 1916. Since 1922, Sinn Fein and the Sinn Fein derived parties have failed to deliver a new Ireland. It's now time for the Labour party to step up to the plate and offer a new vision.

A Labour government or a Labour-led government, which will be coming soon enough, needs to ban the following:

1) Commemorations at the graves of the following people:

A) Patrick Pearse
B) James Connolly
C) Eamon DeValera
D) Michael Collins

2) Commemorations of the 1916 Easter Uprising at the GPO on O'Connell Street.

3) Commemorations of Wolfe Tone and the 1798 Uprising at Bodenstown.

The present economic crisis is an opportunity for our people to grow. Let's seize it.
 

DuineEile

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Since 1997, we've essentially had an incompetent government. To cover for its incompetence, it basically adopted the Reaganite/Thatcherite dogma of 'No Government is Good Government'. Using that cover, taxes were cut. It was cut, cut, cut; labour taxes, corporate taxes, income taxes, capital taxes, you name it. There was no such thing as raising taxes, except maybe consumption taxes which affect disproportionately the poor. We thought that the best way to help the poor was to cut their income taxes (aside from consumption taxes which remain amongst the highest in the EU 27).

We felt that there was no such thing as a social contract between the Government and the people that elect the Government). We have retained a distrust of government post-1916. People, of course, distrusted the British government when they were here, reluctant to pay them taxes et cetera. That continued after the Free State was born. The distrust was just transferred from one entity to another.

These so-called revolutionaries did not bring us a revolution at all.

It seems to me we are coming down to a stark choice. Either we're going to leave the Euro or we're going to look at ourselves in the mirror in order to ask ourselves some tough questions. I suggest we take the second course.

If this country leaves the Euro, this country will be set back 30 years. I also fear it will re-ignite the troubles in Northern Ireland.

We have to address the cronyist/parish pump/constituency pump corruption of Irish politics.

In the first instance, we need to get rid of PR-STV and adopt an open-list Party list electoral system like they have in Sweden.

In my view, we need a new Constitution. We need a Second Republic. De Valera's Constitution, its amendments notwithstanding, doesn't cut it for me.

I think we should move the capital of the Second Republic from Dublin to Galway.

The Second Republic should be characterized by a spirit of 'can do', not 'can't do'.

I recall a photo from the early 1980s of the French President Francois Mitterand and the German Chancellor, Helmut Kohl. They held hands. They were commemorating the fallen of World War 1 and 2. They were saying 'Never again!'.

We need to do the same in the Republic of Ireland. We too need to say 'Never Again'. We need to condemn the violence of the 1916 uprising, that is, our violence, not the violence of the British troops. We started it. We need to condemn all violence because there is never any justification for it.

Furthermore, it is time to take the battle to the Conservatives in this country. By Conservatives, I mean Sinn Fein, Fianna Fail and Fine Gael, the parties of 1916. Since 1922, Sinn Fein and the Sinn Fein derived parties have failed to deliver a new Ireland. It's now time for the Labour party to step up to the plate and offer a new vision.

A Labour government or a Labour-led government, which will be coming soon enough, needs to ban the following:

1) Commemorations at the graves of the following people:

A) Patrick Pearse
B) James Connolly
C) Eamon DeValera
D) Michael Collins

2) Commemorations of the 1916 Easter Uprising at the GPO on O'Connell Street.

3) Commemorations of Wolfe Tone and the 1798 Uprising at Bodenstown.

The present economic crisis is an opportunity for our people to grow. Let's seize it.
Should we let your family know where you are?

Are you sure you are allowed out? Sit down for a while and have a nice cup of tea. You are all confused.

I drop you to the hospital myself, but it's about to be closed. No, not for lunch. Permanently.

All the fault of those nasty men in 1916 apparently.

D
 

Paul Carr

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Paul Carr said:
Since 1997, we've essentially had an incompetent government. To cover for its incompetence, it basically adopted the Reaganite/Thatcherite dogma of 'No Government is Good Government'. Using that cover, taxes were cut. It was cut, cut, cut; labour taxes, corporate taxes, income taxes, capital taxes, you name it. There was no such thing as raising taxes, except maybe consumption taxes which affect disproportionately the poor. We thought that the best way to help the poor was to cut their income taxes (aside from consumption taxes which remain amongst the highest in the EU 27).

We felt that there was no such thing as a social contract between the Government and the people that elect the Government). We have retained a distrust of government post-1916. People, of course, distrusted the British government when they were here, reluctant to pay them taxes et cetera. That continued after the Free State was born. The distrust was just transferred from one entity to another.

These so-called revolutionaries did not bring us a revolution at all.

It seems to me we are coming down to a stark choice. Either we're going to leave the Euro or we're going to look at ourselves in the mirror in order to ask ourselves some tough questions. I suggest we take the second course.

If this country leaves the Euro, this country will be set back 30 years. I also fear it will re-ignite the troubles in Northern Ireland.

We have to address the cronyist/parish pump/constituency pump corruption of Irish politics.

In the first instance, we need to get rid of PR-STV and adopt an open-list Party list electoral system like they have in Sweden.

In my view, we need a new Constitution. We need a Second Republic. De Valera's Constitution, its amendments notwithstanding, doesn't cut it for me.

I think we should move the capital of the Second Republic from Dublin to Galway.

The Second Republic should be characterized by a spirit of 'can do', not 'can't do'.

I recall a photo from the early 1980s of the French President Francois Mitterand and the German Chancellor, Helmut Kohl. They held hands. They were commemorating the fallen of World War 1 and 2. They were saying 'Never again!'.

We need to do the same in the Republic of Ireland. We too need to say 'Never Again'. We need to condemn the violence of the 1916 uprising, that is, our violence, not the violence of the British troops. We started it. We need to condemn all violence because there is never any justification for it.

Furthermore, it is time to take the battle to the Conservatives in this country. By Conservatives, I mean Sinn Fein, Fianna Fail and Fine Gael, the parties of 1916. Since 1922, Sinn Fein and the Sinn Fein derived parties have failed to deliver a new Ireland. It's now time for the Labour party to step up to the plate and offer a new vision.

A Labour government or a Labour-led government, which will be coming soon enough, needs to ban the following:

1) Commemorations at the graves of the following people:

A) Patrick Pearse
B) James Connolly
C) Eamon DeValera
D) Michael Collins

2) Commemorations of the 1916 Easter Uprising at the GPO on O'Connell Street.

3) Commemorations of Wolfe Tone and the 1798 Uprising at Bodenstown.

The present economic crisis is an opportunity for our people to grow. Let's seize it.
Incidentally, in relation to the commemorations or political events I suggest we ban, there is a very recent precedent for it.

From: http://en.m.wikipedia.org/wiki/Historical_Memory_Law

_____________________

"The Historical Memory Law is a Spanish law passed by the Congress of Deputies on the 31st of October 2007. It was based on a bill proposed by the Spanish Socialist Workers' Party government of Prime Minister José Luis Rodríguez Zapatero."
_____________________

The law, among other things, prohibits political events at Franco's burial place, the Valley of the Fallen. It also condemns the Francoist regime and removes Francoist symbols from public buildings or spaces. Exceptions may be given for artistic or architectural reasons, or in the case of religious spaces.

Labour leader, Eamon Gilmore, should follow the excellent example set by his fellow Socialist, Prime Minister José Luis Rodríguez Zapatero of Spain.

LABOUR FIGHT!

LABOUR - BREAK THE LINK WITH FINE GAEL.

IT IS TIME FOR A NEW REPUBLIC OF IRELAND.

IT IS TIME FOR THE SECOND REPUBLIC!
 


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