Prof. David McWilliams writes an excellent piece arguing for the relaunch of the punt. He amkes a number of superb points.
1- The "need" to stay in the euro is similar other failed totem poles like "property only goes up", "soft-landing" and "banks well capitalised".
2- We cannot deflate our way out of this mess.
3- Anyone who questions a totem pole is first ridiculed and then viciously attacked before it accepted they were right all along.
4- It would require brave decisions like reneging on the state gaurentee of interbank lending and big investors would get an almighty kick in the cojones.
5- There would be a rapid devaluation of the new punt but that would immediatly make us competitive again.
6- We could use quantitative easing to lift the liquidity trap. Inflation would have to be carefully managed.
7- Many countries have used devaluations successfully before.
8- Even Iceland has now restabilised.
9- The banks would fold, but why not let them and gaurentee personal deposits up to a certain level and start new banks.
10- The price of land would collapse but it would find its level again before too long.
11- Unemployment would fall dramatically as it did in scandanavia and asia.
12- Ther would be a flight of capital but it would return once the economy settled.
13- Middle aged savers would be hit very hard but young people with debts would win bigtime.
14- Before the 1993 devaluation there was all sorts of threats of economic disaster which never materialised.
15- On our current trajectory we are facing slow strangulation.
Well he is a professor of economics so knows what he is talking about. Point 15 is the most telling. By staying in the euro we have a large degree of certainty and stability but that just means a slower death. Its time for some radical solutions.
Ditching the euro could boost our failing economy - Analysis, Opinion - Independent.ie