Should Ireland Abandon the euro?

[DaBrow]

Crazy idea. No.

I am not convinced Iceland is doing so well. Prices for food & other imported goods must have rocketed there.

As already mentioned everything we import would suddenly rocket in price. The punt wiuld just mean devaluation every 5 years as we did in the past.

Leaving the euro would mean Ireland is less attractive to FDI due to fluctuating exchange rates.

Iceland has been taken over by the IMF, but they are recovering.... Their Weak Currency has brought in a huge flock of investors whom are opening up offices for their products which are best preserved in Iceland's mild-coldish climate Like Server Farms.

With due respect, we are not getting any investors now with the euro because the rate is too strong for any foreign companies to even establish presence.

We are not cost effective or competitive... Our Tourism Industry has gone down the gutter because the exchange rate is so bad.


I see... there is a bit of varience:

The external poll for the thread is almost split down the middle.... 48% Yes 52% No

[hiding behind a poster]

No but EMU needs to be reformed. The Euro is hurting our exports outside of the Eurozone because of its strength. On the other hand, it secures our exports within the Eurozone - accounting for 40% of our exports. This percentage is likely to rise as the Eurozone expands. The longterm problem with the Euro is the single interest-rate. It played a huge role in the property-bubble which has devastated the economy. It was not the only factor - but it must be seen as the main one. In that context, I would propose a return to separate interest-rates.

(Bangs head violently on table). Oh Dear Sweet Divine Mother Of Jesus, FT - YOU CANNOT HAVE MULTIPLE BASE RATES WITHIN THE SAME CURRENCY!!! IF YOU DO, THE ONES WITH DIFFERENT RATES BECOME DIFFERENT CURRENCIES, BECAUSE THE DIFFERENT RATE MAKES THEM WORTH MORE, OR LESS!!!! That is basic, Day One, first hour, just-in-the-door economics. Now God knows I've said this to you often enough, but for your own sake go and read some very basic book about economics - because you're just making a clown of yourself here.

It was economic lunacy for this country to have been subject to Franco-German interest rates during the decade of 5-11% Irish economic growth - the last 7 of them spent with 4-7% inflation.

So why were you then cheerleading the pro-cyclical tax-cutting policy of the Irish government during that period? (Or do you even know what "pro-cyclical" means?)

[The Underdog]

Imagine what the golden circle would get away with in this country if the EU / Euro wasn't involved.

Do you want to go back to 15 % intrest rates ?

[jimmyfour]

.... In that context, I would propose a return to separate interest-rates.

But we have that right now; states borrow from the ECB based on the perceived credit risk of the country. hence our rates being much higher than Germany. It's the same euro, but the interest is very different but within a much more stable and manageable level.

Seeing as the banks are now getting all their funding from the state, the result is the same, EXCEPT, the banks cannot throw 15% interest rates on customers.

So far, no riots, no rapid inflation and bread costing 10x as much, etc., . No energy shortages. yes a small percentage rise in bankruptcy or debt default individually but the state - and thus our democracy - continues. This is the reason the euro is there. The risk that Ireland would have to cover to borrow would mean instant bankruptcy for the state - at the moment, the risk is shared between all eurozone members. Think of it as Universal Health Insurance, but for money.

[hiding behind a poster]

But we have that right now; states borrow from the ECB based on the perceived credit risk of the country. hence our rates being much higher than Germany. It's the same euro, but the interest is very different but within a much more stable and manageable level.

No, that's not what happens. What happens is that states issue debt paper, or government bonds, with a stated interest rate being paid on that debt. And in Ireland's case, when debt isn't selling, despite paying a higher rate than countries like Germany, the ECB is quietly buying up that debt. The rate is not a Euro interest rate as such. The single Euro interest rate is the rate that the ECB will pay on overnight deposits from Eurozone banks. And obviously it can't vary that for different countries - as if it was paying out 2% on Euros deposited by Irish banks, but only 1% on Euros deposited by German banks, then those Irish Euros are instantly worth more than the German Euros, because they pay a higher return. At this point your single currency completely breaks down, (FutureTaoiseach, take note) as units within it which are nominally similar have different actual values - which obviously can't happen.

Quite simply, I have ten Euro in my pocket, and you have ten Euro in your pocket. If my ten-Euro note is worth more than yours, then the Euro no longer exists, but has instead broken up into two different currencies.

[sparkey321]

I thought it was a good idea until I read your poll

Yes, we need to leave & devalue it's the only way to recover
Yes, we need a currency we can control... The Euro was doomed
No, It is a stable currency even though the rate is too strong
No, it would mean being disloyal to the EU & ECB

If you are going to load the survey, why bother?
why didn't you go for

Yes, the North Korean model is the way to go
No, the Euro is better than being Iceland and having the IMF run the show

He is spot on.

Your poll is so front loaded as to be worthless.

[White Horse]

I personally would welcome back the Punt, it would enable us to control our own prices and would relate specifically to our own economic state.... The Euro was never going to be a Suitable Currency for all of Europe due to the completely different economic stages of each member which vary incredibly.

In theory you have a good point.

However, would you trust the people to collapsed the economy (Government, Central Bank, Financial Regulator, Dept. of Finance etc) with running our own currency?

Me neither.

[DaBrow]

He is spot on.

Your poll is so front loaded as to be worthless.

What is this supposed to mean?

In theory you have a good point.

However, would you trust the people to collapsed the economy (Government, Central Bank, Financial Regulator, Dept. of Finance etc) with running our own currency?

Me neither.

Truth be told White Horse, We are in the position of removing the government if enough pressure was gathered to force an election.

The People mainly responsible for this collpase are the Government & Particularly the Department of Finance, but the ECB have a sizeable share of blame because of the crazy low interest rates that fuelled a bubble in our country along with wild inflation too.

We should demand the financial regulator chairman is removed too.... I hate to say it, but we need the IMF in the country.

Whether we like it or not, I do see the chances of us being out of the eurozone next year because the rate will either remain the same so far or it will increase in value... This will really cripple us.

If the € reaches parity with the £ or stronger which I hope doesn't happen, that's when we certainly kiss any hope of improvement goodbye.

[Cassandra Syndrome]

Do you want to go back to 15 % intrest rates ?

Yes. It would have great return on savings. So you earn, you save, you invest, you earn more, you expand, you save, you invest.

There used to be name for this old fashioned concept, capitalism I think it was called.

[Cassandra Syndrome]

Great poll Da Brow. Fair play for your courage. Its pleasantly surprisingly high for the Yes side.