ECB rate cut?

[Disabled student]

Well then why are you suggesting it as a solution?

I am still suggesting opt out of Euro zone as a solution as we don't have to depend on the ECB. Bring back the autonomy of the controls and discard the Anglo- Saxon model.

We are the mercy at the ECB and they have no interest in us only the Germans and the French. BTW, the Germans and the French fared well compared to Ireland , England, Spain and Greece. It's their model that we should look at or alternatively, the Canadian model.

The bank lenders here were trading as reckless & irresponsible with no criminal arrests.

My question is why should we depend on the EU? Everything they do and say will affect us in every way even not our interests at heart.

[maxthedog]

The fact that some countries are at different stages of development and at different points of the economic cycle is irrelevant. In the US the same dollar, at the same exchange rate and interest rate is used in Silicon Valley in California and in Pork Bend, Idaho. Despite this the dollar seems to be holding up OK for 220 years or so.

When we had the Punt it was the same in Leitrim as in Ballsbridge, should Leitrim have had its own currency?

The idea that we could operate an independent currency belongs only in Economic textbooks. I reality we would be (as in the past) a satelite of a larger currency - there is no alternative. Those who would have us leave the Euro are effectively suggesting that we return to the Sterling sphere of influence. When its put in those terms few people think its a good idea!

There are two core problems.

One is aligning Industrial Europe....Germany France England, with the PIGS.

The other is how can the PIGS pay back their debt should they be bailed out by the ECB.

The idea that we are moving from one crisis to the next is really a media fiction.

Greece didnt suddenly become bankrupt just after Ireland and before that Iceland, in a nice manageable order. And net we will have Spain.

We are all in this huge melting pot. With very little of any problem solved.

If the interest rate goes up, the PIGS will fall in a huge crash.

If the interest goes down , Germany will suffer inflation and will become a basket case.

Our politicians will keep the propaganda going. "When we sort Greece we will then sort Spain etc."

But the truth is they are juggling. Trying to keep a marble, a chainsaw, a small child and razor blade in the air. All different objects with different weight,size and movement.

its impossible.

[Disabled student]

There are two core problems.

One is aligning Industrial Europe....Germany France England, with the PIGS.

The other is how can the PIGS pay back their debt should they be bailed out by the ECB.

The idea that we are moving from one crisis to the next is really a media fiction.

Greece didnt suddenly become bankrupt just after Ireland and before that Iceland, in a nice manageable order. And net we will have Spain.

We are all in this huge melting pot. With very little of any problem solved.

If the interest rate goes up, the PIGS will fall in a huge crash.

If the interest goes down , Germany will suffer inflation and will become a basket case.

Our politicians will keep the propaganda going. "When we sort Greece we will then sort Spain etc."

But the truth is they are juggling. Trying to keep a marble, a chainsaw, a small child and razor blade in the air. All different objects with different weight,size and movement.

its impossible.

Yeah you sussed it out. There's a lot of uncertainty out there as no one is certainly sure of even the banks or the financial experts.

[hiding behind a poster]

I am still suggesting opt out of Euro zone as a solution

But its not a solution, because it leaves us with the issue of personal debt. Even in a very benign scenario, a new Irish currency would lose at least 20-25% of its value against the Euro - and with hundreds of billions owing in mortgages, car loans, overdrafts etc, ALL IN EUROS, that would be the equivalent of increasing everyone's debt burden by about 33%. And that's in a very optimistic scenario. Now, there's two possibilities there. Either the banks pass on the cost of servicing those Euro debts to the customer, which crashes the economy, sees massive bad debts bring the banks down and trigger the State Guarantee - or else the banks try to shoulder the extra burden themselves - leading to massive losses, a liquidity crisis, a run on those banks, and again the triggering of the Guarantee. Both scenarios bankrupt the country.

as we don't have to depend on the ECB.

We are currently broke. We have to borrow lots of money every year, meaning we'll be depending on SOMEONE.

Bring back the autonomy of the controls and discard the Anglo- Saxon model.

What controls? We've never had control of our currency. To control your currency you need the cold hard cash to be able to flood the markets in support of your decisions. We don't have that, never have, and never will.

We are the mercy at the ECB and they have no interest in us only the Germans and the French. BTW, the Germans and the French fared well compared to Ireland , England, Spain and Greece. It's their model that we should look at or alternatively, the Canadian model.

Or alternatively, perhaps we should look at managing our public finances prudently, rather than building the tax revenues of a temporary asset bubble into our permanent cost base. Fact is that too many people here, including your good self, think that we shouldn't be held responsibly for almost a decade of suicidal economic recklessness - that there should be an easy and painless way out. Well they're isn't, nor should there be. The reality is that the last 3 years or so of our bubble was based entirely on fake wealth, which no longer exists. And only when people's living standards have that fake wealth stripped out can we get moving again.

The bank lenders here were trading as reckless & irresponsible with no criminal arrests.

There are ongoing investigations. But its always best to wait till you have the evidence before you arrest people.

My question is why should we depend on the EU? Everything they do and say will affect us in every way even not our interests at heart.

What???? Have you any idea how much the EU has discreetly been bailing out our economy in the last year or so?

[mr_anderson]

But its not a solution, because it leaves us with the issue of personal debt. Even in a very benign scenario, a new Irish currency would lose at least 20-25% of its value against the Euro - and with hundreds of billions owing in mortgages, car loans, overdrafts etc, ALL IN EUROS, that would be the equivalent of increasing everyone's debt burden by about 33%. And that's in a very optimistic scenario.

Indeed.

It also leaves another cataclysmic scenario.
Being in the euro allows our government to borrow close to ecb rates.
If we leave the comfort of the euro, at what interest rates will the markets agree to lend to us at ?

I think current government bonds have hit c8% in Iceland.
That would flatten us.

[maxthedog]

Indeed.

It also leaves another cataclysmic scenario.
Being in the euro allows our government to borrow close to ecb rates.
If we leave the comfort of the euro, at what interest rates will the markets agree to lend to us at ?

I think current government bonds have hit c8% in Iceland.
That would flatten us.

Being able to borrow money easily, is what has caused the problem in the first place.

If we were hit with a higher interest rate it might engage a few minds and work on a solution and not just keep returning too the well.

The idea is to reduce costs, not just PS wages but all costs. The goverment have a price list for rates, rents insurance and medical costs , Cut these also instantly, in line with any wage reductions.

As for Iceland being charged 8%, they did devalue so they are still up. Also they are negotiating with bond holders etc. In other words they are proactive.

Unlike our shower of re-active muppets.

[feargach]

The ECB view:

Deflation in Ireland: doesn't mean a damn thing.

Deflation in Ireland, Greece and Spain: means something.

[feargach]

If the interest goes down , Germany will suffer inflation and will become a basket case.

Not necessarily so. Only if a nation spends rather than saves can there be inflation. When Germans get extra money, they put that money in the bank.

Unemployment is very high in Germany, and now that Spain and Greece are in trouble, why would the business community create more jobs in Germany when you can pay much lower wages in Spain or Greece to get the same effect.

I can't see German inflation getting far above 2.5% even with rates at 0%. If anyone tries to jack up consumer prices, they'll simply lose a big chunk of market share to a Lidl-style discounter as a reward for being a pig.

[bob3344]

If we were hit with a higher interest rate it might engage a few minds and work on a solution and not just keep returning too the well.

The idea is to reduce costs, not just PS wages but all costs.

Do those two statements not contradict each other - that we need to reduce costs but a higher interest rate might be a good thing ?