113LikesWe don't have a decent growth rate and our biggest problem is constrained demand in the economy compounded by debt personal and sovereign debt overhang.Originally Posted by feedmelies
We don't have a decent growth rate and our biggest problem is constrained demand in the economy compounded by debt personal and sovereign debt overhang.
Yes that's true and it's nothing to do with Germany's export surplus. And yes our growth rate is fine considering that in 2007 a large proportion of our economy was based on speculating on houses - we are still recovering from that.
I don't think anyone is denying that there is a problem, but essentially what you're outlining is that Ireland and Germany do not share identical aims and interests ( obviously enough - the German government is concerned primarily with German Voters, the Irish government is primarily concerned with the people who are eligible to vote in Ireland ), and that, for Ireland to improve its position, Germany's position must be damaged, and vice versa.
My point is that, given what you've said on this thread, there's no incentive for Germany to make life more difficult for its citizens except to feel loved by its neighbours. And that's just not a good enough incentive. The EU does not exist and was not brought into existence so that nations would like each other. It was established to provide stability and mutual improvements in standards of living ( i.e. wealth, freedom of movement, etc. )
This clearly isn't working, but we are very much in the EU, and it's not a hop-in, hop-out arrangement. And furthermore, there's no mechanisms in place to allow for a devolution or a retreat from the EU. Even if there was, the big question is that, in the case of calling it a day on the EU, the cure may be more damaging than the disease.
I agree with you when you say that it would benefit us if Germany's trade surplus was reduced, but the German power-that-be will not do that just to please us. Why would they? If we want the German trade surplus to shrink, and for Germany to import more of our exports and more exports from other PIIGS countries, then the onus is on ourselves and the other PIIGS countries to produce goods and services that Germany wants to buy from us.
As far as I can see it, this is the only real sustainable way to get any actual leverage. Crying "it's not fair!" isn't going to cut it.
On a more personal note, I think it should be kept in mind that, while the Irish character is one that puts a higher value on being liked than on being strong or being correct, the german character tends towards believing the opposite. Personally, I believe that Ireland, and especially its politicians, could do well to focus on being strong and correct rather than being likeable. Then we may have a chance of improvement.
Thank you.
Well, I agree with most of this and share your diagnosis of the problem. I also agree that Germany is not going to reduce its trade surplus just to be better liked by the rest of us and that there is no easy way to leave the Euro or even to talk about leaving the Euro. Crying it is not fair is not going to make much difference, but it helps when such a cry comes from the Fed or IMF.
Where I disagree with you is on your final point. Even if we are the best performing PIIG and our exports are the only bright light in an otherwise grim domestic economy, it is not going to provide sufficient leverage in its own right to renegotiate the debt overhang.
If you mean that by "being strong and correct" rather than "likeable" our politicians will talk more candidly -- even if only behind closed doors -- about the inevitably of eventual PIIG (or yet another Greek) defaults on sovereign debt in the absence of economic growth, unless the type of eurozone structural reform that Stiglizt talked about occurs at a faster pace, then we are on the same page. These are the tactics that led to the renegotiation of the promissory note, but it happens way too slowly.
Draghi only backstopped the euro with his promise to do "whatever it takes" to keep it afloat when the alternative was absolutely clear that it would collapse without a backstop. The same goes for Germany's trade surplus. Enlightened self-interest will push it to redress this when it becomes even clearer still that the export machine itself will collapse if euro-membership is reducing the periphery to perpetual misery.
Even the Troika disagrees with you here. Since you don't engage with internationally renowned economists, we shall dry a domestic one. This is macro 101. You should give it a try some time.
You know the drill. Please rebut point by point etc...
Ireland
Britain is among those few countries in the world that issues its own currency, determines its own interest rates and has no problem in getting foreigners to buy its debts – debts that it determines how and when to pay and at what value. This ability to borrow from foreigners in your own currency and pay them back at a value of your own choosing is an amazing economic and financial advantage.
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Last edited by stringjack; 9th November 2013 at 10:49 PM. Reason: Please do not post copyright-protected material to the site.
Nul points RMD. You've simply reposted [unattributed!] the text of a Krugman article which has been there all along and which has been the subject of much discussion already.
You're not making any net contribution. So there's really nothing to rebut. If you want to take up any of Krugman's points and add to them, then maybe there's something to discuss. But your lazy response is not really worthy of engagement.
Last edited by stringjack; 9th November 2013 at 10:55 PM. Reason: Please do not post copyright-protected material to the site.
Incidentally, Germany is also the world's biggest milk exporter.
Top 10 Milk Exporting Countries in the World - World Top Ten
And still they buy a hell of a lot of Kerrygold.
Kerrygold sales in Germany forecast to exceed €280m by end of year
There's potential to increase our export trade to Germany and other countries, if we focus on the things we produce that are in demand.
Germany probably will have a minimum wage of 8.50 after the new government comes in.
But Germany put some effort into reducing its wage costs in the about 8 years ago and that helped reduce their unemployment from double digits, they don't want to undo that too quickly.
