Will Ireland have to leave the Euro to save itself?

[goosebump]

Of course, most of debt is now denominated in Euro at this stage too.

We'd have great crack paying that back with a toilet paper currency.

[clytaemnestra]

I think this deserves a bump. Nearly two years down the line, is leaving the euro less unthinkable than it was?

[TradCat]

Leaving the euro would go hand in hand with debt default and in the end it is not going to be something of our own choosing. So the real question is will circumstances force us out. It's certainly possible.

[Machdaddy]

I'm missing something here.

Sterling and the Dollar are falling like a stone. Both economies are f*cked for the next 5 years at least.

Ireland is part of the Euro and has no exposure to exchange rate risk across the Euro zone.



What possible reason might there be for abandoning the link to Germany & France, and transforming ourselves into Iceland Mark II?

Total utter and complete stupidity!

What do you propose we use to back our currency? Where do you propose we get the foreign currency reserves to pay off our current borrowings? Who in their right mind is going to lend new money to a little rock in the Atlantic with massive debts, bigger contingent liabilities, no natural resources, and a floating currency?

Can we have a little bit of reality here please?


..
.

Its not that we will abandon France & Germany.They may well abandon us.

[blodger]

At the first hint that Ireland would leave the Euro the first thing that you, I and every organisation with money in Ireland would do is withdraw it to lodge it in a European bank. That is there would be a run on the banks and a total collapse of the Irish financial system. We would all refuse, if possible to be paid in the new currency. The currency would be absolutely worthless. The ECB could stop bailing us because (i) we'd be a complete basket case and (ii) they'd have less need to as we'd no longer be in the Eurozone. The government would have no money to pay for any services. They'd have to print money like there's no tomorrow, thereby leading to hyper inflation. We'd be left as a country with nothing to barter with but turf. It'd be far worse than anything even Iceland had experienced. Never in the history of the world has a country willingly left a currency zone to set up a weaker currency. Total and utter madness

[SideysGhost]

That is there would be a run on the banks and a total collapse of the Irish financial system.

I'm not sure how to break the news to you blodger but the Irish banking system collapsed two years ago, and anyone who still has real amounts of money in one of the toxic Guaranteed banks is either an idiot or insane, and deserve everything they are going to get frankly.

The banks are spectacularly insolvent, the State is massively insolvent, huge swathes of the population and the bulk of all indigenous companies are insolvent. We're bust, and default is inevitable.

Dancing in circles singing happy songs and licking the boots of our external masters isn't going to get us out of this one I'm afraid.

[blodger]

The banks may be insolvent but they haven't collapsed. You can still get your money out of the hole in the wall. Leaving the Euro would lead to a run and a collapse of the banking system. Nobody could get paid. There'd be no cash to give out.

[MPB]

At the first hint that Ireland would leave the Euro the first thing that you, I and every organisation with money in Ireland would do is withdraw it to lodge it in a European bank. That is there would be a run on the banks and a total collapse of the Irish financial system. We would all refuse, if possible to be paid in the new currency. The currency would be absolutely worthless. The ECB could stop bailing us because (i) we'd be a complete basket case and (ii) they'd have less need to as we'd no longer be in the Eurozone. The government would have no money to pay for any services. They'd have to print money like there's no tomorrow, thereby leading to hyper inflation. We'd be left as a country with nothing to barter with but turf. It'd be far worse than anything even Iceland had experienced. Never in the history of the world has a country willingly left a currency zone to set up a weaker currency. Total and utter madness

I noticed you first posted in June of 2008 and have only posted a few times since.

It begs the question, have you been in a coma since July of 2008?

I appreciate that in 2008 leaving the Euro would have had all the risks you envisage, but in 2010, the Banks are bust and a leaving of the euro would have followed the inevitable default on our sovereign debt.

A pity because it did not have to be this way.

[Nermal]

Anyone with any better analysis or solutions?

Yes, cut government spending instead of stealing our savings.

Prescient post by the way - you got the timeline just right.

[MPB]

The banks may be insolvent but they haven't collapsed. You can still get your money out of the hole in the wall. Leaving the Euro would lead to a run and a collapse of the banking system. Nobody could get paid. There'd be no cash to give out.

How do you work that out?