We have to devalue, says David McWilliams

[ballot stuffer]

I think this might be a good idea. If you did a deal between the gov, the unions and the retailers to cut everything by 20% - wages and goods - it might be acceptable to all.

Its precisely what needs to happen. I have no idea if its possible or been done before.
I fear we don't have the strong leadership to get something like this off the ground.

[sandar]

Its precisely what needs to happen. I have not idea if its possible or been done before.
I fear we don't have the strong leadership to get something like this off the ground.

since so much of what we consume is imported and the poeple we import from are not likely to by 20% for us its impossible, and would mean retauklers having to sell items at a massive loss, also I believe people would reign in their spending on the ssumption that isf no one spends now, you might get better than a 20% reduction later

[fiannafuddy]

I think this might be a good idea. If you did a deal between the gov, the unions and the retailers to cut everything by 20% - wages and goods - it might be acceptable to all.

I reckon that must have been what McWills must have been on about. He's a better entertainer than economist really. If you keep saying anything reasonably plausible for long enough it will eventually happen...Davy boy has made a fortune doing this.

[kerrynorth]

The implication of what Williams said is that we should leave the Euro unless the EU is prepared to bail us out as a quid pro quo for Lisbon. What everyone seems to forget is that Ireland does have another option to achieve a devaluation without having to resurrect our own currency again - namely adopt Sterling as our currency!

Radical? Yes. But it would tick all the boxes in the short to medium term at least.

[fiannafuddy]

since so much of what we consume is imported and the poeple we import from are not likely to by 20% for us its impossible, and would mean retauklers having to sell items at a massive loss, also I believe people would reign in their spending on the ssumption that isf no one spends now, you might get better than a 20% reduction later

There's more than a 20% margin on nearly everything sold in an Irish shop. Considerably more in many cases.

[ballot stuffer]

The implication of what Williams said is that we should leave the Euro unless the EU is prepared to bail us out as a quid pro quo for Lisbon. What everyone seems to forget is that Ireland does have another option to achieve a devaluation without having to resurrect our own currency again - namely adopt Sterling as our currency!

Radical? Yes. But it would tick all the boxes in the short to medium term at least.

Eh we can't devalue sterling.. Adopting Sterling isn't devaluing. Its just a straight swap. Unless it was to slide further against the Euro afterwards.

[kerrynorth]

Eh we can't devalue sterling.. Adopting Sterling isn't devaluing. Its just a straight swap. Unless it was to slide further against the Euro.

Sterling has had a competitive devaluation vis a vis the Euro of circa 20% over the last few months. If we adopt Sterling we would be buying into that devaluation. There is more than one way to skin a cat.

[Catalpa]

I think this might be a good idea. If you did a deal between the gov, the unions and the retailers to cut everything by 20% - wages and goods - it might be acceptable to all.

Anyone who has ever run a business will tell you a 20% markup is good going. The more competitive the type of business you operate in the harder it becomes to maintain a margin.

So an across the board cut like that would only drive a lot of companies to the wall. Anyway I doubt if such a decree would be legally enforceable.

Might be a better idea to really push hard on Consumer protection against overcharging as a very important part of a strategtic attempt to lower the cost of living.

For instance pair of trousers in Dunnes Stores that reads £14.00/€25.00 !

Go Figure....

[ivnryn]

I think this might be a good idea. If you did a deal between the gov, the unions and the retailers to cut everything by 20% - wages and goods - it might be acceptable to all.

In principle just dropping all wages (including the minimum wage) by 20%, should push down retail prices, but perhaps not.

However, the benefit of devaluing the currency is that prices don't actually change. People who are used to something costing a specific price are much more resistant to a price increase than they would be to forcing down the price. Maybe the rule would be that each retailer must drop prices on average by 20% to be held for at least 2 months, so people can get used to the new prices.

Also, this would mean that mortgages would in effect increase for everyone by 20% as they have to be denominated in Euros. With a devalued currency, that doesn't happen.

The only way the banks would agree to cut them by 20% is if they can also cut all deposits accounts by 20%.

You could do that by imposing a 20% tax on all deposit accounts in the country and giving the money to the banks (i.e. not requiring them to actually give the money to the government after they have 'collected the tax at source').

Planning ahead, you could pass a law requiring all loans/mortgages and deposit accounts in the country to by linked to a multiplier. This multiplier could be changed by the government if economic conditions required it. It could also be linked to wage agreements.

Ofc, the problem would be that it is so transparent. Devaluation/inflation works so well because people don't see their salary and bank accounts drop.

Also, there would have to be a rule to handle (smart) people who move their money to foreign banks.

[Digout]

If you keep saying anything reasonably plausible for long enough it will eventually happen....

Yeah, like this "it was not a bribe, it was a digout" ?