David McWilliams: Ditch the Euro

[sandar]

wehen did he become a professor?
Leaving the euro right now woukld be a disaster, causing massive inflation, serious issues with oru national debt, and depending on how its done, maybe restrict our main asset as a nation, trying to attract FDI, i.e. our open access to the EU market

[youngdan]

Why would it cause massive inflation

[wombat]

Why would it cause massive inflation

For a start, energy costs would rocket and they are one of the main disadvantages which manufacturing has in trying to compete. Personally, I don't like the idea of my life savings becoming worthless overnight, I suspect I'd head overseas with as much cash as I could escape with.

[ibis]

I was addressing the question you asked of ibis back in post no. 149.

If you're interested in a very potted account of ERM and what happened to Ireland in the aftermath of the 1992 crisis, check out: Exchange Rate Mechanism - ninemsn Encarta.

SBP article.

Still, youngdan wasn't paying attention to Ireland at the time, so it doesn't count.

[myksav]

I see the ECB have dropped rates to 1%. I thought part of this whole euro argument - as put forward by the Telegraph and Irish economists channelling them - was that (a) low ECB interest rates forcibly produced a housing bubble without any Irish intervention, and that (b) we were now facing 'punitive' ECB interest rates that would slow our recovery.

Where's the housing bubble that the historically lowest ever ECB rates ought to be generating? And since when is 1% punitive?

Does that 1% rate apply to Gov't borrowings?

[sandar]

it would also cause inflation because the irish punt would have a lower value than the euro, and with our high level of national debt, the value of the punt would only decline over time, meaning imports would cost more, and has been said, oil is a mjor import and is a cost in every sector of the economy.

[maxthedog]

Just thought I would point out. We would have to find another country willing to accept the new Irish Punt as payment for goods or service`s.
" The sound of a new Irish penny dropping"

[sandar]

they would accept it if they wanted to buy what we are selling.....whether they would accept it for the money we alreday owe them is whole other problem, they probably would but at a low relatove value....which means inflation.

[X-ray]

Its interesting and effectively we are trying to devalue by cutting pay, which wont work.

But what about debt in euros? debt in punts turned into euro debts, if the same happened in reverse it makes things worse right? Alot of debt is with foreign owned banks?
We are finished in EU also.

[maxthedog]

"they would accept it if they wanted to buy what we are selling....."

And what unique product do we have to sell, that they would have to buy from us.
I was in Poland 30 years ago where £5sterling in cash was king, We could call the new currency the PUNTzLOTY.