David McWilliams: Ditch the Euro

[eurosceptic]

Still waiting for a euro-fan to outline a clear strategy for recovery without a devaluation.

[youngdan]

Their strategy is simple, as simple as themselves. They keep repeating, "we need our friends in Europe"


How any adult can convince themselves that a stranger a thousand miles away is their friend, tells you all you need to know

[Dios]

How any adult can convince themselves that a stranger a thousand miles away is their friend, tells you all you need to know

Bit rich coming from yourself, Dan.

[Seos]

Still waiting for a euro-fan to outline a clear strategy for recovery without a devaluation.

Did you try reading?

Are you seriously suggesting that we "get out" of this by taking the pain of structural readjustment, rather than pulling some clever accounting trick that allows us to pretend for another while that we've escaped the consequences of our own stupidity?

Out-fecking-rageous. Can't believe anyone would suggest that.

What kind of questions are these? Anyway:

Deflation: I wouldn't recommend it. What I would heartily recommend is a substantial reduction of costs in the Irish economy, and a serious effort to regain some semblence of our competitiveness. Then the Irish Times can at last go head-to-head with the Daily Telegraph, at least on cover price!

Inflation: I certainly wouldn't invite the ECB to inflate the Eurozone. Do you seriously propose printing money (or whatever the silly euphemism the Anglosphere is using for this macroeconomic "policy")? The Eurozone isn't the UK or Wall Street you know.

Well, your rhetorical limitations are probably unacceptable to many poster here.

Anyway, the best thing the ECB can do is keep interest rates low for now, but not go to 0%. After that it's largely down to addressing the variety of problems in the different Eurozone countries. Germany will have to absorb temporarily high unemployment until their exports pick up again. Ireland will have to slash costs and expenditure and hope for the best. ECB/IMF bailouts may be deployed for the likes of us and Spain.

The Eurozone overall will not deflate because it is not fundamentally weak, and its main single currency competitor, the US, will itself deflate because of its own inherent weakness.

The Eurozone will certainly not inflate, because as the world economy slowly recovers, the effects of printing money in the Anglosphere will cause inflation there to rise thereby causing them to raise interest rates up to a highly uncompetitive 5 or 6%. The Eurozone will take this opportunity to continue reining in costs thereby continuing to improve its export performance.

Since you don't mind increasing our national debt and certainly leading to default, which is what devaluing our currency would mean, with all our debt (National and private) being in Euros. Why not borrow like crazy instead, have huge stimulus packages? At least that way we'd have some infrastructure to show for that mode of economic suicide.

But seriously, to talk about us getting a recovery through deflation is inaccurate, no one believes that. What I do believe is that Ireland as a whole has costs which are too high, they must come down before we can recover. I also believe that deflation is the unfortunate consequence of our bubble which we must suffer through before we recover. Right now, we know how painful that will be or at least have some understanding of it, we know what's ahead of us and we must bravely face it and go through it, not try and con our way out of it.

I'm still waiting for you to explain how we would deal with all our debt being in Euros, if we did devalue.

[eurosceptic]

Not all our debt is in euro's. Irish issued debt can be redenominated whether our creditors like it or not. Thats the risk of the market. Some commercial debt is in euros but we can let the banks fold. Anyone who has euro debts with a non-irish bank would be hurt by a devaluation but there arent too many of them.
McWilliams adknowledges all the concerns and risks involved in a devaluation in his article.

[Seos]

Ok... could you loan me €1,000?

[eurosceptic]

I could and if the punt is relaunched i will have to take 1000 punts back. That is the risk of the game!

[Seos]

I could and if the punt is relaunched i will have to take 1000 punts back. That is the risk of the game!

No really loan me €1,000! Like I have a printer, I'll pay you back with as much of the money I print with it as you want! You could be Ireland's first quadrillionaire if you just loan me €1000!

[eurosceptic]

Mmmm i might just take you up on that offer! Get your lawyer to draw up a loan agreement and send it to me by private message.

[eurosceptic]

The european movements descent from a credible, sensible and all round deserve to be taken seriously even if you dont like what they say bunch, into fearmongerers continues here as the threaten us with iceland if we were not in the eurozone. No mention of norway, switzerland, czech republic, sweden etc.

Setting interest rates:
They also make misleading claims such as us having a seat at the table deciding interest rates. The ECB board and executive committee (which we are not allowed sit on btw.) must act in the best einterests of the eurozone as a whole (which makes sense is suppose) so the irish member does not look after irish interests.
They claim iceland has no control over its interest rates, but what about norway, switzerland, czech republic?
They make no mention of the property bubble being inflated by cheap ECB credit.

Devaluation:
They make no mention of the highly successful 1993 devaluation, the successful finnish devaluation etc. They only claim a spiral of interest rates will result.

They do let the real political agenda of the eurozone slip though:
Being part of a rival to the dollar used by 320 million people.

European Movement Ireland: Your questions answered[tt_news]=2228&tx_ttnews[backPid]=7743&cHash=283596d385