The Euro Area Crisis: The Agenda for the New Irish Government

I will give a public lecture on this topic tomorrow evening (Wednesday April 6) at 6.30pm, as part of the Henry Grattan Lecture Series of TCD’s Policy Institute.

Venue: Jonathan Swift Theatre (Room 2041A), Arts Building, Trinity College Dublin.

More details here.

22 replies on “The Euro Area Crisis: The Agenda for the New Irish Government”

No need Philip. Apparently it is all over. Phew! (Image of sweat wiped from brow)

According to this report recovery is just around the corner.

Who wouldn’t buy 100% guaranteed bonds???

Donal Donovan, ex-IMF, gave a comprehensive and accurate run-down on the situation to Myles Dungan on the Pat Kenny Show just now.

As to the official game-plan cf.

It seems there will be no early move on the issue of the rate until the government faces the reality check outlined by Donal Donovan (which will have reached a wide audience).

The one joker is what happens with regard to Portugal in the coming weeks.

@ seafóid

It should be available as a podcast. But, in general terms, DD took Myles over all the fences that had to be crossed in the MoU, hinting at the distinct possibility of reversing the slippages that had occurred (minimum wage, investment bank, notably).

Most importantly, he underlined that the excessive pay levels in the Irish public sector, from politicians down, would have to be viewed from the creditors’ points of view not of those who are still living in the “Age of Entitlement” (my phrase). The blatant raids on the public purse that are still occurring – as detailed in the IT in recent days – will probably have made excellent breakfast reading for the Troika.

Hmm…might be able to make it, might not.

Would it be possible to set a laptop in the front row with a webcam and broadcast a stream? TCD’s gotta have the bandwidth and the tools are cheap or free these days.

Henry Grattan & Jonathan Swift ….. hmmm … neat context for the mo ..

… why not deliver on the holodeck and lets see how they would both respond …. thought experiments appear to be in agin in macroeconomics and political economy and looks like we are ourselves the main experiment … might invite Bohr, Heisenberg, Wittgenstein & Schroddinger as well …. betcha none of em ‘ll figure it out … ‘mus be a mystery’, as Blind Biddy is wont to put it at times, ‘simply bend over, an grin an bear it’!


On the real agenda …. uncover what is un-said at the ECB … and what Angie whispers into Nicky’s ear …. this is what we need to communicate to EU and rest of world – declaring a ‘state of emergency’ and ‘compulsory tillage & turf-cuttin’ would also assist.

Axel Weber now back onside as a German & European pragmatist: apparently there were other dissenters within ECB – but none so open as Axel was in Berlin last week. Who were they?

Donal Donovan doesn’t know one edge of a slean from the other …. open both ears!

@ seafóid

Sorry. No podcast. Maybe RTE could be persuaded to put one up.

On the broader aspects, the attached, courtesy Voxeu, on the incredible ESM will be of interest to contributors generally.

All of Angela’s trains are going to be meeting in the same station in June 2013 and the sight is not going to be pretty. It is better that Ireland get off before it happens. The key, of course, as far as the euro is concerned, is to stop the rot now at the Portuguese/Spanish border. Another Voxeu contribution would make one somewhat pessimistic in this regard as it points out that the problem with the Mediterranean countries is not that they are uncompetitive in terms of unit labour costs but because they are not making the right products. I do not think that this is true of Ireland. And neither do market analysts.

There is only one way to resolve, or at least neutralise, this problem and that is to continue with a hefty economic and social cohesion programme for the countries in question. Also for decision in 2013.

P.S. It may be noted that Zapatero has announced his decision not to contest the next Spanish elections as leader (March 2012).

It is a real pity that none of Swift, James Joyce and Myles na cCopaleen are around to document the farce that is Eire bocht under its new European management.

@ SeaFoid

“…..the farce that is Eire bocht under itś new new European management”.

A bit unfair to “managers” wouldnt you think?

The word “management” implies that there is some form of efficiency, coherent strategy and competence in place instead of the “gab fest” and unhelfpful “lecturing” our nation has been recently subjected to in Frankfurt and Brussels every month from certain quarters.


‘Another Voxeu contribution would make one somewhat pessimistic in this regard as it points out that the problem with the Mediterranean countries is not that they are uncompetitive in terms of unit labour costs but because they are not making the right products. I do not think that this is true of Ireland. And neither do market analysts’

That view seems correct on the numbers provided, but what it’s really reflecting, as you well know, is the gee whiz activity of the MNC enclave. As the indefiatigable @Michael H is forever reminding us, the FDI sector has limited employment potential, precisely because of its high tech basis.

Meanwhile, we are looking at domestic deflation, even without the proposed ‘extra’ austerity on top. It is extraordinairly difficult to see where the investment will come from to bring the domestic sector to the point where it can make the ‘right ‘products.

It seems the 1% liquidity flowing into our banks the nearest thing we have to an economic and social cohsion budget now. The VoxEU authors may be right for the wrong reasons, but that doesn’t make their conclusions wrong.

@ Paul Quigley

The best way to answer is to provide the attached link to that paragon of independent thought; The Economist.

A more misleading chart it would be difficult to imagine. When the EU enlarged, the economies of ALL the new members added up to the size of the economy of the Netherlands.

What is truly striking is the fact that the basic parameters have not changed. The Mediterranean countries are still what they were and the former Communist countries are still what they were and the whole continent is trying to recover from an extremely bad economic hangover because the designers of the euro did not allow for the devastating impact of assuming, mistakenly, that Germany was “good for the money”.

Germany is not good for the money and has not intention of changing position.

What it will be prepared to do, in my opinion, is fund spending on economic and social cohesion which it can control and from which it gains some return e.g. a Siemens train that whizzes you from Lisbon to Sintra in great style. (Whether such investments are good or bad for an economy is another question. By and large, the Irish Department of Finance deserves full marks for its choices).

Ireland’s economic destiny, especially in the context of investment, has to be viewed in terms of the size of the economy relative to others and what this means for FDI investment decisions.

The other point is that, by good fortune, we produce the three commodities that the anchors of the CAP – France and Germany – also produce; cereals, milk and beef. There are no intervention stores for what the Mediterranean countries produce.

The only thing keeping rural Ireland alive at the moment is the upturn in agricultural incomes. In other words, we are back producing that in which we have a comparative advantage and which can operate within the sheltered confines of the CAP.

In the academic community, I regret to say, I find little published evidence of these rather basic international economic considerations.

I was trying to find another chart of Europe produced by The Economist some years ago showing the countries of Europe in terms of the size of their economies. Someone reading this might have the skills to produce an up-to-date version.

@ Paul Quigley

There is an additional rather fundamental point to which I drew attention on another thread in the context of the debate on the CCCTB. Differences in fiscal and social laws and conditions are not considered as distortions of competition. Common rules on direct taxation and minimum rules on social policy can be adopted but they are not viewed as essential to the establishment of the internal market. This explains why the CCCTB proposal is based on Article 115 TFEU (unanimity and consultation of EP only) as against Article 114 TFEU (QMV and co-decision with EP). But the issue is not the technicalities but the view Ireland takes of the concept of “a highly competitive social market economy” introduced by the Lisbon Treaty (Article 3.3 TEU).

The drafters of the Treaty of Rome had more sense than to introduce such a contentious concept into the text of a treaty but it is there now, largely, need I say, on German and French insistence. The question will be; are we closer to Boston than Berlin if there is a move to agree a deal between nine countries under the enhanced cooperation procedures of the Lisbon Treaty?

As I have also pointed out on another thread, we would need to be in the position of Finland to exercise any influence in the debate. There is something rather quixotic in the idea of a “diplomatic onslaught”. The castle is in Dublin this week, the windmills are elsewhere.


Mile maith agat. There is a nice ring to your pickaxe. A few more smacks at this spot maybe.

‘Ireland’s economic destiny, especially in the context of investment, has to be viewed in terms of the size of the economy relative to others and what this means for FDI investment decisions’

arising from the marketwatch link…

Was it Bertie Ahern who said, while he was Taoiseach, that he was the only socialist in the Dáil?

So nationalising the banks was part of a long-term strategy by “the most cunning, most devious, most….of them all”, wasn’t it?

Eh Philip, you and Prof H been comparing notes?? 😉

He’s made some GNP-linker comments today in the FT…

… they were spotted in Hartigans last nite …. (-; bit of a spatter on how to spell ‘manag€able’ – couldn’t figure out if it had an ‘€’ or ‘not€’ … Wittgenstein joining them on the holodeck off the smoking room tonite … hush hush …

Not going to make the event tonight. Need to attend to child/school matters.

Any chance of getting the slides afterwards?

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