VAT to rise by 2%?

Thought I said this before although I used the term Synthetic Devaluation – although I am uncomfortable with a scatter gun approach that may effect life support.
The waste is in transport – being on the road during the school run proves this hypothesis.

It is widely reported that the German parliament is debating the news that Ireland is planning to raise the top VAT rate by 2%.

Its quite possible that the German parliament might think the 2% vat increase is not enough. They might change the figure to 3% and give it back to Dail Eireann to sign off.
After all the German banks wants their money back.
How about Ireland introduce a new tax 80% tax on dividends on all foreign bonds and 80% tax on foreign deposit interest for both individuals and corporations.
That might be as good for the domestic as a VAT increase.

It used to be that heads rolled if a budget item leaked prematurely… was Phil Hogan seen anywhere near the Platz der Republik?

Tax should be all about freeing capital for productive use , not raising revenue – but what if it is all about paying back malinvested capital , what is it then ?

The only proper use of this exercise is to get the right fiscal measures in before default but if we default we will not need such a synthetic tax ………..I am puzzled by it all really.
Why don’t all economists accept we have a suboptimal currency that “they” will not even modify by destroying malinvested debt.

This Frankestein like creation is a abomination – wrecking ancient poltical contracts for what exactly ?
Another year of depreciating our capital stock so that financial capital has enough time to escape !!!!
We desperatly need men with Liathroidi.

We live in a medieval like Sheriff of Nottingham economy where tax only serves to raise revenue for the local collectors and the far away Kings.

Meanwhile the wenches sit around their hearth televisions waiting for the next episode of Robin Hood Men in Tights.
http://www.youtube.com/watch?v=pc1am3KyYgA

@Richard Tol

I would have some concerns about a flat rate system as analysed in your paper. I find it hard to see how it would not very inequitable.
When the UK rate went from 17.5% to 20%, that allows the ROI to increase from from 21% to 23.5% with no more cross border issues than previously.

Another point that your paper did not cover and needs to be looked at separately.

There was a major VAT change introduced on July 1st 2008.
In my humble opinion is will cost the State billions in lost VAT. I have seen no analysis done on the change. Nor have I seen any report of it being examined by the Dail PAC.
That VAT change had the effect of deferring the 13.5% VAT charged on new buildings that were “leased” from that date and spreading the collection of that VAT over a 20 year period.
It was introduced just about the time that the “Gasworks” building failed to sell and was being put into use for leasing or renting.
It was a political stunt to help banks and FF developers at the time but is costing billions.
Yet it has never been analysed.

@DOCM@All

“Putting the matter in another way; why is it not being discussed in the other parliaments of Euro Area?”

Perhaps the “other parliaments” are not so concerned about how Ireland manages itś fiscal affairs. From my perspective it looked like Enda Kenny was speaking, yesterday, in Germany like a trusted friend rather than a “jingoist” or “lapdog”.

Of course like family members trusted friends often tend to tell you things which are not always easily dismissed or flattering.

@LivonianA/DOCM

It looks like we are going to be ruled from Brussels/Berlin if the document the Telegraph got hold of is accurate….
“The six-page German foreign ministry paper sets out plans for the creation of a European Monetary Fund with a transfer of sovereignty away from member states.
The fund will have the power to take ailing countries into receivership and run their economies. Even more controversially, the document, entitled The future of the EU: required integration policy improvements for the creation of a Stability Union, declares that the treaty changes are a first stage “in which the EU will develop into a political union”. “The debate on the way towards a political union must begin as soon as the course toward stability union is charted,” it concludes.
The negotiating document also explicitly examines ways to limit treaty changes to speed up the reforms. It indicates that Mrs Merkel will tell Mr Cameron to rule out a popular EU vote in Britain.”

Nein to Referendums

@Ceteris

I think what Mr Kenny was trying to put across yesterday is that if Ireland had not been “misdiagnosed” (i.e not saddled with a Euro wide Bank debt) we would not be “ailing”.

In his Adenauer speech (a link was posted on another thread yesterday by Georg Baumann) Enda Kenny highlighted the fact that Ireland , prior to the banking madness, had always stuck to the terms of the stability and growth pact. What he did not (need to) add was “unlike other countries”.

Combined with the media reports of his visit his Adenauer speech is well worth reading as an example of a”diplomatic offensive” action. 🙂

@all

Re my last post:

All IMHO of course:)

Hang on, were peoples private pension funds not ‘robbed’ to fund a jobs plan that did not create one job so that vat could be cut on a night out after an afternoon in the hairdressers and now they are going to increase it. This lot are worse then the last. And it seems stuff the Irish we better let the Germans know that Enda and the lads think more of them then the Irish voter/taxpayer. Reasons to be mad, growing by the day!

@Livonian,

I hope you mean the countries that are driving us off the cliff, Germany and France who broke the rules 10 years ago.

@Livonian
Link requested…

http://www.telegraph.co.uk/news/worldnews/europe/eu/8898044/Germanys-secret-plans-to-derail-a-British-referendum-on-the-EU.html

“In terms of income distribution, the regressive impact of a VAT increase has to be calculated in the context of the overall package of taxes and transfers, since it is important to work out the net impact of all policy changes taken together, rather than on a “one at a time” basis.”

That’s a fair point, but considering the government’s pledge not to increase income tax, along with planned social welfare cuts, and the proposed introduction of a pointless flat tax for water users; isn’t it fair to think that a generally progressive budget is nigh on impossible?

@Bolshevik

Germany is just the Host.
It thinks it is sentient but it is following subconscious signals implanted by its Bundesbank.

Her is a surprise…from the IT
THE CHAIRMAN of the Irish Fiscal Advisory Council has defended the council’s call on the Government to implement greater austerity measures in the forthcoming budget, saying its assessment “was not taken lightly”.

Prof John McHale, chairman of the five-person council established in June to monitor and assess the Government’s fiscal policy, was addressing the joint Oireachtas committee on finance, public expenditure and reform yesterday.

And

“LEAKED DOCUMENTS: When you are a programme country you no longer have full control of your destiny

BEYOND THE Government’s huge embarrassment at the German Bundestag getting sight of Irish budgetary proposals in advance of the Oireachtas is a new and harsh reality – when you are a programme country you no longer have full ownership or control of your destiny, or even your secrets.”

And when you join the new European Monetary Fund you lose all control of your destiny…whether or not you are a good pupil and digilently squeeze the life out of the population.
It get beyond belief.

@Ceterisparibus

Sarkozy went to Asia with the begging bowl out and achieved the opposite so he must have said something to spook the Chinese. It was then whispered on. Sell sell sell.

@Ceteris/PR Guy
The article in the Telegraph is interesting for the following among other items.

Jean-Claude Juncker, Eurogroup chief, fueled the fire by warning that Germany is no longer a sound credit with debt of 82pc of GDP. “I think the level of German debt is worrying. Germany has higher debts than Spain,” he said.

This is clear evidence that European countries are no longer willing to have their funds sucked into German while they are unable to raise funds except at exorbitant rates.
It is not only a statement of the obvious but a prelude to capital controls if the situation continues.
IMHO Germany should be asked to buy back its bonds from foreign residents and replace that funding with domestic savings. That might sort the Target2 balance that Prof Sinn and Thomas Meyer of Deutsche Bank keep bleating on about.

http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000279906/Euroland%E2%80%99s+hidden+balance-of-payments+crisis.pdf

I agree with PR Guy on the Torygraph. Last August on a Saturday afternoon I found myself in the drawing room of a very agreeable country pile in Somerset . The only newspaper in the room was the Telegraph. I had read the guardian in the morning. They had the same stories. But the treatments were polar opposites. The Torygraph is rabid concerning Europe.

Regarding the leak, Enda has to get the Germans onside. The narrative is that Ireland is the perfect bailout. IT readers got it on Tuesday. Bild readers are getting it now.

Ireland in denial of German budget primacy
…
But the Irish Times, which has seen the document, said giving the information to the Bundestag was in line with German guidelines for participation in the European Financial Stability Facility (EFSF) – the German budgetary committee has to approve proposals to increase income and reduce spending before each bailout tranche can be released.

“What’s happened is the federal government meeting its legal information to inform the Bundestag about the EFSF,” one committee member told the Irish Times.

“This is widely known and seems unproblematic from our perspective. This is the day-to-day reality of a programme country.”

http://www.thelocal.de/politics/20111118-38953.html

I’m not sure if it is clear what is done in budgetary committees. It might surprise some here that when evaluating an investment then the business plan, including projected costs and projected revenues, is evaluated by the budget committee. For countries the business plan consists of taxes and state spending.

Ireland is asking for a loan to invest in Irish economy. Either the budget committee looks at the business plan, taxes and spending, or it does not. If it does not evaluate, then it is not doing its job and is then as useful as the risk-committees proved to be in Anglo, AIB etc

At the risk of being accused of ‘raising hares’, how should countries decide if they want to offer a bilateral loan & release funds?

@Grumpy

Excellent quote. Not quite as unintended as the FT thinks I would say.

@all

Jean-Claude Juncker has proved himself to be one of the leading, if not the leading, centre right pragmatists throughout this crisis.

Not that I could be considered centre roight meself, but I seek pragmatists on left, right and centre … On German Debt, he is absolutely correct – the ‘real’ debt of the German Financial System has been ruthlessly ‘hidden’ and an absolute joke that 100 billion will be sufficient to re-capitalise EZ banks …. as noted on earlier thread, unlike China which kept a good few bob in reserve, German finance tossed it out like confetti to peripherals (anglo-irish and aib anyone? PD/FF anyone) so that they could binge on reckless consumption [while the ECB and the BundesBank stood idly if smilingly by – readers of the blog will be familiar with the supreme ostrich on capital flows LBS the Magnificent who is shortly to be sent to Coventry in Harvard]

And the Bundesbank and Chancellor have been highly successful to date in ‘getting their deutsche dosh back’ to the extent, to take one minor example, of lending dosh to the Irish Sovereign so that it can be sent straight back to the German Financial System – and the poor eejits of innocent supine irish_citizen_serfs, skewed towards the lower orders, and their offspring having to pay it back …………. and this is NOT being sufficiently communicated to the European Citizenry – and especially not to the general mass of German Citizenry.

@PR Guy

Nothing personal – but cosmopolitan J-CJ would have FIREd you within a few days …… got a lighter?

Might try the Irish Gov though …. our EU Communications on Reality, and key reps, is Abysmal ….

@ Jesper

“At the risk of being accused of ‘raising hares’, how should countries decide if they want to offer a bilateral loan & release funds?”

Its not a bilateral loan between Ireland and Germany. Its between the Troika and Ireland. Enda Kenny, pre this unfortunate but unsurprising German political idiocy, said the same to Merkel on Wednesday – Ireland is in a program, has signed up to an agreement, and is meeting the demands laid down in that agreement. The Troika is supervising and analysing Irish measures and enaction of those measures, and it is happy. That is all that is required of Ireland. While the German courts have decided that the Bundestag should debate the contributions to the EFSF and what they are being used for, this does not necessarily necessitate them being given every document that has been provided to the Troika (as opposed to some headline numbers contained therein), and it certainly does not mean that the German Bundestag is entitled to leak it to journalists ahead of it actually being debated and enacted within the originating and ultimately deciding country. If the Germans want to play this game, i’d suggest they will find it very difficult to convince the periphery to yield more sovereignty to the core going forward. At some stage the Germans will have to realise that while they are the guiding force within the EU, they cannot simply do as they choose without there being some reaction from a periphery that is already struggling to keep their economies and societies together as-is.

Breaking Newz

Unconfirmed reports, from a usually unreliable source in Rioters, that a bazooka round has been fired in the unpopulated vicinity of a historic building in berlin ….

Blind Biddy has been drinking tea, and knitting, with me all morning 😆

@David O’Donnell

Nothing personal – I always enjoy your posts and you’re probably a great guy – but cobblers.

If the various unelected EU ptb want to see Europe out of this mess they had better get a comms plan together that doesn’t include shooting their mouths off individually and being seen to disagree with others in the ‘team’ in public (by all means shout at each other behind closed doors as much as they want until they get to an agreement). I don’t personally give a toss what he says but he’s clearly gone off on his own agenda. The saying ‘loose lips sink ships’ came about for a reason. The current situation is precarious – and I for one don’t want to go back to hunter-gathering.

@Eoin,

the parliament is doing what it is supposed to do. Trust but verify. To verify they need information, they asked for information and the information was given.

It is surprising that the Irish government agreed to hand over a draft to another parliament before the Irish parliament had debated it. However, that was a choice that the Irish government made. A borrower can refuse to give information and a borrower does not have to agree to everything their lender asks for.

@ Jesper

“It is surprising that the Irish government agreed to hand over a draft to another parliament before the Irish parliament had debated it.”

They didn’t. They gave it to the Troika. “Germany” and Ireland have no deal in place. The EU, ECB and IMF do, aka the Troika. This isn’t difficult to understand.

Germany, while entitled to some information, is not entitled to every single document the Troika receives on Ireland. The German constitutional court simply says that the Bundestag must be informed of how the EFSF is being deployed. This isn’t difficult to understand.

Further, they are definitely not entitled to leak this information to the press, in a bid to gain domestic favour but which risks undermining the democratically elected government of a program country. This isn’t difficult to understand.

Using your own inaccurate example, if you ask for a loan from a bank, are the banks shreholders entitled to look at all the information you have given? Further, are they entitled to leak this to the press? No, they are not.

@Mr. Bond,

Completely agree with the points you’re making, but this is ‘grubby politics’. Most German voters are pretty mad because they were lied to. They were promised by their politicians when they were being asked to abandon their beloved Deutschmark for the Euro that there was absolutely no possibility of anything even remotely like a transfer union arising. There were told that every possible safeguard to prevent this had been put in place. Now the voters realise that this was a tissue of lies. The politicians are hoping that by demonstrating that they will be able to exercise some oversight on support funding of other states and on the fiscal performance of these states, they might be mollified.

And this isn’t going to get any better. German voters are still being lied to about the state of their banks. It’ll probably need a bit more than some passing embarrassment of other sovereigns and the Troika to mollify them when they eventually extract the full story.

@ All

An interesting link.

http://blogs.ft.com/brusselsblog/2011/11/germany-raises-orderly-defaults-again/#axzz1dgdhP2Is

Jesper may have a view on the following extract from the German negotiating document.

“When the exact rights of intervention in nationl budgets of programme countries are being designed, the constitutional provisions on the budgetary autonomy of the Bundestag must be observed in every case”.

The IT featured a picture of a building in Berlin on the front page today. “People walk by the Reichstag building, the seat of Germany’s parliament the Bundestag, in Berlin”. The Reichstag was the Imperial parliament. The building now holds the Federal parliament .The Empire fell following a previous financial crisis. The Reichstag was burnt after the next one. The Federation followed the war that followed.

Where is Grumpy ?

http://www.irishtimes.com/newspaper/breaking/2011/1118/breaking28.html

The Croke Park agreement on public service pay and reform is unsustainable and needs to be renegotiated, the chairman of the Dáil Public Accounts Committee has said.

Speaking after a speech in Dublin this morning, Fianna Fáil TD John McGuinness said the pay and pensions of staff in the public service were being protected under the deal.

He said that only 58 per cent of the workforce in the country had a pension while 42 per cent had not.

“But those 42 per cent who cannot afford a pension for themselves are contributing to the pension of the public sector. It is creating a two-tier workforce, it is creating a two–tier pension scheme and it has to be renegotiated.”

@PR Guy
That claim by Junker above is rubbish….see report here.
http://www.nytimes.com/reuters/2011/11/18/business/business-us-banks-europe-funding.html?hp.
German short term treasuries have gone negative.

@ B.EB

That is about it! But there is one slight qualification. It applies only to countries “in a programme” which is unlikely to be the case for Germany.

For the information of Paul Hunt, Germany has not paid one red cent to any bailout up to this point other than in respect of her own banks. What the country has accepted is a very large contingent liability through the IMF, the ECB, the budget of the EU and the bilateral guarantees given under the EFSF. But that is enough to make any German voter queasy.

What is really rather unsettling is that the very valid case being made by Germany is being undermined by the lack of a coherent position in Berlin, the participants being evidently more interested in scoring political points off one another rather than having regard to the disastrous possible consequences for the image of Germany abroad and, more seriously, the future of the euro.

It is simply incoherent to insist on diziplin in order to restore access to the markets while at the same time announcing to private investors that they will lose their shirts in the rather likely event that the necessary discipline may not be forthcoming.

But as I have indicated above, there is some reason for optimism. The German opening bid was always likely to be high and Merkel has already retreated somewhat (if the quotation from Derek Scally is to be believed).

But, meanwhile, in the real world, France risks falling out of the bed (maybe even this weekend).

@Mr. Bond,

You may view them as ‘domestic politcial games’, but I would see them as mere tactics in a bigger strategy to secure voters’ consent to what needs to be done to resolve this crisis. We’re used to politicians lying routinely to us. Many Germans, for all sorts of reasons, seem to find this offensive – particularly on matters related to the currency or economic management. They have been lied to once on these matters and it will take some convincing for them to trust their politicians on these matters again.

Let the German politicians do what they have to do. In any event if you’re in the treatment room because you couldn’t manage on your own you haven’t much grounds for quibbling if those who are paying for your stay want to make sure you’re taking the medicine and might be heading for the exit soon.

@Ceteris
Thanks fo link.

@Joseph Ryan@Livonian
Those two countries were exactly the countries that sprung to my mind (recalling their rule breaking 10 years ago) when I read Mr Kennyś Adenauer speech. I would venture to guess that his audience also knew what he was diplomatically referring to.

@Bolshevik
re Lady not for turning.

I see that following Taoiseachs visit to Germany the good Doctor is now proposing “limited” treaty changes.

Face saving is important in politics and diplomacy which is why we are hearing about German Parliament “inspecting” the Irish budget.

“Inspection” can mean anything and nothing except as a useful “bone” to toss at German tabloids.

“Limited”treaty changes can also (and probably will) be “watered down”.

We need to avoid the temptation of “jingoism” and not indulging in “voyeurism” by equating Cameronś upcoming visit to Germany with Chamberlains visit in 1938.

Dr Merkel has many flaws (including forgettting that the EZ started in the West and that that is where it will succeed or collapse) but she can never be compared to her 1938 predecessor.

If I remember correctly Margaret Thatcher (same poitical party as Cameron) had many “rows” with her Helmut Kohl (same party as Merkel) but it never seemd to do any harm.

@Bond @DOCM

“so they can intervene in ours, but we can’t intervene in theirs?”

IMHO some Germans (who are very worried the Euro will collapse and the new DM will skyrocket thus damaging exports)might argue that by saying that Ireland was not interested in Treaty changes but that the crisis should be fixed quickly using existing treaties Ireland did “intervene in theirs”. 🙂

@Cetris@Livonian

I agree “the game has changed” but somehow I think (hope) it was the “Quiet man from the West” who has just restricted the “game” into 15 minutes extra time rather than the “hour” Dr Merkel wanted.

Two state visits from North West Europe with Germany in a matter of days looks like this “game” is moving very fast.:)

@BEB

just so we’re clear – the European Commission has admitted that they forwarded on this document to the German finance ministry by mistake. These documents were never intended for them. The German finance ministry then decided to use (and abuse) it in the manner in which they did.

I’ll allow that sending the budget on to German TDs certainly seems like a mistake to the Commission in retrospect but I would question whether it was something that was done unintentionally. What the CDU wants it gets.

I do not think it is hyperbole to say that this is now the German centre rights EU and that this is a bad outcome considering their instincts are not progressive. A CDU EU will be a pretty miserable place for anyone not bordering Germany and aligned with its economic priorities.

Cartoon of the Day Süddeutsche Zeitung appropriate methinks!

http://www.presseurop.eu/en/content/cartoon/1185081-oh-what-sound

@Ceteris

I read your link and once again many thanks.:)

Actually right now there are two “outer groups” in addition to the EuroZone which IMHO “3 tiers” already exist.

Tier A Sweden, Denmark and UK
Tier B EuroZone
Tier C about nine accession states.

IMHO unlike Portugal and Greece (I suspect Belgium will be “carried” by Holland, Estonia will be “carried”by Finland and Austria may “carry” one or two of its EZ meighbours) Ireland is currently assessing whether Tier A or Tier B is the best option.

Portugal and Greece may well be happy to opt for Tier C if Spain and Italy also opt for that.

This may all be spun as a “struggle” between Germany and UK but behind the “smoke and mirrors” this may actually be a struggle between Germany and the ECB.

If the “proverbial” hits the fan I might even consider betting my solitary Transnistrian Ruble that Berlin will win out over Frankfurt.

The ECB may have made the mistake, which many banks have made, and hired to many PR specialists as advisers to Economists rather than Political Scientists and Business specialists.

@Eoin Bond
Thanks. Must have a closer look at it. Too busy trying to make sense of all the conflicting reports. News of a “silent run” on Euro sovereigns further complicates the thinking…
http://www.reuters.com/article/2011/11/18/us-eurozone-germany-idUSTRE7AH1KR20111118

@Livonian
Not much today on the Telegraph leak….maybe we should email Ambrose?

How about this for misery….

“Portugal has to do more than initially planned to meet its budget goals, Passos Coelho said Oct. 13. The government has announced a one-time Christmas income-tax surcharge on all taxpayers to help cover the budget shortfall this year.”

@Ceter
I don’t understand the Bund trade if you are a maturity investor – it displays a complete ignorance of game theory.

We are witnessing the possible break down of the modern version of the Latin Monetary unit and we all know what happened after that episode.

If you are confident the Euro will survive you buy Gold as that is the only monetory asset that will save it under its current inter sov framework.

If not you row as fast as possible across the Atlantic and buy $$$$$$$$$$$$$$$

@ B.EB

I think the wording to which you refer is a roundabout way of saying to the Dutch – who are pushing hard for it – that the idea will not fly.

The problem that has arisen for Germany is not related to the democratic legitimacy issue as such but to the fact that, courtesy of the constitutional court, the representative (Bundestag) and executive (Federal Government) responsibilities have been mixed up. This is a serious problem of which the “Irish leak” may be a useful reminder. Combined with the requirement for unanimity, the involvement of the Bundestag makes the EFSF effectively inoperable.

At the same time, the German government is clinging to the idea that it is the solution. The fact that it has so far raised only about €16 billion, and at a cost that has now risen by 100 basis points, shows how delusional this position is (unless it is back-stopped by the ECB, a move, among the many others tried, blocked by Germany/Merkel?).

Of course, the EFSF is the branch on which Ireland is sitting and, as I have pointed out elsewhere, I do not suppose we are in the best position to point out how weak that branch is.

P.S. Jousting with Jesper is a hare-raising experience.

@ Paul Hunt

for the record, the unflinching remark was meant as the highest compliment, even if i may disagree with this democratic power being used so purely at times (as you yourself just noted, and as i have complained re Greece and Germany recently). A pure democratic balancing argument is often required against arguments for more efficient and quick decision making.

Gross and Fink not impressed…
“Investors are basically fleeing what were previously safe havens,” Gross said. It’s “certainly a moment of 2011 which is significant”

And

““It is a very dangerous stake Germany’s playing,” Fink, who runs the world’s biggest asset manager, said at the event at the Beverly Hilton Hotel in Beverly Hills, California. “And many people would not play these stakes because the outcomes can be black or white.”

Gross and Fink, whose firms collectively manage $4.7 trillion in assets.”..

@Eoin,

I’ve repeatedly said that a borrower does not have to agree to everything that the lender wants. I don’t see how you can interpret that as me contending that the Bundestag has to have access to every single document it wants.

Given how the competence of political leaders is being ridiculed here I’d expect that people would welcome limitations imposed on political leaders by their courts and parliaments. The biggest failure in this crisis comes from the incompetence of the financial industry & now the advise from the same industry is seen as the way to go?

It seems more likely that a few banks would do well in copying the prudent and careful approach of the German parliament in their lending practices.

@Jesper

“It seems more likely that a few banks would do well in copying the prudent and careful approach of the German parliament in their lending practices.”

I wonder if that sentence provides a clue as to why this is turning out to be a “have a go at Germany week” in various media outlets?

@DOD

re Der Spiegel article.
http://www.spiegel.de/international/europe/0,1518,797626,00.html#ref=nlint

I have to say I found it difficult to get a coherent view from the article and did not see too many positives in it.
I got the view that the weight of opinion, much supported by the article, was in favour of a two speed Europe. Or more correctly a new core Europe and a coterie of outsiders who could sink or swim. While Habermas’ views were welcome, the solution being proposed even by Fischer seems to be an inner core run by a Eurostag!
Perhaps the fact that there were several authors gave the article it lack of coherence or perhaps it was just my own lack of understanding of the article.

” it is important to appreciate that an increase in VAT that avoids an increase in labour taxes is, in relative terms, an employment-friendly policy and is also part of the mix that can engineer a “fiscal devaluation” that can partially replicate the impact of a “currency devaluation” .”

Aha – so that was why this government had the cunning plan of raiding my pension to CUT VAT rates as part of their stimulus package?

@ Livonian

“( I am not any good at posting links)”

Neither am I the most elegant poster, but the link to the blog is here:

http://blogs.telegraph.co.uk/news/author/danielhannan/

@ All

The defenders of the Community method attempt to head off the inter-governmentalists at the pass!

http://www.reuters.com/article/2011/11/18/eurozone-budgets-proposal-idUSP6E7L30020111118

It may be noted that the immediate measures to be proposed next week by the Commission, and that would be adopted under the existing provisions of the treaties, are in the form of Regulations which would become part of the national legislation of the member states and would apply to all EQUALLY.

The distinction between the two approaches is fundamental. The Community method may achieve the necessary level of political and democratic legitimacy, the inter-governmental approach, as practiced hitherto largely on the insistence of Germany but with the active support of France, will most certainly not.

I wonder if the ECB will be the last fortess of monetarism, sort of a monetarist Masada with Trichet going down in history as a Bar Kochba type zealot.

@DOCM

It’s half baked and fundamentally flawed. They acknowledge interference in national sovereignty and claim legal cover because a treaty mentions that the economic policy of the EU is ” of common concern”

That a threadbare legal argument and I could see at least one of our Supreme Court judges demolishing it very quickly.

I won’t even go into the proposed right to go before national parliaments or the right to veto (and that is the correct word) national budgets.

I despair. Borrosso and his crew are living in la la land.

@ Jesper

Where exactly did I try to make out that the guarantees could not become debts? I was simply stating a fact – the German government has decided to guarantee the EFSF. It did not decide to provide loans to Ireland, and did not decide to provide guarantees to Ireland. Germany -> EFSF, that’s the agreement in place. Whats the confusion here???

And again, you need to keep up to speed here – the Irish government has formally complained to the EU Commission about the release of the document.

@ Livonian

Peace in our time or just more “jingoism”?
http://www.independent.co.uk/news/world/europe/germany-tightens-the-screw-on-isolated-britain-as-tensions-soar-6264596.html

Der Spiegel and the Torygraph throw petrol on the fire.http://www.telegraph.co.uk/news/worldnews/europe/eu/8900799/Britain-will-join-euro-before-long-says-German-finance-minister.html

Schauble thinks “that the survival and eventual stabilisation of the euro will convince non-members to join the currency club”. What planet is he on?

While even I wouldn’t compare Merkel to her 1938 predecessor I can only describe what has happened in Greece and Italy as the undermining of democracy. I’m sure that nobody in Europe wants to re-visit 1938 or the horrors that followed but I get a sense of history repeating itself.

@Ceterisparibus

“It looks like a full blown run on Euro assets.”

All true. I was working with a big continental client of mine this week who have, as of yesterday, reduced their (very significant) European holdings to less than 1% of their overall investment pot. I don’t quite get it when I read in the press that there ‘might’ be a run on European banks or that another recession ‘may be’ on the horizon. It’s already here. Wake up and smell the coffee press corps.

@Joseph

“No amount of talking behind closed doors is going to change Germany’s mind.”

I’m not trying to say it’s a bad thing (or a good thing). It just won’t work.
It will just create further retrenchment by Germany. Merkel knows she cannot afford to be seen (by her electorare) to be seen to be backing down to things that have been thrown in public.

@ Ceterisparibus

The interpretation of the treaties is a matter for the European Court of Justice, not national courts. That is what the peoples of Europe have signed up to. The supreme courts of all EU countries, with the possible exception of that of Germany, have accepted this and even the latter has never actually put the matter to the test. Its judgements have been confined to forcing changes in domestic legislation while the more appropriate action would have been to refer the cases for a preliminary ruling to the ECJ (as many German legal experts have been urging it to do).

That is why we have such a mess in Berlin.

However, the essential and primordial point is that the EU would be proceeding within the agreed legal structures of the treaties, applicable on an equal basis to all member states, subject to decision in accordance with set procedures and the member states would be dealing with the executive of the EU and not a committee of a national parliament, no matter how powerful it imagined itself to be.

Incidentally, there is little prospect of change in the attitude of the German court if this report from Handelsblatt is any guide.

http://tinyurl.com/7eyd72k

Google Translate does a faily good job. One simply could not imagine such a debate with the senior judge of a supreme court in any other country of the EU. Opinion polls confirm that the constitutional court is the most widely trusted institution in Germany. You will not the criticism of its most recent controversial decision removing the 5% threshold for elections for the European Parliament by the CDU elder statesman, Karl Lammert.

@DOCM

re ECB to lend to the IMF for sovereign bailouts in the region, the Dow Jones Newswires reported.

Yes that would be a good start but even if initiated it would not solve the problem.
It still leaves the banks unresolved with the current position that unresolved banks acting as a hidden sword of Damocles over sovereigns.
However if the proposal you mention were accompanied by an agreement of the ECB to act as LOLR to banks with full power to wind down banks, impose losses on bondholders as part of ECB run Europe wide bank resolution regime, then that would resolve the immediate crisis.

@all foolish fans of Bernard Connolly – Wise UP: AIG AIG AIG AIG ….

Words of a Euro Doomsayer Have New Resonance | Betting on Bernard Connolly
Good god….

Bernard Connolly was “a European Union economist in the early 1990s, where he helped design the common currency’s framework, but then he was dismissed after he expressed turncoat views. In 1998, just months before the euro’s introduction, he predicted that at least one of Europe’s weakest countries would face a rising budget deficit, a shrinking economy and a “downward spiral from which there is no escape unaided.”

“The origins of that fear, as well as the anger and passion that drive him, date to 1995, when he took a leave from his job with the European Commission to write “The Rotten Heart of Europe.” The book was an excoriating history of the failure of the euro’s predecessor, the European exchange rate mechanism.

In 2005, when Greek, Portuguese and Irish bonds were trading at rates barely higher than Germany’s, Mr. Connolly’s work at AIG Financial Products persuaded a small group of hedge funds and independent investors to bet on a euro zone crackup.

They did so by buying the credit-default swaps of what he saw as the most vulnerable European countries.

When fears that those countries would default took off in 2008 and 2009, sending the values of those swaps skyward, they were able to sell – reaping large profits.

“It took a while, but we finally were able to monetize Bernard’s views on Europe,” said James Aitken, who worked with him at AIG Financial Products and describes his job at the time as translating Mr. Connolly’s arcane musings into actual investment strategies.

While other investors have also profited from following Mr. Connolly’s advice, Mr. Aitken says that the analyst’s true passion is to try to prevent the social and political train wreck he fears is just around the corner.”

http://www.irishleftreview.org/2011/11/18/words-euro-doomsayer-resonance-betting-bernard-connolly/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+irishleftreview%2Ffeed+%28Irish+Left+Review%29

There is something really rotten at the heart of the global financial system’s derivatives wing ……….. it feeds on human flesh and blood … The Matrix Reloaded ….

@all

ECB lending to IMF which then lends to EU Sovereigns is MAD MAD MAD … it is simply loading more and more and more of Financial System losses onto present and future generations of European citizen_serfs …. this is simply SOCIALIZATION WRIT EVEN LARGER THAN IT IS NOW …..

The idea of the ECB lending to the IMF sounds like madness to me and smacks of lining up the taxpayer to take the hit (in the country borrowing).

@PR Guy

A good article on Reuters as to why we are horlixed…. A flavour

“In fact, it’s the definition of a vicious cycle. The EFSF’s funding costs rise along with those of its guarantors, and perversely, bond market participants say that the very existence of the facility also causes its guarantors’ cost to rise. That’s because there aren’t many investors who are interested in buying European sovereign debt these days. Those who are demand a very high premium if they’re going to buy, say, Italian debt instead of EFSF debt. This is why the EFSF was going to be hurtful, rather than helpful, if it had to be used: it competes with its very creators for investment, driving spreads higher and higher. One hedge fund manager calls the EFSF  a “self-inflicted killer” of Europe’s bond markets.”

The EFSF is due to expire, and is supposed to be replaced by the European Stability Mechanism, or ESM, in mid-2013.  But the ESM looks like it’s going to have same problem the EFSF does: Its finances depend on the very same countries that it is supposed to bail out.  In other parts of the world, this isn’t called stability; this is called a Ponzi scheme.”

On the IMF thingy…I think DOCM has it right…smoke and mirrors.
The whole thing is just an almighty mess that has destroyed the European sovereign markets and is even reaching into the last bastion of financial credibility, Germany.

@ All

I have just been reading the leader in today’s IT.

http://www.irishtimes.com/newspaper/opinion/2011/1119/1224307822886.html

The missing element is that the Commission takes the view that what is proposed can be accommodated within the existing treaties which would appear to be the case from a reading of the relevant articles of the treaties.

To quote the paper of record;

“Chancellor Angela Merkel insists that all she is talking about is “limited treaty change” to give a legal basis for such collective accountability which Germany sees as a prerequisite for any form of collective sharing of euro zone risk. That means applying to the rest of the euro zone and to Germany itself the sort of budget scrutiny which the Bundestag is involved in with respect to Ireland. A taste of its own medicine, and the sort of scrutiny any prudent lender would quite understandably want of a borrower. What’s so difficult about that?”.

What indeed! Even less difficult that she imagines but, of course, to quote again the leaked German negotiating paper (it seems to be the week for leaks!) “the constitutional provisions on the budgetary autonomy of the Bundestag must be observed in every case”. What is sauce for the Irish goose (and assorted other geese) is, apparently, not to be sauce for the German gander.

That cannot be a basis for agreement.

An excellent article on Schauble..
http://www.nytimes.com/2011/11/19/world/europe/for-wolfgang-schauble-seeing-opportunity-in-europes-crisis.html?hpw

But is he delusional?

@Jesper

The German parliament is examining the quality of the underlying collateral for debts it is about to guarantee. The Troika has said they were satisfied but, as the German parliament will be stuck with the bill if the Troikas appraisal isn’t 100% correct, they’ve decided to verify the underlying collateral.

Something that seems to be rather missing in this discussion is the fact that the policies of the currently dominant European players is that they represent a particular political outlook within their countries. Angela Merkel makes European policy for profoundly conservative CDU voters, not some more inclusive idea of Germany, let alone the European Union.

In this way Jesper serves a useful purpose in reminding us how critical it is that either the German political right’s lock on Eurozone fiscal policy is broken or we move ourselves further away from the Eurozone. Make no mistake that the further political integration Schauble sees the peripheral countries indenture to the ECB forcing will make right wing economic policies essentially a legal requirement for Eurozone membership in the same way that the ECB has institutionalized that other favourite of the German right, monetarism. It is to be privatization, austerity and wage deflation across the EU, a battle German mercantilism is well prepared for and that international capital is naturally very sympathetic to.

The plight of the EU reminds me very much of the subversion of the political system in the US by the Republican party, the European right were always going to lose any emerging popular pan European consensus so they focussed on making European Union institutions adopt inherently right wing policies and the centralization of technocratic power. Quite brilliant, a very European Union coup.

@ Ceterisparibus

The Der Spiegel assessment is utter and total rubbish. The very opposite is the case. The Commission has woken from its slumber, Barroso being startled to discover that the other countries of the EU – all 25 – do not wish to see the phenomenon Merkozy continue or to see the Commission rubber-stamp proposals just because the two capitals in question want them. There is no better indication of a return to the Community method than the fact that countries are beginning to assess possible winning and losing coalitions under the new voting arrangements that will come into force in 2014.

As to Schaeuble, the NYT should explain how he can be both a close confidante of Merkel and his own Chancellor. The world and his wife know that the two have been tussling incessantly for control of the the direction of German policy.

@Jesper
I look forward to examining the German budgetary proposals before the Bundestag in 2015 after world trade has entered its fourth year of slump and Germany is once again in breach of Maastrict.

@DOD

re:
“this is unquestionably the most dangerous time for Democratically minded European Citizens since the late 1930s.”

And the fascists are winning everywhere this time.

Anyway, back on thread, I see Enda is defending this vat rise as people will have a choice whether to pay it or not. Surely he’s not telling consumers they can opt out of shopping in the run up to Christmas? I’m with that.

And don’t forget that next Saturday is buy nothing day – a day for society to examine the issue of over-consumption….. what got us in this mess in the first place.

@Jesper & All

Professor* Colm McCarthy in fine form this morning –

Professor Franz, and numerous other opinion-leaders in Germany, could do with a tutorial on the “collectivisation of debt under the auspices of the ECB”. It is the Irish Government’s job to communicate effectively that debt has been collectivised on an industrial scale, and at the insistence of the ECB, in Ireland. The Government has failed dismally to get this message across where it counts, in Germany.

http://www.independent.ie/opinion/analysis/lets-prepare-for-the-long-stay-at-rock-bottom-2940087.html

*UCD response to TCD Unilateralism 😆

@Professor Eoin Bond
Some students never geddit!

@An Taoiseach

A few more tooreen hurlin tutorials – and bring the hurley to Berlin next time!

@ All

Liam Halligan in the Telegraph is in equally fine form.

http://tinyurl.com/7q66xb8

Colm McCarthy’s article is fine but for the bits that are missing. The article by Halligan fills in some of them but even he is presenting the issues too much in black and white terms.

He is particularly good on the true meaning of LOLR for a central bank and neither Germany nor the ECB will budge from this position and rightly so in my opinion.

Among the other bits that are missing from the McCarthy article is the fact that the Irish government, off its own bat and without consultation with either the ECB or other governments, gave a guarantee of bank debt because it feared a collapse of the Irish banking system and with it, the Irish economy, opening up in the process an entire can of worms for the rest of the EZ.

What is also missing is any attempt to answer the simple question that many that do not have a mastery of either economics or finance pose; where did the money go? They can see most of the answer all around them in the visible signs of wealth (now muted: ostentation is out!). This is without taking into consideration the capital held abroad. To expect the German taxpayer to pick up the bill for those unfortunate enough to be left holding the resulting debts is to ask the impossible. German was not the language of discourse in the Galway tent.

Advocating a “wall of money” approach and questioning the viability of the EFSF, the branch on which Ireland is currently perched, is hardly likely to win approval in Berlin.

There is a major problem of debt overhang. But there can be no resolution to it until the Irish people confront the reality of the situation in which they find themselves. The answer is to be found in the article. There has to be an early move to real austerity in relation to expenditures from the public purse and an immediate stop put to the continuing haemmorhage of spending with borrowed money.

@ All

FYI

http://tinyurl.com/c7x3myj

@DOCM

They can publish all the green, white, blue or purple papers they like (in 23 languages) and it will not change the fact that the lady said NEIN. More delusional ravings from Borrosso and co. How is he going to get Lisbon 3 through various electorates, or will he just dispense with that little formality and impose a new treaty.

A Banker’s Prayer

Mario Draghi
Who art in Franfurt,
Hallowed be thy name,
Thy kingdom come,
Thy will be done,
In politics as it is in banking,
Give us this day our daily liquidity,
And forgive us our bonuses,
Though we don’t forgive those who bought defaults against us,
And lead us not into inflation,
But deliver us from involvement,
For thine are the Understandings,
The power to sercure us,
For ever and ever,
Amen

@ All

There was a very good item by Julian Coman in The Observer about the general Brussels mood.

http://www.guardian.co.uk/business/2011/nov/20/eurozone-crisis-european-union-plans

The Commission’s green paper is not going to change the world but its timing and content is important, especially the third option identified; essentially, if I am not mistaken, that of “safe bonds” on which considerable work has been done (including by Philip Lane and his colleagues). There is also the not unimportant fact that the SDP is on board for the idea of the introduction of euro bonds and the indications are that Merkel is angling for the re-creation of the Grand Coalition in the operation of which she has considerable experience.

If the Humpty Dumpty of the European bond market is to be put back together, there has to be a start somewhere. And even an expression of willingness to try out the idea would have some of the desired impact.

There is also the wider global dimension. As Weber so incisively put it in the Der Spiegel article, the guiding principle so far has been to ask “how can I get myself out of my current difficulties with someone else’s money?”. This has been true of Ireland but also of the EZ as a whole in the misguided efforts so far with regard to leveraging the EFSF.

Involving the IMF means involving the UK and if the UK wishes to be a player in the game it must agree. It cannot say “nothing to do with me guv'” and, nevertheless, complain about the impact of what it claims has nothing to do with it. German politiciams, from Merkel down, have been making an issue of this for the past week.

What seems to me to be significant is that the various parties are evidently making their opening negotiating bids as evidenced in particular by the various “leaks”. This makes a change from the lead-in to previous European Councils and EZ summits (of which, of course, there has been a surfeit).

@DOCM

re As Weber so incisively put it in the Der Spiegel article, the guiding principle so far has been to ask “how can I get myself out of my current difficulties with someone else’s money?”.

Weber should have explained himself a little better as that quote is open to all kinds of interpretations. It possibly is a cut at people who want Germany to pay for everything which would be clearly unfair to Germany. However Germany showed no support for Ireland when the ECB insisted that we pay bond debts.
A bit of intellectual dishonesty there I would say on the part of Dr Weber, who was on the ECB Board at the time. On reflection a lot of intellectual dishonesty.

I would be interested also in seeing data on the foreign owned portion of Germany’s approx 2100 billion of debt. I have seen some estimates that approx 50% is in foreign ownership.
In that case running ones country “with someone else’s money” should also be thrown into the mix.

@ Joseph Ryan

Who, exactly, is going to provide the money to alleviate Ireland’s banking debt if Weber’s contention is to be invalidated?

@DOCM

Who, exactly, is going to provide the money to alleviate Ireland’s banking debt if Weber’s contention is to be invalidated?

My favoured answer was “nobody”, let them sink but I think that neither the ECB or Herr Weber were too keen on that (though Weber’s feelings are a little conflicted on weasel phrase of the decade contender “private sector involvement”).

Eurozone hyper-monetarism has been an epic failure, everyone not beholden to the European financial sector or the European centre right accepts it, but it remains a article of faith for Merkozy’s political constituency. Germany’s entirely rational insistence on private investors not being protected can not be made consistent with a single mandate central bank that will not take up the resulting financial slack, which they also insist on. Schauble’s insistence on the necessity of “market discipline” sits right next to his logically incompatible but laudable call for a Tobin tax. This set of mutually incompatible political and practical needs has crippled the European response to the Global Financial Crisis and that is the heart of our problem.

To put it another way there is no Christian Democrat solution to a set of problems very much the creation of the European centre right and I see no hope of a resolution of these logical contradictions in the Eurozone unless Germany and France turn to the left and the ECB is made democratically accountable.

There seems to be a number of knee jerk reactions going on based on perceptions formed by British and American media. Germany has been invaded many times by the Romans, French, Poles/Lithuanians, Austrians, Czechs, Danes, Dutch to name just a few. Since the state of Germany was formally recognised in the Versaille’s Palace hall of Mirrors in France Germany has participated in three wars namely with the Eight Nation Alliance in the Boxer rebellion (China), WW1 invaded by Britain as a pre-emptive move to retain mastery of the seas, WW2 started by Germany. Since WW2 they have reluctantly had minimal participation in UN sanctioned “peace keeping missions” originated by those great lover of peace and freedom the British and the Americans.

Today Germany and a few other responsible countries have trade surpluses that are keeping the Euro stable. At the other end we have the bubble blowers who feel the Germans owe them a decent living and should allow the ECB to give blank checks to the spendthrifts.

A good example of the sacrifices that we are not prepared to make are the tens of thousands of small business people who are in an uproar over a 2% VAT increase. If you are looking at this from the point of view of the people in the rest of Europe who will have to foot the tab that attitude is not instilling confidence. We are a nation of untouchables, public servants, dentists, accountants, lawyers, doctors, retailers, wholesalers, only manufacturers are exposed to competition.

When the debtor nations show some inclination to deal with domestic economic distortions then and only then could an honest dialogue begin on rescuing what is fast becoming the unrescuable.

@ All

Some preliminary German-UK deal-making according to the Guardian. Not very edifying but there you are!

http://www.guardian.co.uk/business/2011/nov/20/cameron-merkel-working-time-directive

Text from Blind Biddy – She has just parachuted into Tahrir Square …

@Mickey Hickey

Setting aside the banking system debt for a mo, on which a deal is necessary if default is to be avoided …

There is no evidence whatsoever of the type of radical change in governance philosophies, structures, processes and policies required to correct for the lunacy and recklessness of appreciation over the PD/FF decade, let alone the dominance of the possessive class and the institutionalization of a highly dysfunctional class structure since at least the latter part of the 19th century. It is 2011 and we have never been Modern – We have never been Industrial either – so where is the post-national and post-industrial constellation to come from around here?

@all

Minor Point: LOLR does not imply that all who apply will get it. It simply implies that it exists, and that it has requisite capability.

Will Enda have the liathrodi to use the veto on Treaty changes?

@DOCM

‘not very edifying’.

So Merkel gives the nod to Cameron that it is OK to flog the British workers more than 48hrs per week – and to essentially opt-out of the Working Time Directive … Angela must, obviously, not have heard about the Stormont Troopers from Belfast … could be a few little surprises in store here … and the other Nikki across the local pond might take a scan from the Irish GP …

Seriously concerned now on this upcoming treaty-tweak summit …. handcuffs are one thing – lead balls and steehl chains yet another …

@Joseph Ryan

“I have asked elsewhere if there is such a word as a tri-oxymoron or trixymoron.”

I know a Trixy Moron. She works in my local branch if B of I.

The uproar over the VAT increase is nuts. The country is undergoing an IMF bailout .

What does a typical IMF bailout involve ? The IT covered it last year

“There are many measures in the 32-page Greek bailout document that could easily be envisaged as conditions for an Irish bailout.Regarding tax and spending issues, conditions include the reform or outright cancellation of welfare programmes that are deemed ineffective, privatisation of State assets, cuts in capital spending, an immediate increase in VAT and a widening of the VAT base, increases in excise duties, a widening of the property tax base and the imposition of a luxury goods tax.”

@Mickey Hickey

Peter Stringer is joining The Barbarians – maybe we should apply? ’nuff said at the mo …

@Gavin@Livonian

Thankyou for posting that link. The article by Dan Hannan ( dealing with European scepticism) can be found under November 16th as I see Dan has wrtten a few blogs since then.

@DOCM@Livonian

I agree with you re: criticism of anothers countries foreign policy.

I just feel that Germany (wjich IMHO could be doing more to placate “friends) should not be criticised in a way which brings up “old wounds”. We should not forget why the EU/EEC came into existence but if West Europeans cannot “forgive” then we cannot expect other parts of Europe to forgive and embrace democracy

As the only EZ country which escaped WWII unscathed we need to be especailly careful and lead by example. For some EU 15 countries the legacies of WWII only ended in the 1970`s while for most accesion states in addition to East Germany WWII did not end until 20 years ago.

We are dealing with Germany 2011 (albeit with a Chancellor who seems to have forgotten that West Europe is where EZ/EU will survive or fail) and not Germany of 1938.:)

Germany is selling itself during the crisis as a haven of stability – and the financial markets even believe it. But, in truth, it’s hardly better off than the others. And its public role of disciplinarian is arrogant and dangerous, writes Spiegel Online.

Luxembourg Prime Minister Jean-Claude Juncker is therefore right to get worked up about German domineering. Spain, for example, with a debt ratio of 69.6 percent, is considerably closer to complying with the Stability Pact than Germany is. Even the Dutch (64.2 percent) and the Finns (49.1 percent) have more right to put themselves forward as European disciplinarian than the Germans do.

http://www.presseurop.eu/en/content/article/1194641-myth-german-economic-discipline

FYI Bond, seafoid, and all Lewis fans and confused citizen_serfs

New York Review of Books

Boomerang: Travels in the New Third World
by Michael Lewis
Norton, 213 pp., $25.95

Boomerang is about what he has come to see as the larger phenomenon behind the credit crunch: the increase in total worldwide debt from $84 trillion in 2002 to $195 trillion now. The thesis is that “the subprime mortgage crisis was more symptom than cause. The deeper social and economic problems that gave rise to it remained.” It is these deeper problems that are dominating economic news at the moment, and led to the desperate measures announced at the European summit on October 27 and to the aborted Greek plan to hold a referendum that followed. The G20 Economic Summit of November 3–4 was dominated by discussion of the Eurozone crisis, but ended with no coherent plan in view, and none has emerged since. Boomerang tells the story of how we got here, and in the course of doing so gathers together an extensive arsenal of data at the top end of my 0–10 Reykjavik waitress scale: the fact that Greek railways have €300 million in other costs; the fact that the Californian city of Vallejo spent 80 percent of its budget on the pension and pay of police, firemen, and other “public safety” workers; the fact that between 2003 and 2007, Iceland’s stock market went up ninefold; the fact that in Ireland, a developer paid €412 million in 2006 for a city dump that is now, because of cleanup costs, valued at negative €30 million.

http://www.nybooks.com/articles/archives/2011/dec/08/how-we-were-all-misled/?utm_medium=email&utm_campaign=December+8+2011+issue&utm_content=December+8+2011+issue+Version+B+CID_73cb2650f3da6d354999dbb13f257abd&utm_source=Email+marketing+software&utm_term=How+We+Were+All+Misled

Germany’s ace in the hole is its export machine which is well maintained and conquers new markets every month. If you look at the world’s greatest import machine NAFTA the high value added goods on display are from Germany and to a lesser extent Japan. Germany has flexibility given the range of goods it exports and the number of exporting manufacturers. Japan has a much narrower export market in terms of range and number of manufacturers. Korea and Taiwan are also in the winners circle.

Depth and breadth is what matters as we know only too well in Kerry, our team is now like the country narrow and unfocused. We will never be a small Germany but we could try for a small Netherlands, Denmark or Switzerland. We have our wits, imagination, social skills, we need to add some engineering know how and most of all get a grasp of the economics in the real world. In politics we need to shift from the cute rogues who drink ’til 3:00 a.m., renew our passports in five days and line their pockets with “campaign contributions”. Have any of you heard the phrase ” If oo do dat for me now I’ll throw in four tousand for da cause.”. Oh the patriotism of it all, so Irish.