A new referendum likely, says IT

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The IT has answered Karl’s question in the affirmative:

Taoiseach Enda Kenny has publicly opposed the need for treaty changes and that remains the Government’s official position in advance of the summit.

However, there is a realisation among senior Ministers in Dublin that Dr Merkel’s commitment to treaty change and the backing she has received from French president Nicolas Sarkozy may have made that process unstoppable.

So, in a Union of 27, if Merkozy wants a new Treaty requiring an Irish referendum then, the IT assumes, this is what will happen. They are quite possibly right.

This should remind us that there are political objectives which the 25 should have in any new Treaty negotiations as well as economic ones. (If we are going to have a referendum, this will take time, and create uncertainty, anyway: so why not get it right?) Economically speaking, if you want EMU to survive in more than the immediate short run, you should logically want a new mandate for the ECB, and some method to provide counter-cyclical adjustment in depressed regions. (I guess we are not going to get this, and indeed we are probably going to get the opposite of this.) Politically speaking, we need moves to reaffirm the primacy of the Community method, or it will be more than EMU that is endangered in the long run. I guess we’re not going to get that either. Of course I would love to be proved wrong.

126 Responses to “A new referendum likely, says IT”

  1. anonym Says:

    For convenience, here’s a link to the article, “Referendum to change EU treaty likely as Merkel stands firm”.

  2. Kevin O’Rourke Says:

    Thanks anonym, fixed that.

  3. Eureka Says:

    There is a risk in assuming that they’ll want us to pass it. This could be a very good mechanism by which they can throw us out of the club. In terms of negotiating they could very easily say – so what….

  4. shaun byrne Says:

    stephen Collins is at it again!!
    http://www.irishtimes.com/newspaper/opinion/2011/1203/1224308521780.html
    (how do you do a link?)

  5. shaun byrne Says:

    AH there you go!!

  6. anonym Says:

    So, in a Union of 27, if Merkozy wants a new Treaty requiring an Irish referendum then, the IT assumes, this is what will happen. They are quite possibly right.

    Yes, one reason to think that no attempt will be made to squeak the treaty changes through as de minimis revisions is that Sarkozy, for one, was talking about a “new treaty” in his big speech. It seems that Merkozy specifically want this to be received as (at the minimum) a major treaty revision with all that entails. (Another reason to think that won’t happen is that it could cause problems with the Constitutional Court in Germany.)

    That raises the question of why the French and German governments want full ceremony. One explanation is that they hope the awful solemnity of a new treaty ratification will cow the Italians, Irish etc. into abiding by the new debt-brake commitments for a little longer than they otherwise would – or at least sell German etc. voters on the idea that the commitments will bind in practise. Another explanation is that they’re actually hoping that some peripheral governments will take a hint and decline to ratify the new treaty, saving the trouble of actively ejecting them from the Euro or full EU membership. My money is on the first explanation, though. In the first place because the whole object of the exercise is protecting the EU core/world banking systems by preventing Eurogroup-member defaults or redenomination-and-devaluations (not “saving the Euro”). Secondly because Sarkozy was as emphatic as ever that Greece’s default would be the last.

  7. Joseph Ryan Says:

    The logic of Merkozy is this:

    You will have the euro on our revised terms. This despite every botched attempt of ours to fix the situation over the past three years. And if we stiffed Ireland with bank debt, changed governments in Italy and Greece and reduced Greece to a state of chaos, so what. We run the show.
    This revised euro is for the benefit of Germany and France.
    The rest of you don’t count. And won’t be allowed to count.

  8. John Foody Says:

    Well they either think

    1)we could pass it without a treaty,
    2)want us out
    3)are willing to give us concessions.

    If we take what Sarkozy said seriously then we can rule out 3. If we take what the IT says as fact we can rule out 1.

    Maybe Endas speech Sunday is the first part in a series, with part 2 the following Sunday detailing the concept of Capital controls and Punt Nua to the Irish people.

  9. Paul Hunt Says:

    We just don’t know precisely what will be on the agenda at next week’s Coundil meeting. Some sort of quick fix is required to staunch the outflow of funds, to build on the temporary band-aid provided by the main central banks and to ease pressures on vulnerable sovereigns. But an agreement in principle is also required on the institutional and procedural arrangements required in the longer term to remedy the deficiencies in these areas that this rolling crisis has so cruelly revealed.

    I don’t think it’s possible at this stage to comment on how this package will be structured. But there are some quite strong indications of the ‘philosophy’ that will drive it.

    Following in the foosteps of her mentor, Helmut Kohl, (whom she subsequently defenestred), Chancellor Merkel appears committed to the concept of a European Germany – which would indicate a far greater reliance on the Community Method than, for example, the French would be willing to concede. In this respect, I believe she would have the support of the other, let’s call them ‘creditor’ nations – the Netherlands, Luxembourg, Austria and Finland (with outside support from Sweden and Denmark).

    (Like the British who lost an empire and have still to find a role in which they are comfortable, the French are reluctant to concede that their administrative dominance of a much smaller French Europe and ability to assert national prerogatives relatively unrestrained is long gone. The time when Konrad Adenaur had to salute the French flag three times before saluting the German flag once is in the dim distant past.)

    But, as a politician – and a politician of the cente-right – Chancellor Merkel is also being pulled by a newer generation of Germans who believe they have made ample reparations for any residual ‘war guilt’ and who have taken a big hit to pay for unification and an even bigger hit (in the form of wage repression) to build its current economic strength. This is a vision of a German Europe and it is one to which its neighbours, not only the advanced ‘creditor’ nations, but also the neighbouring newer members, however grudgingly and warily, would, to some extent, subscribe. The Polish Foreign Minister, Radek Sikorski, put it well: “I fear German power much less than I fear German inactivity.”

    Chancellor Merkel is seeking to combine these visions and the Community method is the overarching and indispensible tool. But she is also subject to a further and more profound pressure which must be reconciled with her policy thrust to resolve this crisis. Many voters in the ‘creditor’ nations believe, and for very good reasons, that they earned this label through good governance and that the problems that exist are due to bad governance in the design of the EMU’s institutions and absolutely woeful governance in the PIIGS. The bad governance of the EMU’s institutions is primarily due to the failure by the leading politcians during its design to secure sufficient democratic legitimacy in their rush to secure their politcial objectives. The woeful governance in the PIIGS in now the stuff of legend.

    The proposal to apply ‘central fiscal governance’ is simply a proxy for enforcing responsible economic governance, that secures effective democratic legitmacy, on the PIIGS – so that it becomes the norm for all EZ members and aspiring members. And Chancellor Merkel will have to finesse the primacy of the Bundestag – and the Constitutional support for this primacy – in the context of EZ wide fiscal governance.

    Ireland and Portugal have, and, soon, Spain will have, ‘elected dictatorships’ governing in compliance with this approach. Italy has a technocratic government and Greece a technocrat-led government that are also compliant, but both relying on their parliaments for legitimacy. Ireland, for example, has an Economic War Cabinet comprised of the Taoiseach, Tanaiste, tho senior ministers and their advisers and officials.

    But the cruel and ironic cycles of history suggest that Ireland, on the week of the 90th anniversary of the Anglo-Irish Treaty – and in the weeks to follow, will be convulsed by desires to preserve the mythic, transcendental Republic in the face of this requirement to apply effective, sensible economic governance that secures sufficient democratic legitimacy.

  10. Tonicforthetroops Says:

    I’d consider voting yes IF AND ONLY IF we get rid of the Anglo-tross round our neck…

  11. Al Says:

    Is Collins channeling what Govt wants us to think?

  12. Dan Says:

    If the overall aim (or a substantial part of it) of a treaty change is to give the ECB cover to make waves in the market, then we’re likely to get a 4am on a Sunday night sort of solution. Good enough for a college essay but not the future of the EZ.

    I think the crucial part of the debate will be enforcement mechanisms and penalties. If we get some Stability & Growth Pact (ha!) type targets, what would be the consequences of breaking them? I’ve seen the European Court of Justice mentioned but what sort of actions could they take?

    If this does come to a referendum I won’t look forward to the debate. Threats and rhetoric all round.

  13. Overseas commentator Says:

    “Merkozy” sounds good but the French and German positions on the Euro crisis are very far apart: The French are for Eurobonds, the Germans against, the French want the ECB to purchase Sovereign obligations, the German are against, the Germans want the European Court of Justice to condemn wayward countries, the French are strongly opposed, etc.
    If you caricature events and positions as if the mythical beast “Merkozy” existed you make them totally impossible to understand What is true is that the tête à tête of two politicians up for election is not the best forum to discuss Europe’s future.

  14. Colm Brazel Says:

    After another fudgy muddle from Merkozy and once again the new kite of a summit announcement, which invariably seasoned observers will probably be an announcement of an announcement that will announce news of a coming announcement.

    We neither have a Green Paper nor a White Paper just a speculative morass of mess contaminating the contagion and making it worse.

    Let’s have some technical detail on the table from Merkozy on what treaty changes will be required:

    Re Sean Hunt

    face of this requirement to apply effective, sensible economic governance that secures sufficient democratic legitimacy.

    Technically, I’d like to point out the above sentence verges on being a paradoxical oxymoron :-) Reason, what Sean is referring to is the imposition of powers from the coming Treaty revisions to Lisbon, that will subordinate our consitutional primacy of the people in Articles 5 and 6, to an overarching power vis a vis the Bundestag/ECB and LisbonNUA.

    On technical detail, I do hope Enda in his speech tomorrow will do more than a Fr Ted in the lingerie shop job, ‘Ladies and gentlemen, the store is about to close’ job. http://www.youtube.com/watch?v=beN7FftWNCM It has been noticed the ATM’s have been running short of 50′s recently!

    I would like to hear the technical detail on ELA, promissory notes, 20% GDP debt repayment schedules and the increase in debt obligations especially over 2012 with falling tax revenue and increasing vat rates.

    What progress have we actually made in reducing our debt burden. And don’t give me the rubbish on reduction of our penal 5.8% catastrophy following the Greek default to save total embarrassment all round.

    Paradoxes and oxymorons and Ceausescu late coffee announcements to beguile the bewildered will probably be served up for all.

    Next year the national debt will rise by ¢2.6 bn euros.

  15. Michael Hennigan - Finfacts Says:

    @ Al

    I would assume your opinion is your own; why would you wonder if Stephen Collins is a frontman for the Government?

    It is actually possible that he believes what he presents in his piece.

    @ All

    Enda Kenny likely fears the aftermath of a crisis that a rejection would create. It would not be a surprise if Fianna Fáil whose forefathers turned on their own after the compromise settlement in 1921, would see potential in exploiting the mayhem.

    To some, it would be more exciting than addressing the unemployment crisis which will only get worse.

  16. PeterJ Says:

    @John Foody 

    There is a fourth more depressing option.

    They want us in (they are afraid of anyone leaving) they are not willing to give us concessions. ( every one else will want something) but they have not thought through the difficulty of a treaty change in Ireland.

    BTW a  number of posters seem to believe that this is part of some Germanic or banking conspiracy.  But Hanlon’s razor says

    “Never attribute to malice that which is adequately explained by stupidity”

    Can there be any doubt at this point about the stupidity

  17. Paul Hunt Says:

    @Overseas Commentator,

    In my 10:01am above I outlined my understanding of what is driving the German position – it is the indespensible power and appears to speak for many of its neighbours – and I accept I was, perhaps, unnecessarily dismissive of the French position. But I remain convinced that Chancellor Merkel is determined that a position is secured where democratically elected governments (in the EZ and in the wider EU) will no longer be subject to intimidation by, or to the whims of, participants in the sovereign bond markets. The simple message is: don’t allow yourself to be subject to this intimidation and if you are get yourself out of it. And the best position to be in is where participants are demanding the issue of bonds as a home for ‘good money’ – and not be in a position where you are pleading with bond market participants to have mercy.

    It may be that President Sarkozy realises that France can no longer afford to run fiscal deficits indefinitely. He may posture and he may be allowed to convey the optical illusion (for domestic consumption) that he has secured concessions, but he knows, and everyone else knows, that France is under the cosh of bond market participants.

  18. David O'Donnell Says:

    Well – IF a Referendum – Let it be a European Referendum – with ALL EU Citizens allowed, by right, to exercise their democratic rights …. Now: what is to be written on the referendum?__This is what matters …. what’s it all about? Who sets the agenda?

    Citizens of the EU [ Der Spiegel International Yesterday ]

    How to Forge a Common European Identity

    By Thomas Darnstädt, Christoph Schult and Helene Zuber

    Europeans are searching for an idea: What should the Europe of the future look like? Could a federation of European nations function? How could a working government in Brussels be structured? And could a continent-wide democracy foster unity and solidarity among European nations? In a three-part series, SPIEGEL reports on new plans to restructure the European Union. This is Part 3. Be sure to also read Part 1 and Part 2.

    Europe has a face. It can grin, and it has freckles. Almost everyone in Germany knows it. It’s the face of Daniel Cohn-Bendit, 66, the Green member of the European Parliament and former revolutionary.

    No one else can explain Europe the way “Red Dany” can. No one but this polyglot global citizen can convince people in almost every country on the continent to listen and to pick up at least some of the enthusiasm he exudes for Europe. “There will be a United States of Europe,” he says. “I’m sure of that.”

    http://www.spiegel.de/international/europe/0,1518,800775,00.html#ref=nlint

    So – what is the text to be? Very open question …………

  19. Al Says:

    @MH
    Perhaps you are right!
    And if it is actual beliefs then he might want

  20. Paul Hunt Says:

    @Michael H,

    Of those who vote in these EU-related referenda there seems to be a hard-core of about 30% which will vote ‘no’ irrespective of the question that is posed. The ‘powers-that-be’, both in Ireland and throughout the EU, will want to ensure that ratification of any changes that will be required will not require a referendum in Ireland – or, indeed, anywhere else. Since we don’t know, in detail, what changes will be proposed and agreed in the Council, we don’t know to what extent it would be legitimate for this course to be pursued.

    But one thing we can we sure of, irresespective of what emerges from the Council, is that there will be enormous sound and fury in Ireland demanding a referendum. The 30% of ‘nay-sayers’ will have there numbers increased for all sorts of reasons – good and bad. But there will be a sizeable number of voters who will be disposed to accept what is proposed, but who will want a referendum so that they may affirm their ultimate authority in these matters.

    It is these voters that the Government needs to respect. The 30% of ‘nay-sayers’ will always be unpersuadable. If the Government seeks to over-rule the desire of those who are disposed to accept whatever might be on offer, but who, quite rightly and legitimately, would wish to have their say and refuses a referendum, there is a serious risk that they will be driven in to the camp of those who espouse the mythic, transcendental Republic.

    And another thing we can be sure of is that there will be a huge upsurge in references to and imagery of the Nazi era – and the British media with organs in Ireland will help to whip this up.

    If there is a referendum, I can see Ireland rejecting what is on offer – irrespective of its merits. And this time there will be no opportunity to vote again.

  21. Al Says:

    Dam smart phone.
    Continued..
    Want to explain his view of the world a lot better, rather than the schoolmaster dismissals of opposing opinions.

  22. Shay Begorrah Says:

    It is remarkable how as soon as Empress Merkel decides on the necessity of EU wide CDU friendly constitutional change that Mr Collins is out of the gate yapping in his mistresses voice.

    Note how Merkel’s refusal to adopt a policy better reflecting a more inclusive/sane/fact based idea of Europe is labelled as “standing firm” (Another EU referendum looms as Merkel stands firm) rather than “intransigent”, “self interested” or “self indulgent” in another Collin’s penned article? I wonder how he really fells, underneath his no doubt disciplined journalistic impartiality?

    Something Mr Hennigan often riffs on is how Ireland’s citizenry never showed much interest in confronting the plutocracy led policy making of the last decade. I think the role of the print media has been unfairly ignored in this. Our paper of record enjoyed a former right wing political representative as its editor for much of the boom, even now the politics of the Irish Times are an almost perfect statistical representative survey of members of the European People Party members (with Fintan O’Toole allowed as a court jester as along as he keeps us his revisionist schtick).

    Meanwhile Independent Newspapers has a political outlook more closely matching that of the European People’s Party’s forebears around 1936.

    With a press substantially committed to whatever the current right wing establishment line is it is any wonder that much of the public is still convinced the Croke Park deal and the undeserving poor somehow caused the Global Financial Crisis?

    If this new treaty effectively forces all of Europe’s democracies to adopt right wing economic dogma as policy it has to be opposed, how ever frightening it will be to vote “No” in a referendum and take a stand.

  23. Brian Woods Snr Says:

    @PH: “It may be that President Sarkozy realises that France can no longer afford to run fiscal deficits indefinitely.”

    I’d sub out ‘France’ and sub in ‘all states’ … I have a nasty feeling that there is a very unpleasant surprise lurking in the not too distant future: an energy crisis. Its unavoidable.

    I am sure that ‘those in the know’ in the upper levels of the financial world know full well what lies ahead on the energy front and are gathering their harvest into their barns. However, the first major crisis may be a water shortfall one. That would precipitate a food shortage. Now you have problems. We’ll see.

    Brian

  24. Georg R. Baumann Says:

    Beautiful and blustery Saturday morning in Donegal. :)

    Messrs. Beesley and Collins were perceptive to notice that:

    … “the second-best solution” was an intergovernmental deal operating outside the framework of EU law.

    Merkel’s speech had an embarrassing tone of “Do as I say, or go to Hell” attitude, and her little intrigue now named Frankfurt Group Of Eight is testimony to the disastrous ways Europe is steered.

    The sudden outcry of Catherine Ahston against Teheran came just in time after the FED opened the flood gates again, and European Banks now can access $ cheaper than U.S. Banks.

    If there should be a referendum in Ireland on treaty changes, and I doubt this very much so, what would an Irish ‘NO’ vote mean if already backup plans exist to circumvent this? Let aside the fact that the rest of Europe’s citizens that would not be asked to vote.

    The motivations of this woman with an orange shopping bag might be multifold, but one thing is for certain, the European project never was envisioned to turn into German Europe.

    This short time of a post Lisbon Europe has left very deep impressions already, and personally, I put a lot of weight on first impressions. The Troika’s missions was a 100% failure, and the “Incrementalists” deepened this disaster considerably.

    What I can see now, it is a scared and confused public that was force fed with a shit sandwich of austerity and propaganda lies, a public that will be bullied again into a mind frame of ….”There is no other way!”

  25. Paul Hunt Says:

    @Shay,

    Rather than being forced to adopt what you describe as ‘right wing economic dogma’, what you fail to acknowledge is that most of Europe’s democracries are being governed by the centre-right. The centre-left is exhibiting a terminal decline in its electability. Only Denmark, recently, has bucked the trend – quite narrowly – and it may be, partly, in response to the antics of its version of the BNP.

    It is almost inevitable that these centre-right governments will be voted out of office as their terms expire. It could start with a co-habitation in France next May. But how widespread this will be – or how quickly this will happen – are uncertain.

    The key questions are when and how will the centre-left regain a sustained and consistent measure of electability.

    While the centre-left panders to those within its ranks who are well-organised and are able to exercise economic and political power at the expense of those who do not have these advantages, but who should be part of its core support, it will continue to fail to secure the democratic plurality required to govern.

  26. Georg R. Baumann Says:

    Perhaps this call comes just in time for treaty changes: (shaking head in disbelief)

    A consultant psychiatrist last night called on Government to add lithium salts to the public water supply in a bid to lower the suicide rate and depression among the general population.

    http://www.irishtimes.com/newspaper/ireland/2011/1202/1224308474582.html

  27. Georg R. Baumann Says:

    Interview with Jaques Delors:

    http://www.telegraph.co.uk/finance/financialcrisis/8932640/Jacques-Delors-interview-Euro-would-still-be-strong-if-it-had-been-built-to-my-plan.html

  28. Bklyn_rntr Says:

    Poor Merkel can’t win. If she says do what you like, but we are not bailing everyone out indefinitely, she’s accused of trying to create a German Europe. She clearly wants a European Germany and is prepared to fight for it, but instead it’s, “oh, no, she’s arrogant and pissy and why can’t she just pay up and stay quiet”

    Ireland is entitled to vote on a new treaty, so we should.

  29. Shay Begorrah Says:

    Warning: slightly off topic.

    @Paul Hunt

    Rather than being forced to adopt what you describe as ‘right wing economic dogma’, what you fail to acknowledge is that most of Europe’s democracries are being governed by the centre-right. The centre-left is exhibiting a terminal decline in its electability. Only Denmark, recently, has bucked the trend – quite narrowly – and it may be, partly, in response to the antics of its version of the BNP.

    The left went to sleep while the right spent the time since 1980 working on how to stage a coup through inculcating institutions and the media with their values. The independent “ECB” is the most obvious example of how cleverly drafted laws have managed to make the implementation of left wing politics (full employment, equality and social justice) effectively illegal. The various attempts at austerity and poverty pacts or Merkel and Sarkozy’s ambitious new attempt to make Christian Democrat friendly politics a requirement of Eurozone membership are other examples.

    The right did not bother trying to win the argument (greed, contempt for the poor and sociopathy is a tough rhetorical sell – except to bankers), they set about changing the terms of acceptable argument at an institutional level.

    Socialism is now un-European (or un-Eurozony), wealth and its agents once again control the majority of the media and a mobile and national allegiance free European commercial and bureaucratic elite are rather indifferent to the suffering of the immobile national parts as long as the whole prospers.

    The next Irish constitutional referendum (couched in terrifying terms) or legal back door used to accede to the treaty is just one more step at signing conservatism into law.

    So no wonder the left is in decline – it has gradually been made illegal.

  30. grumpy Says:

    @Paul Hunt

    “While the centre-left panders to those within its ranks who are well-organised and are able to exercise economic and political power at the expense of those who do not have these advantages, but who should be part of its core support, it will continue to fail to secure the democratic plurality required to govern.”

    I think there is a not quite so centre centre right experiment in simplistic macroeconomics going on.

    In Europe and in Ireland very much so, the ‘centre left’ are not distancing themeselves too much as they have morphed in part into protectors of protected and quite affluent sectors of society. They too are protectors of ‘the establishment’. To the extent they oppose the right, it is to frustrate reforms, and ivert the austerity to the people the ‘left’ was always supposed to protect.

    After the experiment has unravelled, a new ‘left’ could be in a very strong position given macroeconomic consistency. They do not seem capable of that though.

  31. paul quigley Says:

    @ Paul Hunt

    ‘Many voters in the ‘creditor’ nations believe, and for very good reasons, that they earned this label through good governance and that the problems that exist are due to bad governance in the design of the EMU’s institutions and absolutely woeful governance in the PIIGS. The bad governance of the EMU’s institutions is primarily due to the failure by the leading politcians during its design to secure sufficient democratic legitimacy in their rush to secure their politcial objectives. The woeful governance in the PIIGS in now the stuff of legend
    The proposal to apply ‘central fiscal governance’ is simply a proxy for enforcing responsible economic governance, that secures effective democratic legitmacy, on the PIIGS – so that it becomes the norm for all EZ members and aspiring members’

    Fiscal governance is only part of economic and social governance. If core country financial regulaiton had not been just as’woeful’, the big EZ banks would never have been allowed to drown in toxic derivatives and shaky sovereign debt. Rather than lecturing the rest of us on fiscal responsibility, the Bundeskanzellerin should acknowledge the profound errors of successive German governments. She should also recognise the central role of the Euro in sustaining the German export-based economic model.

    Of course the lady will not do so because she, and her MoF have been captured by the financial services industry. Frau Merkel is being continuously and insidiously misbriefed. She believes this stuff.

    ‘But I remain convinced that Chancellor Merkel is determined that a position is secured where democratically elected governments (in the EZ and in the wider EU) will no longer be subject to intimidation by, or to the whims of, participants in the sovereign bond markets. The simple message is: don’t allow yourself to be subject to this intimidation and if you are get yourself out of it. And the best position to be in is where participants are demanding the issue of bonds as a home for ‘good money’ – and not be in a position where you are pleading with bond market participants to have mercy’

    You advise that we comply fully with the demands of the bankers, irresepective of the political or social costs, incluidng a deep and prolonged depression. That is debt peonage, which has dogged human society for millenia.

    Your analyses of Irish politics and insttiutions are admirably lucid and constructive. Why don the rose-tintred spectacles when looking at Europe ?
    We are an ex-colony, and have more in common with peripheral regions of large states than with their sovereign governments. Given our history, we would be naive to imagine that Berlin or Paris will protect our interests in a severe crisis scenario. Have you forgotten the Famine ?

    With respect, our republic is no myth. It is a political reality, which was achieved at considerable sacrifice. Since you hold, and rightly so, that our political institutions are no longer fit for purpose, the task is to reform them. Your frustrations with Ireland are entirely legitimate, but throwing the sovereign baby out with the fiscal and banking bathwater will take us backwards.

  32. disgruntled observer Says:

    @ Paul Hunt,

    “…Of those who vote in these EU-related referenda there seems to be a hard-core of about 30% which will vote ‘no’ irrespective of the question that is posed…”

    “…It is these voters that the Government needs to respect. The 30% of ‘nay-sayers’ will always be unpersuadable. If the Government seeks to over-rule the desire of those who are disposed to accept whatever might be on offer, but who, quite rightly and legitimately, would wish to have their say and refuses a referendum, there is a serious risk that they will be driven in to the camp of those who espouse the mythic, transcendental Republic….”

    Wow. You really puzzle me sometimes. You say you’re on the left, but take every opportunity to deride the left. You consistently advocate democracy, but then everytime you find a group of people who vote on a point of view you disagree with, present them as dogmatic and unpersuadable, and use cheap snide remarks to deride them, such as their espousal of a “mythic, transcendental republic.” Having once or twice done the same myself but from a different standpoint, I would be remiss and a little hypocritical to take too much issue with you on that, but you do it so often it’s becoming really tiresome. You seem to believe that democracy is for only those who can be persuaded of your views.

    You may well be thinking, “but there are 30% or so who always vote no on EU treaties.” And you may well be right, but equally there may well be 30% who will always vote yes, irrespective of the treaties worth or legitimacy, and who hold views of Europe of a “mythical transcendental” nature. So should the government ignore them too? Should policy on the EU only be made to represent the 40% or so presumably reasonable, considering citizens who have no view on anything until it is studied, parsed and pondered, and who clearly have a thorough understanding of European politics, political structure, and historical roots?

    It is the essence of democracy that power is held as close to the people as possible. What I have increasingly observed is power becoming ever more centralized, both at home and abroad. Referenda on the EU, are the only times the population gets a say on whether more centralization of power should take place, and increasingly they have been saying no. Oh, it comes across as zany arguments about all sorts of things that commentators then deride as idiotic for they have nothing to do with the treaties, but what all these arguments have in common is a sense of loss. Loss of power, the right to decide, democracy, and yes sovereignty. I voted no in the last two referenda, not because I’m anti EU. I’m empatically not. I’ve lived in other EU countries. My wife is not from here. But I do not like this constant erosion of democracy. When a people have to be scared and cowed into submission it has gone too far. It has gone beyond the point of consent.

  33. Bklyn_rntr Says:

    DO
    Good post, and the fear emanating from those very elites is palpable. But none of us should get too carried away. The fear from the UK elites is also palpable. Europe will be made from the iron of crises and this is the perfect one to force a more solid union. It is up to us to make it one we want.

    Interesting that Merkel wants a referendum. She wants a European Germany and is prepared to run risks to get one. France doesn’t want that and neither does the UK.

    We can influence the “new” Europe by voting down any treaty changes that provide more power to the center without more representation from below. We can’t influence the bastardized system of intergovernmental, nationalistic tower of babel the exists today.

  34. Frank Galton Says:

    We need to think about who our country allies would be in such negotiations but this will require a change in negotiating strategy relative to the previous EU standoffs. For instance, Lisbon II essentially became about securing a Fianna Fail spot on the European Commission indefinitely and our typical strategy for EU policy towards lagging regions was to ensure that we could keep defining parts of the country as lagging (hence the BMW nonsense) even as we shot up the income per head league — and awarded ourselves pay raises and bonuses accordingly. Now our administrative elite has learned that there were some serious policy issues at stake during those discussions. Going in looking for a repeat of “brave brians battle for Ireland” type headlines is not going to do it.

  35. seafóid Says:

    If it was as easy as left vs right we wouldn’t be in year 5 of the meltdown.

    Here is Ron Paul on the political crisis in the Republican party . Politicians who don’t know what their policies are from month to month.

    http://www.youtube.com/watch?feature=player_embedded&v=mVIBj8NejGg#!

  36. Paul Hunt Says:

    @Shay and Grumpy,

    You both make very valid points – and I suspect from very different perspectives. But we are going off-topic to an extent. I accept I encouraged some consideration of this detour, but it was for a purpose. It was to clear some ground to make clear that my willingness to look positively on the steps that are being indicated will be taken to resolve this crisis does not imply approval of the centre-right policies being pursued.

    It pains me that two remarkable and gifted, and generally progressive, politicians of this age, Bill Clinton and Tony Blair, were suckered, and allowed themselves to be suckered, by the Neocon hegemony – and, directly or indirectly, influenced politicians of the centre-left in other advanced economies. And it pains me even more that the centre-left throughout the EU has not been able to confront and transcend its internal contradictions to secure electability – without reliance on the woolly-brained and utopian Greens.

    But we have to deal with what’s in front of us – and that is a, hopefully temporary, centre-right plurality in most EU member-states. However, my focus is on sensible economic governance and this leads me to…

    @Paul Quigley,

    Ireland as a republic differs little from the parliamentary democracies in most other EU member-states. It has a written constitution; but so have many others – indeed Germany’s constitution (and its intepretation by the judges in Karlsruhe) is a major hindrance to Chancellor Merkel. It has an elected head of state, but the powers exercised are little different from those exercised by constitutional monarchs or heads of state elected by parliament in other states. So, in essence, the Republic is a parliamentary democracy established by and sustained by the ultimate authority of the people. But the historcial symbolism is that it is not a political entity governed by an external parliament under a constitutional monarch.

    So the Irish Republic has been defined historically in the popular perception as ‘freedom from’ rather than the liberty of the people to decide their own governance and to impose this governance on native power elites. And, for a while from the late ’90s, freedom and liberty was defined as ‘licence to’.

    Ireland’s autonomy has always been limited – both by circumstance and choice, but, unfortunately for many years of its independent existence, this autonomy was not exercised properly in the national or public interest. And, during most of the first decade of this century, this limited autonomy was abused to such an extent that much of it has been taken away to prevent unnecessary damage to Ireland and others.

    It is an unfortunate fact that those who now restrict autonomy and exercise a measure of control have their own interests and these may not always coincide with Irish interests. (And their interests include minimising the cost to the major economies of dealing with the extent to which they too succumbed to the Neocon hegemony.) But that is a regrettable outcome of abusing one’s autonomy and sovereignty to make decisions while being part of a union of nations where sovereignty is pooled in key economic and other areas.

    The decision of a majority of the people to eject the previous government and, by default or intent, to legitimise this coalition government was a necessary frist step. But is has not, and could not, restore the previous limited autonomy of the Republic. It has instead established an ‘elected dictatorship’ in domestic matters, but subject to external restraint.

    It is a further unfortunate fact that this external restraint will continue to be imposed in some shape or form while Ireland chooses to remain a member of the EU and EMU. Because some economies in the EMU were woefully badly governed all economies in the EMU will, in the future, be subject to restraint. It is a measure of the extent to which parliaments, not only in Ireland and the other PIIGS, but also in many other member-states failed to assert their primacy over governments. It was a general failure in parliamentary democracy and it is difficult to see how it will ever be fully remedied. And, while an ‘elected dictatorship’ is required in Ireland and the rest of the PIIGS to comply with external requirements, it is even more difficult to see how parliamentary will ever be fully restored.

    What a mess – all driven by greed and stupidity.

  37. Paul Hunt Says:

    @Disgruntled,

    My response to Paul Quigley may help to turn aside some of your wrath. It is in deep sorrow, and not any desire to exhibit a weak-kneed, fore-lock tugging compliance, that I find myself making this case. But you make valid points with which I would wholeheartedly agree. We retain the power to rebalance the power of the Government relative to that of an impotent Oireachtas, to reconfigure, re-empower and resource effective local governance by reducing the role and powers of an over-centralised and over-expanded state apparatus and to empower ordinary citizens as consumers to advocate their interests against the well-organised suppliers, producers, professions and agents of privileged occupations.

    But while we have – and will probably be required to have – an ‘elected dictatorship’ the domestic status quo is likely to remain intact.

  38. Overseas commentator Says:

    No matter what the real referendum question is ,all the other Eurozone countries (and I suspect most Irish citizens) will believe that the question really is “Do you want to stay in the Eurozone or leave it?”.In a sense, it will really clarify the situation.

  39. DOCM Says:

    @ All

    Both Merkel and Sarkozy are bidding up the treaty revision aspect for obvious domestic political reasons. But the markets could not care less. They are not interested in whether Ireland needs a referendum or when and if a treaty change is agreed. They want action now on a number of specific and related issues that could be summed up as a trade-off between (i) immediate clear progress with regard to binding sanctions and (ii) steps to restore confidence in the markets.

    As I have indicated on other threads, there are ways in which this can be done but when each avenue is examined, it appears to contain an insurmountable obstacle for one country or other of the Big Three (France, Germany and the UK).

    It is also clear that the US is getting seriously exercised about the myopia of European leaders who fail to set these supposed insurmountable obstacles in their appropriate wider context. The essential negotiation is about trading them off against each other. In my view, this will happen as there is no alternative, not because the leaders concerned wish to concede on them.
    But none wishes to return home appearing as having conceded more than any other. That is the political difficulty. Europe and the euro versus a truncated political career either personally, or party, or both!

    It may be noted that Cameron has softened his position considerably as he discovers that it is not, in fact, possible to shout advice from a largely imaginary sideline position and play on the pitch at the same time. Herewith agian a link to the article by Peter Oborne of the Telegraph. (It is a lot more pertinent than the interview with Delors trying to establish his place in history).

    http://www.telegraph.co.uk/news/worldnews/europe/eu/8931546/The-eurozone-crisis-we-need-more-than-prayers-now.html

    @ Paul Hunt

    I agree entirely with your presentation of the situation. Unfortunately, such is the limited grasp of the Irish political class, media and commentariat of European issues, there is no prospect of it becoming the accepted view at this stage. The phenomenon is not confined to Ireland. All politics is local!

  40. Ceterisparibus Says:

    @@DOCM
    “Both Merkel and Sarkozy are bidding up the treaty revision aspect for obvious domestic political reasons. But the markets could not care less. They are not interested in whether Ireland needs a referendum or when and if a treaty change is agreed. They want action now on a number of specific and related issues that could be summed up as a trade-off between (i) immediate clear progress with regard to binding sanctions and (ii) steps to restore confidence in the markets.”

    Two stories today suggest that neither issue you highlight are going anywhere
    fast..

    http://www.nytimes.com/2011/12/03/business/global/german-bank-chief-sticks-to-hard-line-on-euro-support.html?ref=world
    The first is Schaeuble and his Redemption Fund for each country
    http://www.reuters.com/article/2011/12/03/us-eurozone-germany-idUSTRE7B20FF20111203
    And the second is Weidmanns continuing opposition to euro bonds or suchlike

    The Redemption fund where anything over 60% of GDP would be paid off over 20 years looks very difficult for Ireland

  41. The Dork of Cork Says:

    Good turn out in Cork today – although with a woeful performance from 2 youngsters singing out of tune Dublin songs that was finally saved by a Middle English man / Cape Clear farmer who sang a Great Post Napoleonic depression song.
    Good support from cars & Buses as we did the circuit although some Middle aged shoppers from the country seemed not impressed.

  42. DOCM Says:

    @ Ceterisparibus

    Thanks for these very informative links.

    There is nothing really surprising in either. The idea that Germany is going to accept that the ECB launch into an unlimited bond purchasing spree is a pure fiction of the Anglo-Saxon financial press.

    However, how can one not be struck by the following in the Reuters report?

    “Merkel’s spokesman welcomed Schaeuble’s proposal as “interesting,” saying it could help rebuild investor confidence.

    However, it is far from clear whether Merkel will push the idea. Her main focus is securing a deal on changing EU treaties to force states to be more rigorous in budget discipline”.

    Does Germany have a government?

    What the final elements in the mix are going to be is impossible to say. I certainly believe that the PSI issue will figure largely cf. extract from Sarkozy’s speech.

    “Il doit être absolument clair que tous les pays de la zone euro seront solidaires les uns des autres. Il doit être clair que ce qui a été fait pour la Grèce, dans un contexte très particulier, ne se reproduira plus, qu’aucun État de la zone euro désormais ne sera mis en défaut. Il doit être absolument clair qu’à l’avenir aucun épargnant ne perdra un centime sur le remboursement d’un prêt accordé à un pays de la zone euro. C’est une question de confiance et la confiance conditionne tout”.

    “It should be absolutely clear that all the countries of the euro will show mutual solidarity. It should be clear that what has been done for Greece, in a very particular context, will not be repeated, that no other state of the euro zone will be placed in default. It should be absolutely clear that in the future no saver will lose a centime of the repayment of a loan accorded to a country of the euro zone. It is a question of confidence and confidence shapes everything”.

    But should we not be discussing the pressing issue of Ireland’s next referendum. After all, the paper of record has given its view!

    P.S. One of the snippets in the report is of interest. It is the reference by Merkel to “regulations”. Such can only be adopted in a Community legislative context (as in the case of the Six-Pack).

  43. Andrew Says:

    @ disgruntled

    Totally agree with you. I have voted no to every treaty so far because I believe the project of European integration has been designed by and for financial elites who now see this crisis as an opportunity to enshrine their control over sovreign states into law. As long as I believe this to be the case I will continue to vote no. To be categorised as being part of some rabble that will blindly vote no to anything is frankly ridiculous and arrogant. In a democracy people are free to vote as they please and for whatever reason and that should be respected. I’m afraid in my opinion the powers that be in Europe fear democracy that they cannot control. The The idea of fiscal union cannot happen in my opinion unless rule by decree of the elite is what we aspire to. Let’s have a referendum in every country in the EU. Surely the democrats in Brussels would be all for it.

  44. seafóid Says:

    Greece 2000
    http://www.youtube.com/watch?v=D8ONKSmsw5s&feature=related

    Greece 2011
    http://www.youtube.com/watch?v=YqiC9pQ4YZ0

  45. Ceterisparibus Says:

    @DOCM
    Agree. Dr Merkel is not for turning…backed by Weidmann.
    However, the sanctions bit seems tame. As you say the markets don’t give a hoot. And how does she enforce sanctions. Dragging Ire before the ECJ wouldn’t achieve much. Automatic taxation increases when the country is bled dry would appear to be nonsensical.
    None of the solutions being advanced would appear to be realistic. The bond markets are going to be disappointed.

  46. PR Guy Says:

    @Al

    “Is Collins channeling what Govt wants us to think?”

    In a word – ‘yes’.

    The PR starts here. We are going to get plenty more of it before Christmas.

    And after that, if (and I still think it’s an ‘if’) a referendum is called, I can already see what I would be writing for the likes of Barroso piling on the pressure… “It is the choice of the Irish people but they have to think about whether they want to go it alone (will be the threat even if that’s not what’s in the ref. question) or stay in the EZ and enjoy the backing, strength and support of their partners in what is a difficult and dangerous situation out there for a smaller economy…. etc etc. laying it on thick about the consequences of not voting how the EC/Merkozy want us to.”

    When the PR really starts to come on thick and fast, just remember guys that everything before the ‘but’ is bullshit e.g.

    It is the choice of the Irish people but …. (they have no choice)

    We respect the wishes of the Irish people but …. (we have absolutely zilch respect for their wishes)

    The EC will do everything in its power to support Ireland but …. (you are having a larf if you expect us to lift a finger)

    etc.

    Enda’s PR position is of course very weak… he can’t get on TV3 because it seems the X-Factor is more important than anything he might have to say!

    @Brian Woods Snr

    “I have a nasty feeling that there is a very unpleasant surprise lurking in the not too distant future: an energy crisis.”

    Sooner that possibly even you think…. my man in Israel says it’s at least 60/40 odds on a strike against Iran in 2012 and all the oil price spikes that’s going to bring with it. Iran knows where the West’s jugular is and it’s oil supply and apparently the war games scenario what-iffing that goes on with military types assumes they have already decided what they are going to take out to massively disrupt oil supplies from the mid-East.

  47. The Dork of Cork Says:

    @seafoid
    Looking at energy use per capita KOE Greece was always a poor country.
    Libya had a higher energy use per capita since the mid 70s.

    In 2008 : Libya 2963 KG KOE
    2008 : Greece 2707 KG KOE.

    Both are closer to 2000 KG KOE now I guess………….job well done ?
    http://www.google.com/publicdata

  48. Michael Hennigan - Finfacts Says:

    @ Paul Quigley

    Most aspects of life are in shades of grey but arguments about responsibility at inter-country level tend to be viewed in black and white.

    I think Merkel has acknowledged that countries like her own and others had failed collectively in respect of risks that the EMU faced but sovereign countries like Greece and Ireland made bad choices that negligent regulation in other countries should not eclipse.

    Germany would have become the export power that it is, if the euro had never appeared as the UK’s previous strength in manufacturing waned. What is remarkable is not only the world class reputation of its engineering but the number of sectors where its companies both big and the traditional family-run Mittelstand firm, that meet the demands of the emerging economies. The British car industry died decades ago while VW this year will end the year as the world’s No 1 automobile company.

    The foreign import content of German exports mainly comes from Europe. Superficial commentary argues that Greece was left out on a limb but it had a dysfunctional system that never took advantage of its close ties with the Arab world as that region got rich. Nor did it seek to actively attract FDI as Ireland did. Debt to GDP ratio in 1980 was 22%.
    Neighbour Turkey has a strong economy and a debt level of less than 40% of GDP.
    It would be stupid to say that Turkey has done well just because of devaluation.

    Countries like Ireland and Greece did get significant cash transfers and in 1991, Ireland collected more than 6% of GDP.

    In net terms, we have not paid a cent towards the budget since 1973.

    @ All

    Twice in a generation the Irish economy was brought to its knees and despite the latest episode with its collateral damage that has wrecked the lives of tens of thousands of fellow citizens with little consequence for the guilty, have things so fundamentally changed that we could say, it will never happen again?

    External supervision should be welcome.

  49. Georg R. Baumann Says:

    Twice in a generation the Irish economy was brought to its knees and despite the latest episode with its collateral damage that has wrecked the lives of tens of thousands of fellow citizens with little consequence for the guilty, have things so fundamentally changed that we could say, it will never happen again?

    External supervision should be welcome

    That I feel Michael is a very odd argument.

    Especially given the WHO is supposed to do this oversight.

  50. Ceterisparibus Says:

    Probability of default within 5 years according to a Bank of England report
    Greece. 100%
    Portugal 60%
    Ireland. 50%
    Italy. 40%

    Not very inspiring if accurately reported…
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/12/2011_417257

  51. The Dork of Cork Says:

    Micheal Micheal Micheal , do you really think nations matter that much these days ?………its the banking network and their credit production baby.

    Do you really believe Dorks such as the Micheal Martins of this world have control of anything of consequence ? never mind international trade flows.

    If we are to look at Germany we must accept it has become a Industrial Pygmy – creating Industrial Boutique machinery that in a massive deflation will become excess fluff.
    It must export these high cost items because its energy stratergy has been a disaster – relying on austerity rather then core capital production so that it must export real goods for a currency it has little control of.

    If this sucker goes down the last place you want your money is in the current bankers best friend country.
    Germany is a very very vulnerable giant – it can be taken down with one well aimed sling shot.
    Supervision me hole.

  52. Donal O'Brolchain Says:

    @Paul Hunt at 4:01 pm
    “Ireland as a republic differs little from the parliamentary democracies in most other EU member-states. ”

    This is misleading, as most people in this Republic assume that this means that all members of Government are also members of Parliament.

    In her Nover 2009 paper “Institutional Design and Irish Political Reform” UCD’s Dr. Niamh Hardiman pointed out that
    “The main concern expressed about the electoral system is that it does not supply us with people who are skilled in specific policy areas. We might consider two issues that arise in this connection. Firstly, we should consider what the conventional Irish pattern of recruitment to government looks like in comparative perspective. Secondly, we need to consider the opportunities to improve recruitment and quality of debate across both chambers. The manner of appointing government Ministers is quite varied across democratic countries….,

    The Irish pattern of recruitment to government is quite unusual in European terms: no other system relies as heavily on elected representatives for its government ministers…..

    Ireland also stands out as having an unusually high level of executive dominance over legislative practices, in comparative European context, as Figure 4 indicates……”

    http://www.tara.tcd.ie/bitstream/2262/41161/1/Hardiman%20new%2015%20nov%2010.pdf

    Earlier this year, I put forward a series of mutually reinforcing ideas for changing the way our Government Ministers (Cabinet and non-Cabinet Minister of State), without any need to change our Constitution.

    for summary, see p. 57 of Dublin City Business Association(DCBA) Towards a Second Republic here
    http://www.dcba.ie/static/doclib/Towards_a_Second_Republic.pdf
    here

  53. Donal O'Brolchain Says:

    Correections
    Niamh Hardiman’s paper was presented iin November 2009

    last paragraph
    “changing the way our Government Ministers (Cabinet and non-Cabinet Minister of State) are selected, without any need to change our Constitution.”

  54. Andrew Says:

    @michael
    So who will ‘supervise’ us. I think you’ll find the German economy has been brought too its knees twice also in the not to distant past. Maybe we should get the Canadians in to run the place seeing as we can’t do so ourselves. I really do not understand where your coming from or what you want for our country

  55. The Dork of Cork Says:

    @Georg
    Micheal has a obsession with fiscal flows – that was just the little mechanism that made the much deeper rentier structure sustainable over the medium term.
    The huge underflow / rip tide in the shadow bank sector seems to escape him.
    The European Vendor fiance model is finished.

  56. Brian Woods Snr Says:

    @PR Guy: Thanks for that update.

    I was not even thinking about the two state you mention. I had in mind the 158 others, 156 of whom are nett oil importers. Chindia (2) + 42 oil exporters makes up the balance of the 200 odd states we have on the planet (act. I think it may be 195 – but no matter).

    42 exporters – 9 of whom are inconsequential. That’s 33 exporters for the rest of us (158) to suck from. Now those 33 are sucking an increasing quantity of their own output, for their internal domestic use; like about +7% p/a, approx. It varies, but its still significant. So that leaves a nett for the rest of us.

    Now Chindia has an exponentially increasing usage, +15% if you believe the stats. That’s a lot of sucking! The rest of us (156) make do on that netted nett; ie. [Total Global Production - domestic consumption] => Nett Global Exports. [Nett Global Exports - Chindia] => Us!

    Big, big trouble ahead on the liquid fossil fuel front!

    Brian.

  57. Livonian Says:

    @Kevin

    “(If we are going to have a referendum, this will take time, and create uncertainty, anyway: so why not get it right?) ”

    IMHO that is an excellent point which needs to stand out and is one that most people (for and against the need for a referendum) would find hard to disagree with. :)

  58. disgruntled observer Says:

    @ DOCM

    “…But the markets could not care less. They are not interested in whether Ireland needs a referendum or when and if a treaty change is agreed. They want action now on a number of specific and related issues that could be summed up as a trade-off between (i) immediate clear progress with regard to binding sanctions and (ii) steps to restore confidence in the markets…”

    With all due respect DOCM, this shows how you completely misunderstand the nature of “the markets”. The markets are credit junkies. They don’t care about binding sanctions or steps to restore confidence. Those things are just excuses to throw the dice, forgotten about almost as soon as they’re spoken. The only thing they care about is that there is a constant stream of credit that is ever increasing so that when they’re at the roulette table they can take their losses along with their winnings and come out ahead. As long as they can double up the markets care about nothing else!!!

    The problem that Paul Hunt refers to as “Neo Con,” and that has pervaded for the past thirty years was an ever increasing opportunity to gamble (i.e. deregulation) and the constant supply of credit that was affectionately referred to as the Greenspan put. As the Dork of Cork likes to point out, we’re all dollar bitches, and so in order not to destroy Germany in the midst of a deflationary post unification bust with a currency sky rocketing in value against the dollar, the ECB tracked the Federal Reserve’s interest rate policy. Germany was saved, Ireland and Spain, in particular, went to the moon. There were undoubtedly governance issues in many countries across the EU and elsewhere, however, substantially that is the story.

    Both Paul Hunt and Michael Hennigan do have a point about Ireland’s governance, although they usually aim for their own peculiar targets. However, the chief failure of governance here wasn’t social spending or the size of the public sector, or even (despite the disgusting pay rates at the top) public sector pay, but tax breaks such as section 23 which existed pre ERM and set the institutional framework for a building boom. In fact, it was designed for two reasons: for legal tax evasion and quite frankly to create a building boom. A cursory reading of the past fifty years will show that this is Irish Economic policy. It was what happened in the 70’s, when the government not only fuelled the boom with subsidies and financial deregulation but then also became the chief buyer of commercial property when there appeared to be no demand. The 80’s was the consequence. This time around, the government couldn’t possibly provide the demand so instead it came up with NAMA. This is argued lucidly by Conor McCabe.

    But what broke us was monetary: With the building boom already created, an insane interest rate that was wholly inappropriate fuelled it to the point of no return. You see, here’s the rub. The world was awash with credit. Iceland is a case in point: outside the euro, it received insane monetary inflows in the chase for yield. The only countries that came out okay where those who were in a cyclical downturns, or in the case of Germany and Japan and some Scandinavian countries, a bust, whilst this was all happening, (and in the case of Germany, there were serious governance issues there – Hartz IV has been a disaster that exported it’s demand problem to the periphery).

    A question to consider: Despite all the rhetoric about German virtue, who do you think will be the first to face breaching the “new and improved” super stability pact? I’d place a bet on Germany. And I’d bet the automatic procedures would have no bearing on them also. But little auld us now, we need supervision. Reminds me of a teacher that drinks and smokes in class berating his students for bad behaviour.

    http://www.thenational.ae/thenationalconversation/industry-insights/property/german-property-enjoys-a-boom

    “You used to pay €2,500 to €4,000 per square metre in the Hamburg district of Eppendorf,” says Mr von Fehrn. “Now these flats are changing hands for €6,000 to €7,000. The rise has happened in less than two years, since the financial crisis.”

  59. DOCM Says:

    @ disgruntled observer

    There is little in your analysis with which I would disagree, if anything! Indeed, I think Merkel would agree wholeheartedly with you as well. My main point is that we have to deal with the world as it is and not as we would wish it to be. The “markets”, casino, or whatever you like to call them, are coming out on top once again. The developed world has hold of a tiger by the tail and it simply does not know how to let go of it. It is something of any irony that the main source of the problem, the US, is probably the most advanced in addressing what is wrong.

    Leaving aside the usual Telegraph gloss, I think Oborne is drawing attention to the wider international context which is generally being ignored. The objective is to stop the stampede. There is no time at this point for a discussion of how it started or how to prevent it happening again.

  60. paul quigley Says:

    @ Michael H

    Of course. Credit where credit is due.

    My favoruite story of German ingenuity is the junior chemist who was shown an enormous mountain of some yellow coloured industrial by-product and told to make something useful out of it. And so we got paracetamol. No thinking person fails to recognise Germany’s technical strengths.

    German business culture goes all the way back to the Hanseatic League and beyond. Paddy Kavanagh’s pungent observations about Dublin’s provincial culture have not lost their sting.

    @ Paul Hunt

    I merely note that technical strengths have not prevented the subversion of German democracy by the global plutocrats. Government has technical aspects, but cannot be reduced to technocratic functions. That would be another form of tyranny.

    This is where Edward Harrison thinks the ‘external supervision’ will take us.

    http://www.creditwritedowns.com/2011/12/more-on-what-will-happen-in-europe.html

    DO’s point that the ‘supervision’ (aka enforced deflation) won’t actually disturb our existing domestic pecking order too much is also relevant.

  61. DOCM Says:

    @ Donal O’Brolchain

    You are absolutely correct. We get the politiciams we deserve! Nothing has changed! A surfeit of ministerial posts has been handed out – with associated pension benefits – to office holders who are clearly incapable of mastering the intricacies of national, not to mind international, policy. This results in the “permanent government”, which has become sclerotic, remaining firmly entrenched.

    It seems that the Irish electorate likes it that way.

    Ireland is facing a radical situation but there is not the slightest evidence of radical thinking.

  62. DOCM Says:

    @ All

    FYI

    http://online.wsj.com/article/SB10001424052970204012004577073623507093122.html

  63. The Dork of Cork Says:

    @DOCM
    Radical thinking ? what can we do ? we have the most open – see neo liberal – see not in my statist hands mate economy.
    Mercantile states suffer most in depressions which is why I think Germany will hit the floor bigger then most commentators expect but Ireland is a economic absurdity wrapped up in a riddle.
    As Yanis V. said on the Max Kaiser show -Ireland alone can bring down the City of London although we supposedly have equal “assets” across the Irish sea.
    I can only imagine what a modern Brian Boru character would do – hold up a wad of Mortgage paper on the Wicklow coast and shout “come and take it yee bastards.”
    Is that the kind of radical thinking you want in this bog ? – you certainly would get their attention.
    I reckon the RNs very last Frigate would be used in a show of force.
    Now if you excuse me I must go to the pub and ponder my navel.

  64. The Dork of Cork Says:

    “hit the floor HARDER” ………….. I was getting thirsty & impatient.

  65. David O'Donnell Says:

    @Andrew

    ”’ Maybe we should get the Canadians in to run the place …

    After Mandy Marchak and her team’s perfomance in winning the World Rugby Sevens, I would be delighted to either receive an application from, or extend an invitation to, The Canadians to join the EU. We badly need a few more decent rugby players to liven up the present game …

    Did a tidy job with your banks as well, I must say …

  66. seafóid Says:

    November 2010, FT

    ” Ireland has done more than many other countries to shine a light on losses in its banks (although not enough, even now). Its fatal mistake was not to follow up with a credible and fair plan for who should shoulder those losses. Now that markets have caught on, as they eventually always do, the European response displays the worst instincts of a mob in fear: it puts Ireland in the stocks in order to protect Portugal and Spain,”

    What we are seeing now are just the inevitable consequences of the decisions made by the PTB at that time. Irish culture is neither here nor there in this game. That nice man Peter Sutherland stuck the knife in too. I think it was Peter Barry who described him as “a gentleman thug”.

    It might have been a little easier if the Euro wallahs were competent or understood the finance world.

  67. The Alchemist Says:

    The Irish are almost never satisfied unless some recognition of victim status is inserted into the narrative, captivated by a vicarious Matt Talbot syndrome.

    Ireland is ‘where it is’ because of a succession of development policies that favoured incentivising property investment above all else. The chocolate box of incentives within the gift of Irish governments has favoured property, multinationals (FDI), professional elites, and public sector employment. Even the most popular BES schemes were ‘asset backed’, meaning property related. I don’t recall many of the beneficiaries crying stop at the time.

    Ireland could field ten thousand referendums, and unless the incentive mix is rinsed out thoroughly, the same bad policies will continue to emerge.

    It really is little wonder that Ireland doesn’t get much of a hearing by Merkel, etc. Under the ‘closer to Boston than Berlin’ philosophy of the previous government, the country seemed have become detached from the EU. Baseball hats, shopping on Fifth Avenue twice a year, and annual trips to Disneyland Orlando were the signatures of the Ireland that lectured the rest of the EU on how to be successful.

    It was embarrassing to read the coverage in the Italian and French media after the last referendum was rejected – and of course passed eventually. The country was simply ungrateful despite the wads of EU cash shoved into it. That was the theme.

    The chickens have come home to roost. Unfortunatelly the brunt of the hard perching is being experienced by small businesses and the vast numbers of unemployed. The latter get about as much attention in the running commentary as the rockery list of Merkel’s next door neighbour.

    Where will the US multinationals go, if another referendum is rejected? Presumably, all those ‘against’ will come up with replacement jobs.

  68. paul quigley Says:

    @ Alchemist

    ‘Ireland is ‘where it is’ because of a succession of development policies that favoured incentivising property investment above all else’

    That is only one of the reasons. I refer again to Joe Lee’s excellent ‘Ireland 1912-85′ for an in depth analysis of our development problems. Ireland’s economic progress cannmot reasonably be

    With all due respect to the efforts and achievements of those who work in the FDI sector, we had all we are going to get by way of net employment gain from that quarter. Spanish umemployment is going to hit 25% next year.

  69. Eureka Says:

    @ Alchemist
    So if this is all Ireland’s fault – how come we have a global crisis?

  70. grumpy Says:

    @docm

    Regarding that Wall Street Journal article, a careful reading of the first of these paragraphs suggests it might have been written by a guy on sabbatical from Fox News:

    “While Mr. Sarkozy is pushing for short-term moves to stop the crisis, Ms. Merkel’s proposals on Friday focused on making the euro zone more stable in the long term and preventing a crisis of excessive government from recurring.

    Ms. Merkel said her strategy is to use the crisis as an opportunity to achieve long-term change in Europe, especially to make significant progress on building a closer political union in Europe to compliment its currency union.”

    Also, the latest idea you draw attention to seems to be that the politicians think if they don’t say that bondholders will have to take writedowns if debts are otherwise unsustainable, then the market will assume something else will be done instead to make them sustainable. For the banks, this ‘something else’ is “get the sovereigns to pour money into them”. What is planned for the sovereigns if they have too much debt?

  71. paul quigley Says:

    Sorry. Hit submit button in error.

    @ Alchemist

    ‘Ireland is ‘where it is’ because of a succession of development policies that favoured incentivising property investment above all else’

    That is only one of the reasons. I refer again to Joe Lee’s excellent ‘Ireland 1912-85′ for an in depth analysis of our development problems. Ireland’s economic progress cannot reasonably be anlysed without reference to our colonial history. It’s ironic that we should still have a dual economy, which is typical of colonies. The limits of political sovereignty.

    With all due respect to the efforts and achievements of those who work in the FDI sector, we had all we are going to get by way of net employment gain from that quarter. The diviil knows where jobs will come from. Spanish umemployment is going to hit 25% next year, so we have plenty of company, if that’s any consolation.

  72. Livonian Says:

    @Kevin et al

    I was originally a bit surprised when Enda Kenny decided to address the nation on Sunday.

    At first I thought it would make more sense to address the nation next Wednesday after the budget and ahead of the Euro meetings on thursday and Friday. However after thinking about it I can see certain political logic in the strategy.

    There have been a lot of forceful statements aimed indirectly at Ireland by various EU/EZ personalities in recent days which have received prominent coverage in the media.

    After Monday and Tuesday Irish people will be more focused on the impact of the “cuts budget”(monday) and “taxation budget”(Tuesday).

    With Monday being devoted to coverage and analysis of the Taoiseachs address Irish media coverage of statements by various European personalites will be relegated to less prominence on Tuesday and Wednesday.

    Consequently this will diminish opportunities for European personalities to adopt “carrot and stick” approaches which we witnessed in recent days.

    Statements emanating from “our friends” such as “12BN gained” or “10 days to save the Euro” as well as comments about corporation tax and “fiscal compacts” are going to pale into insignificance as Irish people analyse the individual impact of the budget and reasons why we are paying for a stitch up-sorry- “bail out”.

    IMHO it would not surprise me if the harsh facts of the budget, and the Irish people`s reaction, may actually strengthen what Enda Kenny will say at the meetings, behind closed doors, on December 8th-9th.

  73. Livonian Says:

    @Alchemist

    I beg to differ.

    IMHO Ireland “is where it is” because the leaders of our previous government blindly trusted some of our European counterparts so much that we let them stitch us up twice.

    As for our unemployment problem this is a reflection of the reality throughout Europe.

    Between 2004-2007 Ireland experienced unprecedented net inward migration from the EU. Despite the downturn very few of these immigrants have “rushed to the airport” because they know what the reality in Europe actually is.

    Perhaps our leaders in 2008, 2009 and 2010 should have paid more attention to why new EU immigrants were not rushing back to Shang-ri-lah instead of trusting , being frightened by and then being “rail roaded” by certain European “friends” :)

  74. Mickey Hickey Says:

    The Road to Serfdom by Marshall Auerbach (with apologies to Friedrich Hayek).
    I am surprised this was not on here, I did search.

    http://www.creditwritedowns.com/2011/11/the-road-to-serfdom.html

  75. Bklyn_rntr Says:

    @Livonian
    No, we don’t get to live high on the hog and then, when the excrement hits the ventilation, blame others. WE lived it up while the money was “Free” and we allowed our politicians/developers/local bankers run amok while the goodies were flowing. We also convinced ourselves that, when push came to shove, these politicians would take the high road….right! They looked after themselves and, by blaming everyone else except ourselves, we are trying to do the same.

    Maybe that is logical, and there are good reasons why, in every society, there is an aspect of “striving” in the sense that, if I emulate my “betters” I will get what they have. Of course it doesn’t work, but that doesn’t stop us. The point is – a lot of the pain we are suffering today is because our elected politicians and our bubble heroes (developers and banksters) acting out of maker self interest, and WE let them. Now they are getting away with it because WE are blaming the Germans for imposing austerity.

    I know German banks are not blameless, but I also know that the German taxpayer should not spend one red cent bailing us out IR covering our fiscal deficits. So as we bitch and moan about austerity and German intransigence, we should remember, we are fighting internally to determine who should bear most of the losses and while we bitch and moan about the Germans, the ones who were the primary beneficiaries of the bubble, are getting. Away with all the loot.

    Germany is TRYING to impose discipline and it HOPES that it can remain an integral part of western Europe. Merkel it trying to establish a new roadmap, rulebook to govern the EU, but we bitch and moan about representation, because we don’t want to tighten our belts. Well, we are heading to a disaster this way. If we leave the belt tightening will be sudden and merciless. If we stay and are sheep, we will be fleeced. It’s time to man up and fight our corner, and that means

    1. Impose a rule banning limited liability for banks
    2. Find an alternative source of funding for the sovereign (diaspora bonds)
    3. Establish a REAL enquiry of the crisis, and arrest the traitors that caused this (including politcians, banks and developers).
    4. Threaten to default on the anglo portion of the national debt if New EU framework allows cross border lending without struct regulation.
    5. lower the corporate tax rate to five percent and tell Sarkozy to go f@ck himself

  76. Mickey Hickey Says:

    @Eureka
    If our Gov’t had not backstopped the banks and bondholders we would now be on par with the Nederlands, Austria indebted around 80% of GDP.
    Ireland would have had a normal downturn with enough room for stimulus without aid from ECB/IMF. Unemployment around 8-9%.

    We did not cause it but we blindly and wilfully got ourselves entangled.

  77. Mickey Hickey Says:

    @Bklyn_rntr

    Re item 3.
    As my mother used to say when she brought back 8 to 10 bottles of Cognac to Ireland. Sure the jails are full boy, do you think they would touch an old woman like me.
    You are talking over a hundred thousand people from the Taoiseach to lowly planners in small towns. You are effectively saying we should jail a close friend or acquaintance of everybody in the country.
    Fraud and corruption is deeply embedded in the culture, it is “normal”, as they say there isn’t a judge in the country would jail or fine me for what everyone is getting away with. Did we grow up in the same country or are there a few honest pockets?

  78. disgruntled observer Says:

    @ Mickey Hickey,

    “If our Gov’t had not backstopped the banks and bondholders we would now be on par with the Nederlands, Austria indebted around 80% of GDP.
    Ireland would have had a normal downturn with enough room for stimulus without aid from ECB/IMF. Unemployment around 8-9%.

    We did not cause it but we blindly and wilfully got ourselves entangled.”

    I can’t disagree with a word of that, however, it naturally leads to a number of questions.

    Did we learn the mistake? If so, and we sought to untangle it, did anyone try to prevent us by making serious and credible threats? Alternatively, are we hiding behind supposed threats to maintain a status quo?

    Finally, is there a way of untangling it now? Should we as Bklyn_rntr puts it, man up, but to finally take some bloody responsibility for ourselves? Should we condemn the country to servitude for the sins of our establishment? Should we give up on our democracy? These are the quesitons we’re being asked.

    We are still an independent people. The answers are ours. But if we go down the road that’s been marked out, we’ll no longer have that right.

    PS. Your analysis of point 3. is flawed. It’s the same tired auld, “shure we all partied.” If you want people to take responsibility for their actions here, you’ve got to stop the old Catholic line of universal guilt. The fish rots from the head.

  79. anonym Says:

    (I am not an expert on anything.)

    @Dan

    I think the crucial part of the debate will be enforcement mechanisms and penalties.

    This is crucial all right. In one very important respect it doesn’t matter much whether the redesigned Euro will have explicit fiscal transfers or not, or will have ECB monetisation of public debt or not. As long as the new Euro requires Eurogroup members to adhere to some kind of restraint of their debt and deficits then there has to be an effective ‘or else’ to prevent a member state from breaching its restraints but remaining in the Euro with impunity. Again, it doesn’t matter if those restraints are looser than they otherwise would be thanks to Eurobonds or monetary easing or whatever, or easier to live inside than they would otherwise be thanks to some kind of mega-Structural-Funds: as long as there are restraints there must be a real and effective sanction for breaking them. What could those sanctions be?

    1) There would certainly be verbal and written reproof, as there is already. The EU’s fiscal condemnations could be made more solemn, more specific, and more vehement, but it’s quite unlikely that finger-wagging alone is going to be enough to restrain governments facing a fiscal crisis.

    2) The new treaty can prescribe penalties for fiscal offenders: fines, the end of EFSF/ESM/whatever support, Euro expulsion. Of course the SGP prescribes penalties already. The critical problem is that in the present financial crisis any of these will push the offending state into default (or Euro exit, redenomination of debt, and devaluation – more or less the same thing). But the whole purpose of the EU’s present policies is to prevent systemically-important defaults at almost any cost. (Totally contrary to the design of Lisbon, which is not at all fundamentally incoherent, but rather founded on the bedrock principle of default inside the Euro; the SGP penalties are a bolted-on extra.) So under present circumstances, threatening a member-state with these penalties is a classic hand-grenade mugging. The chance that the EU centre will consistently get everything it wants – in other words, full adherence to the deficit/money-printing/fiscal-transfer limits – from the staredown is not high. I shouldn’t have to spell out the likely consequences of such slippage in a multi-year, multi-member currency union. The EU centre could at any stage give up: decide that it won’t take any more and opt to release the handle on the grenade. But then the new treaty will simply have delayed the financial collapse; it would be a lot less hassle to just have it now.

    3) That only leaves force. If and when national finance ministers who present a budget unacceptable to the EU find themselves arrested, thrown in a cell and brought up on charges, then the EU will have relatively little difficulty enforcing budgetary limits. Punitive military action would probably have the same effect. Clearly, once the EU is ready to exercise Option Three over its member states, we have the real end of national sovereignty and real political union – the birth of a single EU state. (Well, that or a war.) Call this “hard” political union. Of course, this option does not seem to be on the cards at present. The one interesting step in that direction is the apparent German demand that all countries place a debt brake in their constitutions. But the thing that really matters here is what would happen if a Eurogroup member started flouting the debt brake written into its constitution, or started the internal process to have it repealed. If the answer is “but then it would be expelled from the Euro”, see point 2) above.

    4) There is no Option 4.

    So any possible Eurozone fix is either a resort to member-state default, or a resort to Option Three, or a paper tiger – a rope of sand which is not capable of restraining EU member states under the circumstances where they are most motivated to break the rules. If the first two of those are ruled out, then the result will be a paper tiger. If the paper tiger is tried and found wanting, it will turn out in retrospect to have been a stepping-stone either to member-state default or to Option Three, depending on which one follows (first).

    The only question is how long it will take the paper tiger to be found out. And this is probably where the question of whether the “fiscal union” will be a transfer union starts to matter. A status quo arrangement with no money-printing and no fiscal transfers is not likely to have a long life, but maybe just the right transfer union will do enough for everyone to keep every EZ state reasonably happy and not desperate to yank the deficit restraints tighter or looser, and so no-one will call the new treaty’s bluff for the foreseeable future. In practise, it seems this would effectively boil down to a bet that enough QE will produce a serene Japanese lost decade or two for the EU, and that this will remain politically acceptable to EU voters. It’s not a bet I’d be jumping to take myself.

  80. Paul Hunt Says:

    I tried, but failed to submit a comment of Mr. McCarthy’s latest offering in the Sindo – accompanied by a separate, balancing (?) op-ed presenting the obligatory evocation of the Third Reich.

    Probably just as well as I expect I’ve insulted far too many of the sensitive souls here.

    In any event, and despite these straitened times and irrespective of the outcome of the coming week’s deliberations, it will be ‘business-as-usual’ for Ireland’s native power elites – and their assorted camp followers. Those who are unorganised or who lack the ability to apply effective collective action to exercise some political or economic power can go hang.

    It was ever thus.

  81. Gavin Kostick Says:

    @ Paul Hunt

    I very much value your contributions and see you as a proponent of robust debate as part of a continuum, rather than ultimately goal-oriented. If your points raise some of the excellent replies that they do, so much the better.

    Here’s Colm McCarthy:

    “ECB must step up to the plate and end this panic”

    http://www.independent.ie/opinion/analysis/ecb-must-step-up-to-the-plate-and-end-this-panic-2953410.html

    Perhaps it will get a thread to itself.

  82. paul quigley Says:

    @ Paul Hunt

    The fact that the native and EZ eilites are trying to do business as usual doesn’t necessarily mean that they will succeed. Otherwsie history would have no motor.

    You have challenged my thinking an the thinking of others. Fair play to you and people like you.

    It’s a time of crisis, so critical, impassioned debate is to be expected. What would worry me is if we didn’t have that.

    As the saying goes, batter on regardless :)

  83. Eureka Says:

    The big problem is this:
    We will have to cede more power to Europe but Europe is undemocratic and banker run.
    We don’t get a vote in the German or French elections but these guys will be running our country for the foreseeable.
    Fine with European fiscal integration but where is the democracy?
    If Europe imposes power for Goldman Sachs without allowing representation of the people then it will boil up and blow up.
    The last few weeks have been about bankers scaring everybody into a situation where all of Europe (not just the periphery) is now enslaved to Goldman and the likes. Save the Euro my butt – save the City of London and bondsters more like

  84. anonym Says:

    @Kevin O’Rourke

    I enjoyed reading your presentation linked here recently, but the comments left me wondering if I had read quite the same paper as everyone else. In particular I thought that your mention of “Rodrik’s trilemma” left some things hanging in the air. I was left with these questions:

    1) Do you believe that the EU can sustainably have fiscal union without hard political union – a full United States of Europe, with the necessary police and military power to crush secessionism and regional insubordination? If so, can you explain how you consider fiscal union without hard political union can be achieved?

    2) If you accept that EU fiscal union requires hard political union, can you make it clear whether you support, or oppose, hard EU political union as part of a response to the current crisis?

    3) If you support hard EU political union, can you justify this preference? I won’t dredge over all the problems with dashing for a single European state here; I’ll just mention that if people nowadays are inclined to think that reopening the entire European nationalities question, in grand style, is a reasonable and proportionate response to a banking crisis, then this is another really good example of stability breeding instability.

    4) And basically the same question as one I asked in reaction to LBS’ FT article back in April: if Rodrik’s trilemma implies that Ireland must enter political union with Germany – and that both countries must have a common banking regulator – in order to maintain free trade between both countries and democracy in each, then in what way do you believe Brazil’s relationship with the EU must change? Must globalisation between the EU and the rest of the world be rolled back? Or must the EU and Brazil enter a political union? Or must dictatorships willing to hand over bank-bailout money to foreigners be installed in Brazil and/or the EU?

  85. anonym Says:

    (“the same slides” not “the same paper” of course.)

  86. Paul Hunt Says:

    @Gavin & Paul Q,

    Many thanks for your kind words. I drafted a longer comment in response, but it was rejected when I hit ‘submit’. Somebody, somewhere is trying to tell me something. Ah well.

  87. Brian Woods Snr Says:

    @grumpy: “What is planned for the sovereigns if they have too much debt?”

    “Why, Pour lots of money into them, silly!” 8) And that is what looks like is happening. ‘Cept money won’t buy you growth. What we need is the ungrowth of debt – like real fast. Whose in for a nasty shock then?

    Brian

  88. Brian Woods Snr Says:

    @PH: I sincerely hope its only an electronic gremlin, not an unctious censor. Re-draft (shorten or split into several posts), then re-submit.

    B

  89. Paul Hunt Says:

    @BW Snr,

    Almost certain it’s a gremlin. I have complete confidence that out hosts here eschew ‘unctious’ censorship.

    In any event, the debate here is almost always when some policy decision has been announced as a fait accompli – or, even when some decision is coming down the line, the policy debate is taking place behind closed doors and any comment is unlikely to make a blind bit of difference.

    It seems to be the case that far too many who exercise power and influence are far too comfortable with the status quo — and have every incentive to defend it (or, if pushed, to concede to only cosmetic reforms). I’m not denying a public interest motive among the academics and others with competence and a public standing, but it seems that the freedom to comment and opine is valued above all – even if it has a negligible impact on the formulation of public policy (and almost invariably is after the event). There seems to be a view that more competent civil servants (well-trained by the academics) will be able to exercise restraint behind the scenes – and that these dignitaries will be able to whisper words of advice into the ears of Ministers or secure plum commission from government or advise their civil servant graduates – again behind the scenes. This may be beneficial, but falls far short of what is required.

  90. Kevin O'Rourke Says:

    @anonym: I agree that if Europe moves towards a proper fiscal union, that logically implies more political federalism. (I guess that any such arrangement would allow countries to secede at any time if they so wished, which is the case presently.) The question is, would this be acceptable to European citizens? As I indicated in Dublin Castle, I am skeptical (although opinions can change with changing circumstances and in response to political leadership). It is this basic chain of arguments that has traditionally made many economists skeptical about the EMU project.

    The point about trilemmas is that they force you to choose between things you would really rather not have to choose between. The genius of European politicians over the past 50 years is that they have been able to maneuver within the Rodrik triangle, avoiding the hard trade-offs it implies.This crisis seems to be forcing them ‘towards the edges’, and it isn’t clear what they will choose, For my part, I am with Rodrik: if you have to choose, democracy wins hands down every time. But that doesn’t mean that we shouldn’t try to preserve all of the many good things that European integration has accomplished over the past 50 years.

  91. David O'Donnell Says:

    @all

    Like this bit from Colm McCarthy this fine morning under the financial system occupation of the tentacles … taking The Aesthetic Turn forwards, and discovering the much neglected Linguistic Turn in political economy, presents a strong argument that Present EU Leadership (sic) is flagrantly guilty of Extraordinary Linguistic Abuse. The penalties for such abuse, apparently, have yet to be written.

    ‘If next Friday’s summit is presented with a scheme for penalties on countries in budgetary trouble because of local downturns, our Government should, tongue in cheek, suggest a proper fiscal union as an alternative. The pretence that a reinforced Stability and Growth Pact is a fiscal union is preposterous and an abuse of language.

    http://www.independent.ie/opinion/analysis/ecb-must-step-up-to-the-plate-and-end-this-panic-2953410.html

  92. hoganmahew Says:

    @Gavin Kostick
    “It is even more ridiculous to have sacrificed the solvency of European states, Ireland included, in a failed attempt to pretend that the solvency of banks is more important.”
    Honestly, I am not Colm McCarthy in disguise…

  93. David O'Donnell Says:

    @Kevin O’Rourke

    ‘The question is, would this be acceptable to European citizens?

    Europe needs a European wide, every citizen, every vote, Referendum on a ranges of issues as Europe conducts a step up in integration. This goes well beyond ‘savin’ all doze bleed1n banks and financial bleed1n institutions.

    Direction of European Democracy is at stake; and I smell tentacles setting all the agendas, including around here.

  94. Eureka Says:

    It’s strange how your opinion can evolve by reading a blog like this. A testimony to the blog itself.
    Thinking strategically a referendum is not in our interest. It will occur at a point when they won’t care if we stay or go and we won’t be able to negotiate off it.
    We are in a bind. Britain has the most exposure to our debt and is terrified of a Euro collapse because punts are worthless to them. They are also pushing for us to act as a simple conduit for ECB money to pay back their banks. But they are also using us to hold up Angels’s cherished financial transaction plans. So we are being squeezed.
    In real terms who do we need more now? Where are our alliances best met?
    Maybe it’s time to get onside and give Germany what they want. Let’s support the financial transaction tax (but only after guarantees on corpo tax). Maybe it’s time to start playing it a bit closer to Frankfurt than London?
    And maybe it’s time for our govt to show signs of wavering too. (though the total thicks in Fiana Fail will probably offer to replace labour if they leave govt!) After all Europe only responds to crisis. The markets can “generate” them. We can too

  95. Jesper Says:

    I read this post:
    http://www.nakedcapitalism.com/2011/12/david-apgar-could-germany-be-right-about-the-euro.html

    As far as I could tell the central issue was/is this:
    “Suppose, however, the feasibility of Mediterranean austerity – austerity at a scale big enough to impress the bond markets – is not what Merkel’s team is counting on. Suppose instead the Germans are really counting on the feasibility of a series of orderly partial defaults.”

    Is it possible to have a series of orderly partial defaults?

  96. paul quigley Says:

    Per Colm McCarthy

    ‘ It is ridiculous, in a monetary union with free capital flows and freedom of establishment for banks, to leave bank supervision in the hands of 17 national bank regulators. The United States abandoned this hands-off approach in 1913, after a succession of (you guessed it) banking crises’

    +1.
    The Fed makes mistakes too, but the EZ setup was a recipe for one colossal banking b****s up. As the Dork might say, of course, that was the plan :)

  97. Brian Woods Snr Says:

    @Jesper: “Is it possible to have a series of orderly partial defaults?”

    But we are in the midst of a default process! That’s why the panic stations. Real, economic surplus producing, economic activity has stalled. Debt load is increasing by the minute, and there is no matching income generating surplus to deal with this. I thought this was obvious to all. No?

    Brian

  98. Jesper Says:

    @Brian,

    I hope nobody is arguing the fact that we are in a default process. The longer the process takes the longer the negatives (some of which you outlined) of being in a default process will continue. Can the economic system survive settled orderly partial defaults?

  99. The Alchemist Says:

    @KOR

    I am skeptical about the willingness of politicians to set aside hackneyed party positions and shibboleths, and explain clearly the implications of being out of the euro.

    There is a atavism, a curious fatal optimism, in the Irish psyche entailing the fantasy that no matter how bad things are, something or someone will turn up with a bailout. This is usually accompanied by the backstory beginning with the myth ‘after 800 years of oppression…’

    Post-Celtic bubble that party piece has worn out its welcome in contemporary Europe.

  100. Brian Woods Snr Says:

    @Jesper: “Can the economic system survive settled orderly partial defaults?”

    Yes, but the Dear Leaders have to accept, and to inform their respective folk, that ‘our borrowing days are over’. Not exactly a cheery message. At least not the sort of thing you want to be saying in the advent of an election. So, I suppose its panic-around-the-panic stations, for a while yet.

    I expect Reality will tap on the window about 2015. “Gather yer harvest, fast!”

    Brian

  101. Jesper Says:

    @Brian,

    I think you’re right, the panic stations will be manned for another couple of months. A central bank independent of political pressure has not much to benefit from the strategy of ‘extend & pretend’ by printing money to fund deficits. The main argument that is left for the printing of money is that it is necessary to maintain financial (economic?) stability. Hence the question, can the economic system survive settled partial orderly defaults?

    It would seem that the system survived during the time of default by devaluation. Is it now the case that as default by devaluation can’t be done means that no default is possible?

  102. paul quigley Says:

    @ Alchemist

    ‘There is a atavism, a curious fatal optimism, in the Irish psyche entailing the fantasy that no matter how bad things are, something or someone will turn up with a bailout. This is usually accompanied by the backstory beginning with the myth ‘after 800 years of oppression…’

    Are you really suggesting that economics and politics can be divorced from history ? Where was the ‘bailout’ during the Famine, the 1930s, or the 1950s, for example ? Do you deny all connection between colonial economic structures and emigration ? Michael Hudson, among others, sees it otherwise.

    Let us please distinguish between the cynical use of nationalist mythology to sustain corrupt native elites, and the nationalist movement per se, insofar as we are able to understand it. A project of those dimensions and complexity requires serious and dispassionate analysis.

    The record shows this. Having milked the nationalist mythology for decades, our elite then adopted an anti-nationalist mythology, largely in response the events in the north, but also as part of a broader secularisation process.

    Most persons under 40 have been inculcated with that revisionist curriculum, so the Celtic Bubble was a revisionist, consumerist myth, rather than a nationalist one. Nationalism was reserved for footrball matches, and probably that was for the best.

    We are where we are, as they say, and this is 2011. Given that matters in Ulster have settled down a lot, and secularisation is more or less complete, the revisionist exercise has surely served its purpose.

    We are left with two mirro-image mythologies. Both have been utilised cynically for the purpose of obscuring the instituitional deficiencies and injustices which remain in our society. There is little to choose between them, sand they need to be recognised for what they are.

  103. paul quigley Says:

    http://michael-hudson.com/books/trade-development-and-foreign-debt-a-history-of-theories-of-polarisation-and-convergence-in-the-international-economy/

  104. Shay Begorrah Says:

    @jesper

    central bank independent of political pressure has not much to benefit from the strategy of ‘extend & pretend’ by printing money to fund deficits.

    One wealthy capitalists political pressure is another unemployed labourers democratic accountability, don’t you think?

    It is also very tired to extend the pretence that the ECB and failed monetarist dogma is not substantially to blame for the effect that global financial crisis has had on the EU. Reverse genius Jean Claude Trichet’s last interest rate rises and enthusiasm for austerity have done almost as much to wound the EU as the requirement that state finances be destroyed to protect a fundamentally flawed financial system from restructuring.

    Since the ECB will not be a proper central bank (and they and northern European conservatives are fanatically committed to this approach) then the only question is how to break up the Euro without breaking up the EU.

  105. Overseas commentator Says:

    @Eureka

    Why should the rest of us not take advantage of the situation to get rid of the abomination that is “fiscal competition”?

  106. Brian Woods Snr Says:

    @ Jesper: “Is it now the case that as default by devaluation can’t be done means that no default is possible?”

    “No, no, its default by default, silly!!!!” 8)

    Sorry, just realized I may have skipped my medication this morning.

    Somebody’s economic-ism is; that when private consumers shut their wallets (G*P declines), then mammy and daddy (state) pick up the slack ’till confidence (whatever the hell that means) returns. Then, G*P picks up, incomes rise, tax revenue exceeds expenditure: happiness all around. Mostly that has been the historic experience – until it is not Then you head into sh**sville – which is now.

    Irrespective of who picks up that tab, the unspoken codex is that it will be paid. Just, no one cares, or even thinks it necessary, to spell out in all the gory detail how this magical event will occur. You get utterly dopey commentary: usually from the brightest folk. They seem to be a tad short-staffed in the intellectual cop-on department.

    All ideological economic Model-in-Use paradigms only continue to succeed if their annual increase in economic surplus exceeds their annual increase in dept accumulation (due to credit emission and uptake). Ideological economic paradigms have few restraints – ’cause Milton said so!

    However, our actual economic activity takes place in a finite physical system, and is constrained by some very nasty, immutable laws of nature and iron rules of exponents. Guess who come off best in that contest?

    “Creditworthiness precedes the granting of credit” That is, you prove your creditworthiness, in advance! Otherwise no credit! Looks like we inverted that boring old process.

    “Where’s that damn medication?” :-)

    Brian

  107. Brian Mercer Says:

    @Paul Q.
    I agree with most of your analysis. A large part of this is down to the media, in particular RTE which is quite cynical in its news and current affairs presentation. It always gives and supports the establishment view, it is currently promoting FF as the main opposition and minimising coverage of SF and the socialists.

  108. Jesper Says:

    @Brian,

    stay off the medication a bit longer :-) and have a read of this:
    http://www.chrismartenson.com/crashcourse/chapter-16-fuzzy-numbers

    A quote from the beginning:
    “In Fuzzy Numbers, we will examine the ways that our measures of inflation and Gross Domestic Product, or GDP, are flawed, using charts of inflation and GDP as well as other easy-to-understand graphics. This chapter will help you understand inflation and GDP and how our national obsession with misrepresenting them to ourselves has led us to the edge of a recession and possibly depression.”

    A quote from the closing:
    “That’s it for Fuzzy Numbers. Join me next time for Peak Oil and its relationship to our economic future. “

  109. Colm Brazel Says:

    Instead of vague conjecture, opinion, waffle, kick can, aspirational wishful thinking, ‘changes required’ that emanate from Government circles and from Europe, we need concrete facts on the table upon which informed opinion can deliberate.

    We are short on facts but long on selective soundbites that contribute to confusion and vacillation that promote the view the crisis may be made to disappear if the latest ‘go away’ spray in inhaled deep enough.

    None of this is good enough to fool the markets.

    With Enda Kenny’s speech this evening, its hoped the Irish people will be treated to the precise cost of government borrowings by way of our debt repayment costs as a result of the guarantee.

    Instead, we will be probably given the selective falsehood given by Leo Varadkar of how the limited extension of the banking guarantee has meant the banks contribute ¢1 bn in levied fees. Lets show the annual repayment costs our banking guarantee is actually costing the Irish public eg the ELA ¢3 bn promissory note repayment due to be paid back to the Irish Central Bank early 2012, that our government has dismally failed to take action against.

  110. Colm Brazel Says:

    Show us the full spreadsheet related to the banking guarantee costs and show us the one related to our borrowings under the budget deficit.

    Don’t hide from the public the former under the latter; show concrete facts instead.

    Similarly, we await concrete facts from Europe on what Merkozy propose re Treaty changes to replace obfuscation and more empty speculation, but we’ve nothing but peppered air on what might amount to ‘need for Treaty changes’.

  111. Brian Woods Snr Says:

    @ Jesper:

    Best lectures I never attended!

    Brian

  112. The Dork of Cork Says:

    @Brian
    Yes 1500 – 2000 people( both the usual suspects & many others ) marched down the streets of Cork yesterday and not a word on the 6 O’ clock news.
    In defence of the original Pravda – at least it was free………….

    As for Germany’s weird trading with the Asian landmass strategy ….. I hope it works out for them – but perhaps they should now just beat it.
    http://www.youtube.com/watch?v=3mvuQ6Es6Do

    Although in this coming festive season perhaps it is time to finally compromise.

    http://www.youtube.com/watch?v=DcICwPdlCwQ

  113. hoganmahew Says:

    @Colm Brazel
    Instead of vague hints, you prefer conflation? The ELG and the promissory notes are unrelated. The promissory note is a sovereign debt. It is too late to say that it is not. It doesn’t mean nothing can be done about it, but room to move is limited.

    Seamus Coffey has extensively covered the costs attributable to the bank bailout versus the deficit – it is still 2:1 in favour of the deficit (including the capital cost of the promissory notes, but not the interest on them). By the time the deficit is closed (sometime in 2025 at the rate we are going), the numbers will have changed…

  114. Brian Woods Snr Says:

    @ Dork:

    I have it in the most authoritive authority, that the Free Travel Pass is for the chop next week.

    Reckon that should be good for a few hun thou!

    The latinized version of your Non-de-Guerre sounds a lot better, classy even: less of a dork about it!

    Reading the posts: parallel universe comes to mind. See you ’round.

    Brian.

  115. Colm Brazel Says:

    @hoganmahew

    Re:

    The promissory note is a sovereign debt. It is too late to say that it is not. It doesn’t mean nothing can be done about it, but room to move is limited.

    This is exactly the blind alley logic and obfuscatory reasoning I referred to in my post. Thanks for opp to make my points more lucid and specific.

    Its propaganda and brainwashing to say promissory note is a sovereign debt. Here’s why:

    From Karls Business/Finance article:

    http://www.businessandfinance.ie/bf/2011/12/commanalyde2011/timeforadealwithsupermario

    Instead of regular Eurosystem loans, the Irish banks received what is known as Emergency Liquidity Assistance (ELA) from the Central Bank of Ireland. The Central Bank of Ireland is legally allowed to give these loans unless the ECB Governing Council finds by a majority of two thirds that these interfere with the objectives and tasks of the Eurosystem.

    In practice, this means that the Central Bank of Ireland had to consult with the ECB Governing Council (whose twenty three members consist of the seventeen national country governors and the six members of the ECB Executive Board) to set the terms of its ELA operations. These terms included a guarantee from the Minister for Finance that the ELA would be repaid but no official timeline for repayment has been published.

    The ELA is recorded on the Central Bank’s balance sheet under the heading “Other Assets” and this category rose from only a couple of billion euros before the crisis to €70 billion in February. This had fallen to €48 billion by October as money from recapitalising banks and selling off assets was channelled towards repaying the ELA.

    At this point, the vast majority of the outstanding ELA, about €42 billion by my estimate, is owed by the dreaded IBRC. In fact, the ELA now appears to account for about two-thirds of the debts of the IBRC.

    Rather than sovereign debt its ‘twenty three members consist of the seventeen national country governors and the six members of the ECB Executive Board) to set the terms of its ELA operations’ who should be accountable for these loans that have sunk this country in order to save German and French banks.

    In fact, let me simplify the ‘room for mano

    Sure, room to move is limited, if negotiating you have a bunch of gombeens who’ve handed the state over to bankers and the ECB….

    ELA is ECB’s baby, let me simplify ‘room to move is difficult’ as you are having difficulty with this.

    All you have to do, after firing our disastrous negotiators, the members of the NTMA and those who ran our CB, who have difficulty here, and for whom the following concept is difficult, is to state clearly and unilaterally, we are leaving the EMU unless we get an adequate debt forgiveness deal which includes a total write off of the total ELA of ¢48 bn above.

    But we don’t leave the “twenty three members consist of the seventeen national country governors and the six members of the ECB Executive Board” with empty hands. We give them back the IBRC banks.

    We open new banks and go through the difficult process of protecting and defending our sovereignty and rebuilding our economy with PuntNUA and a dollar or sterling peg, whatever is most advantageous.

    People are becoming increasingly disillusioned and dismayed at the antics of our gombeen leaders who who find it difficult to act with a modicum of Bo Lundgren and Grimsson intelligence and liathróidi because they are mired up to their necks in cronyism and banker puppetry.

    By the way, see that position outline above, its called a ‘bailout’ position, not the anchor that has been strung around our necks that is taking this country to Davy Jones’ Locker, the axing of the heart of our economy, that will call for support later this evening!

  116. Colm Brazel Says:

    Does anybody see parallels with our economic path that will be outlined later this evening and the following:

    “http://en.wikipedia.org/wiki/Nicolae_Ceau%C8%99escu

    “Foreign debt Ceaușescu’s political independence from the Soviet Union and his
    protest against the invasion of Czechoslovakia in 1968 drew the interest of
    Western powers, who briefly believed he was an anti-Soviet maverick and hoped to
    create a schism in the Warsaw Pact by funding him. Ceaușescu did not realise that
    the funding was not always favorable. Ceaușescu was able to borrow heavily (more
    than $13 billion) from the West to finance economic development programs, but
    these loans ultimately devastated the country’s finances. In an attempt to correct
    this, Ceaușescu decided to repay Romania’s foreign debts. He organised a
    referendum and managed to change the constitution, adding a clause that barred
    Romania from taking foreign loans in the future. The referendum yielded a nearly
    unanimous “yes” vote. In the 1980s, Ceaușescu ordered the export of much of the
    country’s agricultural and industrial production in order to repay its debts. The
    resulting domestic shortages made the everyday life of Romanians a fight for
    survival as food rationing was introduced and heating, gas and electricity
    black-outs became the rule. During the 1980s, there was a steady decrease in the
    living standard, especially the availability and quality of food and general goods
    in stores. During this time, Ceaușescu shut down all radio stations outside of the
    capital, and limited television to one channel broadcasting only two hours a day.
    The official explanation was that the country was paying its debts and people
    accepted the suffering, believing it to be for a short time only and for the
    ultimate good.[citation needed] The debt was fully paid in summer 1989, shortly
    before Ceaușescu was overthrown, but heavy exports continued until the revolution
    in December.”

  117. hoganmahew Says:

    @Colm Brazel
    Making stuff up and posting it on a website doesn’t make it true.

    The promissory notes are sovereign debt. They are issued by the Government of this, as yet, sovereign state to three nationalised banks. Those banks count the notes as an asset, the state counts the notes as a liability and it forms part of the national debt. The ECB, ESCB, ICB or any other European institution was and is not involved in the issuing of the promissory notes.

    Whether they should have been issued is another question, but for me comes under the heading of whatiffery. Arguing about whether the outcome of a minor hurling final might have been different if Kilkenny had chosen to play into the wind in the first half might be entertaining in a pub, but it is at this stage pretty pointless.

    As to the rest of your fairytale, I wish you luck with it.

  118. hoganmahew Says:

    PS given that you want to introduce an new fiat currency, shouldn’t we call it the punto?

  119. Colm Brazel Says:

    @hoganmahew

    I think we have a case of Orwellian BlackWhite here, and it’s not me: so I repeat above: What is it about the following you do not understand:

    In practice, this means that the Central Bank of Ireland had to consult with the ECB Governing Council (whose twenty three members consist of the seventeen national country governors and the six members of the ECB Executive Board) to set the terms of its ELA operations. These terms included a guarantee from the Minister for Finance that the ELA would be repaid but no official timeline for repayment has been published.

    RE: The promissory notes are sovereign debt! Never argued anywhere promissory notes were not sovereign debt. But the sovereign debt is knotted into ECB management of its Central Banks, or lack of management/regulation of its central banks, the terms of ELA above.

    The ECB of which Professor Honahan had a seat, if it wasn’t involved in the issuing of promissory notes by way of tacit approval, was in derogation of a proper regulation and oversight of such operations by the ECB.

    But, hey, what does the term ELA mean. http://www.nber.org/~wbuiter/ela.pdf Its an extension of the state guarantee by ICB. ITs a ruse to suggest the ECB didn’t give tacit approval to ELA and give approval to the responsibility being exercised by the sovereign using ELA.

    ITs a convenient ruse to suggest support of our banks through ELA through the guarantee exercised by the sovereign had nothing whatsoever to do with the ECB.

    Its a bit like saying the performance of the Irish team against Estonia had nothing to do with Traps management.

    Soon as you waken up to the fact, the sooner you begin to look at accountability and responsibility and how the ECB needs to understand to provide less than insulting bailout.

    Good luck with myopia, its the same mindset that took the bank losses onto the sovereign in the first place.

  120. Ceterisparibus Says:

    @Hogan
    “PS given that you want to introduce an new fiat currency, shouldn’t we call it the punto?”

    Holy God no. Had one of them once and it was a disaster..the Italians made it…I think.

  121. Bond. Eoin Bond... Says:

    @ Colm

    Difficult to square this…

    “The promissory notes are sovereign debt! Never argued anywhere promissory notes were not sovereign debt.”

    …with this

    “Its propaganda and brainwashing to say promissory note is a sovereign debt.”

    You seem to be confusing the ELA with the promissory notes. They are of course inter-related to each other, but they are also two very seperate things altogether. The usage of the ELA predates the promissory note by quite some time, while we may still have issued a promissory note even if we never wanted to use ELA.

  122. Gavin Kostick Says:

    @ Mr Bodn, Colm, Hogan etc.

    Just keeping up.

    I thought the ELA was supposed to be neutral – it is liquidity after all. That is – as IBRIC is wound down the ELA will no longer be needed. Is that right?

    I gather a number EZ countries have used ELA-type arrangements from Central Banks for their banks – has anyone else ended up with pro-notes (or ‘letters of comfort’) to put government money behind the ELA?

  123. Bond. Eoin Bond... Says:

    @ Hogan

    ELA is, as you note, simply liquidity. The problem is that it has to be backed by collateral, and Anglo does not have that collateral anymore. So thats where the promissory note steps in. We could have simply injected 30bn in physical cash into Anglo and therefore done away with the need for both ELA (or most of it) AND the promissory notes (ie what we ended up doing with the other banks), but obviously we didn’t have that cash to hand. There are essentially three types of ELA being used at the moment – a small amount (c.6bn) of ‘real’ ELA liquidity being used by the non-IRBC banks backed by genuine assets, around 15bn in realish ELA liquidity being used by IRBC (that is, they have actual assets probably worth that much), and then fake/QE-lite ELA that is being backed by the prom note. As the prom note is turned into physical cash (ie the 3.1bn per annum figure that needs to be funded), ELA will reduce down by the same amount, and likewise as the real assets of Anglo are wound down/sold off over the next few years. ELA, i believe, will still technically remain in place well after all of Anglo’s ‘real’ assets are sold off, when all that is left on the books is a prom note on one side and ELA on the other side.

    Re ELA and prom notes elsewhere – small amounts of ELA thought to being used at Belgian, Portuguese and Greek central banks, but no one else has required something like a prom note to recap their banking sectors.

  124. Gavin Kostick Says:

    @ Mr Bond

    I take it that was for me – thanks very much. Much to chew on. A swift game of pass the parcel with the prom notes seems in order.

  125. hoganmahew Says:

    @Gavin Kostick
    Since we are all talking across each other :D

    Yes, passing the parcel to someone else would seem to be the best solution not just for Ireland, but for those states that have yet to address their banking systems (and will have to).

    The somebody else is probably best placed as a supra-national body – the BoE has done most of the heavy lifting in the UK and the Fed in the US, so a central bank would seem to be the sensible target.

  126. anonym Says:

    @Kevin O’Rourke

    Thanks for your reply.

    I agree that if Europe moves towards a proper fiscal union, that logically implies more political federalism. (I guess that any such arrangement would allow countries to secede at any time if they so wished, which is the case presently.)

    The problem is that any kind of partial fiscal union supported by limited political federalism seems likely to be just as frangible as the current arrangements, at least as long as hard times keep pushing everyone out of the mushy middles of triangles. (And again, only as long as politicians keep blocking the safety-valve of default which was built into the present treaty.) Even the right to secede will likely be more than enough to allow the games of chicken over deficits etc. to continue: France will have as much to fear from an Italian secession as Italy itself.

    It is this basic chain of arguments that has traditionally made many economists skeptical about the EMU project.

    I’m not under the impression that I’m saying anything new or surprising here. I’m just alarmed at the ease with which all these fairly obvious things seem to slip out of many people’s minds the minute a halfways fiscal union (transfers or no) emerges as the last option to “save the euro”.

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