Draft Treaty

This post was written by Karl Whelan

A draft of the proposed Treaty has been released. I think we should be very very slow to look to put this to a referendum, if such is required (and it probably is).  Many things may happen in the meantime that could derail this particular process.

In the meantime, our leaders should stop making up exciting scenarios involving Ireland leaving the euro if a treaty is rejected. That Stephen Collins vehemently disagrees with this only strengthens my conviction on this point.

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136 Responses to “Draft Treaty”

  1. Jagdip Singh Says:

    “Rejection of the euro treaty by Ireland would represent an unequivocal statement that we want out”

    What “euro treaty”?

    The “compact” published yesterday is for the EU (including nine, ten if you count the UK non-euro countries) and is aimed at fiscal discipline in the *EU*

  2. inscrutable Says:

    I agree - kick this to the long grass.

    Firstly we’ve Dominique de Villepin saying he’ll renegotiate this deal if he gets the French presidency (early May).

    Then we’ve Greek elections in mid-February after which they will be seeking their 7th tranche in early March. A €14.4 bn bond is also due for repayment in March, which is the absolute deadline for PSI negotiation. Following the latest IMF report, there have to be serious doubts that Greece will get this next disbursement.

    Then there’s Portugal which have only managed to stay on track this year by raiding their banks’ pension funds - expect serious unrest there when they take on their unions.

    Another negative print in Ireland in Q4 will mean we’ll probably fall behind on our target too, requiring a mini-budget.

  3. Michael Hennigan - Finfacts Says:

    This is a draft and is subject to revision.

    Given that Irish governments brought the country to the brink of economic ruin twice in a generation, involving huge collateral damage on tens of thousands of citizens, on both occassions, in principle, some external discipline should be welcome.

    Given the parlous state of the non-FDI Irish private sector economy, should anyone have reason to fear losing their jobs where in the aftermath of the rejection of a referendum, irrespective of the legal issues, international and local media speculation was dominated for months by speculation on Ireland’s future in the EMU?

    I ask this question because I note for example on the issue of austerity, that there are a lot more critics than individuals who can present credible alternatives.

  4. PR Guy Says:

    I thought it was interesting that a PR Guy for the DoFA described the publication as ‘unorthodox’ and a ‘break with tradition’. I will give this a slow and thorough read in between visiting various Santa’s this weekend.

    And why do they keep calling it a ‘treaty’? I thought it was a compact?

    As for the Steven Collins article, I didn’t get half way through it before losing the will to live.

  5. Ceterisparibus Says:

    @inscrutable.

    Agree with you. As Leo Varadkar said..events will overtake us.
    This PSI negotiation in Greece has become farcical. How long does it take to agree a 50% discount on debt…this has been going on since October. Apparently the Greeks are using the nuclear option to threaten the bankers.
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_16/12/2011_418834
    Finally, beware of solutions proposed by Von Rompuy…his track record is iffy.

  6. David O'Donnell Says:

    At EU level this is a ‘takeover tool’ - what is in it (however tautological the 0.5, 3.0 & 60) is probably less important than the way it is now to be used ….

    # a dictated Gaullist agenda
    # a surveillance role for flawed ultraorthodoxy of the Bundesbank (won’t mention the flows with Geithner and Lagarde …
    # qualified majority voting (e.g a matrizsquidesque influence within France, Germany, or Italy can VETO non-regressive fiscal flexibility anywhere else in EZ)
    # attempt to institutionalize franco-deutsche intergovernmental Gaullism in European Law so as to downgrade its main rival, The EU Commission, to a secondary power position; Since Walter Hallstein this one has to continue to be fought …

    # I expect a surplus of ‘events’ …

  7. Joseph Ryan Says:

    I will be voting against this proposed treaty and will do what I can personally to argue against it.

    The only relevant part is Article 3 which shackles every country hand and foot if it attempts to diverge in any way from the German rules. It is economic and political nonsense and in the case of the PIIGS has already been demonstrated to economic, social and political nonsense.

    One point re Article 3.3 -”exceptional economic circumstances”. I suppose the promissory note payment of 3.1 billion annually could be an “exceptional economic ” circumstance or perhaps not. Perhaps paying for private bust banks is the new norm.

    @ALL
    When the ECB makes a profit as the State bonds it has purchased at significant discount mature eg Irish, Italian etc who gets the profit? I assume that the ECB hands back the profit to the sovereign? Or is the ECB running a ‘nice little earner’ on this at the expense of the sovereigns. Come to think of it, the ECB also make a nice interest margin as well. Do they keep that?
    I appreciate it may not have happened yet but it will. What kind of ‘exceptional profit’ is involved

  8. Colm McCarthy Says:

    The principal provisions are

    Application

    The Treaty applies to contracting parties only and comes into effect when nine Eurozone countries have ratified. It is silent on what happens to Eurozone countries which do not sign up. They would of course remain bound by the Excessive Deficit Procedure and the programme countries by the terms of their programmes.

    Comment: As drafted, there does not appear to be any incremental downside to opting out. The treaty imposes obligations but does not appear to provide privileges or benefits.

    New Fiscal Ratios

    The countries that contract will accept fiscal ratios in addition to the 3 and 60 rules in Maastricht. Article 3 states

    ‘a) Revenues and expenditures of the general government budgets shall be balanced or i nsurplus. The Contracting Parties may temporarily incur deficits only to take into account the budgetary impact of the economic cycle and, beyond such impact, in case of exceptional economic circumstances, or in periods of a severe economic downturn, provided that this does not endanger budgetary sustainability in medium term.

    b) The rule under point a) above shall be deemed to be respected if the annual structural deficit of the general government does not exceed a country-specific reference value, which ensures an adequate safety margin with respect to the 3 % reference value mentioned under Article 1 of the Protocol (No 12) on the excessive deficit procedure annexed to the Treaty on European Union and to the TFEU (hereinafter ‘Protocol No 12′) as well as rapid progress towards sustainability, also taking into account the budgetary impact of ageing. The Contracting Parties shall ensure convergence towards their respective country-specific reference value. As a rule, the country specific reference value shall not exceed 0.5 % of nominal GDP.’

    Further on there is a clarification:

    ‘”annual structural deficit of the general government” means the annual cyclically-adjusted deficit net of one-off and temporary measures.’

    Comments: Unless the rate of economic growth is negligible, fiscal rules which specify deficits at 0% or 0.5% of GDP imply the progressive elimination of the sovereign bond market.

    Economists and statisticians are not able to measure cyclically-adjusted budget deficits. It is irresponsible to include, in a draft international treaty, concepts incapable of meaningful measurement.

    Glidepath

    For those whose debt ratio exceeds 60% there is to be a new constraint as follows (Article 4):

    ‘When the ratio of their government debt to gross domestic product exceeds the 60 % reference value mentioned under Article 1 of Protocol No 12, the Contracting Parties undertake to reduce it at an average rate of one twentieth per year as a benchmark.’

    Comment: This seems a sensible addition, and should have been in the Maastricht Treaty from the outset.

    Powers of the Commission

    Article 7 states:

    ‘While fully respecting the procedural requirements of the Union Treaties, the Contracting Parties whose currency is the euro undertake to support proposals or recommendations put forward by the European Commission where a Member State whose currency is the euro is recognised by the European Commission to be in breach of the 3 % ceiling in the framework of an excessive deficit procedure, unless a qualified majority of them is of another view. A qualified majority shall be defined by analogy with Article 238(3)(a) TFEU and with Article 3 of Protocol N° 36 to the EU Treaties on transitional provisions and without taking into account the position of the Contracting Party concerned.’

    Comment: This could be the rock on which an Irish referendum perishes. A majority could impose detailed economic policy measures, proposed by the (unelected) Commission, on a member state in excessive deficit.

    The expenditure of political capital required to achieve a new treaty is enormous and a treaty which repairs the flaws in the monetary union will eventually have to be contemplated. It seems a shame to waste so much effort on so little.

  9. DOCM Says:

    @ All

    I will re-post here what I had to say on the Fiscal Responsibility Bill thread.

    @ All

    http://www.telegraph.co.uk/news/matt/

    There are several other rather ironic aspects with regard to the current situation.

    The first, and the most important, is that the institutions of the EU, and the way they work together in a manner known as the Community method, will emerge greatly strengthened. The intergovernmental method is being seen for what it is; an opportunity for political grand-standing and the cause of a break-down in trust between the Member States of the EU, putting the very survival of the latter at risk. Representatives of the four main political groupings in the European Parliament will be associated with the work of the negotiating group, the threat being that, if they were not, and they viewed the result of the negotiations as in conflict with existing EU treaties, the Parliament would take the matter to the European Court of Justice. Their participation, of course, also increases the democratic legitimacy of the exercise.

    The second irony is that the Sarkozy and Merkel view of the European Council as a forum where they can dominate has been called into question. The agreement to hold two meetings of the Euro Group at Heads of State and Government level adds nothing new.

    The third irony is that the animated debate taking place in Ireland has been shown to be based on a false premise viz. that Ireland’s participation was a sine qua non with more than a hint that a price could be set for it.

    @ Karl Whelan

    I agree with your view regarding the comments of Minister Noonan. They were ill-judged and, in the changed circumstances outlined above, it is to be hoped that this type of rhetoric will be abandoned.

    You say that a referendum is probably necessary. It would be useful to have an explanation as to why you think this should be the case especially in the light of the wording of Article 2. If the text is adopted as drafted, and it seems fairly likely that it will be, it is near impossible to see any reason why a referendum would be necessary as the the provisions of the Agreement “shall be applied by the Contracting Parties in conformity with the Treaties on which the European Union is founded”, treaties for which the people have provided a full constitutional licence. Indeed, the draft states also that “European Union law has precedence over the provisions of this agreement”, the term ‘agreement’ being undoubtedly chosen over the term ‘treaty’ in order to drive home the point. (There is, if I am not mistaken, no substantive difference between the two).

    The one issue that could require a change to the Constitution and, ipso facto, a referendum is if the government decided that a debt brake was to be introduced. The wording at present is “national binding provisions of a constitutional or equivalent nature” which is rather ambiguous and will have to be teased out in the negotiations. As spendthrift governments have put the country near to financial disaster on several occasions and the one just ousted from office actually managed to do it, such a mechanism in the Constitution has much to recommend it and might, indeed, recommend itself to the Irish people. But such a step is fraught with complications that have nothing to do with the EU but with the nature of our parliamentary system (cf. wording of Explanatory Memorandum for the private members bill introduced by Sean Barrett in the Seanad on the other thread).

    There are many other elements in the draft agreement text worth detailed discussion, notably the suitability of the deficit parameters to Ireland’s economic situation. But the referendum hare should be left lie by all concerned for the moment. Not that it will be, of course. The facts have never been a major consideration in political argument.

  10. DOCM Says:

    @ Colm McCarthy

    “Comment: This could be the rock on which an Irish referendum perishes. A majority could impose detailed economic policy measures, proposed by the (unelected) Commission, on a member state in excessive deficit”.

    This is one of the most controversial issues but not for the reason that you state. The question is; would the wording be in breach of the provisions I have mentioned in my post. (I had not read yours at that point). I doubt very much if the wording will survive in the text.

  11. PR Guy Says:

    I was just talking to someone who reckons S&P servers were brought down by a cyberattack that it is believed originated in a western European country last night. Surely not as it was just about to announce a triple-A downgrade?

    S&P are saying it was a cooler failure in Cologne.

    Any conspiracy theorists out there know any more than this?

  12. Karl Whelan Says:

    @ DOCM

    I discussed why I thought there needed to be a referendum here
    http://www.iiea.com/blogosphere/the-eu-summit-2011-analysis

    I don’t think “constitutional or equivalent” is particularly ambiguous. We have a constitution. Passing a bill for fiscal responsibility that can then be unpassed isn’t equivalent to a constitutional amendment.

    I suspect there are other reasons why a referendum is required anyway.

  13. Ceterisparibus Says:

    @DOCM
    The fact is it is a “Treaty” or ” Agreement” which limits and transfers our economic sovereignty to a foreign body and as such would appear to fall foul of our existing Constitutional arrangements.

  14. The Alchemist Says:

    Were Noonan’s comments intended more for abroad rather than at home?

    This proposed spendthrift control agreement is it likely to work? In other words, what will be different should it be adopted?

  15. TC Says:

    @Karl

    Off thread, but have you seen this from Business Week?

    “Germany’s Hidden Risk
    The Bundesbank has quietly lent half a trillion euros to the European Central Bank. Could that determine the fate of the euro?”

    http://www.businessweek.com/magazine/germanys-hidden-risk-12142011.html?campaign_id=rss_topStories

  16. Blucher Says:

    Before anything is put to a referendum at the very least the suggested 9 should have signed off.

    The position of Greece and Portugal, political and civil, should be known.

    Apart from which it is the greatest piece of nonsense the Merkel/Sarkozy have come up with yet.

  17. DOCM Says:

    @ Ceterisparibus

    How does it do so beyond the transfer of sovereignty, as you put it, (it is, in fact, shared, see below) in the existing treaties? We are already locked into a more draconian version of what is proposed with the added pleasure of dealing also with the IMF.

    I would also like to pick up on the reference by Colm McCarthy to the “unelected” Commission. The members of the Council are political representatives either elected or appointed with the approval of their parliaments. The members of the European Parliament are elected. The Community method refers to the interplay or division of powers between them which follows that of most democratic systems. The unique characteristic of the Commission, as the executive of the EU, is that it has sole right of proposal with regard to the adoption of legislation at the level of the EU. No Commission proposal, no decision! This is the key to the protection of the “general interest of the Union” (Article 17 TEU) and, incidentally, the rights of smaller Member States in particular. The Commission can, however, only implement decisions where the power to do so has been given to it by the Treaties. In various areas, notably with regard to competition, these are very extensive indeed up to the power to levy major fines on governments and companies. Nobody ever seems to question its right in these circumstances.

    In fact, it boils down to whether or not one accepts that the decisions taken in accordance with the Treaties meet the test of democratic legitimacy. If one does not, and the Irish people have actually approved them, the logical inference to be drawn from that position is that one should argue for Ireland to leave the EU.

    What we are dealing with here is, however, an extreme situation viz. the power for the Commission to interfere - on the basis of a Council decision -in the budgetary decisions of governments which might be seen as cutting across the budgetary powers of parliaments (which are not very extensive in Ireland’s case, as it happens). I have no idea, no more than anyone else on this blog, I suspect, how this conundrum is to be resolved. But the fact that we do not know the answer should not lead to a distorted view of how the EU as a whole functions, and continues to function.

    Either way, the purpose of the entire exercise is to try and get a basis for a wider popular acceptance of the need for solidarity between richer and poorer countries in the EU. The core countries recognise this and are willing to do something about it. When any German hears the words “wall of money”, however, what he hears is “wall of my money”. The idea that it can be used to pay levels of salaries way above those paid from the public purse in Germany is anathema and political poison.

    They are, by this stage, largely indifferent as to which way Ireland hops. It is up to us to decide.

  18. Colm Brazel Says:

    Wrote this on Promissory Note Campaign, more appropriate for this topic I guess:

    “Fitch are not buying it. I agree, bit like watching a house burn down and drafting better fire regulations to prevent such fires in the future!

    What about the fire of debt??

    So, I’m wondering about this compact:

    http://www.thefreedictionary.com/compact

    (Law) an official contract or agreement

    Compact
    adj [kəmˈpækt ˈkɒmpækt]
    1. closely packed together; dense

    I’m thinking of a new box that’s being built for the euro. Only those countries that can be ‘compacted’ into the box will be in this new euro.

    I think we are being shown the door. In this game of snakes and ladders the ‘compact’ sends us out of the euro to a fiscal state outside the EMZ.

    We need to do a cold shutdown default on our debt, bring our economy to a point where in the future, having renegotiated our own writedown and carried out reconstruction/devaluation, we may wish to rejoin a new Europe.

    What the ‘compact’ is trying to do is save the core. Greece, Ireland, Portugal and perhaps Spain will be forced to leave, a two tier euro is on the cards.

    Above is best result that can be achieved. The Rating agencies could/may buy into the above, but the markets and the rating agencies will not buy into the compact if it includes the peripherals.

    Either the above, or the scenario of a return to DM and a complete collapse of the euro EMZ house of cards! In any of the above scenarios, we are out of the euro! We need asap to follow the lead of the Greeks and pursue a policy of debt writedown.

    Honahan/Kenny/Cowen/Cardiff policy has failed miserably.

    “Greek finance minister confident on private debt writedown negotiations - The Washington Post ” http://wapo.st/sv7fnf

    We need to do a cold shutdown on our own debt problems to prevent further damage wrought by this disastrous government and previous one, whose policies have been reminiscent of the Ceaucesco Romanian policy of failed debt appeasement .

    If we follow the current path, should we not be ejected from the EMU, expect to see our government disappear and an emergency ‘technical’ government in situ in the not too distant future.”

    Fitch are not buying the Treaty, all the rating agencies are getting ready in Q1 2012 when they look into the empty Xmas stockings re debt writedown, that Merkozy have set themselves against.

    They will writedown France, Italy and basically all the main contributors to EFSF/ESM, so there goes the leverage that fund could get to mount rescue.

    @ Colm McCarthy,

    Agree with you re your interpretation of Article 7 especially re ” It seems a shame to waste so much effort on so little.”

    @ Karl Whelan,

    Stephen Collins ad hominem, we all need to avoid the ad hominem, including me! Agree with you many scenarios can interrupt the proposed Referenda process. However, for the sake of empirical evidence that we can examine, perhaps you need to elaborate on the disingenuous:

    “In the meantime, our leaders should stop making up exciting scenarios involving Ireland leaving the euro if a treaty is rejected.”

    1. Please state clearly your reasons for holding this position, which, at worst, is a blatant attempt to stifle and censor debate; at best, is short sighted and prejudicial against real debate.

  19. The Dork of Cork Says:

    Me thinks this will not work without a New Gold standard at M1.
    Maybe this is what Draghi means by a fiscal compact.

    If it cannot work without a Gold standard or at least a much higher gold price then it follows they must be planning a new standard.
    Me thinks the guys telling the political figureheads what to do are not stupid.

    The European Banking Industry cannot work under this zero fiscal debt system unless they have a risk free asset in very large quantities / price.

    This explains the extreme tension between the Anglo world & the continentals otherwise known as the $ Bitches vs Gold Bitches.

  20. Colm Brazel Says:

    http://www.iiea.com/blogosphere/the-eu-summit-2011-analysis

    “For all the temptation to present such an agreement as a “yes or no” moment on euro membership (a temptation last seen with Mrs. Merkel’s “ya oder nein” moment)
    the truth is that there is no clearly defined way to expel a country from the single currency. Beyond the potential of a bullying approach back-firing with the Irish public, a focus on a referendum as a decision about euro membership risks triggering a massive bank run as depositors take flight to avoid the redenomination that is being threatened.

    This agreement does little to help solve the crisis. And it places countries like Ireland in a very difficult political corner. Let’s hope our European partners can
    keep their rhetoric dialled down and perhaps consider how to improve Europe’s image in Ireland prior to any referendum. A deal on the burden imposed by the
    legacy of Anglo Irish Bank’s debt, as I discussed in a recent column, would be a good place to start.”

    I suggest Karl Whelan’s short sighted position is informed from the above points in his blog. Its short sighted because it shows Karl does not know how to accept NO for an answer.

    The Merkozy have set themselves against any debt writedown on the lines you ask for?

    What is it about the word No you don’t understand Karl :-)

    Yes, it would have made us more likely to go for a ‘Compact Treaty Deal’ if we had clear evidence that our debt would be restructured; if we had other backstops in return for our ‘compliance’ with the Borg.

    We got nothing. Deal with it. What is on the table is, the dumb compact.

    Surely the above is sufficient evidence for any clear thinking person to examine the question of our continued membership of the Compact Club ;-)

  21. Michael Hennigan - Finfacts Says:

    @ Colm McCarthy

    This could be the rock on which an Irish referendum perishes. A majority could impose detailed economic policy measures, proposed by the (unelected) Commission, on a member state in excessive deficit.

    The expenditure of political capital required to achieve a new treaty is enormous and a treaty which repairs the flaws in the monetary union will eventually have to be contemplated. It seems a shame to waste so much effort on so little.

    Multilateralism can be frustrating as George W. Bush felt but it is usually better than war.

    Should there be a provision on facilitating members of the EMU to leave if they wish and in an Irish referendum, a question also on membership of the single currency?

    Even if there is compromise on most of the big issues of governance, there will inevitably be issues as irrelevant as the dispute between Rome and Byzantium about the Nicene Creed, that will be big issues in a campaign. Many will argue for quitting the euro and defaulting. The victims’ cross will be paraded across the land.

    Both sides are well able to scaremonger; European countries are not run by dictatorships - - so gunboats on the Liffey are unlikely — and while some may point to the American Union as an example to aspire to as a fiscal union, it took a civil war and a century later, much effort to enforce the writ of the Federal government to end segregation. Fifty years later there is a ‘more perfect union’ as the US Constitution says but it’s a work-in-progress.

    We had dreamers and realists in 1921 and why would it be different today? Michael Collins recognised that the Irish side had few bullets left and we’re in the same boat today.

    As a rejection of the new governance rules would likely be seen internationally as a rejection of the euro and trigger turmoil that could last for an extended period, why not give the people the ‘nuclear option’ to make the democratic choice clear?

    Otherwise, the No groupings will ride 101 hobby-horses to suit whatever their agendas maybe.

    Finally, the members of sheltered elites should look beyond their own world to the impact on the invisible people in media terms, who wonder anxiously week by week what the orders situation is for their companies.

  22. grumpy Says:

    @Colm mcc

    “Economists and statisticians are not able to measure cyclically-adjusted budget deficits. It is irresponsible to include, in a draft international treaty, concepts incapable of meaningful measurement. ”

    Readers might like to mug up on Gordon Brown’s Golden rule, and the accommodative way the ‘cycle’ was kind of shifted about a bit.

    @Karl W

    Typo in the title of this post - you have inadvertently included an “r” after the “D” in the first word.

  23. David O'Donnell Says:

    meanwhile … back at the Bundesbank (just missing a Gary McKay reevent

    German chancellor Angela Merkel gained some respite from domestic pressure to take a tougher line in the crisis when eurosceptics in her junior coalition partner, the Free Democrats, lost a grassroots party referendum aimed at blocking a permanent euro zone rescue fund.

    A victory for the eurosceptics could have brought down Dr Merkel’s centre-right coalition, but the outcome still left the FDP split, with its public support in tatters.

    Meanwhile, a first draft of a planned fiscal compact among euro zone countries and aspiring members, published yesterday, showed that countries could be taken to the European Court of Justice if they did not meet agreed budget goals.

    Dr Merkel - under pressure from the revered Bundesbank to force debt-saddled euro zone countries to reform and save their way out of crisis with austerity measures - has led a push for automatic sanctions for deficit “sinners” in the bloc.

    http://www.irishtimes.com/newspaper/breaking/2011/1217/breaking23.html

    “revered” … !!!

  24. ceterisparibus Says:

    @DOCM

    “How does it do so beyond the transfer of sovereignty, as you put it, (it is, in fact, shared, see below) in the existing treaties? We are already locked into a more draconian version of what is proposed with the added pleasure of dealing also with the IMF.”

    Cannot agree.
    The Memorandum of Understanding is as it says on the label. No automatic sanctions apply (other than, maybe, turning off the tap and starting a European banking meltdown. ) Article 28.4 provides for laying the estimates before the Dail and not the Bundestag or the EU first (as has happened this time). And as for our budgets being justiciable before the ECJ to the exclusion of our High Court…maybe our learned friends will have something to say about that.

  25. colm mccarthy Says:

    @Michael Hennigan

    ‘Multilateralism can be frustrating…’

    Of course. The 1999 version of EMU has been shown not to work, has clear design flaws, terrible crisis resolution procedures and built-in governance problems at the ECB. If there is to be a new treaty, why not EMU 2.0, and do the thing properly this time?

    If Van Rompuy’s effort is agreed by all, the resolution of the present crisis is not advanced, nor will the the risk of another one be reduced.

  26. DOCM Says:

    @ Ceterisparibus

    Would you please read Article 8 of the draft text! It refers to Contracting parties i.e. the signatory governments to the agreement that “have failed to comply with Article 3(2)” which, in turn, “shall fully respect responsibilities of national Parliaments”.

    This is the conundrum that has to be resolved. How, I do not know!

    As I said in an earlier post, nothing seems capable of stopping the chase after hares of every description which have little or nothing to do with the subject under discussion.

  27. Gavin Kostick Says:

    The link to the draft agreement isn’t coming through properly on this computer.

    From memory then, the draft suggests that countries who sign up can take other countries to court if they don’t like the cut of their budgetary jib.

    In practice, what are the chances of, say, Greece blowing the whistle on, say, Germany?

  28. Karl Whelan Says:

    @ Gavin

    Works for me. Try this one instead maybe.

    http://www.rte.ie/news/2011/1216/eudraftagreement.pdf

  29. Gavin Kostick Says:

    Thanks Prof.

    Then the bit I’m referencing is:

    “Article 8

    Any Contracting Party which considers that another Contracting Party has failed to comply with Article 3(2) may bring the matter before the Court of Justice of the European Union.”

  30. DOCM Says:

    @ Gavin Kostick

    That’s it in a nutshell! Mutual assured destruction or MAD.

    There is a considerable logic to it as there would be no hiding place for politicians e.g. Berlusconi who ignored the agreed disciplines. How Berlin proposes to reconcile the risk for itself, given the view its constitutional court takes of the inviolable budgetary powers of the Bundestag, is not yet clear. One must assume that the matter has been thought through.

    The possibility of Germany being taken to the ECJ is not that far-fetched. It has a public debt approaching, or over if I am not mistaken, 80%.

    The issue is rather academic as far as countries in a programme are concerned. As I pointed out above, what Ireland decides to do is of little concern to the main players, a message which needs to sink home, and fast.

  31. colm brazel Says:

    RE ” Article 8 of the draft text! ”

    Article 8 is a bit daft. As I understand it, it states contracting parties must if disagreeing refer and be bound by findings of ECJ.

    Here’s text: “Any Contracting Party which considers that another contracting Party has failed to comply with Article 3(2) may bring the matter before the Court of Justice of the European Union. the judgment of the Court of Justice of the European Union shall be binding on the parties in the procedure, which shall take the necessary measures to comply with the judgment within a period to be decided by said Court. The implementation of the rules put in place by the Contracting Parties to comply with Article 3(2) will be subject to the review of the national courts of the
    Contracting Parties.”

    Consider where the national court disagrees with the ECJ and takes the side of the local side.

    Article 8 is short on telling us what stick it will use?

    Will it be Big Brother is watching you, so be good; or, Orwell again, big planes with civilised people will fly over you; or, simply, we will replace your parliament and ……….????

  32. DOCM Says:

    @ Colm Brazel

    You might care to explain how the national court comes into the picture. This is an agreement between the contracting parties to refer disputes to an agreed arbitrator, a procedure which is specifically covered by Article 273 TFEU as far as the involvement of the ECJ as the agreed arbitrator is concerned.

  33. genauer Says:

    @ David, Karl, and all

    As I would say, and had said before, our “cherished Buba”, die Bundesbank is seen by many German people as “A Mighty Fortress”.
    Together with the Supreme Court of Justice. You might not have heard this term YET in Catholic Mass.

    As you might have noticed,
    a) the core has run out of carrots, (France will loose its AAA, and they will ask why) and
    b) with the open blackmail of the Greeks over this summer, any Goodwill for the periphery(and this includes specifically Ireland) has vanished,
    based on overwhelming evidence. I can assure you that a lot of people in Germany found Fintan O Toole in the Irish Times pretty interesting.

    In contrast to carrots, Sticks are reusable, and therefore a very sustainable business model.

    You might wanna first open:
    http://blogs.ft.com/material-world/2011/12/02/angela-merkel-dresses-for-doom/#axzz1gpMMeRGh
    to get this also from the fashion side,

    and then read:
    http://dl.dropbox.com/u/46265023/2011-12-02%20Regierungserkl%C3%A4rung%20BKin%20Merkel%20.pdf
    or whatever english translation suits you.

    According to the BBC this might be one of the defining speeches of the European Union.

    Just one more thing, about 5 % of the German debt comes from the financial shenanigans of Depfa/HRE in Ireland,
    those folks, who just “found” 55 billion a few weeks ago. So much for reliance on irish institutions /oversight, even today. We are not amused.

    If you think, like Karl, that continuing to play nasty gets you anything anymore, you might also start thinking about how permanent off-rule behavior can result in off-rule answers.

    Please dont be delusional, “very slow” is now clearly recognized as cheating, the caravan will not stop for such silly things anymore, this is a “Ja oder Nein” moment,
    make it or break it, your FM Michael got that pretty precise, and once the train departs it might end up all out of Europe. Just think it through.

    And how do you like the BCG proposal for resolving the debt crisis
    http://www.bcg.com/documents/file87307.pdf

  34. seafóid Says:

    @ Michael Hennigan
    “Given that Irish governments brought the country to the brink of economic ruin twice in a generation, involving huge collateral damage on tens of thousands of citizens, on both occassions, in principle, some external discipline should be welcome.’

    I was thinking about this this evening after I cut my finger cutting some vegetables. The body has its own healing processes. First comes the bleeding, then the clotting, then the patience and time works and after some days the finger is back to normal.
    The economy was experiencing a massive blood loss. The Trioka came in and applied financial techniques to staunch the bleeding and start the healing process. Except they didn’t, in fact. The wound is about to blow open and start gushing again. The bailout was carried out in bad faith. And that’s just as bad as what FF did.

  35. Joseph Ryan Says:

    @Colm McCarthy

    Article 7.

    Therefore I am reading this differently to you:

    I am reading it as follows:
    I read it that it will take as qualified majority (85%?) to STOP the Commission imposing its recommendations or rules for any country in breach.

    [And we have Kevin Cardiff to make sure that they will all comply etc]

  36. seafóid Says:

    Noonan spells out stark reality
    http://www.irishtimes.com/newspaper/opinion/2011/1217/1224309212506.html

    I love the use of the word “reality” in the Irish Times. It appears to mean “what we have decided” and comes with the adjective “stark” or is otherwise attached to “of the situation”

  37. Joseph Ryan Says:

    @ALL
    The comment from @Bryan G on previous thread re Draft treaty is relevant to this thread.

    http://www.irisheconomy.ie/index.php/2011/12/16/promissory-note-campaign-a-quiet-downgrading/#comment-212260

  38. Colm Brazel Says:

    @DOCM

    Re “will be subject to the review of the national courts of the Contracting Parties”

    I’m as curious as you to inquire what this exactly means? Does it mean, for example, that ECJ decision is subject to ratification by national courts. Doubt that?

    Plus I would be more alarmed at the lack of elaboration in detail on this piece…”which shall take the necessary measures to comply with the judgment within a period to be decided by said Court.”

    The word ‘comply’ is used twice. Dare I ask, what are ‘the necessary measures’…….?

  39. Colm Brazel Says:

    ‘which’ refers to CEJ. Otherwise ‘who’ would be used if it aimed to refer to ‘the parties to the procedure’.

    Also I can see why ‘Big Brother’ doesn’t want to be seen to be wielding a big stick, but not stating what the stick might be, is even more worrisome for those with imagination.

    I also think invocation of the ECJ as arbiter of such disputes makes the mind boggle. I don’t see it as having any other expertise or function except to determine its decision on what is in the Compact Treaty. How could it allow exceptions if exceptions were seen to endanger Stability where one country could be favoured over another. It could be a hugely lengthy process as well. Overall, this is a messy article once again trying to overcome the problems of lack of federalism? Basically, best way to view Article 8 as a red herring. It gives the appearance of autonomy and self determination by invoking a clause allowing for intervention or appeal to ECJ. Its cynical in the extreme because appeal to ECJ will merely endorse the Compact Treaty over any exceptions to it. Also no powers are specifically given to ECJ to overule the Compact Treaty itself. Its a piece of window dressing, a bunch of carrots hiding the big stick pretending redress for sovereigns where there is none.

  40. Bryan G Says:

    @Joseph Ryan

    I had the same thought as regards the “exceptional circumstances” provision - I suspect it is there so that countries can be forced to recap their banks. In Van Rompuy’s original draft there were a couple of exceptions allowed. However at the summit all these exceptions were removed, which I put down at the time to Merkel saying - “ze discipline will no exceptions allow”. However they are now back with a bang - there are exceptions covering “economic cycle”, “exceptional circumstances”, “severe downturn”, and “one-off and temporary measures”.

    @DOCM, Colm Brazel

    The way I read the role of the courts is

    - if you are unhappy with the way a country has transposed the budgetary rules (defined in the Agreement) into their national laws or constitution, you will go along to the ECJ and file court papers.

    - if you are unhappy with the way a country is adhering to the budgetary rules themselves (defined in national law), you will go along to the national court and file court papers.

    @Joseph Ryan, CMcC

    I’m pretty sure that what the Commission proposes will automatically take effect, unless a qualified majority of the Council explicitly overturn this. The QMV rules that apply will be Lisbon Treaty rules (55% member states & 65% population). The 85% threshold is only for the ESM Treaty (and which is the same as for the IMF).

    @All

    There will be three Irish members participating in Van Rompuy’s working group next week. Anyone know who they are?

  41. Michael Hennigan - Finfacts Says:

    @ Colm McCarthy

    EMU2 would be a good thing but as Chancellor Merkel says, the final solution for the crisis will take years.

    It is likely that some countries may restore their own currencies but those who see big paybacks for non-commodity producers from devaluations are deluded. Others see defaults as a solution — an apparent cost-free solution for those who have public sector pensions but a further threat to the near decimated pensions savings of the private sector.

    Until there is some visibility on reforms, assuming they happen, it will not be possible to fashion a durable EMU2.

    The IMF says that in Austria, Germany, the Netherlands, and Sweden, the share of export and import in GDP rose by about 15% to more than 20% between 1995 and 2010. The same was true for the Czech and Slovak Republics, and, to a lesser extent, Poland. At the other end of the spectrum, the export-to-GDP and import-to-GDP ratios of Greece, Italy, Portugal, and Spain stagnated over those years.

    Germany’s largest trade surplus is ex-EU, second biggest is with EU10 non-EMU members and the smallest in 2011 is with other Eurozone countries.

    How can there be a final solution now, given the parlous state of Italy - - the third biggest economy?

    In 2000-2010, real per capita income fell. The devil may or may not wear Prada and while Italy has some strong international brands, its tradeable business sector is stifled. Mongolia ranks higher in the World Bank’s rankings for ease of doing business.

    While Italy is in a parlous state, Ireland’s state is perilous.

    The biggest export sector is facing the same challenges of change that the computer industry faced 20 years ago and one of the overlooked aspects of the dominant FDI sector is that there is no intellectual capital in marketing and sales that can be of value to a small economy, as the functions generally are located elsewhere.

    Asian prosperity has spread to South America and Africa is on the rise at last. Regional trade is on the increase and China will sell more in the South in 2012 than elsewhere for the first time.

    While we bemoan the snail’s pace progress in Europe, there appears to be common resignation to the likelihood of a decade of stagnation at home.

    We do love to talk and chewing the fat about Europe and parsing for deficiencies appears to be an antidote to looking at the black hole under people’s noses.

    @ seafóid

    The bailout was carried out in bad faith. And that’s just as bad as what FF did.

    Trichet did overdo it on the disciplinarian side with demands for punitive rates but on the positive side, this was changed by political leaders 8 months later.

    However, you’re really part of the growing band of crazies if you believe that an international bailout loan program with limited demands for reform ranks on the same level of culpability as the local Neros who have destroyed the hopes of a generation and blew the best set of opportunities in the history of Ireland, to put the Irish economy on a long-term sustainable basis.

  42. Eureka Says:

    On the face of it this looks sensible.
    http://www.independent.ie/national-news/forgive-us-our-debts-and-well-pass-treaty-2967004.html

    Does anybody know what figure we need to be aiming for? I think that we cannot afford to pay more than 5bn per year in debt repayments (for say 30 years). This is just plucked out of the sky but is how do you go about calculating these things?

  43. EIS Says:

    @Michael Hennigan - Finfacts

    What do you think will happen to the export sector here in Ireland once we “harmonize” corporate tax after signing up to this “treaty”.

    Go ahead do spell it out in your prophesies.

  44. Gavin Kostick Says:

    @ Michael Hennigan

    “I note for example on the issue of austerity, that there are a lot more critics than individuals who can present credible alternatives.”

    Sundayish thoughts.

    I’ve noted before the challenge you’ve made to propose alternatives, so here’s a few sketches for better informed posters to take over.

    First note: austerity doesn’t work in the way it has been advertised to work, ie the outcomes are not as predicted by those doling out the medicine, see Bill Michell taking the cudgels to the IMF report on Greece here:

    “100 per cent forecast errors are acceptable to the IMF”

    http://bilbo.economicoutlook.net/blog/?p=17332

    However, if it had been just Ireland undergoing austerity whilst Europe remained in growth, then I could have seen the country being exceptional for reasons well rehearsed on the blog.

    And before I leap into pretending to be the government, I’d say that possibly the most useful thing people could do is join protest groups against failing policies, until we all end up banging pots and pans outside the Dail.

    So moving to actions that can be pursued at government level, I’d say that the agony of the situation is that the government needs to be about 3 5 bn better off, pa, for three years to squeak through. Or put it another way, a stimulus about the size of the cuts whilst the cuts are being implemented should be enough to avoid a debt spiral - with a note that this would be vastly improved if government spending were not going out in prom notes and debt interest.

    Also note, as long as 3-5bn extra is going into the domestic economy, it doesn’t really matter from whence it comes.

    So as follows:

    (a) Change balance of tax/cuts etc to a more left model of 50/50 as outlined by David O’Donnell and practised in Iceland, with similar ideas outlined by Aiden R.

    PROBLEM: FG won’t do it, even if it would be better.

    (b) Investigate (sharpish) high street business bank as mentioned many times - something on the lines of Kwibank.

    http://en.wikipedia.org/wiki/Kiwibank

    (c) Go back to Eurpoean Agreements where it was signed with the sovereign pen (July and October) that EU structural funds would be advanced and targeted in programme countries, with EU oversight: get on with it.

    (d) Investigate potential partnerships with EIB.

    (e) Consider ways of encouraging Irish pension and wealth funds to invest in Irish projects.

    PROBLEM: If, in spite of this, it all goes horribly wrong then this might suck out furture wealth when it is most needed. Approach cautiously.

    (f) Consider state making overtime/bonus/increment payments in local scrip vouchers or money using the model of the One4All gift card, ie money that is time and geographically limited.

    (g) Continue to work internationally to encourage ‘diaspora funds’ to come into Ireland, eg by promoting and further engaging with Ireland Funds.

    PROBLEM: This is easier said than done, and I’m not sure how much people realise the damage has been done to relations in the Irish-American community.

    (h) Consider Joe Stiglitz’s analysis in Vanity Fair as linked by Eamon Moran, and concentrate on long-term fruitful investment in useful infrastructure, education, with particular emphasis on where Ireland has a record of excellence.

    I’m sure others could do a lot better.

  45. DOCM Says:

    @ Eureka

    This must be the silliest headline ever dreamed up by the Sindo (and it has a strong track record in the matter).

    The proposed agreement will come into force when nine member states have ratified it. We could, of course, aim to negotiate an outcome where it would only come into force on the basis of unanimity and thereby give ourselves the veto the author of the headline imagines that we have. How likely do you think that is?

    It really is time for the Irish politicians,media and commentariat in general to wake up and smell the coffee. If something is to be done about Ireland’s banking debt, it can only come about in the context of a recognition of reality.

    @ Genauer

    Thanks for the Boston Consulting Group link. The item makes for fascinating reading.

  46. David O'Donnell Says:

    DO’D: You’re lookin very pleased with yourself this mornin Biddy!

    Blind Biddy: Just back from a joust in Frankfurt ..

    DO’D@ … in Frankfurt

    Blind Biddy; … where I nailed 27 Treatises to the front door of the Bundesbank …

    DO’D: Nuff o dat now Biddy …

  47. PeterJ Says:

    @Gavin Kostick

    I have another one:

    (This is slightly tongue in cheek so nobody wig out. And it could only be done if we expected a complete breakdown of the euro zone.)

    i)
    Step 1) Tell AIB and BoI to gather up every residential mortgage they can and use as collateral for a huge loans from the ECB. Mortgage Loans total about 115 Billon.
    Step 2) The banks use the money to buy new Government debt at 2-3%,
    Step 2) Tell the Banks to default on the loans and let ECB keep the mortgages. ( not easy I know)
    Step 3) Pass a law allowing every Irish mortgage holder to walk away from their mortgage with no consequence.

    Results:

    The economy is better off to the tune of about 5 billion a year as all mortgage payers have an extra 1000 or so to spend each month
    The government has a huge war chest of cash to pay off some of our more expensive debt and give more time for the economy to recover or the government could consider a partial sovereign default.
    Best of all we get to see heads explode in Frankfurt. :)

  48. Eureka Says:

    @ DOCM
    More Noonan showboating then!
    Ah well - he looked promising for a while….
    I think I agree with you on this. Negotiating like this is very dangerous.
    This majority rule stuff is a very dangerous precedent and would be applied if we were to accept the changes. So you can say goodbye to corporation tax etc.
    Referendum is just a bad idea and should be avoided at all costs. Govt need the balls to stand up for the people instead of setting them up.

  49. Kevin Walsh Says:

    So, does anybody believe that Article 9 will be interpreted by anyone who matters as meaning that Germany will be obliged to reduce its balance of payments surplus?

  50. genauer Says:

    @kevin

    make a proposal for how Germany should reduce its Current Account (CA) balance. I am interested. But please be serious, no “gift” or “donation” stuff, my taxes are high enough.

    On the light sight, not so “serious”, but it may inspire your thinking, DE has about 800 b€ acc. CA, divide it by 80 m population, 10k for every nose, just print what the ECB owes us anyway, and then buy up half of all GIPS. Would you like that ?

  51. Kevin Walsh Says:

    @genauer

    A coordinated policy of pay rises for German workers.

  52. Shay Begorrah Says:

    @Kevin Walsh


    @genauer

    A coordinated policy of pay rises for German workers

    +1

    What good German could disagree with that? Surely only some nightmare far right hybrid of monetarist and mercantilist could want to stifle demand and prosperity in their own country in order to punish their neighbours for not following a similarly heartless ideology?

  53. genauer Says:

    @Kevin

    I am aware, that many folks here want to discuss the wording of the proposed treaties and changes to your constitution, and I dont want to be inpolite.

    The inflating of german wages would result in substantial inflation across Europe, and intentionally breaking the Maastricht treaty.
    Beyond that, this would only work, if the resulting inflation would not be “corrected” by continued inflation indexing for wages and pensions everywhere else. When Angela actually proposed that, it was met with howls of “colonialism” in many EU places. Has that changed ?

    Second point, the savers, not only in Germany, but in many other places like Finland, Dutch, Austria, China, would have to be compensated for the broken promise, treaty guarantee, what should these then 1200 billions (rough guess) buy, where ?

    Somehow we have to resolve this.

    @PeterJ,
    the problem is simply, that nobody would gives AIB and BoI any kind of that loan, because t is pretty transparent, that it would NOT be paid. How often to say this ? It is the same old story of somebody wanting a loan, and saying it will not be paid. The classical greek approach.

  54. Eureka Says:

    @ Genauer
    Did you know that life expectancy in your country is actually Falling????

  55. genauer Says:

    @Eureka,

    any data, reference to back this up ?

  56. genauer Says:

    @all,

    I dont think you are really fully aware of this.
    One reason I come here, is, that, after the usual rant, people here go pretty quickly over to discuss treaty and law changes pretty specifically. Any recommendations to see this from any other nations blogs? I would be very interested. Kudos to you here.

    People in other nations, Finland, Czech, Poland, also Germany, are also very concerned, what these treaties really mean, and with the Maastricht disaster, which was supposed to be ironclad, are very afraid, to sign over their money and freedom. As Angela said, people still trust the Buba and the Supreme Court, but politicians, including her, and now even the Bundespresident, much less so.

  57. DOCM Says:

    @ genauer

    The enormous German commercial surplus has not happened by accident but because of a deliberate policy, followed by all governments since Schroeder, to favour the export sector over domestic consumption. The evidence is all around you, notably in the reforms introduced under Hartz IV from which the SPD has done its best to try to distance itself and avoid responsibility (and even Hartz himself).

    http://www.dw-world.de/dw/article/0,,5221558,00.html

    The resulting statistics with regard to the increases in precarious employment and poverty do not lie.

    My suggestions would be;

    (i) introduce a nation-wide minimum wage (scrapping in the process the misery jobs offered to supplement inadequate levels of social welfare)

    (ii) stop measures which transfer the cost of energy from the heavy industry export sector to the domestic user with the obvious depressive impact on consumption

    (iii) scrap restrictions on takeovers of German industry, notably the “golden rule” with regard to share-holdings in large companies

    (iv) liberalise the retail sector

    (v) stop subsidising labour in high-skill industries during economic downturns.

    It is too late to reverse the impact of blocking free movement of labour from the former Eastern European countries for the full seven years allowed, while busily transferring investment to factories in those countries.

    This would be in Germany’s own interest. What is the purpose of exports, after all, other than to pay for imports! The argument is advanced that because of the poor demographic situation of Germany, that a reserve of wealth has to be built up and there is some merit in this. But for the moment the only beneficiaries are those that support the FDP, CDU-CSU and the organised labour elements in the export industries.

    It must also be added that Germany has an excellent social welfare system in most respects which could well be emulated by Ireland, including paying equivalent moderate levels of salary.

    Christine Lagarde summed the situation up well as French minister; “It takes two to tango”.

    In fact, I think that Germany is ready to do so.

  58. Shay Begorrah Says:

    @genauer

    The most recent reports are very recent indeed, this month:

    From the English language version of Der Spiegel at http://www.spiegel.de/international/germany/0,1518,803192,00.html

    The report, which cited the German government’s response to an inquiry submitted by the Left Party, showed that those on low earnings could expect to live an average of 77.5 years in 2001 but only 75.5 years in 2010.

    A less recent source was a 2008 OECD report referenced at the Financial Times and many other outlets.

    http://www.ft.com/intl/cms/s/0/e5248dfa-9f49-11dd-a3fa-000077b07658.html#axzz1gtlMe0bd

    Since 2000, income inequality and poverty have grown faster in Germany than in any other OECD country. They increased by more in five years (2000-2005) than in the previous 15 combined (1985-2000).

    It has to be stated that pre the Hartz IV cutbacks program Germany’s figures for child poverty and life expectancy were exemplary and though Germany’s gini index may now be higher (more unequal) than Ireland’s this is a recent development which is mainly due to Merkelism and the increase in power of the various other economically liberal but socially conservative parts of the German establishment.

  59. Eureka Says:

    @ Genauer
    From Der Spiegel mein Freund
    http://www.spiegel.de/international/germany/a-803192.html

    Care to comment?

  60. colm brazel Says:

    @genauer

    And how do you like the BCG proposal for resolving the debt crisis
    http://www.bcg.com/documents/file87307.pdf

    Very refreshing to read that document with proposals for eurowide debt write-down.

    I agree with the realism of their last sentence when they point to difficulty of gaining consensus on tough measure and this is not Mesopotamia of a couple of millenia ago.

    I think change will come in 3 directions; one), from the bottom up with countries leaving the euro out of whose ashes something better will come; two), from the top down, the G20 will need to do something globally with a new Glass Steagall that will introduce regulatory reform especially of shadow banking sector; three), from the EMU through measures as in the ‘Compact’

    I recall the academics signed a petition some years ago re policies being developed at the political level that have proved to be disastrous.

    In case there is no petition, and apologies for the cumbersome wording, any improvements/suggestions let me know, but here’s a petition for every one in the audience :-)

    http://www.ipetitions.com/petition/euro-no-more/

  61. DOCM Says:

    @ All

    These exchanges - see link below - reported by RTE are very pertinent to the issue under discussion.

    The strength of Germany lies in the fact that it makes excellent products that people want to buy. The issue is not that of requiring Germany to reduce the country’s level of competitiveness but to anchor that competitiveness in a level playing field as far as its largest European markets are concerned and especially those with which it shares a common currency. As Michael Hennigan points out in another post, it is not under any real pressure to do so. If others in Europe no longer have the means to purchase German products, there are plenty of markets outside Europe that do.

    It is a political not an economic decision that has to be made by Germany and I am convinced that it will make the right one.

    On the curious alliance of government, business and trade unionism that gave rise to the situation that exists in Germany today, it had, and still has, an exact parallel in Ireland. Trade unions are there to protect the interests of their members, not workers, including the unemployed, in general.

    http://www.rte.ie/news/2011/1218/eurozone.html

    To what referendum is Minister of State Hayes referring?

  62. Eureka Says:

    @ DOCM
    Thanks for the link
    I particularly like this:

    “Elmar Brok said everyone had to give something to arrive at a point of common interest.”

    Eh - Ireland bailing out German banks not enough for you Elmar?

  63. Michael Hennigan - Finfacts Says:

    Government social spending by Germany at 26% of GDP compared with several other countries including Ireland, is much higher- - it’s 10% as a ratio of GDP higher than Ireland’s.

    Check out the private sector pensions situation compared with Ireland’s pathetic one.

    In 2009, life expectancy at birth for the whole population in Germany stood at 80.3 years, almost a year more than the OECD average of 79.5 years. Japan enjoyed the highest life expectancy among OECD countries (with 83 years), followed by Switzerland and Spain.

    As I said earlier, the smallest trade surplus is with other Eurozone countries. The biggest is with countries outside the EU.

    So the story on the huge surpluses is a bit outdated. German imports have risen at nearly the same rate as global trade over recent years.
    Ireland depends on American firms for most of its trade; Europe needs more world class companies of Germany’s standard.

    Following the reunification boom, unemployment rose to 5m by early 2005. Reforms resulted in a peak of 1.5m workers keeping their jobs in the subsidised Kurzarbeit system in 2008/2009.

    There is no perfect system and more can be done to improve domestic services.

    Germans are risk averse which is reflected in the low birth rate and low direct shareholdings. The number of children (under 14) has plunged 14% in a decade.

    The end of conscription helps in the services area as Zivildienst, community service carried out in lieu of compulsory military service, saw thousands of young men doing community service crowding out private-sector companies thanks to very low, government-subsidised wages.

    @ EIS

    The profitshifting where US MNCs transfer profits and revenues to Ireland from say Germany and then pay Ireland corporation tax is effectively theft.

    Of course as beneficiaries, we don’t see it that way.

    If individual EU countries sought to gain more revenue from MNC operations in their countries, they could do so without invoking an EU treaty.

    The big risk is in Washington. Both parties are in favour of lowering the corprate tax headline rate.

    A proposal was made last Sept where , Congress should levy a 20% tax on United States corporate profits in any country with an effective corporate tax rate below, on average, 20%. Corporations would no longer be allowed to indefinitely defer American taxes on profits in these jurisdictions.

    But the 20 per cent levy should be reduced to reflect any taxes paid by United States multinationals in low-tax jurisdictions.

    If a foreign subsidiary of an American corporation pays some tax in a low-tax jurisdiction, it should receive a tax credit for that amount against the 20%. For example, if corporate profits in Ireland were taxed at 12.5%, they would be subject to an American tax of only 7.5% (20% minus 12.5%).

    A move like that would be damaging for Ireland:

    http://www.brookings.edu/opinions/2011/0919_foreign_profits_pozen.aspx

    @ Gavin Kostick

    I will reply overnight.

  64. Kevin Donoghue Says:

    “make a proposal for how Germany should reduce its Current Account (CA) balance.”

    Reintroduce the D-mark.

  65. DOCM Says:

    @ Eureka

    You should listen to exchanges between Brok and Harkin cf. embedded link. He makes the obvious point that nobody obliges anyone to buy things.

    The argument advanced by Harkin that Ireland respected the SGP while Germany and France did not does not hold water. We were able to do so on the back of ephemeral tax income from a property bubble which the authorities did nothing to stop, and, indeed, encouraged, in which many people joined. It is puerile in the extreme to try and hold Germany responsible for our own stupidity.

    http://www.irishtimes.com/newspaper/property/2011/1215/1224309094094.html

    Notably;

    “In 2009, the most recent year available, almost 90,000 PAYE workers, which would include guards, civil servants, accountants etc, filed tax returns on rental income for example. Moreover, according to the Revenue stats, in 2009, 65 per cent of taxpayers who returned rental income did so for one property; a further 30 per cent declared between two and five properties; 4 per cent returned between six and nine properties, while just 1 per cent declared more than 10 properties”.

    Of course, the Taoiseach in his address to the nation told us “it was not your fault!” He even had his hands on the desk to show that he did not have his fingers crossed behind his back.

  66. colm brazel Says:

    Heard Elmar Brok pushed on News at One whether there might be debt possible write-down related to ‘Compact’. He cleared that one up straight away by saying no, that was a totally separate issue, everyone would want that for themselves, so this was a non runner…..

    I’m not sure what sort a deal the prawns got in District 9. I’m sure people should not be unduly alarmed at the flimsy ‘Compact’, but you never know :-?
    http://www.imdb.com/video/imdb/vi52625945/

    Having to comply in order to be assimilated may not be that bad! On the other hand, might be a good idea to watch out for any Borg assimilation tubules…

  67. genauer Says:

    @Eureka, DOCM, Shay, Colm, and all

    LOL, I ll asked for it, I ll got it, and I deserve it.
    Originally I wanted to analyze Ancient Roman income distribution this afternoon, and just make a few comments here and there.

    Before I ruin your discussion about treaty wording completely,
    in your replies are a lot of legitimate questions / allegations, of which many can not be just brushed off.

    In comparison, in Greek blogs, often just a simple wikipedia reference is good enough.

    Soo, now I do owe you a more detailed answer, with data and references, and some care, and you will not get it today.
    With you it is not so easy, and this is good, and not bad.

    Just some very preliminary comments:
    - I appreciate it a lot that you also care about german sources, like I go to irish and greek sites, and hear what they have to say. Not to mention all the US, Uk, and especially Canadian
    - unfortunately dw-world and spiegel/international are no good
    - even the leftie kantoos at some point pleaded openly with Paul Krugman, “Tyler [Cowen], Ryan [Avent], Matt”
    http://kantooseconomics.com/2011/09/14/stop-citing-der-spiegel/
    to just forget about this “source”
    - no German, “I know of”, in lack of an instant non-criminal expression, in this moment, bothered so far with the dw-world, to comment
    - in general, public opinion in Germany is at a boiling point. Breaking up the Euro would be bad for Germany, but much worse for all others.

    P.S.
    Each time I hear this “Glass Steagall” I see these Lyndon LaRouche folks, since more than a quarter century on the streets of Germany, often before Universities, and get a little shiver.

  68. colm brazel Says:

    RE, “Having to comply in order to be assimilated (with Compact ) may not be that bad!” …..I was being deeply ironic there

  69. Eureka Says:

    @ DOCM
    This has been done before.
    Even the Germans accept some culpability for the reckless lending of their banks.
    A home is not a discretionary purchase. It’s cost is directly related to the amount of credit available in the market.
    Low interest rates lead to bubbles.
    Nobody gets away without blame (including us) on this one.
    What do you think of the Spiegel article on mortality rates by the way? Don’t want to make too much of it but it shows that the model penalizes marginalized Germans as much as the periphery.

  70. Joseph Ryan Says:

    @DOCM

    re Brok

    He makes the obvious point that nobody obliges anyone to buy things.

    Of course Brok is right. Nobody forced Ireland or now forces Ireland to purchase imported goods.
    But the next and overdue logical step is for Ireland to encourage its citizens not to buy imported goods, a move alluded to by Christine Legarde, when she foresees the next step as being what countries can do to protect their own positions.

    Ireland, however culpable in its own demise, must resile from the notion (that you appear to propound above), that we were all responsible for the demise. And we must resile also from the notion that we must all be made to pay not only the State debts but the private banking debts for which the general population is not responsible.

    It may be peurile in the extreme to hold Germany responsible for our own stupidity.
    But it is not peurile to hold Germany accountable for our demise resulting from being fettered by bank debt from which Germany, France or the ECB refuse forcefully and vehemently to unlock us from.

  71. colm brazel Says:

    @genauer

    Here’s some wiki for you as well. Not Lyndon LaRouche here or Ron Paul, maybe closer to WPC here below, support Dodd-Frank greater transparency/accountability but would go further:
    http://searchfinancialsecurity.techtarget.com/definition/Dodd-Frank-Act

    “”Some think-tanks such as the World Pensions Council (WPC) have argued that the dismantlement of the Glass–Steagall Act was only the symptom of a much deeper problem: the emergence of a new economic paradigm associating the worst interpretations of Keynesian monetary stimulus with unbridled deregulation that came to define the Clinton and Bush eras (1993–2009).[39] In that perspective, they view the Dodd–Frank Act as insufficient, lacking the “broad provisions necessary to restore financial orthodoxy and minimize conflicts of interests”.”

    http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

  72. David O'Donnell Says:

    The EU Commission also happens to have no money, and tends to defer to the ECB on monetary and banking matters. It is surely time to release all communications with the ECB over their conduct towards Ireland, which can only be more embarrassing to the former.

    http://www.independent.ie/opinion/analysis/time-for-a-whole-new-strategy-on-negotiations-2966922.html

    I hear LB-S has been working overtime on the shredding machine - such a great loss to posterity.

  73. DOCM Says:

    @ genauer

    The more information we have direct from Germany the better. But saying some sources are no good will not wash. (I refrained from giving the Wikipedia link to Peter Hartz).

    @ Michael Hennigan

    The issue is not the excellent qualities of the German economic and social model, of which there are many, but those elements of German government policy which are incompatible with a functioning internal market and even less so with a single currency. What has been missed on this blog and many others is that the Six-Pack, for the first time, provides a platform to discuss these issues calmly and dispassionately. They also involve the other major countries e.g. the disastrous organisation of labour markets in Italy and Spain.

    @ Joseph Ryan et al

    On what I will call the theme of “taking one for the team”, you may huff and puff as much as you like but it will not change the reality that the euro as established left responsibility for banks with the countries participating. Germany is picking up the bill for her banks and a pretty hefty one it is. It remains to be seen what the remaining bill for the banks in Europe will amount to and whether the cost will be shared. If so, Ireland will have a legitimate case to make. But we are not at that point yet.

    Thinking that the ECB or the Commission have roles independent from what their legal manadtae allow them is illusory as is the idea that we can hold up adoption of the International Agreement on a Reinforced Economic Union (IRAEU!) and, especially, thinking that we can demand a price for not doing something of which we are incapable.

  74. DOCM Says:

    @ David O’Donnell

    “The EU Commission also happens to have no money, and tends to defer to the ECB on monetary and banking matters”.

    With respect, that is an utterly meaningless sentence. The Commission manages the budget of the EU which is raised under the system of Own Resources set out in the Treaties. It can raise monies on the markets, as it has done is respect of the EFSM, but in accordance with legal decision-making procedures and with an agreed ceiling. The ECB does what its mandate allows it to do, including purchases of bonds on the secondary markets in a manner that fits within that mandate (so far).

    The IAREU will an international agreement between the contracting parties to strengthen economic cooperation between them in a manner that is compatible with the existing Treaties.

  75. Eureka Says:

    Now that I’ve come to read about this Germany actually has the greatest proportion of over 65’s in Europe. This has probably played some part in their frugality but reveals a much greater worry for them. Germany is faced with a simple problem - who will pay for its pensions?
    Imagine if the periphery starts defaulting on German banks and blows pensioners’ savings. Imagine the mess that would create for Germany.
    The stakes in this game are huge. The imbalance in Europe is not just financial but demographic too.

  76. genauer Says:

    @DOCM
    Of course, just saying, I dont like a certain source is “no good”.
    You have to do a thorough “fisking” before that : - )

    @Eureka
    As far as I know, it is only Ireland, which really differs in demography from the rest of Europe, otherwise it would be just toast based on the other financials, and investors are very aware of that.

    This is also the reason why the rest can not “grow out of its debt” any more. And why we Germans are so hard on these debt limits.

    @all
    There should be a South Park “German thing” on Comedy Central tonight at 22:00 CET. Does that also come same time in your place?

  77. DOCM Says:

    @ All

    An unusual source but essential viewing; interview with Klaus Regling on Al Jazeera.

    http://www.aljazeera.com/programmes/talktojazeera/2011/12/20111217102347821381.html

  78. DOCM Says:

    @ genauer

    I will check it out! If it is anything like what the Simpsons did to Ireland in one episode - in the middle of the Celtic Tiger era - it should make your teeth grind.

    It may interest you to know that there is a LIDL at one end and an ALDI at the other of every Irish town of any size and they now have about 8% of the retail market. (Their big other foreign competitor is the UK chain TESCO).

    The weekly promotions have filled every garage and shed in Ireland with tools and gadgets which their purchasers never knew they needed, made in China but supplied by Handelsgesellschaften.

  79. hoganmahew Says:

    @DOCM
    “made in China but supplied by Handelsgesellschaften.”
    Er, much of what is made in Lidl anyway is German in both manufacture and packaging. From filing cabinets, to chisels, to power tools.

  80. David O'Donnell Says:

    @DOCM

    Any charge on meaninglessness I leave to CMcC - where I have an opinion on any abuse of language it is that McCarthy did not go far enough with his alleged meaninglessness - I believe sufficient empirics exist to strongly suggest that the ECB and The Bundesbank have morphed into each other, beyond jedward, where one side of mouth sounds like Weidmann and the other Draghi. Crisis over - the bankers are in charge!

  81. Georg R. Baumann Says:

    Klaus Regling on Aljazeera:

    http://www.aljazeera.com/programmes/talktojazeera/2011/12/20111217102347821381.html

  82. DOCM Says:

    @ David O’Donnell

    Sorry about that! I had missed the source of the quotation. But the point remains. The EU is not some kind of horse opera peopled by pantomime figures and institutions. That kind of treatment is best left to RTE news (invariably at least 24 to 48 hours behind developments, if it understands or picks them up at all).

    @ hoganmayhew

    I must be going for the cheaper stuff!

  83. genauer Says:

    @DOCM
    how did you like this South Park ?

    How about Walmart in your area ?

  84. Joseph Ryan Says:

    @DOCM

    “On what I will call the theme of “taking one for the team”, you may huff and puff as much as you like but it will not change the reality that the euro as established left responsibility for banks with the countries participating.”

    It is good to huff and puff at times. A lot of primates do it!

    However, the phrase

    “the reality that the euro as established left responsibility for banks with the countries participating”

    however much you extend its import surely cannot mean underwriting the losses of all the banks while allowing the profits to flow to shareholders.

    Personally at this point I am in favour of a withdrawal from the euro. The latest Debt/GDP projections give Ireland no hope of recovery. Whatever small hope of recovery there was in a growing European economy has been sabotaged by the imposition of a continent wide austerity regime that is now to be translated into treaties and constitutions.

    So whether we leave “bowels in, or bowels out” it is all the same to me. Ireland’s interest is no longer served by hosting the euro parasite that will consume the children of nation for decades to come.

    Ireland’s strategic interest is now best served by a collapse of the euro.
    That is the only way to destroy the parasite before it destroys us all.

  85. Shay Begorrah Says:

    @DOCM

    I would also like to pick up on the reference by Colm McCarthy to the “unelected” Commission. The members of the Council are political representatives either elected or appointed with the approval of their parliaments.

    They sure are, but what precisely does that have to do with the European Commission, and in particular the commissioners? I understand that in your mind the commission is apolitical, but you also think that about the ECB - a body with right wing politics (mitteleuropean style) baked in. Now the Commission has traditionally been seen as the protector of smaller states but then again the EU used to be thought of as a project with progressive objectives. Neither of those things are true any longer, as Ireland, the other peripheral countries and more broadly the lower end of the European income strata have found out to their extreme detriment. Financial capitalists on the other hand have been quite well served.

    Of course this is a major part of your analysis of the European component of the global financial crisis - the denial that the current laws or institutions have an inherently political bias that is substantially responsible for the mess we are in, along with the structure of the European financial sector and the planned tragedy of the Eurozone.

    Also, you said without a hint of irony on the ECJ and our newly minted political impotence in Europe

    The issue is rather academic as far as countries in a programme are concerned. As I pointed out above, what Ireland decides to do is of little concern to the main players, a message which needs to sink home, and fast.

    It is a neat little circle isn’t it - we have no choice but to do what we are told by the “major players” because we are in the program, and yet we are in the program largely because we did what we were told to do by these same “major players”.

    Interestingly these same major players have done rather well politically out of our worsening crisis. Probably coincidence.

  86. Shay Begorrah Says:

    In retrospect the word “newly minted” in the phrase “newly minted political impotence” should have been replaced in my last posting by the words “recently sutured”. What can I say, I got excited.

  87. DOCM Says:

    @ Shay Begorrah

    I never said that the Commission i.e. the college of Commissioners was apolitical. I was simply making the point that the fact that it is not elected is part of the democratic decision-making structure of the EU. There have been repeated efforts by the larger states to turn it into a simple secretariat by, for example, removing its sole right of initiative.

    As far as the IAREU is concerned, we are not being told to do anything. We are being told that our participation is not required if we do not wish to participate. A message which, on all the evidence, has yet to sink home.

    Cliff Taylor has an excellent piece in the SBP about the dangers associated with the present approach by the government, if that is what it is and not just loose talk by an administration without an established position. I will post the link tomorrow. Indeed, this was the point made by Karl Whelan at the start of this thread.

    The exchanges with genauer above explain to some extent what is at issue for the Continental countries involved. (I would prefer to speak of regions. Northern Italy has more in common with Germany than with the South of Italy).

  88. Eureka Says:

    @ Genauer
    I know a lot of Germans who have settled in Ireland. The two cultures actually compliment each other terribly well. Irish people (as you may have gathered) are actually very serious behind the veneer of bonhomie. Interestingly both our countries have long traditions of resisting imperialism.
    I think the Euro must break first before it can be rebuilt properly again. Next time we will do it right. In the meantime it is best to pull the plug on this botched enterprise

  89. Shay Begorrah Says:

    @DOCM

    The exchanges with genauer above explain to some extent what is at issue for the Continental countries involved

    The exchanges are informative, and reveal the practical interests that Germans have in a strong currency. I had no idea that cash savings were the major part of pension planning.

    However every exchange so far has led me to believe that the German conservative tradition can not be reasoned with on their fetishization of cash and that this obsession with inflation, the imagined virtue of universal saving and the evils of the transfer union will cripple all the European economies not tightly bound with theirs before taking them and their strong currency with it.

    It is unfortunate that though the Germans excel at many things, economics is not one of them.

  90. Michael Hennigan - Finfacts Says:

    @ DOCM

    Whatever about the future, for most of the past decade, Germany was dealing with fiscal problems resulting from the cost of reunification.

    It introduced reforms including flexibility in collective agreements during times of crisis; in contrast with the US, huge job firings were avoided.
    Unemployment was still at a post-war high in early 2006.

    What would have changed the fortunes of the next 3 biggest economies in the EMU?

    1) Even with higher growth, France would still be adding to its public debt every year since 1975 until it faced a big crisis;

    2) How big would German demand have been to change the dynamic of stagnation in Italy at a time of a global credit boom?;

    3) Spain had invented the free lunch and did not need external demand; it built 675,000 homes a year from 1997 to 2006, more than France, Germany and the UK combined.

    The received wisdom in economics is often a mantra that has begun as a soundbite, which provides a simple crutch/ explanation of a complex issue
    – e.g. devaluation. the German trade surplus and the fantasy of Irish unit labour costs.

    J-C Trichet said last Oct:

    The German economy has often been thought of as the engine of the European economy. But less than 10 years ago, Germany was seen by some observers as the “sick man of Europe”.

    Let me cite some books and newspaper articles from that time: “Can Germany be saved?”, asked one of this country’s most well-known economists in 2003, noting that “Germany provides something of a case study of what not to do in designing a prosperous future”.

    “How the mighty are fallen”, said a major international magazine also in 2003, well representing the mainstream economic analysis. “After the German economy was seen as an exemplary model of successful capitalism for decades,” the magazine went on, “ today it is Germany that economists point to with a mixture of contempt and alarm.”

    “Vom Meister zum Mittelmaß”, wrote a major German newspaper in 2005, speaking of “absteigende Staaten wie Deutschland, die in ihrer Bedeutung schrumpften und ihren Haushalt nicht in den Griff bekämen. ”

  91. Michael Hennigan - Finfacts Says:

    @ Gavin Kostick

    Austerity certainly does not promote growth in the short-term.

    When most advanced countries have high debt, there is a problem in getting political support to add to the debt to provide stimulus. The publics want to have their cakes and eat them and politicians also face other conundrums.

    There are two choices with a kleptocracy like Greece: cut the country adrift or provide external funds and try and have reforms implemented - - a very long process.

    On jobs, where there were more teachers than classrooms, more staff in the parliament building than desks to accommodate them, there surely is no viable alternative to cutting numbers.

    Greece loses revenues of €5bn-€6bn annually because of tax evasion, equivalent to 2.5 to 3 percentage points of GDP (it’s likely an underestimate) – - more than any other Eurozone member, according to the OECD.

    In Ireland with the state guarantee of employment, in a restructuring situation, public staff either have to be induced to leave or inevitably, some who stay are likely to be sullen and demotivated — a scenario that is toxic for other staff whether in the public or private sector.

    GNP is at the 2004 level; the population is bigger; 500,000 additional medical card have been issued since 2007 and there is demand for more classrooms. Gross current spending was €39bn in 2004 and €60bn in 2011.

    Taxes could be raised but 5 more years of stagnation will force political leaders to seriously look at all aspects of spending for the first time. Colm McCarthy maybe press-ganged for the next version of Bord Snip.

    Reform of local authorites? Maybe we need 188 planning authorities not 88?

    Swedish MPs can live on a salary of €72,000 and high taxes - - and no lunch money; overnight expenses that has the State pay the costs of a second home for TDs serving up to 20 years, and annual tax-free gifts of €41,000 to independent TDs (not one receipt required).

  92. Michael Hennigan - Finfacts Says:

    InterTradeIreland, the inter-govermental enterprise agency says today that a survey of 1,000 firms on the island shows that small businesses are still the suffering disproportionately from the economic downturn with nearly half (46%) of businesses reporting that they are winding up, contracting or simply trying to survive.

    The result wouldn’t be a surprise to anyone with an exposure to the trading sector.

  93. The Alchemist Says:

    @michael h

    Very true. Ask yourself how many people do you know who bought a house with a mortgage in the past year.

    Credit is very scarce. Offering/receiving credit to the end of the month let alone any 60 days is very tricky. When ISME expresses frustration at government bodies not settling bills promptly, it is greeted with puzzlement and ignored.

  94. Gavin Kostick Says:

    @ Michael Hennigan

    Thanks for the reply.

    I wasn’t really talking about Greece except as an example of how countries without their own CB or currency will inevitably perform “worse than expected” in an austerity package. As you know, one could also point out that Greek workers work considerably longer hours than Germans.

    The IMF is interesting at the moment as it appears to be neither salty not fresh but sort of brackish.

    My point is more in line with the ones made by Wolfgang Münchau in today’s FT.

    “UK will fare better in this Anglo-French spat”

    “The failure to take into account the effect of co-ordinated austerity has been the main reason the European authorities misjudged the adjustment dynamics in Greece. They are now making the same mistake on a much grander scale.”

    It’s not just that I think that austerity is damaging (or indeed that ultimately fiscal deficits shouldn’t be closed: sorry Dork) , but that if Ireland sticks to the programme and does not get an extra 3-5bn (guesstimate) pa for three years into the domestic economy then I think the country will be very hard pressed to avoid a second bailout - leaving aside further international developments.

    I took it that your search for “credible” suggestions means ultimately ones that are practical and implementable by a government that has, after all, got a mandate to implement policies put out in their manifestos and programme for government.

    And again I repeat, this does not have to come all from one source, or from any particular place: I was wondering if somehow we could do a deal with Greece where we all go on holiday there while they all come on holiday here, that would about do it, but sadly I don’t think its practical.

    I won’t repeat the suggestions I listed above, but hope, again, that more informed readers can make better suggestions.

    http://www.ft.com/cms/s/0/a78d2354-273a-11e1-b7ec-00144feabdc0.html#axzz1gyFc02Ko

    http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

  95. Gavin Kostick Says:

    Here’s the ever relevant “Catastrophe” by Samuel Beckett which was dedicated to the imprisoned Václav Havel.

    http://www.youtube.com/watch?v=COZ0QXyDgYI

    Václav Havel “A dissident in the cause of truth”.

    http://www.ft.com/intl/cms/s/0/a798f9fa-2978-11e1-a066-00144feabdc0.html#axzz1gyPyJSv0

  96. The Dork of Cork Says:

    @Gavin
    In this monetory system they should not be closed as they subtract credit deposits & generally prevent malinvestment.
    In a Hard Gold standard system however the goverment can more slowly expand its money supply by producing new paper and giving it to miners.

    In a Full Money / no credit fiat system the goverment can again expand its money supply by a agreed legal amount - lets say 2% a year.

    A CB that can defecit spend can reduce the interest on the goverment money supply by recycling the interest income between the CB & Treasury rather then giving it to the commercial banks.

    There are many different systems but under the current euro system the lesson learned was that there was too little goverment debt relative to private credit.

  97. Garry Says:

    “It is unfortunate that though the Germans excel at many things, economics is not one of them.”

    Probably sums up the ‘intelligent’ debate in Ireland these days, even though the comment is serious it can only be laughed at :)

    We are a bankrupt crooked little country; and in no position to lecture anyone on what is good economics. A little self awareness would be in order.

    When I hear comments like this, I realize Ireland is a long way away from understanding what has happened and what is coming in the next decade.

  98. Colm Brazel Says:

    I’m watching with growing amazement the lopsidedness of the debate on the “Compact”. Here’s a few quotes:

    Michael Hennigan: “When most advanced countries have high debt, there is a problem in getting political support to add to the debt to provide stimulus…”

    Shay Begorrah: “… reveal the practical interests that Germans have in a strong currency..”

    DOCM..”interview with Klaus Regling on Al Jazeera.

    http://www.aljazeera.com/programmes/talktojazeera/2011/12/20111217102347821381.html

    Colm Mc Carthy: re ‘Compact”….”It is silent on what happens to Eurozone countries which do not sign up.”

    Avalanche, appalling vista, armageddon thinking is led by
    economic polyannas like Dan O Brien, economics editor of the Irish Times, who wants us to forget it.

    The propaganda is being swallowed whole by large sections of the media and commentators. For example, Sindo B O Connor, quoting O Brien, overnight shortfall of ¢30 bn to tackle deficit between spending and revenue.

    Look, commentary on the EMZ, the Compact, I enjoy. ITs reasonable and logical to examine these issues.

    Its not reasonable and logical to deposit debate on euro exit into the junk bag of looney tune ‘don’t go there’ scaremongering, short on facts, long on fear and propaganda, blind fold thinking.

    Olafur Grimsson encountered the same Armageddon fear merchants many from within his own banking system. Many face jail as the icelandic legal system weeds out their responsibility for their meltdown.

    The IMF was frankly appalled at the deal forced upon Ireland. One avenue of investigative thought should explore what help the IMF could be to cushion exit.

    Another one would be properly carried out detailed negotiations with George Osbourne on our exit.

    The UK and Ireland should look to amalgamating north and south into one economic zone as a long term prospect, if not able to be factored into short term solutions to our crisis.

    We could do well to talk to China. Alone of the economic power blocks, China was of most benefit to Iceland in denying the Armageddons their prophecies of doom.

    We should speak to all the BRIC countries, Brazil, Russia, India and China.

    Its possible large chunks of our debt following a writedown on euro exit negotiated with our lenders, could be further monetized and bought back with long term trade agreements to supply eg engineering, agri products, places in our educational system to China/India.

    Fear, brainwashing, ignorant bush fires are being set across the land to prevent proper debate happening on the important issue of our need to exit the euro.

    I have not mentioned how democracy is now for sale in Ireland and ready to be sold for a song to pay the private debt of a select few who probably pay no taxes…another time :-) Interesting times.

  99. Colm Brazel Says:

    In case its not clear, quotes from posters above merely to highlight the close enough interest and coverage on external factors. I’m not saying there is any evidence of Stockholm syndrome, but rather highlighting distinct absence of similar coverage on what it will really mean for us to leave the euro!

  100. Michael Hennigan - Finfacts Says:

    @ Colm Brazel

    When you mention Olafur Grimsson, I wonder why ignore Bertie Ahern?

    They were both boom cheerleaders?

    You refer to the BRIC countries, Ireland would be of as much interest to them as Bhutan would be to the Irish.

    Iceland thought about getting a loan from Putin but didn’t; that Chinese guy is back looking to buy a big part of the country after being rejected 2 weeks ago.

    As regards the euro, the people to talk to are in places like Santa Clara, Palo Alto and Seattle.

    @ Gavin Kostick

    There have been a number of national suggestion competitions in recent years and they have come to nothing.

    Developing new export markets will take years.

    In the short-term, the country will have to slim down its operation to live within its means.

    Many in the private sector have had no choice.

  101. Bond. Eoin Bond... Says:

    @ Colm/Michael H

    I believe Grimmsson invited the Russians to open up an naval air force base in return for that loan. Even the Russians thought the idea was nuts. He’s basically nuts and was president for the entire run up in the boom, when he was wheeled out to big up every element of the Icelandic boom, and has tried to assume execuitive type powers for what is a ceremonial position. Think Dana wanting to veto stuff like divorce or abortion referenda and you get the picture.

  102. Paul Hunt Says:

    @Gavin,

    You’re quite right about the need for, say, a 3-5 bn pa stimulus to the domestic economy. While the price level for Irish household consumption is 15% above the EZ average there is ample scope to strip out the inefficiencies causing this, increase the real disposable incomes of the majority of citizens and boost current economic activity and future economic performance. But why expend effort on this when there might be the possibility of a ‘deus ex machina’ intervention to reduce the burden of the Anglo promissory notes? By all means expend effort on securing some relief, but, for goodness sake, put most of the effort into the things that are within our own control to fix.

  103. Colm Brazel Says:

    & Michael Hennigan,

    I deliberately left out Santa Clara because of Geithner Noonan Slamdoor, but agree, would be good if aid came form there.

    Re “In the short-term, the country will have to slim down its operation to live within its means.”

    Nope, that’s a fail. We’ve done that and right now we are on the precipice of a dramatic fall in GDP and GNP with rising emigration/unemployment, mass business closures especially foreign retailers and also the financial sector including the banks? We are way past slim down and right now we are anorexic consuming the lifeblood that gives growth.

    But you are in good company holding that polyanna view.
    See link above and here:

    http://www.aljazeera.com/programmes/talktojazeera/2011/12/20111217102347821381.html

    Klaus Regling, the CEO of the EFSF, talks to Al Jazeera’s Sami Zeidan about the debt crisis

    “national governments are responsible for their fiscal reforms” kinda echoes what you say. Its an interesting interview on the Math of EFSF.

    In the interview, Regling makes the point: “¢43 bn for Portugal/Ireland.. everything they need is already covered already committed”

    So he goes on to elaborate on how EFSF will be leveraged and deal with scenarios such as possible downgrades for principle contributors making much of the point Italy and Spain are able to refinance themselves, at the moment. At one point, Regling makes a point on hope re environment changing…”

    Right there is the flaw shared by you and Regling. Unfortunately, while Sami ticked all the other boxes, he did not tick that box and explore it.

    Let me explore it for you :-)

    ¢43 bn for Ireland/Portugal is not enough. Cutbacks, slim downs, dealing with the avalanche of debt will lead to a worsening crisis in Europe precisely because countries, eg Ireland, face no hope whatsoever of climbing out of their debt holes in a market that is falling.

    Its misleading of Regling to falsely put out that Ireland/Portugal have been made good. We have been made worse with worsening debt due to worsening austerity induced debt levels.

    The crisis will worsen and economic outlook due to a broad range of parameters, recapitalisation/restructuring of the banking system across the EMZ, austerity. The euro is going down and Regling will find his EFSF quickly disappear into debt blackholes such as our own. Rather than flotation devices, his bailouts are proving to be anchors destroying countries rather than saving them.

    Re negative by you on BRIC aid. I have to disagree. There must be a wealth of finance available from financial success stories in those areas. We have expertise in the agri sector that should be able to make those connections.

    Re Olafur and FF, Olafur Grimsson famously learned from his mistakes. Our own political groundhogs don’t drink CopON, they like to make the same mistakes over and ove r and over and over again and again ……

  104. The Alchemist Says:

    @col brazel

    Mirror, mirror on the wall….

    When pundits have been Cassandras about Irish domestic debt, they have been subjected to a degree of scoffing. On the other hand, when pundits have been Cassandras about the euro, eurozone governance, Greece, Italy, France, etc. they have been praised for their insights. Curious is it not?

  105. Shay Begorrah Says:

    I said, totally unironically, “It is unfortunate that though the Germans excel at many things, economics is not one of them.”

    @Garry replied

    Probably sums up the ‘intelligent’ debate in Ireland these days, even though the comment is serious it can only be laughed at :)

    We are a bankrupt crooked little country; and in no position to lecture anyone on what is good economics. A little self awareness would be in order.

    When I hear comments like this, I realize Ireland is a long way away from understanding what has happened and what is coming in the next decade.

    Dear god we are in trouble.

    If I were to have said “American’s excel at many things but their predilection for military foreign policy adventures has been disastrous for the world” would you feel the need the reflexively need to doff your cap to the US and say how foolish someone from a little country like Ireland was to take issue with American thought (and actions) on foreign policy? I mean America has won all their recent wars - how dare someone from a tiny, impotent little country like Ireland take issue with their actions? America has also been good to Ireland and like Germany it is full of brilliant and hard working people. I could go on but hopefully you see the similarities with your original post.

    Even great countries have failings, and powerful ones frequently get away with them longer. So it is with Germany and the way they have continually worsened the European component of the global financial crisis to satisfy a national narrative about the virtues of hard currency and the shocking laziness and/or greed of countries who do not share a border with them.

  106. PR Guy Says:

    @Michael Hennigan

    “nearly half (46%) of businesses reporting that they are winding up, contracting or simply trying to survive. ”

    That’s grim reading.

    I can’t say I’m surprised. I think I fall into the third category though have flirted with the first. I am finding business harder and harder to win - not because someone elsewhere is winning it but because B2B spending is also drying up to the point of being negligible - though fortunately, I don’t just rely on Ireland for business and I’m quite happy to ‘get on my bike’.

    So, if consumer spending is dropping (well, it will again after Christmas), government spending is falling and businesses are not spending money with other businesses……. is there any other kind of spending? Where’s all the money gone?

    It’s going to be a miserable Christmas for many self-employed and SME’s.
    I’m not sure I see any light at the end of the tunnel.

  107. The Dork of Cork Says:

    @Bond
    You must swim in a very small Goldfish bowl.
    Begins a 6.20
    http://www.youtube.com/watch?v=oJNxg3ZhXf8

    Follow the nest link if you can freestyle to the next idea.

  108. Colm Brazel Says:

    @ Bond,

    Re

    he’s basically nuts

    It give me great pleasure to defend Olafur:

    You do know Olafur was first ever in Iceland to gain a PHD in Political Science, he was editor

    “Not an economic test, its a fundamental test of our democratic systems”

    Interview with him:

    http://www.dailymotion.com/video/xftc79_grimsson-says-iceland-may-wave-good-bye-to-imf-in-2011_news

    http://en.wikipedia.org/wiki/%C3%93lafur_Ragnar_Gr%C3%ADmsson

    “However, he praised Norway and the Faroes for their swift decisions to grant major loans to Iceland. He also said Iceland should rather invite Russia to use the Keflavík Air Base. According to the memo, the offer was turned down by an “amazed and smiling” Russian ambassador who said Russia did not have any need for this. Ólafur also criticised the International Monetary Fund for the system’s flaws and for their bad treatment of Iceland. He said it was part of Icelandic political mentality to “fight alone” rather than being threatened to submit, and that he expected Iceland to overcome the crisis sooner than the US and Britain by showing initiative and international activity in new fields. ”

    It was a brilliant, tongue in cheek offer to the Russian ambassador, who got the joke! Russian involvement.”

    Russian involvement in the affairs of Iceland has been a source of fascination eg explored by Roger Boyes in his book ‘Meltdown Iceland’ Most of it centers around the career of Bjoergolfur who had a lucrative career in Russian banking and subsequently in Landesbanki he consolidated with political appointments and lots of deals with the Russian oligarchs, I think the brits became so concerned they sent spies to look at the money flows..read the book, we need a similar one on Irish banking with the same level of detail.

    Olafur shames lots of leaders none the least of whom is ex President McAleese, in his referral of financial deals and his defense of Icelandic taxpayers.

    The emergence of Iceland from its difficulties and its growing employment levels shows how bereft of leadership in Ireland we really are!

  109. Colm Brazel Says:

    editor….

    ” As part of the left-wing People’s Alliance, Ólafur was a Member of Althing for Reykjavík from 1978 to 1983; during this time he was Chairman of the People’s Alliance parliamentary group from 1980 to 1983. Subsequently, he was Chairman of the People’s Alliance executive committee from 1983 to 1987; additionally, from 1983 to 1985 he was editor of a newspaper, Þjóðviljinn. From 1987 to 1995, he was Leader of the People’s Alliance; during this time, he served as Minister of Finance from 1988 to 1991 and as a Member of Althing for Reykjanes from 1991 to 1996.[1]
    As member of the Althing, Ólafur was among the most controversial politicians in Iceland.[citation needed] Originally elected as President from a field of four candidates with 42% of the total votes, Ólafur has from the outset been a controversial figure in the office of President,[citation needed][2] an office that has mainly ceremonial functions meant to symbolise national unity and bears little responsibility for government affairs. ”

    Can I have some of Olafur’s nuttiness as well :-)

  110. Colm Brazel Says:

    He(Olafur) became a lecturer in political science at the University of Iceland in 1970, then a Professor of Political Science at the same university in 1973. He was the University’s first Professor of Political Science.[1]

    Half our dudes have no postgrad quals at all?

  111. Bond. Eoin Bond... Says:

    @ Colm

    you’re able to cut and paste. Fabulous. Not sure what the point of it all was though. And you can still be nuts with a PhD. You seem to be mixing intelligence and nuts up. Which makes sense.

  112. Georg R. Baumann Says:

    Draghi in FT:


    The important thing is to restore the trust of the people – citizens as well as investors – in our continent. We won’t achieve that by destroying the credibility of the ECB.

    What planet do these people live on, ECB’s credibility?

    But apart from that, I consider it the lowest possible form to chose a headline that states “Draghi warns on eurozone break-up”, it could hardly be more dramatic, and then continue with an IKEA flat pack of ECB stereotype rhetoric wash, stating the obvious, saying next to nothing.

  113. Eureka Says:

    Ah the age old conundrum nuts vs intelligence!
    Generally only one winner there - unfortunately

  114. Georg R. Baumann Says:

    On the Regling Interview:

    Om I alone with the impression that he came across anything but convincing when he stated that the Euro will be here for decades to come and the EFSF has enough firepower?

    It struck me very much as a statement trained in front of a mirror, many times!

  115. Kevin Walsh Says:

    @Paul Hunt

    The debts of the highly indebted in this country - one of the major things that’s holding back economic growth - aren’t denoted in real money, they’re denoted in nominal money. Cutting costs in order to give people more real money is a fool’s errand, because all it does is increase the cost of servicing the debt.

  116. Georg R. Baumann Says:

    Draghi addresses the EU-Parliament @ 15:30 Irish time

    Mon, 19 Dec 2011 16:30 - 18:30
    5.0 (ECON/7/00032) Monetary dialogue with Mario Draghi, President of the European Central Bank

    EpLive page:

    http://www.europarl.europa.eu/ep-live/en/schedule/

  117. Shay Begorrah Says:

    @Georg R. Baumann

    “Draghi warns on eurozone break-up”

    It was one odd interview - Draghi saying that the ECB would do whatever it needed to do to maintain its credibility, even it that meant failing utterly.

    Also, he said repeatedly, the crisis in the Eurozone has nothing to do with the ECB, structural reforms, fiscal discipline, regaining investor confidence, long process, yada yada yada. If we all devoutly recite the monetarist prayer for long enough the gods of the markets will smile on us again.

    They confidence fairy dust snorting habit in Frankfurt has gotten out of hand, poor Mario’s face has already started to take on the fixed evil grin of EU defector Lornezo Bini-Smaghi.

  118. Georg R. Baumann Says:

    Mario’s face has already started to take on the fixed evil grin of EU defector Lornezo Bini-Smaghi.

    LOL…. I can not avoid but always have pictures of Lord of the Rings on my mind when I hear that name…. Bini-Smaghi… my precioussssssss

  119. Shay Begorrah Says:

    @Kevin Walsh

    Cutting costs in order to give people more real money is a fool’s errand, because all it does is increase the cost of servicing the debt.

    That what was Stiglitz kept emphasising in his last Vanity Fair piece on the “long slump”, though it was more US focussed.

    Again it illustrates a serious problem for Ireland with the current EU regime - the Eurozone/ECB has helped turned this crisis into a zero sum game where the largest economy and the central bank of sorts have directly opposed interests to ours and yet we helped to make it so by avoiding “contagion” in the financial system, or as it used to be known - “risk sharing.”.

  120. Michael Hennigan - Finfacts Says:

    @ Colm Brazel

    Can you be serious?

    You don’t seem to understand the difference between intelligence and wisdom. The latter usually is the result of experience in life not in a university.

    PhDs can be idiots as can folks with a master’s degree. I have one myself.

  121. PR Guy Says:

    “Draghi addresses the EU-Parliament @ 15:30 Irish time”

    I wonder if more than 25 of them will turn up to listen to him this time (the size of the audience last month - though I did see 35 reported as well, the photo I saw looked closer to 25). They are clearly (not) interested in what he has to say.

  122. Kevin Walsh Says:

    Denominated, not denoted.

  123. Colm Brazel Says:

    @ Michael Hennigan

    @ Bond

    Here’s Olafur The Unwise according to you guys:

    http://www.youtube.com/watch?v=8j6JkwV23bk

    “The fundamental basis of democracy, the democratic and social fate of nations, is a fundamental approach to dealing with the crisis….comprehensive, political, social and judicial reforms…echo much of what Michael Hennigan writes.

    Good point re difference between intelligence and wisdom.
    Having plenty of both I’m acutely sensitive to the difference as well :-)

    “I chose the democratic will of the people”…all the dark predictions predicted did not occur…

    Extraordinary you guys suggesting in the face of global acceptance of the success of Iceland, that you guys suggest Olafur was unwise in the methods he used to bring Iceland back from the brink.

    Can you guys be serious?

    You both pick the wrong success story upon which to build a case against wisdom.

    There is plenty of other empirical evidence eg Cowen/Kenny Ceaucescu disaster builders that could be used re unwise policies ’saving zombie banks’ ‘bailing them with ‘taxpayer money’ no more than an exchange to switch taxpayer liquid assets into black hole casino chips, but that’s another story.

    Words of wisdom:

    ““Ordinary people like farmers, fishermen, nurses, teachers and others should pay for the failures of the private banks. And I thought it was only democratically right that those people who are being asked to pay should have the right through a democratic institution to do so, because when we are faced with the choice between financial institutions on the one hand and democracy on the other hand, it is my firm opinion that we have to choose democracy.”

    http://www.youtube.com/watch?v=EuAkD57yI6c

    You guys apparently have some ways to go on the road to wisdom :-)

    I would accept Ireland as a scarecrow against the policies of ’saving the banks’ ‘bailouts’ . But its held up as poster boy of success…..

  124. Paul Hunt Says:

    @Kevin Walsh (and others)

    There seems to be this L’Oreal girlie (”because we’re worth it”) fiction abroad that Ireland deserves, nay is entitled to have, a price level 15% above the EZ average and that any attempt to reduce this gap would require a savage attack on wages and salaries. Not so. Salaries and wages (and jobs) in the non-sheltered sectors have taken a severe beating and prices have retreated from bubble levels; and there has been some retrenchment in the sheltered sectors, but non-pay related structural and financing inefficiencies, deadweight costs and monopoly profit gouging abound in the sheltered sectors - and these are also pulling down the non-sheltered sectors.

    But there is wilful consensus to avoid any consideration of these issues and all sorts of specious, but convenient, reasons are advanced to justify this.

    For example, Richard Tol:
    http://www.irisheconomy.ie/index.php/2011/12/08/gormanston-tarbert-and-regulation/

    coyly drew attention to some prospective monopoly profit/consumer gouging Bord Gais is hoping to be able to perpetrate with the consent of the Minister, Deaprtment and CER. I suspect he was constrained from setting out the facts of this case and I understand that some others are also constrained. This is only the tip of the iceberg, but everyone feels obliged to avert their gaze.

    The Economist, in a tribute to the late, great Vaclev Havel:
    http://www.economist.com/blogs/easternapproaches/2011/12/v%C3%A1clav-havel-memoriam
    highlights his description of how power subverts truth and what is needed to reclaim it. The desire of the wealthy, powerful and influential to suspend disbelief and to conceal reality is universal; only the methods vary.

  125. Colm Brazel Says:

    @ 11:46 Alchemist

    The real Cassandras are those who ludicrously believe NAMA will be a success, the economy is on the point of a great boom, we can’t leave the euro! The Troika bailout?laugh!

    As a little little waves on a large sea :-) I’m happy to see der euro ist fertig. Its a Hindenberg disaster.

    Sooner we are out of that stitchup by the banks, of the banks, for the banks, sooner we can get out of that mess and restore democracy, the better.

  126. Gavin Kostick Says:

    @ Paul Hunt at 11.24

    Thanks for the reply.

    I find it hard to imagine the practical methods by which this would be achieved, which is to say I don’t know enough about it - but yes, if they could be specified and enacted then by all means.

  127. Paul Hunt Says:

    @Gavin,

    Those that know about these things remain silent for all sorts of reasons. It probably needs a particularly egregious example of this gouging to bring it to public attention. One could be coming up in the new year, but I’m not holding my breath.

  128. Georg R. Baumann Says:

    @Paul Hunt,

    see it in a similar way, and to look at the brass plates gracing the entry to the IFSC to get a much better idea why there is this “deafening silence”…. not?

  129. Bond. Eoin Bond Says:

    @ Colm B

    jaysus dude, you don’t have repeat yourself, and still say nothing by the end of it all.

  130. Georg R. Baumann Says:

    `mazing:

    http://www.rte.ie/news/2011/1219/eurozone.html

  131. Kevin Walsh Says:

    @Paul Hunt

    I certainly wouldn’t dispute that there’s gouging going on, but that money is going somewhere and it’s not 100% clear to me that it would do us any good, in the present economic circumstances (as opposed to 10 years from now when we might have some economic growth), to stop any of this nonspecific gouging. Private spending has a multiplier just as government spending does.

  132. DOCM Says:

    @ Colm Brazel

    I am, for one, persuaded by the arguments of BEB. What is happening on the ground confirms their accuracy.

    cf. in case you both missed it.

    http://blogs.ft.com/gavyndavies/2011/12/18/the-weakening-of-the-euro-could-help-the-crisis/#axzz1gzTrCmYP

    Feldstein is of the same view.

  133. genauer Says:

    @Eureka, DOCM, Shay, and all: the promised rebuttal is here:

    > Eureka Says:
    > Did you know that life expectancy in your country is actually Falling????
    see answer to this nonsense further down. Shay asked the same thing.

    > DOCM Says:
    > The enormous German commercial surplus has not happened by accident but because of a deliberate policy, followed by all governments since Schroeder,
    > to favour the export sector over domestic consumption. The evidence is all around you, notably in the reforms introduced under Hartz IV
    > from which the SPD has done its best to try to distance itself and avoid responsibility (and even Hartz himself).

    > ttp://www.dw-world.de/dw/article/0,,5221558,00.html
    Begin of quote:
    “Agenda 2010 - the German contribution to a dynamic EU” ….. took its name from ….so-called Lisbon Strategy promised, by 2010, to make the EU “the most dynamic and competitive knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment.”

    Agenda 2010 was to be Germany’s all-important contribution to this, and Hartz IV was at its heart.

    Hartz I through IV, staggered between January 2003 and January 2005.

    “Good and right”
    Despite the German population’s barely-diminished resentment of Hartz IV, Schroeder is unrepentant, recently remarking “we’re seeing more and more that it was good and right.” Those in power today seem to agree. Schroeder’s successor and former political rival, Angela Merkel, used her first address to parliament as chancellor in November 2005 to make this startling statement: “I would like to thank Chancellor Schroeder personally for bravely and resolutely opening a door with Agenda 2010, so that our social systems could be adapted to a new era.”

    End of Quote.

    Where is the problem? I have very little to add, Merkel is absolutely right. Schroeder has absolutely nothing to be “repentant” about. There is unity about Agenda 2010, except, of course, the communists (”Die Linke”), the anarchists(”Piraten”), and some left socialists (in the Social Democratic Party).

    I do not see at all, how any of this “favors the export sector”.

    > The resulting statistics with regard to the increases in precarious
    > employment and poverty do not lie.
    Where are these statistics? That non-full employment was rising temporarily, I ll give you that for free.
    But with falling unemployment this will now come down. Only 2 years ago some corporations tried to offer temporary contracts even for
    more than 12 year experienced PhD engineers. After they had to fill certain positions 3 times in one year, they quickly realized, that this does them no good : - ) My cleaning lady demanded and got an integral pay raise of 50% over the last 3 years. Supply and Demand does work, really.

    That this was increasing poverty, defined as ” My suggestions would be;
    > (i) introduce a nation-wide minimum wage (scrapping in the process the > misery jobs offered to supplement inadequate levels of social welfare)
    No, in practical all countries with an effective minimum wage, namely the US and UK, income inequality is larger than in DE.
    It was a long standing position of the German Unions, that the government should stay out of wage arbitration,
    and we now only introduce minimum wages sector specific in sectors, where there is no adequate union bargaining position, and this is good.
    The supplements are good, and is was not DE, who invented that, see EITC in the US.

    > (ii) stop measures which transfer the cost of energy from the heavy
    > industry export sector to the domestic user with the obvious depressive > impact on consumption
    No, large German power consumers buy electricity at the same wholesale market prices (http://www.eex.com/en/) as their french, dutch, danish, etc. competitors.

    And this is just fair level playing field. A greenish majority of Germans have decided (since the red (=left) / green (ecologic, not irish : - ) Government 1998, to level substantial surcharges on the retail consumer, in order to promote green Energy, and yes this reduces consumption in favor of energy savings measures, and living not in sub urban sprawl (low house ownership, but more dense rental environments. I live in an area with more than 10 000 people / sq km. And it has advantages, and is good.
    Personally I would have prefered to keep the (cheap 5 c/kWh) nuclear power plants running, but if many of my neighbors are afraid of it, after Fukushima, I value social peace and cohesion higher than paying 5 cents more.

    > (iii) scrap restrictions on takeovers of German industry, notably the “golden rule” with regard to share-holdings in large companies
    The only case Germany was cited for in :
    http://ec.europa.eu/internal_market/capital/framework/court_en.htm
    is this Volkswagen thing (former socialist workers paradise with 28 hr/w work), and I am with you at this.
    On the light side, I was so close to sell this VW stock, one week before Porsche started the fight for domination (BTW: interesting Porsche/Piech family story), and that made this investment finally very profitable. I have no good understanding, how the Bundesland Schleswig Holstein still gets away with it.

    But from an “Ordnungspolitik” point of view, this has become a mute point somewhat, Wolfsburg now has to compete internally with Czech Skoda Factories, and also Spanish SEAT, I believe, not to mention Brazil, Mexico.

    I am not aware of any single other case, but please tell me.

    > (iv) liberalise the retail sector
    I have no idea, what you mean here. German retail is extremely competitive. Walmart gave up, after confrontation with unions, and German law enforcing their right to organize,
    at some point police enforcing voting procedures. Not to forget to mention, that half the board seats are taken by the unions, something I made my (intellectual) peace with.

    > (v) stop subsidising labour in high-skill industries during economic downturns.
    No, there is no “subsidies” at all. German “Kurzarbeit” is an extremely good thing, you should copy it. When a true “Business Cycle” hit 2008/2009,
    workers first drew down their “Arbeitskonten” surplus, then they went into further education of all kinds, and the difference was split betwen employer (80%) and the unemployment office.
    This was very good for all parties involved, no 100 % payment for carelessly laid off folks, by the german taxpayer. No need to lay off good, educated and loyal workers for DE companies.
    And social stability for the workers, and even opportunity for the good ones, to increase their value.
    Kurzarbeit is not a new thing (wiki mentions 1910 as the first time) and as far as I understand it, it is very WTO conform.

    > It is too late to reverse the impact of blocking free movement of labour from the former Eastern European countries for the full seven years allowed,
    > while busily transferring investment to factories in those countries.
    We learned from the (very expensive) experience with former Eastern Germany, and building factories in Eastern Europe is a lot better for everybody involved,
    instead of depopulating countries like Poland, Czech, Romania.

    > This would be in Germany’s own interest. What is the purpose of exports, after all, other than to pay for imports!
    > The argument is advanced that because of the poor demographic situation of Germany, that a reserve of wealth has to be built up and there is some merit in this.
    > But for the moment the only beneficiaries are those that support the FDP, CDU-CSU and the organised labour elements in the export industries.
    As late as 2006 Germany had no substantial accumulated Current Account surplus, see http://www.slideshare.net/genauer/currencies.
    Before 1990 all trade surplus was consumed on world travel / vacations, simplified. We will be happy to do this again, but Greece now competes with Seychelles, Maledives, Turkey, Egypt. And this is good for customer choice and the very legitimate interests of non-EU countries.
    The demographic situation in Germany is basically the same in all Europe, with the exception of Ireland, and depopulating other countries, especially their intelligence / workers would be devastating for them. This is actually one of my greatest concerns in the moment, to not cause such long term harm to our neighbors.

    > It must also be added that Germany has an excellent social welfare
    > system in most respects which could well be emulated by Ireland,
    > including paying equivalent moderate levels of salary.
    As Sweden, Finland, Dutch, Canadians have done it before us, we had to reduce our welfare system to what we can afford, which is still very good.
    Just let me tell the “1-Euro Job” story a little bit. Long term unemployed were required to work for 1 additional Euro/ hour on, lets say not so interesting public services. Originally designed to squeeze them a little bit, to make moonlighting at the same time a little bit more difficult, to motivate them to get some job, as a private person I can say it that way.
    Didnt work like that. Most were in fact content with this, and reduced their efforts to look for real jobs. Most people want to work (with others),
    although it doesnt make sense from a pure “homo economicus” point of view. This program is practically scrapped by now!

    > Shay Begorrah Says:
    > From the English language version of Der Spiegel at http://www.spiegel.de/international/germany/0,1518,803192,00.html
    “Life Expectancy Shrinks for Germans on Low Incomes”
    This is simply not true.

    > The report, which cited the German government’s response [http://dipbt.bundestag.de/dip21/btd/17/079/1707966.pdf]
    > to an inquiry submitted by the Left Party, showed that those on low earnings could expect to live
    > an average of 77.5 years in 2001 but only 75.5 years in 2010.
    The way this communist lie was derived goes via
    http://www.linksfraktion.de/reden/rente-erst-67-sozialpolitik-hackebeil/
    and repeated than in many other low quality outlets, I usually dont read, e.g. http://www.spiegel.de/international/germany/a-803192.html
    The formerly conservative FAZ becomes now more and more an outlet for communists like Sahra Wagenknecht
    http://www.faz.net/aktuell/wirtschaft/lebenserwartung-sieben-gruende-warum-arme-frueher-sterben-11567429.html

    Some half baken reply came here:
    http://www.focus.de/finanzen/news/anfrage-der-linkspartei-sinkt-die-lebenserwartung-von-geringverdienern_aid_693434.html

    See the communist link:
    http://dokumente.linksfraktion.de/mdb/42021473.pdf
    The guy makes some hilarious assumptions on how people retire, and how that would be constant, see just page 5, the poorest living 6.4 years longer than the average (82.5 vs 76.1) in 2001,
    and now only 79.9 vs 76.5 the poor living longer 3.4 years in 2010?
    The poor male Hans in the East living 82.5 years in 2001 (page 5), vs average 75.9 (2010, page 6)? That would really break my heart. What a complete nonsense.
    And, please dont forget, it is the link to their own communist web site !!! Not some second hand interpretation.

    Going back to the real data:
    http://dipbt.bundestag.de/dip21/btd/17/079/1707966.pdf
    You do not have to read all 384 pages, just a few.
    The communist Birkwald derived from page 98 “durchschn. Rentenbezugsdauer” = average retirement years,
    ridiculous changes in life expectancy, based on the assumption that entry age would be constant, the exact thing Hartz IV changed and he want s to change back.
    How would you explain a drop of life expectancy based on this from 2007 to 2008 (page 108, Table 11-08) from 18.8 to 14.9 years ? You would have to shoot about 20 % of them for that.
    Those communist agigators know damn well, that this is not due to life expectancy, but the change of age for entitlement to retirement (Hartz IV), and the very undertandable bubble right in front of the magic date.
    This is exactly what he is arguing to revert. Habitual communist lies at its best. Of course, you can not know that, and neither the journalists in minor outlets, doing 3 stories a day.
    But the Spiegel is carefully constructing the story for international consumption, and after a night of thinking, I say: was done on purpose.
    I have seen this before, with some hilarious claims about reparations, Greeks love to cite.

    The Spiegel cites another newspaper, washing its hand with that, this other (local) newspaper just cites the communist liar, well knowing that their readers dont hold them accountable
    for such miserable journalism. The communist liar Birkwald in the Bundestag is backed by his communist comrades, who find that “the end justifies the means”, keeping up with their traditions.
    You love to read about something bad with Germany, and can not check it. The Spiegel loves to have tons of international clicks, bumping up his advertising revenue.
    Everybody wins, just not the truth.

    > A less recent source was a 2008 OECD report referenced at the Financial Times and many other outlets.
    http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html shows that life expectancy goes up in Germany, like everywhere else. That may make more agressive increases of
    retirement age necessary.

    > http://www.ft.com/intl/cms/s/0/e5248dfa-9f49-11dd-a3fa-000077b07658.html#axzz1gtlMe0bd
    > Since 2000, income inequality and poverty have grown faster in Germany than in any other OECD country. They increased by more in five years (2000-2005) than in the previous 15 combined (1985-2000).
    http://www.oecd.org/dataoecd/50/49/49177659.pdf : inequality is still below OECD average, part of inequality until 2008 is rising capital income, well, but as the diw link shows above about half that effect vanished from 2008 to 2009.
    Unemployment payments were reduced from 75% to 65 %, yes, Hartz IV, good, but this becomes much less important with unemployment dropping from 11 % to 6.5 % now, and more coming.
    With, even youth, unemployment rates at 3.5% in southern Germany, the market will approach marginal utility, real market prices for low skilled labor now very fast, especially without market distortions like minimum wage laws.

    the FT-link, I look at this, and I just see blahblah, no references, no numbers (for Germany), just vague propaganda.

    > It has to be stated that pre the Hartz IV cutbacks program Germany’s
    > figures for child poverty and life expectancy were exemplary and
    > though Germany’s gini index may now be higher (more unequal) than
    > Ireland’s this is a recent development which is mainly due to Merkelism

    what “Merkelism” ? all Agenda 2010 was done under a red/green “Basta” Schröder coalition, and I constantly remind German conservatives to that.
    It is one of the most outstanding and remarkable German achievements,
    that raising taxes was done by the right, and cutting benefits (and taxes) by the left. This is actually the reason, why I am actually now getting a little bit proud of my fatherland.

    Long term thinking, cohesion, social justice, stability, reliability, honesty, the rule of law.

    I accept paying 7 times higher electricity rates than in the US, if my neighbors can sleep well for that. And we do now try very hard to reduce nuclear power as fast as possible. I do not accept any sort of blackmail or crime.

    > and the increase in power of the various other economically liberal but
    > socially conservative parts of the German establishment.
    I wish very much that this is the case.

    > Eureka Says: http://www.spiegel.de/international/germany/a-803192.html
    See my comment above.

    @DOCM
    please stop asking for destroying values and good laws in Germany, just to make yourself looking better in comparison.
    I do not live in a gated community or an ivory tower, but amongst my people, some on social minimum next door, and happily.

    I can live very well without Ireland, Greeeece, Portugal, even Spain and Italy.

    But I can not live without
    - the rule of law (and treaties)
    - promises kept and debt paid
    - respect for individual rights and property
    - social justice and cohesion
    - democratic decisions on all other things

    The fatherland is not a limited liability company. The EU and the Euro is “limited”, so far, as enshrined in the Maastricht treaty.
    Where I live, nobody goes hungry to bed, and everybody can sleep warm and dry, and knows that his property is still there next morning.
    I categorically do not accept unlimited liability for folks, whose expenses I have no control over, and this is VERY good.

  134. Mark Says:

    M. Hannigan ; ”However, you’re really part of the growing band of crazies if you believe that an international bailout loan program with limited demands for reform ranks on the same level of culpability as the local Neros…”

    Ignoring the tacit admittance from ex-Ministers at the time that the Guarantee was at least conditionally imposed by our friends now demanding fiscal oversight.- Eamon Ryan; ”The ECB had made it clear in no uncertain terms that no bank was to be allowed fail” when asked by V.B. why the guarantee.
    Deutschebank uber alles.

  135. Mark Says:

    Genauer; ”I categorically do not accept unlimited liability for folks, whose expenses I have no control over, and this is VERY good.”

    Hear hear - nor should you.

    Neither, of course, do we accept responsibility for the liabilities of continental financial institutions that used the cover of Anglo-Irish & co. for highly profitable & risky ventures they couldn’t carry out openly at home.
    Brian Cowen caved in to relax regulation at the behest of their lobbying.
    Responsibility belongs solely with him & a handful of others, operating outide the remit of their mandate. Take it out of him in sausages if you like.

  136. genauer Says:

    @mark,
    this was mainly a line by line “fisking”, of arguments brought forward by
    Eureka, DOCM, Shay. To be very clear, I do not blame them, they couldn’t know any better, and have tried their best obtaining information also from German sources. kudos, upper 1 % Integrity/diligence/intelligence.

    Their problem is, they drink from a poisoned well, the Spiegel/ international. And I try here hard to make that clear. This is not the first time, Spiegel/International distributes outrageous lies, it is in fact more the habit than the exception.

    I have no beef in how Ireland regulates with its Irish Institutions, Banks, or their creditors. As long as that does not involve the German taxpayer.
    I think it was this Bernie Ahern, who covered, entitled to speak in the name of the Irish people, for the consequences of his prior “liberal finances”.
    Does he sit in prison, is he tried for treason, have I heard of his marriage with the gallow ? How many of those folks in Ireland, who are responsible for that, do prison time, and for how long? Your thing, not mine.

    But there will be no money printing, no eurobonds, no stealing from the german taxpayer.

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