Ireland to hold Fiscal Compact Referendum

The report is here.

382 replies on “Ireland to hold Fiscal Compact Referendum”

Only 12 of 17 countries have to ratify the compact for it to become law. But if we vote no then where does that leave us?
Does it it hinder the execution of the compact … or does it only hinder us?

I’ll be voting yes – TINA – but the useful idiots on the left could help us in extracting some sweets from the ECB.

This decision is going to put the cat well and truly among the European pigeons. Still, looking on the bright side, the decision cuts short a debate likely to have matched that on the PNs.

We’ll need more ELA just to finance Aengus Ó Snodaigh’s “Ireland will fight and Ireland will be right” leaflets.

In the absence of a functioning parliament, perhaps the fear of the people might energise the Government to persuade Dr. Draghi to secure political sanction to restructure the repayment of the ELA and other ECB ‘liquidity support’. He could do worse than look at the UK’s Lend Lease programme repayment schedule (programme terminated – 1945, repayment schedule agreed – 1951, first annual repayment – 1957, final repayment – 29 Dec. 2006).

It seems clear that the reasoned technical arguments it has been advancing have cut no ice with the ECB. So, given the high probability that it would have been forced to agree to a referendum, it may be that the Government is making a virtue of necessity – and seeing what it can secure with this trump card (an irate populace) up its sleeve. But it would be wise not to overplay its hand.

However, all things considered, I’d much prefer a functioning parliament. This decision hammers the final nail into the moth-eaten coffin of parliamentary democracy in Ireland.

It will be interesting, hopefully, to have someone spell out exactly how the compact will influence the nuts and bolts of expenditure control.

Wow, didn’t see that one coming.

Roll on the debate. It will be interesting to see if the ECB try to influence things in the run up to the poll.


In addition to demonstrating the absence of a functioning parliamentary democracy it shows how weak the democratic legitimacy of the EU’s institutions is when we may have to rely on these populist, nationalistic, vaguely left-wing elements to extract some reasonable concessions from these institutions.

Expect much heat and little light : expect the government to fluff the chance to extract significant concessions on the PN; expect all the economic advice that this is a cruddy piece of work (and maybe there is no alternative but in that case god help us all) to be rolled over. And then expect a no, I suspect, as of now, and then another referendum.

@ Paul Hunt

It should be made clear from the outset that the instigators of the fiscal pact do not much care whether Ireland ratifies it or not; that is the essential point of its design and which will make the referendum campaign very different from any that has gone before.

I am still unclear as to whether or not the government has taken a decision to put a debt brake in the constitution. If so, this would be an excellent move for reasons unrelated to the EU.

With regard to the debate on PNs, the debate has plumbed such depths, one wonders what outsiders may make of it. The credit of the Irish state in this matter is only as good as its participation in the euro i.e. the European System of Central Banks and the ECB. Without the latter, the guarantees it would provide would be worth little or nothing. The rest is just waffle. That is not to argue that efforts should not be made to make the burden of repayment easier to carry but there should, at least, be an acceptance of the fact that there is no such thing as a free lunch.

The debate on the fiscal pact will certainly prove it.

As to the general European background, David Owen had a rather apocryphal piece in The Spectator which is worth a read.

It will be interesting to hear the governments pro-treaty arguments in a month where we will be torching €3bn+ at the insistance of the ECB.

This could yet prove to be political masterstroke.


I think there may be quite a bit of interest in ensuring Ireland ratifies the Fiscal Pact, but I agree that the Government shouldn’t overplay its hand. The Troika is investing quite a lot in Ireland’s ‘poster boy for austerity’ status.

It is ironic that a majority of voters might be bought for mess of potage and confirm the death of functioning parliamentary democracy in Ireland while the core EU takes some long overdue steps to increase the democratic legitimacy of its institutions.

I had expected some effort to “soft constitutionalize” the fiscal obligations by statute, in the manner of the European Communities Act in the UK (and similar instruments in other Member States, including Ireland), where it would be assumed that such a statute would not be amended or repealed by later legislation unless the subsequent legislation explicitly and expressly did so. That should have been enough for our European partners (assuming that we never legislated to amend the legislation in question). It also seems to me at least arguable that the Supreme Court would have allowed it without a referendum.

I have to admit, I’m amazed they’ve decided to hold a referendum. I didn’t think they would.

I kind of welcome it (for all the good democratic reasons) but with the following reservations:

The millions of column inches of bollix that’s going to be written
between now and the vote (I’m going to stop reading Irish papers
for the duration)

The millions who probably won’t acquaint themselves with any facts
before they vote

The millions that will be spent on the second vote when the ‘no’ vote
wins first time round and we have to vote again until we get it right

Personally, I don’t think anyone influential in European politics/commission gives a rats whatsit what we do and it won’t make a blind bit of difference to them if they don’t need every country to ratify it – which is why I presume they put the ’12 out of 17′ clause, to cover situations like Ireland voting ‘no’.

I’m sure it will be very entertaining and if we don’t vote yes it will be the loss of jobs/growth/exports, thrown out of Europe, armageddonish meltdown, become like Greece, etc. just like they said it would be in the Lisbon treaty vote.

@ Martin Ryan

Feldstein sets out the theory of the US fiscal union – – what does he call what is happenning in California including in San Jose, the biggest urban area of Silicon Valley?

@ All

As regards a great ‘debate’ or shouting match, it would be a surprise if the nattering nabobs of negativism would be actually forced to propose credible alternatives.

A small bankrupt country struggling to overcome mainly self-inflicted wounds, hasn’t too many choices.

RE “Attorney General’s advice at this morning’s Cabinet meeting was that “on balance” a referendum was required to ratify it”

Good to see nobody saying this was a bad decision by the AG.

I’m sure the vote for the ‘Compact’ will be seen by the Irish people as turkeys voting for Xmas. Was Chinese Vice President Xi Jin-ping making the same association as he winged his way to Turkey following his visit to Ireland?

We’ve the evidence of failure to gain relief on the debt burden. We’ve ample evidence to indicate we’re stuck with the PN’s and the odious IBRC unconscionable debt. There is growing evidence the euro project itself is doomed.

With a good MNC footprint, intact social services and education system though threatened at present; with strong agri services and possibles to grow tourism, replace imports with indigenous manufacturing, we can do it.

No doubt those of us telling it like it is, that we have to leave the euro, will be told we’re lunatics; those of us who said NAMA was a disaster, bailing out the banks was a disaster; even though we were right every time and our critics were wrong.

It will be difficult: ‘but man in his quest for knowledge and progress will not be deterred’. We can do it in celebration of the founders in 2016. We can take inspiration from others who’ve achieved good things for the sake of freedom and self determination.

“We choose to go the moon…not because they are easy, but because they are hard…that challenge is one we are prepared to accept…

It’s time to listen to Kennedy’s speech again.

Enough of begging bowl politics. Feeling quite elegiac today 🙂

Quoting JFK’s speech in the context of the complete mess we’ve *gotten ourselves into* is absurd. Unless you mean that going to the moon is a possible destination for the masses -myself among them- if we leave the Euro..?

If the compact is defeated, one presumes that the government that signed it will resign.

Does the Fiscal Compact specify that al EZ members must sign?
Does it explicitly say that members who do not sign must leave the EZ?


“The millions of column inches of bollix that’s going to be written
between now and the vote”

And here’s the first inch…. (courtesy of the Grauniad)

“The fate and future of the eurozone is once again in the hands of Irish voters…..”

I’m voting NO.

NO to the scare-mongers. NO to the great powers of europe. NO to private profits and socialised losses. NO to the banker and developer bailouts. NO to rewarding failure and fraud. NO to fear, and NO to the euro that made it all possible.

I’m voting for Irish independence, no matter how much hardship and retribution it entails. I am not a republican or an old nationalist, but I am Irish, and as an Irishman my duty is to vote for a sovereign, independent Ireland free to chart its own destiny in the world.

I’m putting my country before my ATM.

“Does the Fiscal Compact specify that al EZ members must sign?

Does it explicitly say that members who do not sign must leave the EZ?”

No (12 of 17 is enough).
And no, but it’s not entirely clear what the implications of not signing are.

@ Cesar

Who would be the mysterious *we’ve* mess makers ; would they be the same *we’ve* who’ll pay for the mess ? No, that *we’ve* would be the one’s who made the mess and are making sure they will not be the one’s to pay for it. Also the same *we’ve* who’ve negotiated a disastrous bailout. Pity now we’ve had to wait so long for a referendum so that we can actually use the term ‘we’ve’ correctly in the future.

Janey Macaroon.

How will they get it passed?

I say – The treaty for the Eurovision. Jedward should’ve won last year anyway.

@ Cesar

“And no, but it’s not entirely clear what the implications of not signing are.”

It is entirely clear. Means that we will not fully comply with rules for ESM requirements. EFSF expires in 2013 and we would exclude ourselves from any funding requirements under future ESM bailouts.

Not sure how ‘current’ bailout Troika deal means in terms of ESM though …

I’m looking forward to it.

My contribution will be to arrange a public meeting in doughty Phibsboro with one decent pro and one decent con speaker, plus one knowledgable person for info purpose and a proper moderated question session.

I’ll let you know if I get it together.


Can I empty my ATM first and join you afterwards?


I think that really is by David Owen, though why one would turn to him as a source of political thinking is beyond me.

@Sarah Carey

Janey Macaroon.

How will they get it passed?

That twitter pic answers your question. The Troika will put the fear of god into the Irish electorate, as probably will the Government to its disgrace.

Fear will be the weapon used to beat the Irish people into submission. We have to stand up to this. We have to put the future of the country before the threats of the ECB.

My greatest fear is not that the country might vote yes, but that it would do so as a result of an intensive propaganda campaign backed by a foreign body. If our referendums are determined by the marketing budget of bodies outside the state, that will be a greater blow to Irish freedom than any fiscal compact.

People must vote no. We have to get out of this Hotel California before it is too late.

(Presuming Enda Kenny’s government doesn’t end up ousted in a coup as happened in Greece. Anyone giving odds on who the IMF/ECB/EU might install as their proconsol here?)

It will be very interesting politically if FG/LB and FF campaign in favour of it and they subsequently lose the vote ? Referendum 11 ? Ollie Rehn, Mario Draghi, José Barossa, Olivia Creighton, Gilmore, Kenny, Noonan doing Riverdance at the! Where were they when we looked for haircuts on the disastrous troika deal?

It would be good if the referendum could lead to a more informed discussion about the whole mess . Bring in Croke Park, the absence of regulation that led to the crisis, the rules of capital formation that sorted out the bondwallahs, the limited room for manoeuvre of the Govt, the scare stories, the winners and the losers.

@ OMF ‘Ireland and her citizens before her ATMs’ I like it.

One would have to think it’ll be a no vote, perhaps 55-45. What’ll be interesting is

1) whether after having two votoes on two referenda already we could have two on this? Politically it’d be a piss take.

2) Europes reaction. They only need 12 to go ahead, a no vote isn’t the kick in the teeth a no to a referenda would be.

From the FT:

‘An opinion poll last month found 73 per cent of the public felt a vote should be held on the treaty, which would tighten budget rules for the 17 countries sharing the euro. Some 40 per cent of the 1,000 people questioned in the Sunday Business Post/Red C poll said they would support the treaty, 36 per cent were opposed and 24 per cent were undecided.’

OMF said:
“Fear will be the weapon used to beat the Irish people into submission.

People must vote no. We have to get out of this Hotel California before it is too late.”

Got hypocrisy?


Can I empty my ATM first and join you afterwards?

Too late. News came out at 16:00. Banks are closed. Cash limits at ATMs.

Kenny was shook looking in the Dail. Uncharacteristically rounded on Adams when asked about the referendum. Started a holy row.

ECB has stopped taking Greek bonds as collateral. They’re starting a new round of quantitative easing on Wednesday.

We might be having a bank holiday tomorrow.

Like OMF, I’m voting no. Our Governments have made one disasterous decision after another in the name of being good European citizens and in order to immorally promote the interests of holders of privately issued bonds over just interests.

There are real problems with the treaty that have been pointed out ably by others, but my fundamental for voting against will be to exercise my one real chance to say: “No, this is wrong. I don’t want to be associated with it. If this is what being at the heart of Europe means I don’t want Ireland to be there.”

In practical terms, I would be very surprised if the EU cut off funding because it is being provided more in their interests than in ours. Faster progress towards a primary surplus is in our interests, and a default triggered by the actions of the EU would do us relatively little lasting reputational damage.

Dear Irish friends – you can vote for your national liberty, self-determination and against european centralism and undemocratic dictatorship. Our german government and the parliament ignore the public scepticism and widespread disapproval of this way. Island shows the better way. Good luck!

@ Gavin Kostick

Who said anything about turning to David Owen for political guidance? “Apocryphal”, the word used by me, indicated that I thought what he was saying was unlikley to be true. But it is indicative of the mood of our nearest neighbour and the decision to hold a referendum is already being spun and for reasons which have nothing to do with the wellbeing of the Irish people cf. comment in the FT linked to above.

@ Cesar

“Quoting JFK’s speech in the context of the complete mess…. is absurd. ”

I dont know, it seems kind of appropriate. Wasting a whole lot of time and money for some half baked ideological reasons that noone can quite remember

Theres not much of a country remaining but I will vote No for sure – F$£kem.
If I was a betting man I would think we are going back into the Sterling zone.
The post 1979 experiment was a catastrophe for society & the domestic economy.
The outright lie of CB independence needs to be put to Bed – we are always going to be someones Bitch.

Well this is disappointing, no Paddy Power odds just yet.

Last Sunday SF was on 25% and others/indies (mostly left and opposed to austerity) were on 17%.

Three months hence, household charges and maybe even talk of fines/court, septic tank inspections and bills, no meaningful movement on promissory notes, the Big Bang bankruptcy legislation in April and the first hints at Budget 2013 which demands a further €3.5bn adjustment, the post Feb exodus from the public sector and deterioration of frontline services. Greek woes continuing, maybe even Portugese and Spanish. Anaemic growth at best and flat unemployment. And regardless of the merits of the Pact, these other issues will jostle for centre stage.

I’d suggest Paddy Power open at 5/4 on for a “yes” and 2/3 for a “no”


Paddy Power had a market up then pulled it, the prices were:
Yes 4/6
No 6/5

I had a nibble on the No. Though if I win I’ll have to get it transferred to sunnier climes.

If we vote against it, looks like they’ll go ahead and simply ignore Ireland just the same way they ignored Cameron and the UK over recent treaty changes. Remember those heady days when the UK and Ireland had the right of veto. The numbers required to pass stuff are getting smaller and smaller at EU level. 62% supported Cameron’s go-it-alone stance last year, most in UK believe the euro is doomed anyway.

“Many Germans oppose bailing out the Greeks on principle, and a growing number are saying it is a fool’s proposition. The Greek economy, they say, keeps shrinking faster than anticipated, cutting tax revenues and making it harder for Athens to meet its fiscal goals, and there are few signs of recovery.

The news that some Greek lawmakers had been shifting personal assets out of the troubled country has only added to the sense of pessimism and gloom.”

Loads of people in Merkel’s coalition defected in supporting the Greek bailout.

“496 members of the Bundestag voted to sign off on the $175 billion Greek rescue package while just 90 voted against and 5 members abstained.”

Bailouts are not working in Ireland and they are not working in Greece.

Its time to leave the sinking ship.

I think I am right that Sarkozy has suggested that France will have a referendum on the Fiscal Treaty. If so, perhaps we should wait until France has secured a Yes vote until trying ourselves.

@ Phelan

the French PM suggested it, but Sarko nixed it. Not sure how they get it thru though, they don’t have the votes in the parliament.

if there is a no vote and Ireland is ejected from the euro, then the austerity doesnt work brigade will get an opportunity to explore more vigorous solutions with lots of pointless punts, for that reason and to see the radical outcome, I will vote no. As the Chinese say, may you live in interesting times, this car crash will be epic and all made in Ireland

Perhaps we should wait until agreement is reached on the timing of a Referendum in ALL EZ member states?

Democracy you know!

Ireland was encouraged to save the European banking system in 2009. The reward was the imposition of the bond debts of bust banks on the country.

The ECB robbed Ireland at ATMpoint to give to the money to bank bondholders. Refund the money and we might take the time to read the bloody compact before we vote.

Yes Joseph it is exactly for this of logic I will vote no, you deserve to be left with an Ireland thats morally right but financially alone, no doubt your self righteous stance will be some comfort in your penuary

Re Fiscal Compact : there were 2 Fiscal Incontinence referenda in Ireland in 2002 and 2007 and they were both returned with massive yes votes.

@ William Phelan

Sarkozy has actually put himself in a bit of a bind as he is trying to promote the idea of referendums for the adoption of his favourite proposals, increasingly blocked by a majority of the Left in the Senate, but has ruled out a referendum for the adoption of the fiscal pact.

@ All

While Mary Whelan on Drivetime seemed fixated on treating the proposed referendum as a re-run of Lisbon and Nice, the first main evening news managed to get the two essential points across;

(a) the treaty will in all probability be adopted with or without Ireland’s participation

(b) if Ireland’s participation ie rejected by popular vote, the country will have no recourse to the European Stability Mechanism.

Full stop!

How about this possibility….. The ECB suddenly discovers that actually it can delay repayments of the promisory notes but only if Ireland ratifies the treaty. Otherwise, it is forbidden under the ECB charter, as they interpet it, to delay repayments. The Irish electorate gets the nod-and-wink message and passes the treaty in exchange for a ten-year delay in PN repayments. Too fanciful?

You left out the last bit I see – Its not my favoured solution but given the BoI boys run this shops domestic affairs I would think it most likely.

The Pillar banks would probally survive anyhow.
It would be somewhat akin to the third or fourth circle of Hell me thinks.

We can then leave the Irish Euro trash with Von Rompuey, Barosso & Co to enjoy the amenities 8th & 9th circle.

IMHO the decison to hold a referendum (as I understand the decision was made “on balance” following advice) demonstrates good governance as is the decision to not rush headlong into it.

I will be relying on this site to help me eventually reach
an informed decision and will also do my best to occasionally post objective, but considered, comments which I hope will inform the debate.

How Europe deals (and behaves) with its challenges in the coming months will hopefully continue be an important criteria for all of us. I also feel it is too early to be advocating NO or TINA.

This is also going to ba vote which will have members of the centre right and centre left finding themselves silently in agreement with each other while simulataneously ( hopefully politely,coherently and transparently) disagreeing with people who usually belong to their part of the political spectrum.

Critcs of the EU may eventually find themselves voting “Yes” in the privacy of the ballot box while hitherto passionate advocates of the EU may privately decide that a “NO” vote is the safer option.

Right now the only thing we can be sure of is that the “scaremongerers” from either side of the TINA or NO argument will be out in full force and “the sky” (no not the one that fell down in recent years) will fall in if voters do not vote accordingly. 🙂

@ Joseph Ryan

As I remember it, european leaders were p***ed off with ireland’s bank guarantee. So I presume you’re talking about the ECB, but what are you basing this on?

@Rory McMonagle

The ECB fingerprints are all over the ATM that it threatened Ireland with.

That took about about 30 seconds on Google and is from 2011. Ireland had been trying to ‘get agreement’ to ‘burden share’ with senior bond holders since 2009.
The burden was not shared. The burden was passed on from the bank bondholders to the Irish State. And it sank the State. A fact that may have have escaped the many who still suckle fat at the State’s teat.

Whatever about Ireland’s stupid mistake, prompted to some extent by a phone call from Trichet, lets not pretend that the Irish State has paid the senior bank debt of Anglo and Nationwide for any reason other than being put under extreme duress from the ECB.



I believe that lesser known species of political animal has the same habits as the better known species of “scaremongers”. 🙂

This decision says absolutely nothing about the functionality of Irish parliamentary democracy. The govts legal adviser concluded on balance that the decision should be put to the people. If the govt and legislature chose to do an end run round this advice they would have ended up in front of the Stadtler & Waldorfs down in the 4 Goldmines & the issue would have then gone to the people. The govt would then rightly be out of office for ignoring its own legal advice.
Now the paradox is that the campaign will descend into a referendum on austerity. If it fails, what will the outcome be? In the absence of access to the ESM – well more austerity.


Almunia also stated: ‘Three quarters of this aid was used for guarantees and liquidity measures, which accounted for almost €1.2 trillion of the total. The remaining 400 billion were used for public capital injections and for the treatment of impaired assets.’

So it is not at all clear that the €1.6 trill is what should be compared with the Irish total, rather than the €400 bill. His figs do not include 2011 anyway.


Anyone got a read on a running total of Eurozone sovereign bank bailout costs on a comparable basis?

@ Tullmcadoo

You are correct on all points. The paradox that you identify is bound to become more evident as the campaign progresses.

Any total of bank bailout costs would need to include the costs to those saving money of near zero interest rates. There’s a massive transfer of wealth to the financially inept that isn’t included in the Almunia numbers.

A simple proposition – surrender power to the owners of a financial “death star” that forced me to bear the cost of debt accrued by private bondholders. My family’s cost per capita – €100K.

That bullies my “sovereign” and sends a mediocre Hungarian economics lecturer swanning into my country as some sort of pro-counsel every quarter to tell my elected politicians what to do.

Then the printing press comes out when a big country (aka Italy) gets into trouble.

I’m looking forward to seeing how the lackeys explain this as anything other than a vote for submission to powers and forces that care _nothing_ for our welfare.

I was aware that the EU or should I say ECB policy was that ‘no bank could fail’ or more correctly that ‘no senior bondholder be left unpaid’. I was not fully aware of the amount involved but no country has stumped up as much as Ireland for a dead bank. I note that WestLB is now in the process of resolution and would be interested in how all classes of bondholders fare in that resolution process.

However, it is difficult to hear Almunia trying to congratulate himself for a policy that was dictated to him by the ECB. More to the point here is the commissioner for competition implementing an EU policy of privatization, suddenly reversing that policy when private bondholders have to be bailed out.

I am not in favour of the fiscal compact for many reasons.

In economic terms it institutionalises economic contraction throughout the EU for many years.
It makes no mention of growth which is essential.
It makes no provision to recoup funds from financial sector.
Employment get no mention at all.
I believe that the proposers have no credibility whatever and are ‘being led by the nose’ by the interest of mobile capital.
The fiscal compact is a debt collectors dictat.

But my most serious objection to the fiscal compact is that I no longer trust Europe. To my mind it has in this crisis ceased to be a force for good and has sided unequivocally with the financial elite and against the ordinary people of Europe. Draghi, who I respect, is quoted in a speech you linked to as saying, ‘social’ Europe is over.

The compact is designed principally by Germany, principally for Germany so that it can secure its foreign debts that are still uncollected and that she can discipline other countries in their management of finances so that there will be sufficient funds left in those countries to purchase Germany’s surplus.

This referendum will be passed in Ireland, not because people think it is a good thing or believe in it or believe in Europe. It will be passed because of the very real threats to impoverish Ireland if we vote no. Very real threats with very real intent behind them.
That is the New Europe.

@ Colm McCarthy

The point that I was making is that European governments, one way or another, ended up with the responsibility for bailing out their own banks. If the situation is otherwise, I would be pleased to be informed.

The only real exception is Greece. And it will remain, hopefully, such.

The most recent example involves, in fact, two governments, the French and the Belgian, in relation to Dexia. cf.

What is of real interest in the speech by Almunia, it seems to me, is his frank statement that European governments, despite everything, have been unable to agree a common position on their responsibilities.

Hans Blok has just painted a picture of German pensions collapsing and the end of the eurozone if the referendum is rejected.

Did the coalition know what was coming ? They said that the AG ‘on reflection’ thought it should be put to the people. And Pres. Higgins said that regardless of the AG’s decision, he would decide whether or not the matter should be put to referendum (last week in London). Thank you Michael D. – if your words in some way caused today’s announcement.
And we didn’t even have to go through the ignominy of a president Dana for it….

The €400m looks far too high to me as a comparator. Capital injections into Irish banks were into insolvent institutions, so a large part of the money was flushed down the toilet to pay off bank bondholders. A lot of the other capital injections into banks around the EU were into apparently solvent institutions to improve their capital ratios, so there was not necessarily any loss of value to the governments concerned.

I am curious to see what the referendum question will actually be.

If it is to insert something in the Constitution permitting the government to sign up to the compact, that is one thing. We can always sign off at a later date, once we are sure we no longer need ESM money.

If it is to insert all these very detailed rules into our Constitution that would be a very different matter in my view.

Didn’t our esteemed politicans say we won’t be needing another bailout so what’s the problem with voting no!! 😉

I presume we are stuck with PNs whichever way the vote goes unless we are given a better deal? Unless of course we vote no and relations deteriorate to such a level that we just decline to pay them???

@ Joseph Ryan

Ireland was encouraged to save the European banking system in 2009.

In the previous year, Ireland was the only Eurozone country to guarantee bank debt to ‘save’ Anglo. So in 2009, there was an Irish guarantee in operation.

Anyway, the countries that have got international bailouts have been the ones most dependent on foreigners to buy their bonds.

So who from the private sector would have foolishly invested in ‘new’ Irish banks after senior bondholders were burnt? No downside at all?

The ECB would have filled the breach?

@ BeeCeeTee

“No, this is wrong. I don’t want to be associated with it. If this is what being at the heart of Europe means I don’t want Ireland to be there.”

There are no easy solutions or choices for a self-inflicted mess.

Maybe that nice Mr. Xi will be more helpful than Frau Merkel, when he becomes Chinese leader? There is always a price and we could no longer entertain the likes of the gentlemen known officially known as the ‘Dalai Terrorist’.

Maybe we would have been better off without globalisation, FDI and that EU?

On the other hand, we even need the EU CAP welfare system to support farming. So back to exporting dairy and beef products to England wouldn’t sustain much.

Ireland has a choice to withdraw from the EU as like it or not, the reality of a No vote is we will be in a modern version of Limbo, at the mercy of the paymasters — or are there fools who believe that future funds would be forthcoming without strings?.

Would be view the situation differently, if the boot was on the other foot?

From Eurointelligence:

‘Ireland’s main opposition party Fianna Fail has said it will join the governing Fine Gael and Labour parties in campaigning for a ‘Yes’ vote. Sinn Fein leader Gerry Adams, whose party forms the second largest opposition bloc in the lower house and has seen its popularity surge over its anti-austerity stance, said his deputies would campaign against the treaty’

Looks like the referendum will finally bring about the long-predicted left/right re-alignment in Irish politics, but not in the expected ’26-county’ manner. This is a textbook example of Maensur Olson’s stakeholders (business interests, professions, property and PS unions) v the hoi polloi.

Victory for the insiders is likely to come at the cost of Labour’s electoral base, with FF drifting further into the wildernesss. The resulting political instability will undo any perceived ‘reputational gain’.


You miss the point, because parliamentary democracy never functioned effectively in this state and, to the extent it once might have, it has been eviscerated steadily over time to leave us with this rotting corpse. But no matter. Perhaps a majority of Irish people never really wanted it. May be they just wanted the trappings – so that Ireland could take its place proudly among the nations of the earth – but had no interest in the essence. There probably is little point lamenting the demise of something that never really existed, but all citizens should reflect on why it is so vitally necessary and resolve to restore it.

Perhaps the ‘dialogue of the deaf’ – at full volume – which has just started and which will characterise this referendum ‘debate’ might give some pause for thought. But have we a parliamentarian who will stand above the fray and who will seek to cut through the cant, hypocrisy, bullshit and bluster propagated by boths sides and speak for, and to, the Irish people? Have we a parliamentarian who will honestly describe the perilous economic position that Ireland is in and the hard graft that will have to be put in to put its economy and society securely on to the path of recovery, and who will confess to being torn behind the vision of a more tightly integrated EU core with increased democratic safeguards and increased democratic legitimacy and the reality of an island embedded in the trans-Atlantic Anglo-Saxon economic and political space with a distinctly different tradition of law, democratic governance and individual liberty?

I don’t think so. And that is the tragedy in the hollow drama that will be performed over the next couple of months.

@ Mark

“And Pres. Higgins said that regardless of the AG’s decision, he would decide whether or not the matter should be put to referendum (last week in London).”

No, he said he’d convene a council of state to decide whether he should refer it to the supreme court. He has no power to “call a referendum”.

I’m not sure exactly what you mean about the shoe being on the other foot, but I like to hope that if I was in Frau Merkel’s position I would have left tackling national debt crises to the IMF. I would have chosen to put money into recapitalising German banks and pension funds rather than spending much more on preventing or delaying defaults with the same end objective in mind.

I suspect that Frau Merkel sometimes wishes she had chosen this path herself.

It’s a pity it’s not the US, really . Tull and DOCM could set up a super PAC and bombard the airwaves with attack ads. Citizens for an austerity less post austerity infinity loop.


“If it is to insert something in the Constitution permitting the government to sign up to the compact, that is one thing. We can always sign off at a later date, once we are sure we no longer need ESM money.”

Excellent point.

The decision to approve the treaty, or not, should be based on a ten-year perspective, not a ten month one. Ireland’s record on understanding the implications of treaty changes is abysmal. Ireland signed up to joining the Euro in 1992, however the debate did not revolve around optimal currency areas or loss of monetary policy, but was all about abortion and the amount of EU funds that Ireland was going to get in the following couple of years. So long after Merkel and Sarkozy have faded away into oblivion, what will remain as a result of the treaty?

All the fiscal rules mentioned in the treaty are already required under the SGP and six-pack and will remain. Even if the fiscal compact treaty disappeared tomorrow, the fiscal rules would still be there. To the extent that the fiscal compact repeats obligations that already exist, it is totally pointless. The main new obligation imposed by the treaty is to introduce an automatic correction mechanism, with the EU Commission specifying the most important details of such a mechanism, such as the time-frame, size of adjustment needed etc.

This mechanism will be tied to a parameter that pretty much all economists have stated is impossible to measure for a country like Ireland – i.e. the structural deficit. The definition of how the structural deficit will be calculated will be made by the EU, and is likely to be one-size-fits all, and may not be appropriate for Ireland.

So it is quite possible that at some point in the next ten years, that this automatic correction mechanism kicks in, acts in a pro-cyclical manner and further deepens a contractionary cycle. The economic thinking behind the treaty is that there is a linear relationship between budget adjustments and deficits. However in the real world this is not the case. Instead there is a certain pace of budget adjustment that needs to be followed, and too much austerity too soon is self-defeating (e.g. this is the view of the IMF). Adjustments need to be capped, and made a function of growth. This treaty allows for the possibility that Ireland will be forced, against its better judgement, to be locked into automatic excessive austerity measures that are based on flawed economics.

If Ireland does get swept into a severe negative feedback loop at some point in the next ten or twenty years (as has already happened in Greece) people will say “what were those guys thinking back in 2012 – didn’t they see this coming?”

The bar for treaty changes should be set very high. There are no upsides, and only downsides, to the long-term obligations that this treaty imposes over and above those that already exist via the SGP and six-pack. These long-term risks are too high to accept, and should take precedence over short-term considerations.

@Sarah Carey,

It appears you would like the Constitution to be used as a proper Constitution. I think you should be well aware that it is not used in that way in Ireland. A majority of the Irish people seem to use it, and seem to want to use it, as an alternative to a legislature.

@Bryan G,

A noble attempt to debate the issue on its merits. But it cuts little ice, because the objective of this ‘compact’ is to compel those who previously danced at the edge of the fiscal cliff to stay well away from the edge in future. It doesn’t matter if it is not possible to measure precisely how far away governments should stay from the edge of this cliff the message is ‘stay well away from the edge’. And by having everyone who signs up staying away from the edge of the cliff the power of the bond markets to intimidate everyone is considerably reduced. And this is another key objective of the exercise.

This is truly an existential choice for Ireland that is far more profound than may be considered by focusing on the technical minutiae of the instrument.

@Paul Hunt

That’s another “ignore the details, feel the force” argument. Details matter. Well they will matter long after this attempt to boost Merkel’s domestic popularity is just a distant memory.

@ Bryan G

Very good post.

I went off to the “Six-Pack” to compare and contrast.

The scoreboard at the bottom is very interesting and includes warning signs and limits in such areas flows in private credit, private debt, house prices rising, unemployment over 10%, running budget surpluses as well as deficits. And it looks flexible.

But what I was wondering was.

Given, for the sake of argument, that the Fiscal Compact contains much the same as the Six Pack, and suppose that in the future these agreements are seen to be pernicious and counter-productive – there is general agreement that they should be changed. Which of the two are more changeable, and which, like the Euro itself, would the EU find itself more locked into?

@ Sarah Carey

Harry McGee’s report in today’s IT may help elucidate the situation. It seems that it will be a simple yes or no question as to whether the Constitution should be amended to allow the state to ratify the fiscal treaty, the provisions in the treaty being applied by way of an accompanying legislative proposal but held in abeyance until the outcome of the vote is known.

Although there is no way of knowing, one must assume that the AG based her view that on balance a referendum was required because of the assumed implications for the budgetary prerogatives of the Dáil of the treaty.

On the PN issue, another helpful piece from the IT which may help raise the level of the debate from its present puerile level.

@ seafóid

If you think the point made by TMD is incorrect, why not demonstrate why?

If we vote no in a referendum but the compact is introduced due to 12/17 countries ratifying it then what is the situation? It seems to me the attorney general is not sure that the compact is constitutional (hence the referendum) however I understand that we will be bound by it is since it will have been ratified by 12/17 (hence the signing going ahead at the weekend?). However if we can be bound by something potentially at odds with our constitution does that not mean EU law now supercedes our constitution? And if so, could similar issues arise in other scenarios where we vote against something in the constitution via a referendum but 12/17 believe we should not have??

I’m not a lawyer (or anything approaching it) but this seems odd to me.

@Gavin Kostick

The SGP/6-pack is more flexible than the Fiscal Compact – for example in relation to deficits there tend to be caveats like

…while leaving room for budgetary manoeuvre, in particular taking into account the need for public investment.

There is thus more scope for “human-involvement” in assessing measures, rather than the automatic by-the-numbers approach that the Fiscal Compact seeks. Of course Germany sees this human involvement as sinners trying to avoid their penance. The problem is that one-dimensional, fundamentalist, diagnoses and solutions tend not to work too well as soon as reality is encountered. One reason the SGP is more flexible is that it went through the entire community process, with involvement of the EU parliament etc. The essential elements of the Fiscal Compact were pushed through at 3.00am in an EU Council meeting where extreme pressure was applied – not a very conducive environment to balanced, considered law making.

Changing the SGP would require use of the community method, whereas changing the Fiscal Compact would likely require more 3.00am meetings. Ireland would have more influence with the former method.


The Fiscal Compact isn’t going to solve the problem. It doesn’t address the intra EZ imbalances that drive the ongoing crisis. By the end of the year there’ll be another sticking plaster.

Things look ok now but it’s risk on, innit, and how long has any risk on mood lasted over the last 3 years?

I still think you would be great with a Super PAC.


“That bullies my “sovereign” and sends a mediocre Hungarian economics lecturer swanning into my country as some sort of pro-counsel every quarter to tell my elected politicians what to do.”

Tinge of racism here? In the juxtaposition of Hungarian and mediocre?

Better to look at the mote in one’s own eye. If the giants of Irish economics had not stayed silent through the bubble, (when not cheerleading), would you need to need to sneer at the standards of Hungarian economists?

I, for one, wish for more Swedes, Hungarians, Slovenians whatever, anything but the gombeen homegrown place-seekers that advised our elected politicians into destoying our children’s futures.

@Bryan G,

That response, I might say, is uncharacteristically unfair of you. I am genunely torn between the two choices on offer. And it is not between my head and my heart. Both are riven. And I suspect, it is the same for those who reflect profoundly (rather than rely on atavistic prejudice, sound-bites and utopian visions) – and who will reflect in this manner in the coming period – on these matters.

This is why I yearn for this to be trashed out by those who have been delegated the ultimate authority of the people in a manner that reflects the merits and demerits of both options, the difficulty of choosing and that seeks to avoid this ‘dialogue of the deaf’.

It is entirely disingenuous to suggest that this issue may be addressed purely in terms of the technical minutiae. These certainly are important, but considerable effort has been expended in crafting them, the HoS&G of 25 member-states have agreed and are at the point of signing off on them and they are the legal representation of a much more profound intent.

The identity of the two member-states on the ‘outside’ is significant. In some respects the Czechs have a relationship with Germany that mirrors that between Ireland and Britain – and, having experienced a tyranny for so long, they are understandably loth to swap it for another (however benignly it might be presented). The English generally have an undestandable and reflexive and instinctive distaste for what they see as utopian visions being crafted by the EU. In the past these visions caused nothing but grief for Britain. And the English, particularly, dislike the enforcement of universal rights and entitlements that tramples on the liberty and freedom of citizens. I supect that many Irish people, though they might be loth to admit it, share this distaste to varying extents. Irish people, in general, tend not to do ‘isms’, except perhaps a very small ‘c’, but unacknowledged, conservatism.

What is on offer, beneath the technical minutiae, presents a profound existential choice. And not an easy one.

@ Tony

if we dont sign up to it we just dont agree to be bound by its rules, so we can do what we like. However, we will not have access to any further ESM support, and i think its safe to assume there would be question marks over us sharing in the benefits of Eurobonds if they are ever created. Further, investors would differentiate (whether positively or negatively) from the rest of those signed up to the compact.

@ All

For reference, the text of the treaty.

@ seafóid

I am not aware of anyone arguing that the fiscal treaty will “fix the problem”. But it is to become part of the solution. Whether we wish to participate or not is up to us. We can have the unavoidable period of austerity in an organised, predictable and helpful context or on our own.

That is the choice!

Now the whole world sees a country with a neutered government at the mercy of an electorate that has a reputation for voting to keep the country poverty stricken. The uncertainty engendered by the decision to hold a referendum will be damaging to the economy of Ireland. Should the outcome be a no vote then the Irish Gov’t will be lord and master of its own fiscal policy. I liken it to the board of directors of a near bankrupt company instructing the company management to fire its bank and seek new arrangements. Sure all that 1% money loaned to us by the ECB was spoiling us and we would be much better off paying 8-12% in the market.

A no vote is not guaranteed. At the time of the Nice Treaty referendums 2001/2002 we were new to the art of walking on water and having a bright economic future. The prospects of abortion being available in Ireland thus avoiding the inconvenience of taking the boat to Liverpool along with having to provide a couple of hundred soldiers to ensure oil flows unimpeded into Ireland was too high a price to pay for prosperity. The following year of course we sobered up and did the right thing. This time we know we cannot walk on water and our economic future is lack lustre within the EZ and positively dismal outside it.

If we decide we do not want to make the adjustments necessary to regain competitiveness within the EZ then it makes sense to vote no. Entering from left stage in all her ungolden glory comes PUNT our newly printed currency worth two to the Euro or worst case initially three to the Euro. Instant competitiveness, soon to be eroded by inflation and a return to the stagnation that started in 1932 and lasted until we entered the EEC. What we are sorely lacking is the will to save ourselves from ourselves. Can the EZ prosper without Ireland and Greece? The answer is yes. Wish it were otherwise and we actually had some bargaining leverage.

Vote No.

I heard one economist say the debate would degenerate into emotion with fear mongering on the one side, anger on the other. Hopefully there will be some fun as well. Part of the serious fun will be to give the arguments on both sides careful analysis.

I’ve already begun to do this with a carefully constructed critical analysis of the ESM Treaty on my blog where I pore over what I regard as great cause for worry and concern. See link above. But, firstly, some fun:-)

Here’s Lucky in Samuel Becket’s ‘Waiting for Godot’ wearing Pozzo’s ECB noose speaking about the boat of stones presumably part of technical discussion on bailout. Lucky I’m thinking has been spending too much time at these discussions of late.

Pozzo’s response to Lucky is to give him a kick and say, “I’ll orientate him”

I suppose present LB/FG Government no chance they’ll send a copy of the ESM and Compact to every member of the audience 🙂

I hope they bring up the Lisbon Treaty jobs in the debate. I believe they are floating in cyberspace with a crowd of leprechauns.


But it is to become part of the solution. Whether we wish to participate or not is up to us.

It is time, once again, for the left wing bias of reality. Is there anyone who disagrees with the following three points?

(1) The fiscal compact is not part of the solution to any currently existing economic problem in the EU, it is a political device intended to energise the German CDU’s domestic constituency and legally enshrine right wing economic dogma into domestic law across Europe.

(2) Adhering to the fiscal compact would not have helped us avoid the current crisis.

(3) The fiscal compact, because of its procyclical fiscal policy implications, is likely to increase the likelihood of future economic shocks and make smoothing them out more difficult.

Despite the line our unfortunate Tanaiste is trying to spin the fiscal compact has only negative effects on policy choices if you are not a committed neoliberal, a European financial institution or politically allied with the German Christian democrats. The sole reason for Ireland acquiescing to it is that the currently dominant strand of German political thought would like to punish us if we do not by denying us access to the bailout fund. This is made all the richer because our need for access to the bailout fund is substantially due to having done everything asked of us so far.

The more we do what we are told, the more we have to do what we are told.

I can understand people not wanting to face the risk of German government hostility but the historical precedents for things improving for those who submit to foreign political imperatives are not good – if Angela gets her fiscal compact what other piece of Mitteleuropean conservative dogma will she try to make European law next?

The possibilty that the ESM would evolve into Eurobonds at some point in the future is worth making. The quid pro quo is that we promise not to trash Daddy’s credit record- hence the Stupid treaty.
I don’t know which way I would vote. Part of me wants to vote no as a protest and also to see the look of shock on the faces of all those suckling off the great state sow when the milk runs out. However, I want to move my few bob and my domicile first. Wiser council probably compels me to vote yes reluctantly.
I see Deputy Pringle has fired an opening salvo for the Nos. A nil would allow us to maintain our fiscal sovereignty.


I suspect you’ve summed it up for quite a few people – and ‘yes, reluctantly’ will be where they’ll end up. But many people will be influenced by a whole range of factors that are not directly related to this issue – and the devil always has the best music. It’s what happens when voting on an amendment to the Constitution becomes an alternative to a proper debate and vote in the Oireachtas.

Like Waterloo, it’s likely to be a damned close run thing.

BOE’s Mervyn King speaking to the treasury committee this morning:

“The idea that the long term repo operations have eased the supply of finance to small businesses in the euro area is a myth….. What it has done is to provide a source of funding to banks particularly in the southern member countries of the euro area which were experiencing a bank run, enabling them to fund the withdrawal of funds.”

I daresay if we vote no, we could experience a similar kind of bank run (on top of the one we’ve already had that nobody talks about). I trust that Irish banks turned up for second helpings of LTRO ….. just in case.

@ Tull/PH

i am in the same camp. Its a sh1t deal we’ve got, it all comes down to the promissory note restructure for me – if it gets done or looks like getting done, i’ll vote Yes. If not, my vote is very much up for grabs.

@Bryan G

“All the fiscal rules mentioned in the treaty are already required under the SGP and six-pack and will remain.”

Apart from putting a value on a completely subjective structural deficit as well of course.

Great post though.

p.s. I was having a ‘breakfast’ telecon with some banking people based in Frankfurt this morning. Before we got down to business, I asked them what they thought of Ireland calling this referendum.

The collective reply was: “did they?”

They then went on to confirm that nobody on mainland Europe gives a rat’s whatsit about what Ireland does or doesn’t do.

One mentioned that we don’t have a choice other than to sign up or we won’t get our second bailout from the ESM – a ‘given’ in their view.

Another laughed at the notion of Enda signing it later this week anyway and then having a referendum about it afterwards.

They also moaned a lot about the Greeks complaining about the Germans and printing pictures of prominent Germans in nazi uniforms: “Any more sh1t from those guys and we will send them back to the middle ages,” was one comment.

@ Joseph Ryan,

The link you’ve sent is from 2011. I was aware that the ECB is currently against not fulfilling the terms of the guarantee.

But as far as I’m aware the original decision in 2009 was made by the Irish themselves.

What evidence is there that the ECB had any influence in the original decision? I can recall the various finance ministers being ticked off by the decision, but I don’t exactly remember what the ECB’s view was at the time?

@ PR

“They then went on to confirm that nobody on mainland Europe gives a rat’s whatsit about what Ireland does or doesn’t do.”

Really? Thats surprising. Irish market went a bit crazy yesterday afternoon and this morning on the news, everyone wanting an update from us on whats going on. LTRO was more important, but the Irish news wasn’t nothing.

@ Michael H

‘Anti-austerity is a good angle but how can Sinn Féin’s printer toner addiction be afforded?’

Perhaps it was Wolfe Toner, and so was part of our shared heritage.

And, FWIW, I merely point out the political in political economy. What many citizens will perceive is that bankers are bein facilitated in giving themselves huge dollops of free cash, while others are left to struggle with unemployment, poor social services and debt peonage.

First class passengers only in the lifeboats. Plus ca change, but it iimplies that the EC project has really lost its way.

Thanks to all for the very balanced commentary. The reality is of course complex, but as B-E_B says ‘It’s a sh1t deal’.

@PR Guy

Re phone call. LOL. Reality check central, what?

Re on having a referendum

I’d say there was a political calculation as well as a legal one. IF they didn’t announce referendum then SF would have them up on the Supreme Court. If they SC said we needed a ref then huge loss for gov. If SC said No, (slim chance) then SF still looks like saviours of the citizens.

And sure maybe we will get some sort of deal. Maybe.

BUT Top Tip for Government

And I see Lucinda is out of the traps already with the line


We got that in Lisbon. Trying it on a second time will produce nothing but bitter laughs.

@ seafóid

The Fiscal Compact isn’t going to solve the problem. It doesn’t address the intra EZ imbalances that drive the ongoing crisis. By the end of the year there’ll be another sticking plaster.

There is no Utopia…this is a step in a long march.

There is no magic solution and Mario Monti would wish that there was one for problems that have been left unattended for decades.

On addressing imbalances, I assume you’re not suggesting that unreformed and corrupt countries should be showered with money? On the other hand, unless there is a national will to solve problems, no outsiders can provide solutions.

A two-way process is required.

@ All

There can be no perfection from multilateralism.

The FC can be parsed line by line but the EU isn’t a dictatorship.

Sometimes the argument is made that Ireland met the 3%/60% targets during the boom but only the economically illiterate and self
interested/deluded were blind to the indicators of a bubble that were flashing red.

At least the intention now is to have closer monitoring of the public finances of member countries.

The Irish economy was wrecked twice in a generation with huge collateral damage – – is it that we don’t need outside control?

Keep in mind that the country is bankrupt and the situation should not be made worse for those seeking work or trying to keep a business afloat.

Yes Sarah Carey, sustainable jobs are important and are difficult to find.

@Sarah Carey


Your negativity on the success of the Lisbon job agenda disappoints me Sarah. Have you forgotten how Ireland’s principled political class selflessly fought to save the jobs of many European commissioners?

However bad things get here in Ireland there will always be at a job in the European Commission for the best connected/least electable Irish politician, and that means something.

@Mr. Bond,

These darned PNs were where I came in on this thread. Doing something on the repayment of this ‘liquidity’ aka sneaky solvency support (the example I used was the British repayment schedule for the US war0time Lend Lease programme) would set the pitch fair.

But the ‘debate’ won’t focus on the fundamental choice between leaning towards the Brits and the Yanks in the trans-Atlantic economic space or leaning towards Germany and this centre-right consensus dominating the EU economic space. Ireland has had its cake and eaten it. There’s a big question that no one really wants to confront about where the next batch of bread is coming from.

The whole exercise will prove extremely divisive, polarising and unproductive when efforts should be being made to repair social cohesion and to bolster the political resolve required to address the challenegs that remain – and will remain irrespective of the outcome of this vote.

My only hope is that enough people will get such a bellyful of the cant, bluster and hypocrisy that they’ll see the benefit of having a functioning parliament.

@ Michael Hennigan

Ahmed Rashid was in the New York Review recently outlining a plan to stabilise Afghanistan

Here is a possible step-by-step approach, involving all the players, that is intended to build trust and confidence in the region so that ultimately negotiations with the Taliban can take place.

1. NATO, the Afghan government, and Pakistan free most Afghan Taliban prisoners under their jurisdiction and seek to accommodate them safely in Afghanistan or allow them to seek refuge in third countries. NATO guarantees freedom of movement for Taliban mediators opening an office in a friendly third country.

2. Iran enters into negotiations with the United Nations and European countries to end its safe haven for Afghan Taliban and allow them to return home or seek refuge in third countries. None of these actions includes amnesty or safe passage for al-Qaeda and its affiliated groups.

3. The Taliban respond with confidence-building measures of their own such as publicly dissociating themselves from al-Qaeda, ordering an end to targeted killings of Afghan administrators and aid workers, and an end to suicide bombings and burning schools and government buildings.

4. The US, NATO, and the UN declare their willingness to negotiate directly with the Taliban when the Taliban publicly request it, although they insist that the dialogue between Kabul and the Taliban remain the main avenue for negotiating a peace deal.

5. A new UN Security Council resolution calls for negotiations between the Afghan government and the Taliban to bring the war to an end. The UN resolution mandates its special representative in Kabul to help those negotiations and to start a dialogue between Afghanistan’s neighboring states to reduce their mutual antagonisms and interference; the resolution also calls for Afghan Taliban leaders who do not have ties to al-Qaeda to be struck off the list of terrorism suspects.

6. India and Pakistan enter into secret talks between their intelligence agencies in order to make their presence in Afghanistan more transparent to the other and end their rivalries. Later the two governments come to agreements that would allow each one to tolerate the other’s embassies, consulates, rebuilding activities, and trade interests in Afghanistan. Both pledge not to seek a military presence in Afghanistan or to use Afghan soil to undermine the other.

7. Central to any plan would be a deal with the separatist insurgents in the Pakistani province of Balochistan who make use of territory in Afghanistan to carry out their attacks on Pakistan. To address the problem, Pakistan issues a general amnesty for all insurgent Baloch separatist groups and dissidents and announces its intentions to discuss a new peace formula with all Baloch separatist groups to end the current insurgency. The army and ISI free all Baloch prisoners they are holding including the hundreds of “disappeared” prisoners.

8. The Afghan government makes a commitment to return all Baloch separatist leaders on its soil once agreement is reached on a political deal in Balochistan and safe passage for Baloch leaders to return home is guaranteed by the Pakistan army and an international agency such as the International Committee of the Red Cross.

9. Pakistan issues a timetable and deadline of between six to twelve months for all Afghan Taliban leaders and their families who want to do so to leave Pakistan and return to Afghanistan. Pakistan, Afghanistan, and the UN would jointly help those Taliban not wishing to return home and not on any terrorism list to seek political asylum in third countries. Simultaneously Pakistan would undertake military action in North Waziristan in an effort to destroy remnants of al-Qaeda and Afghan and Pakistani Taliban who may remain and try to sabotage any peace process. Even if such action were not fully successful, the aim would be to limit their capacity to sponsor insurgency.

10. The Afghan government works to build a national consensus inside the country among all ethnic groups, civil society, and the tribes before entering into formal negotiations with the Taliban. Negotiations also start between the US and the Taliban. The US agrees to sharply restrict killing of Taliban leaders by drones and other means.

It is complex because the problem is complex.

Of course this is never going to happen.

I think the EZ is similar. Say the US is the ECB. The Taliban are the people and Pakistan is the PS. Austerity alone = carpet bombing
It isn’t going to work. Carpet bombing isn’t working in Afghanistan.
But it’s easy and the markets/the Pentagon like it.

The referendum is not just about Ireland.

The fiscal treaty will affect 500 million people across Europe who are being denied a voice on the policy implications of an impending Federal Europe.

Ireland has a unique opportunity to set the terms of reference for a robust democratic debate, for all Europeans, on they type of integration they support. And to ask whether permanent austerity really is the solution to a crisis induced by reckless private market behaviour.

The purpose of the reaty is not technical even if it is being pushed through by tehnocrats. It is to give political cover for the German parliament to support greater fiscal integration which might or might not include the establishment of Eurobonds over time.

Whether Ireland is in or out will make little difference. But Merkel will be annoyed that a democratic route is being taken:,1518,818313,00.html

@Aidan R

The referendum is not just about Ireland.

The fiscal treaty will affect 500 million people across Europe who are being denied a voice on the policy implications of an impending Federal Europe.


Seemingly everything has to change in the EU at a national level, and without popular consultation in most places, in order to preserve the power, status and image of the international level – where the decisions are being taken but the structures for popular consultation and accountability do not really exist.

The United Left Alliance in Ireland have come up with a rather neat description of the fiscal compact as an attempt to “institutionalize austerity”, which nicely captures the creeping mittleeuroepan politicization of the EU.

Keep up the good work on your own blog by the way Mr Regan, very refreshing.

@ Aidan/Shay

“The referendum is not just about Ireland.

The fiscal treaty will affect 500 million people across Europe who are being denied a voice on the policy implications of an impending Federal Europe.”

Forgive me, but isnt that the line pumped out everytime we have an EU Treaty ref? Won’t the French people get a pretty big say in a couple of months with their Prez elections? Surely the issue of Europe came up in the recent Spanish elections? The Germans will have a go at it next year in their elections i believe? And so on and so forth….Each country has a different set of rules and a different set of procedures to enact legislation. Is it not a tad presumptive to assume that they’d all love a go at our often bizarre referendum campaigns?

@ Bond, Eoin Bond

“Is it not a tad presumptive to assume that they’d all love a go at our often bizarre referendum campaigns?”

Political elites and national governments across Europe would hate it (as the Dutch and French referenda show).

But empirical research would suggest that most European citizens would support referenda on European issues.

It is wrong to assume that because people vote in national elections they simultaneously support a technocratic approach to European legislation formation. (on a related issue)

As it stands European citizens are totally excluded from the decision making process. Hence the massive backlash about the technocratic integration project.

Jurgen Habermas, a leading German philosopher/political scientist has made a career out of calling for democratic procedures (such as a European wide referendum) on the previously failed EU constitution.

@ Aidan

apologies, but i do not see how you can square “As it stands European citizens are totally excluded from the decision making process” with free, fair and relatively regular elections.

People get the “national governments” they vote for, and referendums are often voted on on the basis of entirely different issues (our one will be dominated by abortion, septic tanks, bondholders etc). We live in an imperfect democracy, and repeated referendums are unlikely to change that unfortunately.

@ Bond

The idea that Europe is suffering from a democratic deficit is not new. At this stage it is a given by most observers of European integration. Therefore what I am saying is hardly controversial.

I mean, how many political parties governing in national legislatures included ‘support the institutionalisation of permanent austerity to be governed by European technocrats’ in their election manifestos?

Democracy is far more than turning up at a national ballot box every 4-5 years. We live in a multi-level European governance system and the democratic process has yet to adequately reflect this.

Holding on to an 18th century classic liberal assumption that national elections equate to democratic support for all public policy decisions(particularly something as big as the institutionalisation of permanent austerity on a transnational European basis) is not only a tad bit naive but quite dangerous.

Democracy, like all social phenomena, is an evolving practice. If national and European institutions do not evolve to reflect this people will not only lose total trust in the process but seek out extreme solutions to over throw them. Hence the rapid rise of far-right anti-European political parties.

@Sarah Carey

“Reality check central, what?”

Yes…. they were German and not very complimentary about Ireland at all.

@Bond Eoin Bond

Did all these queries you were getting come from Germany? I spoke to some more guys there not half an hour ago and they seriously weren’t bothered what Ireland was doing. They think we’re a backwater.

DO’D: Well Biddy, what do you think of this Referendum?

Blind Biddy: You talkin about the political ploy from The Owl and the Pussycat?

DO’D: Well we know from the blog that it’s Nonsensical an all dat … but what way do you think the Citizenry should vote?

Blind Biddy: Lookit – I’m not steppin outside the door today … that Shia Sheik is about and you know what day it is. But I’ll let the fools fooster away for a month or so …. and I’ll make by position known on da 1st of April … and we’ll see what way the Night of the Proms turns out on March 31st. Patricia the Irish Sovereign is still in Exile – you know!

PR Guy,
I suppose we should be grateful that the Prussians only gave out about us exercising a contitutional right.

Aidan R
‘institutionalised austerity’. Is that they new lefty phrase for living within your means.

I can only marvel at the delusion of those who seem to believe that what is happening now in Ireland is the acme of democratic practice. The EU does not suffer from a democratic deficit; what it is deficient in is the means to secure effective democratic legitimacy. This is being, and will be, addressed as part of this process of greater politcial and economic integration.

@PR Guy

“I’m sure it will be very entertaining and if we don’t vote yes it will be the loss of jobs/growth/exports, thrown out of Europe, armageddonish meltdown, become like Greece, etc. just like they said it would be in the Lisbon treaty vote.”

I see big Phil is already spouting the liathrodi stuff….
“Investment and job creation in Ireland will “certainly come into question” if the country is not part of the European Union, Minister for the Environment Phil Hogan said later.”

So a senior Government Minister is saying we will be kicked out of the EU if we have the temerity To say no.

And it is indeed curious that Enda is signing up to a TReaty this weekend that is to be put to the people later? No wonder the Germans are laughing.

@Tull McAdoo

‘institutionalised austerity’. Is that they new lefty phrase for living within your means.

In as far as ‘living within your means’ is the old right wing code for a vicious circle of tax cuts and service cutbacks intended to make social democracy impossible and serve the needs of the investing classes, why yes Tull, that is correct.

@ Tullmacadoo

“lefty phrase” – Is that the new “righty phrase” to avoid the rational exchange of competing perspectives. Only in Ireland could you hear such nonsense.

@ Paul Hunt

I agree that the only way to solve the democratic deficit is for greater political integration. The term ‘democratic deficit’, as you know, is used to describe the ‘absence of democratic legitimacy’.

Referenda on issues such as this fiscal treaty are not the acme of democratic practice. But they are surely a mechanism to enhance the democratic legitimacy of economic decisions. Regardless of whether one supports the treaty or not – the process of involving people in the decision will massively enhance popular support for its implementation in Ireland (assuming it is passed).

Mr Hennigan speaks , from his Asian exile (your still in KL mike?) about a long march. Are the no side Mao or Xiang Kai Shek?

FYI Der Spiegel International

Fiscal Pact Referendum
‘A Decisive Moment’ for Ireland in Europe
By Carsten Volkery in London

Tuesday was a good day for democracy, but a bad one for German Chancellor Angela Merkel. First, Germany’s Federal Constitutional Court declared the panel of lawmakers set up to approve urgent action by the euro rescue fund to be “in large part” unconstitutional and ordered that it would need to be enlarged to include more than just its current nine members.

And on Tuesday afternoon, Irish Prime Minister Enda Kenny announced his country would hold a referendum on the euro fiscal pact. This threatens to throw a spanner in the works of the euro’s new architecture: It’s possible that only 16 euro-zone countries will accept the fiscal corset that Germany would like them to wear in the future.,1518,818313,00.html

The more I read the ESM , the more it reads like a super hedge fund using its member investor monies in unregulated ways controlled by a small unaccountable elite.

“Financial analysts have also blasted the scheme. Daily Bell editor Anthony Wile, for example, referred to it as “a totalitarian pact for a new European empire.” He suggested the elite might be rushing ahead with the plan, aimed at bringing in a “new world order,” before an increasingly awakened citizenry puts a stop to it.”

Criticism is growing. The last thing the powers that be want is objective, deep scrutiny of what members are exactly required to sign up for.

But where has the ESM suddenly gone, 2 links to it from my own blog show the link to it is down, also link to it from wikipedia?

Two files on wikipedia and my own blog to facts on the ESM and the ESM itself have now been pulled and are down, so, if anyone can find replacement urls/links for these?

Financial analysts have also blasted the scheme. Daily Bell editor Anthony Wile, for example, referred to it as “a totalitarian pact for a new European empire.” He suggested the elite might be rushing ahead with the plan, aimed at bringing in a “new world order,” before an increasingly awakened citizenry puts a stop to it.

Good to see the above catching up with my own views on the ESM 🙂

@ Ceterisparibus,

Governments always sign up to such Treaties. Instruments of Ratification are deposited later by a due deadline, which give effect to that signature. In the event of a ‘no’ vote in a referendum, no instrument of ratification can be lodged. In the case of Nice and Lisbon, there was sufficient time to hold a second referendum and still meet the deadline.

I agree with you on your response to PH.

I genuinely do not know how I will vote. Big Phil is right to emphasise the risk to jobs from being outside the circle in Europe. My own tuppence is a comment from a CEO of an MNC in NY musing on the need to mothball further investment in Ireland until he figures out what currency he is in. It is a complete over reaction but understandable.

@ David O’Donnell

‘fiscal corset’ ha ha

Re “Tuesday was a good day for democracy, but a bad one for German Chancellor Angela Merkel. First, Germany’s Federal Constitutional Court declared the panel of lawmakers set up to approve urgent action by the euro rescue fund to be “in large part” unconstitutional and ordered that it would need to be enlarged to include more than just its current nine members.”

Your Spiegel link doesn’t go into enough detail there. If anybody got links to news/urls describing the powers/setup of the panel of lawmakers in Germany I’d like a read up on that info. Does it work like an Irish Council of State? Is this the one which on behalf of the Bundestag represents Bundestag approval for ECB measures that impact German taxpayers? Is the process same as Irish AG?

Not sure that I understand a lot of the drivel written above but I do know that the rest of the EU really dont mind if some of the Irish decide to be led by former gunmen/sympathisers who like to collect inkjet printer cartridges and nutters who honestly think that Ireland is so very important that they will change the face of Europe by getting people to Vote No. Euro in the mainstream will continue regardless of what the referendum result brings. The only difference is that we will be at the back of the bus and maybe worse when the rest move ahead. There are a lot of intelligent Irish people that will vote for the Compact because it is right for Ireland to have external discipline over the State Finances particularly if the gunmen/sympathisers/nutters are likely to be anywhere near the till !!!!

Some have short memories about Gardai being shot dead in Adare and other places protecting our democracy.

Thanks. Will we count towards the 12 after Enda signs.

@ Tull
Big Phil’s statement clearly implied having to leave the EU in the event of rejection…not leaving the circle of Europe..whatever that is.
It’s the start of the sh1t we are going to be getting, aptly described by PR Guy,and will turn people off. If they have to resort to the big lie then they must be concerned.


You have made your political prejudices pretty clear. I see no ‘drivel’ or ‘nutters’ on on this thread though. The very opposite in fact.

Yes, a lot of intelligent people will vote for the compact. Other intelligent people will vote against, or abstain. As you can see, two senior FF leaders see this matter in quite opposite ways.

Democracy, IMHO, is best served by fair minded debate.

Big Phil can choose his own way of expressing it. Bottom line, if someone on the no side says that the there is a positive benefit to voting no they are not telling the truth, there are two possible answers- cost is unknown or massively negative. Exit from the euro is a strong possible if no access to ESM. Exit from the EU is a more remote but non trivial possibility.

@Colm Brazel

Here you go.

On Tuesday, Germany’s highest court delivered a possible setback to Chancellor Angela Merkel’s efforts to rescue the euro by ruling that a secret committee meant to fast-track approval for bailouts was largely unconstitutional. German commentators mainly supported the court’s ruling, arguing that democracy shouldn’t be sacrificed in the fight to save the euro.,1518,818383,00.html


Early days. One expects the ESM FEAR-Spear from certain handlers ….

Scenario: (i) Ignore the ESM (ii) Tear up the Promissory Notes on the Ides of March (iii) Sit on the EuroSeat (iv) would the 10 year drop to less than 6%? (v) Would the IMF stand idly by? (vi) How would President Obama react in an election year? (vii) Would the UK, Denmark and Sweden dump on our little deals? (viii) Would MerKozy .. er .. survive?

BTW – did I notice another half trillion or so from the matrixsquidesque elite to the financial system today?

Lots of Grey idir Ta agas Nil ….. I’ll hold with Blind Biddy til April 1.

In the short term, I expect that the result of a no vote would be even worse than the consequences of a yes vote. But in the long term, I expect that a yet vote would leave us more likely to have future financial crises, and with less ability to cope with such crises. So on that basis, I’m going to vote no.

If the vote is “no” ,your fellow Europeans will take it as a “no” to Europe and will show you the door.Colm Brazel will be happy.

@Paul Hunt

Apologies if my reply came across as too blunt. I’m saying that the current political context should be subordinate to the long-term impact when making a decision. You seem to have bought into the view that dissenting from the German-led political context will lead to an existential crisis, but I don’t agree. I see a mainly symbolic treaty with an economically bad, and potentially quite dangerous, mechanism thrown in.

The “existential threat” is already part of the government spin. The treaty language is very explicit about the primacy of EU law – the treaty can impose some additional, more stringent, requirements, but cannot undo or materially alter any existing EU law, since it is not an EU agreement. Thus a treaty rejection would, for Ireland, preserve the status quo, or rather the status quo process, for example there is currently a “two-pack” which is working its way through the system, and this deserves more attention than it is getting.

Locking in bad economic mechanisms in perpetuity, tied to subjective assessments made by the EU Commission under the ideology of the day, is not a legacy that the current generation should hand on. Yes there would be some political turbulence for a while with a rejection, but then things would move on again, as they always do.


Do you really believe that Ireland can balance its budget by the end of next year?
Do you think that there will be a market tor Irish bonds after a “no” on the referendum?
Can you stay in the Euro after a default?
Please explain.

@Overseas commentator

When you say that our fellow Europeans will show us the door, the obvious reading is that you mean they will kick us out of the EU (not just the EZ). Maybe you didn’t mean that, but if you did then it’s reasonable to ask how you think the ejection will be accomplished.

@Kevin Donoghue @Overseas commentator

“When you say that our fellow Europeans will show us the door, the obvious reading is that you mean they will kick us out of the EU (not just the EZ). Maybe you didn’t mean that, but if you did then it’s reasonable to ask how you think the ejection will be accomplished.”

Yes I (and no doubt many others ) also look forward to seeing an answer to how thtat would be accomplished..:)

@ David O Donnell 7:07

cheers for that interesting link:

OK, so that confirms the German courts and the Bundesbank are on to the secret committee.

“That ruling held that the euro aid packages must be clearly defined, and that members of parliament must be given the opportunity to review the aid and halt it if necessary.”

This raises an interesting question though given the secretive nature of the ESM and the powers being handed over to the secret committee of the ESM, seems to be that court ruling will require all bailouts to go before the German parliament for approval following agreement by the ESM committee?

This makes the whole secrecy thing quite ludicrous if it subjects itself to German parliamentary oversight.

So, what members signing up to ESM get is a secretive committee whose findings must be vetted by the German parliament?

Also there is this strange piece from FT, appears they have not studied the wording of the ESM which basically provides for making permanent the ‘temporary’ powers to buy sovereign bonds

“The ruling has few consequences for the future of the euro. Because, unlike last fall, the financial markets have calmed down after the European Central Bank took on its role as a savior. Shortly before Christmas, the ECB, because no one else wanted or was able to act, lent the banks €500 billion at low interest rates. Since then, no one has been interested in the EFSF’s instruments that were temporarily blocked by the constitutional court. And no one expects any more that the rescue fund will directly intervene in the markets again.”

The precise relationship between the German ‘secretive’ parliamentary and the structure and role and operation of the ESM should also be a matter for careful scrutiny.

In a snap GE, a new national govt with Grizzly as T, Uncle Joe as finance minister and Eamonn O Cuiv as Aire Gnothai Eachtra. The EU moves to expel Ireland as said govt would be a) embarrassing to the Union & b) not democratic as we know it.

Ireland can balance the budget by CB Deficit spending(introducing more currency units that can then be taxed)……….Petrol would probally be 10 punts a Litre but we can balance the budget if we really have the will.

The European experiment is a expression of pure evil – we need to get out no matter what the cost.
We will probally become a victim of this economic Blitzkrieg – see 1939 Poland with Britain our only hope…………….i.e. Bolloxed.
But this Boa Constrictor method of economic integration through deception & pure malice will stick us in a economic concentration camp anyhow.

Better off leaving the stage with some honour me thinks.
Time to get on our Horse and face those f$£king Panzers.


I was just reading RTE on line,sorry I dont “do links”, and apparently Jose Manuel Barroso (he is one of the “Presidents” we have beyond in Brussels who readers may identify from a prior “appearance” shouting at an Irish socialist MEP prompting John Bruton,most definitely not a socialist, to write a public letter to him explainig the basic rudiments of Irish democracy) has decided to comment on Irish treaty ratification.

“Red rag to a bull” as far as the Irish electorate are concerned? 🙂

@Rory McMonagle
“What evidence is there that the ECB had any influence in the original decision? I can recall the various finance ministers being ticked off by the decision, but I don’t exactly remember what the ECB’s view was at the time?”

Wikipedia may not always be right but here is link to start with:

“ECB Connivance In Autumn 2011, former Green Party Minister, when pressed on the reasoning behind the bank guarantee, informed journalist Vincent Browne on his Tonight tv programme ‘that the ECB had informed the government that in no uncertain terms were we to allow an Irish bank to fail’.
After initial official criticism of such a guarantee, within a month the ECB were advocating such guarantees as protocol for other member states in similar situations.[32] Whether or not the ECB knew about the guarantee, or even ordered it, it is in any case a matter of record that they have demanded the extension of the guarantee each time it was due to end its term”

As to the initial guarantee:
Here, the influence of the ECB President Jean-Claude Trichet comes into play. According to Ireland’s finance minister Brian Lenihan, Trichet called him at the peak of Ireland’s banking crisis in September 2008 urging him to “save your banks at all costs“.

A rummage through the moralising of Lorenzo Bini Smaghi and Jurgen Stark concerning, among other matters, how the ECB could refuse to take the collateral of Irish banks if seniors were burned, gives a good flavour of where the ECB were at and what they were up to.

But Trichet has done his job. The big European banks have now virtually all their bonds repaid.
All in the name of saving the ‘bond’ market. A bank bond market that is now gone- hopefully never to return. Bond funding has now been replaced very sensibly by Mario Draghi with a more realistic and stable funding mechanism.
Hopefully, this will be developed into a situation where all interbank funding will pass through the ECB as insurer and guarantor of the funding. Again hopefully we may see an ECB bank resolution scheme when it is clear to even the dummest that the interbank system as existed if finished forever.
Europe had a lot of positives and may still have. The protection of the banks, protection of mobile financial capital, and protection of a technocratic elite at the expense of workers who are ‘encouraged’ to become more ‘competitive’ is a recipe that will not accepted easily throughout Europe.

Even a little reflection on EMU at the time of its adoption implied that those who adopted to euro were stationing themselves for federalism? The wonder is that something like the FC wasn’t put into motion some years back.

The unpleasant reality confronting the various political ceilidh bands dusting off their megaphones is that the experiment known as Irish economic independence has largely failed. Ireland has repeatedly failed on governance and public expenditure fronts. The tribunals show that in many instances policies of significant economic impact were steered by something only marginally short of a kleptocracy. When various Irish commentators, journalists and politicians were wringing their hands over the shambles that is Greece, one has to assume there were no mirrors in sight.

The country is a lot more bust than many believe it to be – although when you read about the money lavished by the government, Central Bank and NAMA on various classes of advisors, you’d imagine it was Brunei rather than Dublin. Sit down with a few accountants for a round of anecdotes and that should tighten the collar. Try and get some money from a debtor, that’s a real joy. The banks are still underwater with bad property debt. Credit between small companies is nearly gone. When the guy delivering the diesel won’t leave the yard until he has a cheque, it says something about his credit line as much as your own. Or when people are buying heating oil, kerosene, in 5 and 10 gallon containers, rather than 200 or 300 gallons at a time, it tells you about financial desperation.

There may not be much of a solution within the FC, but there surely is much less of a one outside it. Perhaps, one good thing that will come out of its endorsement is the end to public purse gravy trains. That would be something worthwhile.

There’s no need to balance the budget by next year if we vote this thing down. *If* the EU doesn’t want to play ball, the target will be a positive primary balance. That’s tough, but achievable. At that point, it will be up to the EU wallahs whether they keep funding us to prevent a default or we start unilaterally extending maturities, postponing some interest payments, negotiating agreed write-downs and cancelling instruments held as security by the ECB.

@Kevin Donoghue

There is no legal mean to dissolve the treaties (and no political will either ,nobody has any animus against Ireland) but I think that life into the single market will be very difficult in case of default .A sinking currency mandates exchange controls and that would clearly put you in infraction of the treaties .In other words I do not think that a catastrophic currency flight can be avoided if the answer is “no” and then the country will be obliged to call it quits.

@Bryan G,

No problem. Just thought you were bit a tad pesumptive in putting me in the ‘yes’ pigion-hole. I’m genuinely unsure as to which of the two options is the lesser of two evils. Those who already are instinctively and mostly unthinkingly in the ‘no’ camp have yet to articulate the implications of what they are advocating. They may not find it necessary, or even politic, to present a credible alternative. Pure opportunistic, oppositional politics has delivered two EU treaty ‘no’ votes previously.

But, as a regional economy at the intersection of the trans-Atlantic Anglo-Saxon economic space and the EU economic space, we need to be clear that the choice is between the lesser of two evils. And these two evils needs to spelled out in a clear-eyed manner to give the Irish people a proper choice. Whether they will focus on this choice or allow their heads to be turned by all manner of issues that may be related but are not directly relevant to this choice is for them to decide.

I agree that Dr. Merkel desires above all else to be re-elected for a third term – and ideally with a governing partner less constraining that the SDP between ’05 and ’09 or less annoying and frustrating than the FDP currently. But she has a vision of a more integrated ‘core’ EU that appears to be resonating with the liberal/centre-right in these countries and she appears to be prepared to expend political capital – even to the extent of constraining her options after the next Bundestag election – to secure the basis to realise this vision over time. And this is not the neo-liberal fantasy of the left’s fevered imagination; it is a restoration of the German social market economy in the modern era. I believe she is genuinely angry at the damage that was done to this model by the Third Way-ish triangulation of Schroeder and Fischer and by infection from unregulated Anglo-Saxon financial capitalism. She is resolved to repair the damage and to prevent any repetition. And, not only that, but she is resolved to encourage (compel?) the wayward PIGS to adhere to a version of this model. It is her attempt to secure a global strategic position for the EU in the context of the rapidly growing and expanding emerging economies.

This agenda most certainly does not resonate in Ireland. It would be wishful thinking to expect her EPP ally in government here to have the guts or gumption to attempt to articulate it. And this, rather than the unfortunate fiscal mechanism (which stands as a proxy for many things and is unlikely to be as set in stone in other countries as it may, ironically, be in Ireland), is the source of my deep unease. There has to be a positive reason for accepting this compact. Real or imagined fears about the alternative are not a sufficient basis on which to make a decision. It is difficult to see the IMF casting Ireland aside if the EU were to reduce or withdraw support.

But equally real or imagined fears about what is on offer are an inadequate basis for rejecting it. And in making the positive case for rejection, ironically, there is more certainty. Irrespective of the complexion of the government or administration we have a pretty good idea of where the UK and the US stand on matters European. While rejection would not impact on Ireland’s formal membership of the EU or of the Euro Area it would have some practical and economic impacts and the further irony is that the articulation of any positive case for rejection would most likely involve closer economic integration with the UK – and to an extent with the US. It is difficult to see many firmly in the ‘no’ camp swallowing this. And, most likely it would require the deep-seated structural refroms that the Government has so far successfully avoided or has succeeded in watering down.

So, perhaps, the ultimate irony is that the positive case for rejection is probably stronger than the positive case for accpetance, but the implications would be anathema to most of those in the ‘no’ camp.

The focus of both sides on real or imagined fears, the incessant negativity about each others’ positions, the lack of interest in making genuinely positive cases and the stench of hypocrisy is already nauseating and revolting – and the campaign is barely a day old.

@ Overseas commentator

No need to add unnecessary drama to the situation! The fact of the matter is that markets are unlikely to pay much attention to the outcome of the referendum because they do not see the fiscal treaty it as in any way central to the crisis. What the ECB is doing is of much more concern.

As Ireland is already in a programme, it is not immediately affected in any case by the provisions of the treaty.

Given the hoops that the EA has gone through to allow Greece to stay in the euro, any suggestion that Ireland, the best boy in the class, relatively speaking, would be thrown out is far fetched.

Voting no will simply make a difficult national situation worse cf.

This news has not yet been picked up by the Irish media to any significant extent this evening.


“In a snap GE, a new national govt with …”

Whatever the result of the Treaty ratification referendum this is not a referendum, on the coalition which is only 50 weeks old, regardless of how people would like to view it.

Linking the referendum with a the continuation of the Government is IMHO at best pointless and at worst “scaremongering”.

The existing Government already received an unfavourable result to one (of tw) referendum it held last October but it did not have any bearing on the fact that it is still in power and the current Dail can theoretically survive until February 2016

The real “test” of the current Government and our future attitude toward the EU will not come until the local and EP elections in June 2014.

Regardless of political party prefereces ( and eventual individual voting preference in the Treaty referendum) one has to admire the politcal masterstroke Enda and Co. have carried out by announcing this referendum in the way they did.

Partisan (and internal opposition) politics aside the current Government have,IMHO, demonstrated they are “not asleep at the wheel” when it comes to diminishing any pressure from various EU stakeholders.

Please be in no doubt Ireland would have faced tremendous political pressure from various European sources(which could have provoked all sorts of unforeseen reactions ) if the decision was not announced promptly and quickly but still allowing 3 months for issues to be properly debated.

IMHO this decision ( and the way in which it was taken/announced) to hold a referendum was good governance and good politics.:)

BTW I have not decided whether the “right” result should be NO, TINA, or YES. and have no intention of deciding that until very close to the actual referendum date.

@ Tull

“a new national govt with Grizzly as T, Uncle Joe as finance minister and Eamonn O Cuiv as Aire Gnothai Eachtra (sic)”

The IT had an oped about Michael D the other day. Someone presumably respectable warned 30 years ago that if he got into Government he’d go mad. It was respectable FF who went nuts in the end and brought the house down.

These people can be very dangerous :

Oh look…the next budget has been leaked and discussed in the bundesdail…
“Ireland’s government may need more fiscal tightening in 2012 to meet budget targets, the European Commission said in documents supplied to German lawmakers.
Finance Minister Michael Noonan laid out 3.8 billion euros ($5.1 billion) worth of tax increases and spending cuts in December as the Dublin-based government sought to narrow the shortfall to 8.6 percent of gross domestic product in 2012.
“The growth outlook could continue to deteriorate significantly,” the commission said in the documents obtained by Bloomberg News, which were supplied to lawmakers by Germany’s finance ministry. “A further deterioration of the macroeconomic backdrop could require additional fiscal tightening later in the year.”
The commission urged Ireland to reassess its deficit forecasts later this year and detail how it will reach the European Union’s 3 percent limit by 2015. It is part of the so- called troika, which includes the European Central Bank and the International Monetary Fund, in charge of monitoring the Irish economy after the nation sought a 67.5 billion-euro bailout in November 2010.
Paul Bolger, a spokesman for the Irish Finance Ministry, said he wouldn’t comment on “leaked documents.”


Do you think that a second bail-out in 2014 can be avoided ( irrespectively of the referendum results)?
Do you think that the Troika will have a mandate to negotiate a second bail-out if the answer to the referendum is “no”?
Greece has exhausted any patience that the European voters had toward the PIGS countries .
I am not an expert in Irish politics and hope that Mr Kenny knows what he is doing , that the answer will be “yes” and that we will not test if I am “adding unnecessary drama to the situation”.

Europe is decending into full blown fascism – I don’t want any part of it now – I had Gaullist like views of Europe once (before I grew up) , hoping countries could use cross border institutions to improve their productive capacity but not erode their soverginity.
Now I recognize it was a trap with the likes of Valery D’estang and other scumbags at the helm , with others behind the scenes – working working working to create a inherent instability they could use as a battering ram against the nation state.

Its time to eject – forget about the EU – its not what it seems , perhaps make agreements with the euro sceptic elements withen Britian in the interests of Realpolitik.
Islands do have their advantages – its time we made use of ours.

@ Overseas commentator

Frankly, I have no idea! There is a formal undertaking, in any event, to continue aiding countries in a programme if they cannot exit from them because of circumstances outside their control; as long as they stick to the programme! The adoption of the fiscal treaty is a separate issue.

Phrases such as “running out of patience” should be removed from the general vocabulary as they can give rise to misunderstanding. The creditor countries of the EA are aiding the countries in difficulties not because they much like doing so but because it is in their interest to do so.


I already answered that ,you will not be thrown out ,you will be denied the financing that you would need to stay in.

I hear The Mahon Tribunal Report will be leaked this Friday

[h/t The Bundestag


‘It was respectable FF who went nuts in the end and brought the house down. ‘

Now now! it was respectable FF and the Uber-Respectable Progressive Democrats (aplogies Tull) or PEE-DEES who brought the house down — Cormac Lucey was advising Mick McDowell around 2004 and PD Charlie McCreevey gave the finger to the Commision, Mary was sorting out Boston and had no time for Berlin and Bertie, The Bowel Bertie, didn’t even need a Bank! They are still dangerous!

And Mick wants to bring back the Efficient Markets Hypothesis, light touch regulation, and of course, no regulation whatsover for his pals in the GoldMines and the Law Library etc …. now, what colour was that wine?

@ Mark Says:

“Hans Blok has just painted a picture of German pensions collapsing and the end of the eurozone if the referendum is rejected.”

Maybe we have some fundamental misunderstanding here.
Practically all German pensions are strictly Pay-Go. There are no savings.

20 % of incomes is taxed for pensions, and whatever comes in, is distributed. This “collapses” only when German GDP is collapsing.

I had some interesting discussion with some canadian guys, with irish roots, during which I tried to calculate actual Irish government interest payments.

I came up with some 60% GDP (taken as 208 b$ in 2010, and 1.3 $/€) and a 10-year (2020) coupon at 4.5%, leading to a vague guess on average 3.0%)
and another 50 % in IMF / EU loans at 3.5%, rounding to approximately 110 %, as shown in this Scorecard

leading to roughly
60 % * 3 %
50 % * 3.5%
3.55 % of GDP, or after subtrating 2.5 % inflation * 110 % = 0.8 % GDP net interest

German debt and (coupon) payments on it:

is there a similar Irish site ?

German Coupon payments are at 6 % for maturities longer than 10 years.

That looks like , it is the German tax payer taken to the cleaner.

@ B-E-B
Should the Germans have a referendum to put an end to all of this?

Did I get something wrong ?

@Overseas commentator
You are stirring all sorts of ingredients into the stew now: default, breaches of treaties, exchange controls etc. A ‘No’ vote doesn’t of itself entail any of these. Of course we may be in for some or all of them, but that could happen regardless of the referendum result. It’s not as if the current plan is going smoothly. And “nobody has any animus against Ireland” sits rather uncomfortably beside the claim that the EU will show us the door. Rejecting a treaty (or compact) which is widely ackowledged to be a crock is not a hostile act and should not be treated as such.

As for your reply to Bundesboy, what on earth do you mean? “You will not be thrown out, you will be denied the financing that you would need to stay in” might make sense if solvency was a condition of EU membership, but it isn’t.

I do not see an ejection from the EZ in the cards. The most likely scenario will be a moderate decline in cooperation from the EC and ECB. Then we are likely to enact a repeat of our sudden departure from the Commonwealth after our Taoiseach, John A Costello, FG was snubbed by the Governor General of Canada, 1st Earl Alexander of Tunis (the same Tunis where the British last used gunboats in a sovereign debt dispute) in Ottawa in 1948. Ireland in a spur of the moment decision announced it was withdrawing from the Commonwealth forthwith. We can be an insecure, impetuous people on occasion and these traits are reflected in our leadership. The hard bitten, hard as nails confident Irishman is in short supply since most of them decamped for Europe and North America in the centuries prior to Ireland’s entry into the EEC.

Why does everybody want to stay in ?
Europe is a debt shroud.

A couple of thousand Italian MMT Groupies turned up to listen to some Progressive bankers.
Italians have a few Bob lying around I hear.
Europe as defined post 1968 is imploding – get your pretty little heads around that small fact.

Proposed wording for the referendum
We, the Irish people, think that Europe is run by a shower of w***kers but agree to fiscal pact because we have no choice.

That about sums it up. We are being asked to endorse a daft idea with some good in it (balanced budgets) which by the way nobody will ever adhere to. It is a bit like the old Confirmation Pledge. The only upside is that it gives us access to the ESM and Eurobonds. It is a tough sell. One is tempted to vote no as that will lead to institutionalised austerity which will kill the ponzi scheme called social democracy.

You clearly don’t understand the basics of how the banking system works post 1971 – we have freefloating global currencies don’t you know ?
If nobody produces goverment money then what is a risk free asset for the banks – Mortgages ?
Balanced budgets will mean people will be forced into greater private debt – creating even greater instability.
Have you any idea how unstable the European banking system has become because of the 3% defecit rule – or have you been living under a rock ?

Imagine what a 0 – .5% defecit regime would create ?
Europe will become a colder wetter Somalia without the oil to do that pirate stuff in the Med.
It would be back to the Galleys for us.
But thats the plan me thinks.

I’m taking Mae West’s advice: when forced to choose between two evils choose the evil you haven’t tried before.

We have tried – or have a pretty good idea – of what signing up for the fiscal compact has meant/will mean. We’ve really no idea what leaving the Euro might mean although that hasn’t stopped two camps developing with one claiming it would free us of the shackles of debt (among other things) and the other claiming we would fall off a cliff as a country. I wonder who is right and I think I’ll vote ‘no’ to find out.

A MINI- budget would do wonders for the No side in the referendum. The pips haven’t even begun to squeak yet and another 3 b adjustment due in December. Looks like the Commission shot themselves in the foot with that leaked paper. Where are they going to get more revenue this year. Maybe slurry tanks. Lots of that stuff about.
But does anyone seriously believe we would or could be ejected from the EU if we vote no to a compact that is not an EU treaty….just look at the distance Angela was prepared to go in the case of Greece.
Enda and Mickey have told us we won’t need the ESM, so no worries there.
The scare mongering could seriously backfire.

This referendum is about the rejection of the Troika and German/French mismanagement of the currency on the one hand and a chance to slap down the weaklings that that parade as Irish Statesmen on the other.

The prospect of departure from the Euro has to be welcomed. We cannot overcome our economic travails from within the currency union. We must regain sovereignty over our fiscal and monetary affairs.

All debts need to be re-set to zero with banks reduced to servitude. End fractional reserve and establish a National Bank. Aim towards a gold standard.

Stop the socialist gravy train and start working for consumers around the world. If we satisfy the needs of our consumers and increase their number we will achieve prosperity. If we do not we will be poor. Thats it.

This referendum is potentially the start of a great change in us. We have been duped and made fools of long enough. We must grasp control of our future. Government stand aside. The people are about to speak.

The message that needs to be communicated is that:

If we vote NO, it will likely result our exit from the Euro, so Ireland will have the Punt back again.

The Punt was linked from the start to our nearest neighbour and historically largest trading partner – the United Kingdom of Great Britain and Northern Ireland.

So, a NO vote is a vote to effectively make British Pounds Sterling our national currency again, and to link our economic fate as a nation, to that of the UK.

This may or may not be a good thing, but effectively:

“Vote NO to bring Sterling back”.

Our old friend LBS says we’ve taken the eye off the ball

With the three-year LTRO, the ECB has helped to reduce systemic risk and avoided a credit crunch. To minimise the inefficiencies and perverse incentives that may result from the increase in its balance sheet, and to reduce counter-party risk, the ECB should be given a greater role in co-ordinating and overseeing supervision of the eurozone banking system. The euro area needs a supervisory and regulatory compact, as much as – if not more than – a fiscal compact.

You have to be the undisputed superpower of the globe before you can get one of those gold standard thingies which is then used in the fractional lending system
Hibernia God bless her is not quite there yet – separation from the troika via CB defecit spending /Euro default is good enough for me.
But we don’t have control of the oil thingies either so expect 10 Punt a litre petrol.
This will not be easy but unfortunetly it must be done.

In my calculations, the German taxpayer is, even mid term, better off, if Ireland departs.

@ Mickey Hickey

In Nov 2010, Prof. Patrick Honohan, governor of the Central Bank said: “With the structural shift towards high-productivity sectors during the 1990s and again since 2007, unit labour costs tend to fall even if wage costs for any individual firm or industry are increasing. Because of this shifting composition effect, as has been well-known for decades, but is routinely forgotten by superficial analysts, unit labour costs are a false friend in judging competitiveness developments for Ireland.

Unit labour costs have fallen mainly because exports from the Irish pharmaceutical/medical devices sector, accounting for 60% of merchandise exports and 33% of total tradeable exports, rose 38% in the period 2004/2010 but employment in the low 40,000s hardly changed.

@ The Alchemist

The unpleasant reality confronting the various political ceilidh bands dusting off their megaphones is that the experiment known as Irish economic independence has largely failed. Ireland has repeatedly failed on governance and public expenditure fronts. The tribunals show that in many instances policies of significant economic impact were steered by something only marginally short of a kleptocracy. When various Irish commentators, journalists and politicians were wringing their hands over the shambles that is Greece, one has to assume there were no mirrors in sight.

Well said but there is a much bigger market for fairytales in Ireland than for bitter truths.

Come August, it will be 5 years since the onset of the global financial crisis; come November, it will be 15 years since the setting up of a planning corruption tribunal in Ireland.

Brevity is the soul of wit and besides, given the slow pace of change in Ireland, what is new that can be observed?

Ireland is a strange hybrid of one economy dominated by world class companies and the parallel old economy and society, described 25 years ago by the late John M. Kelly as British inherited engines kept intact over the decades by local maintenance crews.

The so-called referendum debate will undoubtedly generate a lot more noise and excitement than any issue under domestic control, due overdue change.

Foreign scapegoats and the MOPE syndrome described by John Banville, will always trump interest in what can be changed without any external involvement.

The planning tribunal minted several multimillionaires and the old system continues. Washington DC shows that bribery can be pervasive when it’s legalised.

Irish camels should have a look at their own humps.

@ Kevin Walsh

In the short term, I expect that the result of a no vote would be even worse than the consequences of a yes vote. But in the long term, I expect that a yet vote would leave us more likely to have future financial crises, and with less ability to cope with such crises. So on that basis, I’m going to vote no.

You are one of the lucky ones who can afford to worry about the long run.

Harry Hopkins, a close aide of President Franklin Roosevelt was being lambasted for excessive spending during the Depression by conservative members of Congress, who claimed that the economy would sort itself out in the long run. To which Hopkins replied, “People don’t eat in the long run, they eat every day.”

@Joseph ryan

The bank guarantee was issued without consultation with other ECOFIN ministers.

It was an Irish solution to an Irish problem and followed the typical trajectory of all such thinking. Keep quiet about it, and pull a stroke.

John Gormley revealed that the government had been discussing a guarantee for at least one week before it was issued in the dead of night.No minutes of th meign that bankrupted the nation for a generation. Now the ECB didn’t engineer that!

Draftings to nationalise Anglo were considered even earlier.

And remember the Taoiseach at the time could spend at least eight hours on a golf course with senior Anglo figures and not once, mirabile dictus, did Anglo’s problems pop up in conversation.

Blaming the ECB and all the other ‘foreigners’ is easy and convenient. It let’s official Ireland off the hook, but official Ireland where in a mature democracy it would be in the dock.


“In my calculations, the German taxpayer is, even mid term, better off, if Ireland departs.`”

That’s with your beggar my neighbour Brillen. Why did Germany provide so much support to the periphery in the past ? Didn’t it have something to do with expanding the market for German output ?
Where’s the growth going to come from if the markets are cut off ? Drang nach Osten ?

The referendum will not address either of the two sorts of failure, domestic and European, which have to be addressed.

As Michael H ponits out, Ireland is a bizarre hybrid economy. Paul Hunt and others correcrtly describe the way in which the domestic sector is crippled by stakehoilder interests. Absent any real attempt to confront them, the ‘NO’ path has little chance of success.

The reality is that our domestic sector is in inexporable decline, but the decline is hidden by the FDI activity. The truth will emerge soooner or later, and very much sooner if our handy Corpo Tax regime gets torpedoed in Europe or the US. Decreasing agri supports will bury what’s ‘s left of the provincial towns.

The further reality, as the Dork, Bryan G and others point out, is that the EC project itself has succumbed ot the finacialisation virus. Even the German banks poisoned themsleves with derivatives, hence the need for steroid injections from Draghi. Those interventions are palliative at best, and will inevitably give rise to deeper systemic problems, leaving Draghi’s successor, if there is one, in currently unimiginable doo doo.

Notwithstanding all the worthy efforts of the politicians and civil servants, as assiduosuly documented by the likes of DOCM here, the middle classes of Europe, even Germany are getting squeezed bigstyle. Mobile global capital is the most merciless tyrant ever invented, and it’s all going to come to a head, as Dork ssays, over energy.

@Michael Hennigan

Interesting you mention the tribunals as an indication of the failure of independence. This small country can’t stand up to the vested interests of its legal profession, let alone stand up to its small oligarchy.

One train coming down the line is the the judgement in the Quinn affair. The ludicrous literalness of Irish law (always it seems in favour of the very rich) means that only a fool would bet against the Quinn’s escaping any liability for €2B. This €2B is then the responsibility of the Irish taxpayers, who think that the European taxpayer will , one way or another, take on that ludicrous debt.

This merry go round will be hidden from the Swabian housewife, but will come to the attention of European policy makers.

Perhaps its time for a new constitution, a new legal profession, a new ruling elite… Maybe we could get them from Eastern Europe, like plumbers.


I’ll be voting yes, but your Mae West quote (when forced to choose between two evils choose the evil you haven’t tried before) is the best argument for a No that I’ve heard so far 🙂

On Eamon O’Cuiv

When he says “the basis of Europe has always been that the commission proposes policy and then heads of state dispose of it.”

“What we have seen in the last year – is two of the leaders of Europe – that is Angela Merkel and Sarkozy – pre-empting the European council and proposing the policy and literally usurping the role of the commission. A Europe that operates on that basis will self-destruct.”

He’s actually right about that and I think John Bruton said something very similar recently. I shall ask The Google…

(He also made interesting remarks here… )

Two articles on this today in the FT.

“Irish minister pushes to cut bail-out cost”

and “Concessions will secure win in Irish vote”

From the first:

“People have made enormous sacrifices in terms of austerity … Relief in relation to the promissory notes would underline and emphasise once again the solidarity that Ireland has received from the eurozone,” Ms Burton told The Financial Times.

Ms Burton said the notes should be extended over 50 years to cut the cost to the exchequer during its present difficulties.

“Dublin has previously asked the EU authorities to renegotiate the promissory notes and technical work has been taking place for several months. However, Dublin has so far received no firm indications that the EU authorities will provide any relief.

“Ms Burton said a move by Europe on the promissory notes would be very helpful in the referendum campaign and would be noted by the Irish people. She said it would also benefit Europe, which could point to Ireland as a success story.”

@ paul quigley

Classy post as ever.

@James Flynn

If we vote NO and by your assessment we are forced to exit the Euro – an with that process give the ECB the two fingers why given the growth profile of Ireland v the rest of Europe should the Punt Nua not in fact trade at a substantial premium to the Euro.

It seems to me that before its even debated the considered opinion is that any Punt Nua would be so discounted against the Euro that its not worth the effort. I’m not so sure. Say goodbye to the strangulation of all that Euro debt and perhaps the infamous ‘markets’ might see it differently. Just a thought.

Hopefully debate over all matters related will be opened here as it is critically examined by media from Ireland and abroad. I look forward to Sunday Times supplements: all you need to know on Fiscal Compact and ESM. Hopefully no efforts will be made to stifle, control or close down debate. Hopefully each side will be able to put their respective sides before the people. We can all help me this rather than hindering it.

Worst that can happen is the debate may descend into a don’t want to know campaign ranging across
different levels of:

Don’t want to know?
No need to know?
Can’t know?
Can’t say no?
Who knows?
Nobody knows?
Everyone knows?
You know?
What’s to know?
They know?
Sure we all know?
I know?
I’ll know?
They’ll tell us, you know?
Just say, no! 🙂

The fact is many don’t want this debate at all. They want their own light weight views to prevail without rancour or dissent of any kind.

The question of secrecy attached to the ESM Treaty is a very troubling one. For example, the ECB has a board with a seat for each Central Bank governor including our own.

This ESM hedge fund which will have large decision making powers re bailouts, purchase of sovereign bonds, investments, has no such democratic, representative mandate. The members of the ESM will be unelected and perhaps represent unknown decision makers from the core.

“Professional secrecy

The Members or former Members of the Board of Governors and of the Board of Directors and any other persons who work or have worked for or in connection with the ESM shall not disclose information that is subject to professional secrecy. They shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy.

“ARTICLE 35 Immunities of persons 1. In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents. “

Here are some sparce facts

Also the Treaty here

No mention as to the makeup of the ESM board except that they will enjoy immunity from prosecution, bound to secrecy except the4 following:

Structure and voting rules
1. The ESM shall have a Board of Governors and a Board of Directors, as well as a
Managing Director and other dedicated staff as may be considered necessary. ”

Debate so far has flowed about the question of membership without looking at the proposed structural makeup of the Board of Governors and a Board of Directors.

We should question how democratic in EU terms will be the makeup of the above structure. From a quick interpretation of the above, democratic representation is not high on its agenda.

Will Merkel provide the ESM’s appointees?

@ Sarah Carey

Herewith a link to another Indo article which sums it all up, at least in my opinion.

What is most reassuring is the fact that, even in the early days of the debate, the issues are becoming so clear cut (sticking the hand out in a blatant manner included).

The outcome is a hard one to call on this occasion as each voter will be asking which outcome is best suited to his/her own interests i.e. the choice between (managed) austerity now and (unmanaged) austerity later but with, perhaps, a more equitable distribution of the burden. Hence, the dilemma with which many contributors to this blog appear to be struggling.

The difference this time is nobody outside Ireland much cares what we do and, despite some rather feeble domestic efforts to establish a case for relevance – saving democracy for Europe etc. – this attitude will not change. Other countries have bigger worries of their own.

Good letter in today’s Irish Times:

Sir, – Could I suggest that we save the taxpayer a few million euro by “holding the second referendum poll first so that we get the politically-desired result without two votes? If this is not possible, an alternative would be to issue two ballot papers, marked Vote 1 and Vote 2. This would afford the voter the opportunity to first reject the fiscal pact on Vote 1 and then accept it on Vote 2. The only additional expenses would be printing and counting. – Yours, etc,


Glack, Longford.”

If German public opinion held that Π = 3 ridiculous Irish europhiles would sing the praises of such an amendment, “Pi for Jobs” etc.

We know that the FC Treaty is a fig-leaf for German politicians who fear domestic public opinion. As a consequence, we are supposed to insert this piece of phoney innumerate rubbish into our constitution.

Maybe that makes to difference to anything except to our vanity. But let’s tell it like it is this time.


Re “The difference this time is nobody outside Ireland much cares what we do and, despite some rather feeble domestic efforts to establish a case for relevance – saving democracy for Europe etc. – this attitude will not change. Other countries have bigger worries of their own.”

Nope, I totally disagree with you there. Our referendum on this puts us in a very privileged place indeed. Debate on such issues was stifled in Greece when Papandreou was ousted, in Italy when Berlusconi was ousted.

There is intense debate and interest in the German parliament on matters related to the ESM. There is enormous interest in this from the peripherals point of view.

Add in the factor that the “Compact’
requires only an undemocratic 12 votes to pass it and the Irish decision to hold a referendum provides a litmus test opportunity for interested people across Europe to scrutinise the ESM and the direction being taken by the EU in terms of its democratic mandate.

The smoking ban in Ireland was largely ignored by the rest of the world but since then has caught the world’s imagination ❓

So re 9:38, who gets to appoint he members of the Board of Governors of the ESM and members of its Board of Directors ❓


Couldn’t see the by-line on the Indo piece to which you linked, but it looks like the journos are beginning to step up to the plate and beginning to behave like a proper Fourth Estate.

This is shaping up to be a Boston or Berlin existential choice.

@Paul Quigley,

I agree about the tyranny of global capitalism, but I remain convinced that Chancellor Merkel and her government are resolved to bring at least the rabid financial arm, in so much as it impacts on the EU, to heel. Can’t say that to the same extent for Washington or London.

@Sarah Carey,

Eamon O’Cuiv has inadvertently highlighted the role of TDs in this ‘debate’ – regardless of whether one agrees with his stance or not. I expect he will be damned with faint praise by the FF leadership – and gutted brutally behind the scenes. All we need is a dissenting TD from the governing ranks and we might begin to see the Oireachtas taking a faltering step or two to do what it should be doing.

@Gavin 9:50

I heard Gilmore on Prime Time categorically state there wouldn’t be another one on this…..but, I don’t believe him 🙂

Re the 2 ballot papers, I won’t make fun of an offer to phone a friend, or final answer check boxes; but, Ballot Paper Referendum 11, in spite of what the Creighton assertions as to their not being linked, may have a clause:

“Given that the IBRC unconscionable and odious debt is an undemocratic and wrongful debt perpetrated under false pretences against the Irish people, the ESM has decided to set the ¢31 bn aside, the support of the Irish people is requested, for the following..”

But PIIGS don’t fly in the EMU and they intend to keep it that way.

@ Gavin Kostick

What is good about the letter? There will be no second vote, not just because the Tánaiste has said that there will not be but because there is no obvious basis on which it could be held as no amendments, protocols etc. could conceivably be negotiated. The treaty will go ahead with or without us.

I’m just looking at Greek manufacturing figures out this morning. If they haven’t already, they are certainly in the process of falling through the floor and I don’t see the bottom in sight. We’re potentially moving towards a failed state the way this is going. The Spanish figures are ugly too and there are clearly more job losses than expected over Jan/Feb there too on top of their already ridiculously high (for an EU country) unemployment rate.

No doubt we will be bashed around the head with that in the run up to the referendum…. from both the no and the yes camps (this is what will happen if you do, this is what will happen if you don’t).

Anyway, is there a book open on the % of the electorate that will actually turn out to vote? I am betting very low c.45% because people are past caring/don’t think their vote will matter it will be done unto them anyway/think if they vote no it will be rerun so what’s the point/think anything to do with the EU is a complete load of bollix/sure it’s not like it’s a general election is it/what’s a fiscal compact?/who feckin cares?/ where’s the remote, Europe’s Got No X-Factor Talent Dancing On Thin Ice is on the telly/ I will be away on my second overseas holiday then because I’m a developer and I’m now earning 200k a year paid for by NAMA, etc..

I was speaking to my old mother-in-law last night. She hasn’t got a clue what this is all about. She’s not alone.

I think that the leaks to the German Parliament about our budget just about sum this stinking mess up.
In my head I know we should vote yes.
But I am so sick of this crap right now that I will vote no.

Here’s what happens in a yes vote anyway:
1: it is followed by a mini budget to “further meet the terms of the pact” and
2: Mario is signalling that the tap will be turned off at the ECB so no hope of returning to markets anyway

Bottom line is I’m sick of this. I want my country back!

@ Paul Hunt

“I remain convinced that Chancellor Merkel and her government are resolved to bring at least the rabid financial arm, in so much as it impacts on the EU, to heel.”

I presume you are referring to recent attempts to bring about Financial Transaction Tax and efforts to curb CDS exposure, but if you look at the makeup of the ESM, it reeks of the worst excesses of financial capitalism you can come up with.

Not saying ESM yet its anything near Enron ponzi fund status, but transparency and accountability, authoritarian management, operation of the ESM fund, we should all have huge questions about it….quite apart from the rather high probability the ESM will prove to be unable to deal with the problems engendered by the periphery/core relationship.

The solution by Germany to this crisis is to demand greater political union/control over peripheral members, run them as principalities
with its technical Mario appointees, could this be Ireland of the future (hope you have a sense of humour):

@ Colm

“The solution by Germany to this crisis is to demand greater political union/control over peripheral members, run them as principalities
with its technical Mario appointees”

Have you actually looked at what Monti has done since he came to power in Italy? He’s directly challenged Merkozy’s “running” of the EU and is trying to bring back the community method. They guy has been seriously impressive and should be seen as an Irish ally.


“the ponzi scheme called social democracy”

Why don’t you set up an investment fund to buy up all the old workhouses and refit them for the glorious laissez fail future that awaits us under the right .


1. “it is followed by a mini budget to “further meet the terms of the pact”

Well, I think the smart boys say that because the treaty refers to the structural deficit and because no one knows what really is, or how to measure it, we can argue the toss with the Commission for years.

2. “I want my country back!”

The government does too and I believe that everything they are doing is designed with this sole purpose in mind, and if that means agreeing to some nonsense to keep the Germans happy, well then press on.
The referendum might give us leverage to do some sort of deal.

I have decided to Campaign for an “I dont know yet” vote for the upcoming referendum.
If we are serious about wanting action on the promisory notes then i dont think karls yes but arguement made on VB last night or a O Cuivs no because vote will help us that much if they both have the objective of seeking to rengotiate the spread of the banking debts. I think that the higher the ‘I dont know yet until we see how the Pro note negotiations go’ is the best strategic option at the moment.

The problem with a yes but arguement is that due to the alarming amount of scaremongering alongside the deteriorating domestic economy, the yes vote may be higher than some people think. This would leave us in an extreemly weak negotiating position.

@ Sarah

“The government does too and I believe that everything they are doing is designed with this sole purpose in mind, and if that means agreeing to some nonsense to keep the Germans happy, well then press on.”
Maybe but it doesnt mean they are going about it the best way.

“The referendum might give us leverage to do some sort of deal”
Only if enough people make it clear that how we vote can be decided on revisiting who should pay for the debts in privately run banks.
Saying we will vote Yes and ‘please pritty please be nice to us’ wont work.


Agreed, I’m just not sure how exactly we convey this. I guess some bleak opinion polls and then Enda can go wringing his hands to Angela?

The more I think about it the more I’d love to see the A-g’s advice. I’d bet there was an arguable case for not having a referendum.

Eamon O’Cuiv doing his bit!!

@ Paul hunt
I agree
We need to end the whip system. TD’s should be able to vote based on their consciences.
(You would also need to similtainiously bring in a rule that the only vote that will cause the government to fall is a vote of confidence in the government)
It would lead to a more democratic Dail.

@ Bond

He’s unelected. Simple.

His policy of bailing out banks may be having some success, but its a short term pyrrhic victory,
banking problems are only a symptom of EMU’s problems, real problems of structural
deficits, and core problems of surpluses vs peripheral deficits are not dealt with except
through the austerity programme that worsens the problem.

This writer is extremely critical of Draghi:

Papedemos, Monti, Draghi list of the unelected in the EMU plus the unelected ESB Board…..getting longer and longer

Can’t find any evidence on the PN’s he’s an Irish ally.

The precise definition of the structural deficit could be argued indefinitely, but a definition will likely be agreed without much delay. The likelihood is that definition will show a structural deficit not very much different to that produced by the Department of Finance. DoF’s budgetary projection on this for the current year was 8.0%.


Sadly such racist-tinged views are all too prevalent – look at media framing of the German Chancellor in Greece, for instance – and increasingly common in Ireland. It’s understandable since people will always look for a ‘scapegoat’ to ultimately blame for their misery. I think it may be a bit late for Mario Monti to start restoring the primacy of the community method in Europe. The crisis has exposed the weakness of the Commission leadership and the futility of the EP; nor have the Lisbon appointees as Council President and Foreign Affairs supremo proved to be up to much either.

I think that’s the bigger picture surrounding this fiscal treaty – it’s symbolic of the breakdown of the community method within the EU and thus begs the question of where the EU is going. I know that’s the problem I’m struggling most with in making a decision on how I will vote, which is not something I experienced in respect of previous EU Treaty referendums. Democratic legitimacy is a genuine concern, but it would be better if it were not framed in crude nationalistic terms.

@ Sarah
“…keeping the Germans happy….”
That’s why we’ll need our mini-budget you see! That’s why we won’t be able to “argue the toss”.

You can rationalise surrendering sovereignty any way you like. In some situations it can be useful. But surrendering sovereignty to perpetually service debts is nothing short of servitude and second class citizenship.
Optimism is good but picture 15 years of keeping Germany happy. Can you do it? Can you force the next generation to do it?


“What is good about the letter?”

Witty, perhaps.

Your absolute summary positions are interesting and challenging, but respectfully, only three hours before the announcement for the referendum – for which you generally argued there would be no need – you informed us that its happening “seems, however, unlikely.”

Do such moments not give you pause when announcing what will happen in the future?

@ Sarah
It just cannot work – dealing with debt through austerity. Have you seen the unemployment stats -5% in the Netherlands and 20% in Spain.
The pact reinforces this. Let the countries split. There can be no recovery until the Euro is loosened up. That may mean reintroducing local currencies on parallel with it but this compact on its own is rubbish.

@ HermanCaint

RE “Is there any actual negotiation ongoing?”

According to Lucinda Creighton there are “technical” discussions going on and good progress has been made over the previous few months….

It’s rumoured they are taking place in Hogwart’s school of witchery and wizardry by headless ghosts but they’ve become so technical no technocrat understands or can make out what progress has been made, or can be made on them?

Anytime one of these headless ghosts tries to escape they boot him back into the room for more technical questioning 🙂

@ Colm

clearly the ESM board is your new pet project. Best of luck with that. And a Telegraph article critical of the ECB? Shock horror! It also seems to have been written before Draghi’s LTRO actually did more or less what the writer was asking via QE.

Re Monti. Do you think its a coincidence that (a) he co-authored the below letter and Merkozy did not even sign it, and (b) that lots of non-core leaders have been visiting him in Rome in recent weeks? We’re seeing the formation of a debtors/pro-growth club vs the creditrs/austerity club.

@ Gavin Kostick

If you are referring to the following quote from a contribution by me on the “Automatic Stabilisers” thread, and I think you are, it is best that it be given in full.

“It is increasingly obvious that the fiscal pact is an irrelevancy. Whether Ireland agrees to ratify it or not is also of little import, other than that the confused and almost certainly highly acrimonious debate about the subject may cause some damage as far as market perception is concerned. This seems, however, unlikely”.

It is clear that I was referring to to the issue of market perception and my view in the matter remains unchanged.

I had no inkling, no more than anyone else, that a referendum was on the cards and I still think, like the government of every other country participating, that it is not necessary as no transfer of sovereignty is involved in the treaty.

However, the idiosyncratic view of those judges in the majority decision in the Irish Supreme Court as stated in the Crotty case still stands. On that basis, it could well be argued that “on balance” a referendum was required. Gavin Barrett has an excellent coda to the issue in today’s IT.

The arguments against the majority view in the Crotty judgement are worth reading. Unfortunately, subsequent judgements of the Supreme Court have put even further limitations on the executive authority of the government in relation to the conduct of foreign relations. The biggest irony is that the German constitutional court is doing exactly the same thing.

Pause for thought?

@Mr. Bond,

“We’re seeing the formation of a debtors/pro-growth club vs the creditrs/austerity club.”

You’re probably not far off the mark, but it may be more a ‘reformed profligates/fiscal reponsibility/pro-single market/pro-structural reform’ club vs the ‘creditors/ignore the internal EZ imbalances/shape up to face the threat of the big emerging economies’ club.

Given what his government has done, and is doing, to avoid or water or water down the structural reforms demanded by the Troika, Mr. Kenny’s signature is just another sick Irish joke.

@ Gavin Kostick

P.S. Some topical thoughts would be the answers to the questions; is it the German federal government or the Bundestag that is conducting the business of Germany in the counsels of the EU? And what does the Commission think?

Paul Hunt,
Given the respective history, I would choose Democratic Boston over autocratic Berlin every time.

Seamus Coffey suggested that the structural balance would be calculated as follows:

SB = B – a.OG – OOM
where B is balance, OG is the output gap, a is the sensitivity of
the budget balance to the output gap and OOM are
once-off measures

This begs many questions:
How are the sensitivity measures defined for each country?
Do “Once Off Measures” include all capital expenditure?
How do we estimate the potential growth rate of the economy to find the output gap?

Without these definitions, you have to suspect that the fiscal compact is not a meaningful, enforceable document but rather a marketing device to get Merkel’s electorate onside for continued ESM support. The referendum reduces to: do we want future access to cheap ESM funds in exchange for signing this empty formula?

Looking at O’Cuív, he looks like a man who’s been waiting all his life to decry a foreign treaty.

Judging by Enda’s remarks on News at One Compact and debt renegotiations are separate.

Am I misinterpreting this, If they offered to squash the PN’s, this would amount to bribery of the Irish people and would have to be refused?..

…Funny that 🙂

Worst leader in Europe ?

@ Bond,

“clearly the ESM board is your new pet project. Best of luck with that.”

Nope, that’s just a technical point of focus for today. I’ll move on over coming days/weeks to highlight other troubling aspects of this treaty.

Re “We’re seeing the formation of a debtors/pro-growth club vs the creditrs/austerity club.”

More like a bankers club worried on whether/how they’ll get their money back. I’ll stick to my main point on his unelected status.

I wouldn’t put too much faith in Monti though judging by his Goldman Sachs background. Seems Goldman Sachs are taking over both the FED and the EMU, no doubt Monti will argue the Goldman boys should all be in there on the ESM Board 🙂


“Given the respective history, I would choose Democratic Boston over autocratic Berlin every time.”

But Germany has been a model modern democracy for more than 60 years and democratic governance in the US is currently dysfunctional, but retaining enormous potential for redemption which I am fully confident will be realised in time.

So I think you are beginning to see the dilemma that no one in either the ‘yes’ or ‘no’ camp will articulate. Our heads and hearts, with equal measures of love and hate, and most of our pockets are locked into the axis defined by London and Washington (and the suitably alliterative Boston). Only a part of our pockets is locked into Berlin (and only very little of our heads or hearts) – and the extent to which it is was fuelled by a desire to duck and dive between Boston and Berlin to secure the benefits of both and by an atavistic Anglophobia.

So what’s it to be, big boy? Boston or Berlin?

Doing a solo from a burning building might be smart. Zero the PN, balance the budget, refuse the ESM. Then wait and see what the ECB does. If they are nasty, print punts.
Having a Swedish CB governor at that point might be useful.

That doesn’t sound like much of a choice, Tull. Say you burn down your house because the whole town is going to go up in flames anyway. And then the fire brigade arrives and they all live happily ever after.

Balance the budget for sure but the rest would just be another load of problems.
What sort of devaluation would a punt nua mean ? And all those Euro debts ?

RTE have a headline: “Irish people will not be ‘bribed’ – Kenny”.

Not a year in office and he’s already lost touch with the people 😉

@ Colm

banking conspiracies? Excellent, they always provide real insight into our problems, always much better to blame a unproveable shadowy clique, rather than look at boring but more practical considerations.

@Paul Hunt

“Our heads and hearts, with equal measures of love and hate, and most of our pockets are locked into the axis defined by London and Washington (and the suitably alliterative Boston). Only a part of our pockets is locked into Berlin (and only very little of our heads or hearts)”

I was thinking about where a more sensitive body part might be locked in could be the determining factor in all this!

@the various sides vis Monti argument

If you speak to anyone involved in the ‘lobbying’ industry in Italy (I have) they will tell you he’s had very little impact (if any) on the various vested interest groups. He may have cut a few budgets but he’s not ‘reforming’ anything. Not even the taxi drivers. The same could be said about Greece and Portugal too (lots of words but very little action) and, er, Ireland too?

Cuts but little actual reform.

I now have the depressing task of reading the latest blurb on unemployment etc. coming out of Europe today and turning it into something C-levels with an attention span of 17 nanoseconds can understand. I’m going to thump the next person who tells me to ‘just put it on a powerpoint and email it over.’ They’re the same people who do ‘management by Blackberry.’

I wanted to be a F1 driver when I was a kid. I should have stuck with the dream.

p.s. anyone got any insight into how the ‘finalisation’ of the Greek PSI/debt swap deal is going? Any last minute snags? I sense something in the wording being handed to various politicians (they don’t make it up themselves!), IMF head, EC prat, etc. Some delay? Something not quite going right?

US is recovering. Nice how we can say that – using the collective term really easily.
The rest of the world will pick up. Only the European periphery will be left behind.

@ Eureka

The US periphery is not recovering . Towns across the Rust Belt are declaring bankruptcy. House prices in Arizona are still falling. Most of the jobs lost since 2007 won’t be coming back.

@ Seafoid
Sure there are regional differences but, in general, they have a collective sense of purpose and identity that Europe lacks I think.
Europe really is about each to their own. That’s fine but you can’t have a common currency on that basis.
Europe is broke. Sometimes if something’s broke you have to take it apart before you can put it back together again.
Europe will get there but it won’t get there like this

@ Bond 2:08

I wouldn’t really call it a conspiracy as its been done in the open in plain view. Internationally most economists eg Stiglitz, Krugman, see the sovereign bailouts are a bailout of the lender banks

From article earlier post:

An example below is the Jon Corzine $6bn bet he made against Italy collapsing that brought down MF Global.

“”My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.”

So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default.

When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

Authors of the article above that articulate this point of view are backed by Nobel prize winning economists eg Stiglitz/Krugman who warn against similar aspects of the current european ‘bailouts’.

I thought we were long past the illusion sovereign bailouts were not bailouts of the banks; especially, when we re on the receiving end of a particularly odious IBRC Anglo debt of ¢31-47 bn.

Perhaps you believe no conspiracy is involved that makes debt writedown a NO NO. Good luck with that one 🙂

@ Colm

the one problem with your suggestion is, of course, that MF Global was NOT bailed out.


Em, not really, but I’ll try.

However in the past when I’ve challenged coverage of issues (too much, not enough, biased angles) the response is invariably that there is no conspiracy – it just depends on whose on the newsdesk that day.

I presume you mean by “appropriately” that not enough coverage has been given? I haven’t been listening to the radio much today (except for news of Ian Bailey…now there’s justice..’bout time those dodgy warrants were refused). Has Newstalk been giving it much airtime?

As for Irish people won’t be bribed.

OH YES WE WILL . In fact, isn’t that the point of the exercise?

🙂 🙂


Wow! More than 261 responses. I wonder if this some kind of “site” record. 🙂

@ Livonian

not even close. Didnt a deposit selling thread have 500 or something like that??

@ Eureka

I was talking to someone from Michigan yesterday. She was talking about her sister who still lives there . She said “why would anyone stay in Michigan ? You go where the jobs are”.

Meredith Whitney in Vanity Fair

All states may have been created equal, but they were equal no longer. The states that had enjoyed the biggest boom were now facing the biggest busts. “How does the United States emerge from the credit crisis?” Whitney asked herself. “I was convinced—because the credit crisis had been so different from region to region—that it would emerge with new regional strengths and weaknesses. Companies are more likely to flourish in the stronger states; the individuals will go to where the jobs are. Ultimately, the people will follow the companies.”

It’s the same process as in Europe .

@PR Guy
Could be. Perhaps that’s the reason they decided not to declare a credit event. Looking at the list of bank heavy hitters that decided not to force the issue at this juncture makes you realize whose pulling the strings.

Funny that Corzine got it right…Italy and Spain below 5%….just the timing was wrong.

@Mr. Bond,

Will you ever let Prof. Lucey’s error recede in to the sands of time? Even Homer nodded..

Stop it. I’m finding it very difficult to stop myself forming this picture in my head of you as a total paragon of virtue and perfection …and it’s really distressing to behold…:-)


‘“It is increasingly obvious that the fiscal pact is an irrelevancy. Whether Ireland agrees to ratify it or not is also of little import, other than that the confused and almost certainly highly acrimonious debate about the subject may cause some damage as far as market perception is concerned. This seems, however, unlikely”.

‘It is clear that I was referring to to the issue of market perception and my view in the matter remains unchanged.’

Apologies I had you wrong the first time. I did take it you meant that a referendum is unlikely. But what you’re actually saying is you think that this “highly acrimonious debate” is unlikely to cause any damage to market perception of Ireland. Is that right?

@ Livonian and nostalgia fans


@ CP

margin calls, they’re a b1tch!

re credit event – today was just a sighter, result as expected. Another one to come on Monday, but only if the CACs actually get used, as opposed to just inserted, are we definitely gonna get a trigger event.

@ PH

just pointing out that we’ve still got a ways to go!! 😀

I keep hearing in the media that we have no veto. What to point out that that’s actually strictly not quite true. We can still actually veto the EU legal basis to the ESM. This was the paragraph that a council decision in March last year proposed to add to TFEU article 136:
“The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”
That amendment needs to be ratified by every single one of the EU 27. We actually haven’t ratified this yet. It still needs to be approved by the Oireachtas. In theory at least, our parliament could refuse to do this, which would remove any EU legal cover from the ESM and cause all kinds of other problems for it. I’m not saying we should do this but merely technically we *could* veto the amendment to article 136 (though it might amount to shooting ourselves in the foot, along with quite a few other feet). And there’s also the chance someone may yet challenge the constitutionality this amendment in the courts (am no lawyer so couldn’t say anything on the chance of success). What’ll be interesting to see though is that, given a referendum has now somewhat unexpectedly been called, whether approval of this article 136 amendment will be hurriedly rushed through the Dáil at the earliest possible opportunity.

Breaking Newz

Unconfirmed reports that Blind Biddy shacked up with that one-eyed Shia Sheik last nite ….. no sign of her anywhere …

to be contd.

Final Greece decision still hanging out there. I see two hurdles for Greece between now and 9 March teleconference – a Troika report (no hard date on when it’s going to be issued) on how well they are actually implementing things and the participation level of the debt swap needing to be ‘high’ (unquantified by Juncker).

Twixt, lip, cup, slip, many, and, a.

@ Colm

today’s CDS decision was as expected, slightly more contentious one on Monday due, but ultimately only if the CACs get used are we likely to see a trigger event.

Wall Street & The MatrixsQuidesque elite hold the Geithner Veto on CDSs …

The Shannon front row still hold that 20 billion Euro note of comfort for Herr Geithner next time he’s in town.

@ Gavin Kostick

Yes. The evidence up to this point confirms it i.e. no sudden major change in bond spreads. That is not to say that other considerations may not impinge on the view taken by the markets in relation to the only issue that really concerns them viz. Ireland’s ability to repay. This is a matter in our own hands. They may, for example, have noted the Tánaiste’s confident assertion that no supplementary budget will be required and compare it to actual out-turn figures.

@ Sarah Carey

It is a good choice of a word but for the fact that the other countries of the EA see no reason why a bribe should be offered. That a debate on the topic could be taking place not only among the political class and commentariat generally but within the government itself is final evidence, if such were needed, of the immaturity of Ireland as a functioning nation state.

@ Paul Hunt

“And this is not the neo-liberal fantasy of the left’s fevered imagination; it is a restoration of the German social market economy in the modern era. I believe she is genuinely angry at the damage that was done to this model by the Third Way-ish triangulation of Schroeder and Fischer and by infection from unregulated Anglo-Saxon financial capitalism. She is resolved to repair the damage and to prevent any repetition.”

Apologies if youv made this point in more detail before and iv missed it, but this is interesting. What makes you think this is the case?
Also even if this is Merkels intention, does she really have the political power (either domestically or within EU institutions) to carry it out?

The other EA countries may see no need for a bribe because they don’t think it will make much difference to them whether Ireland ratifies the treaty, or alternatively because they think we have no choice so there’s no need to sweeten the pot.

If it’s the former, then perhaps you have a point. My guess is that it’s more the latter. But I’m looking forward to finding out as we get close to the referendum and rejection threatens.


The “refuse to be bribed” remark is an attempt by Enda to present being backed into a corner as taking the high ground. Pathetic, but perhaps not to the same extent as Gilmore’s sad wittering about how the fiscal compact is “an opportunity to go beyond Casino capitalism”. There is a man who must be removing the mirrors from his house.

Of course there is no reason why Ireland would be offered any improvement in our surrender terms. The EU/ECB know they have the latitude to keep beating us indefinitely as long as the politicians and the rest of the aspirational EU administrative class (former stagiaires, serious political journalists and holders of qualifications in European law) can be kept on side.


Thank you.

I remember deliberately skipping that one when I read the “thread title” as I tend not to get very worked up by occasional “cameo apperances”. IMHO prominent economists/academics should either enagage fully in public discourse or not at all.

Occasional “pronouncements from on high” with no follow up or clarification tend to stretch my patience.:)

@ Sarah
It seemed to have been buried beneath two guys who hit a referee. A bad editorial decision – somebody thinks that it’s a non-story when your sovereign affairs are discussed by a foreign parliament. Kick me once – shame on you etc….

The bribe comment is all he can do. I think there will be a concession on the promissory notes – but it’s “because they like us and were tough..” instead of a bribe. That’s how they’ll spin it.

But im with Eamonn O Cuiv on this one. The pact makes sense but Europe sucks.
@ Seafoid
Regional differences exist in all entities re jobs etc. But the US has a US government elected by US citizens. We’ve just got Germany – its that democratic deficit piece again

@Colm Brazel

A strand of the current crisis in the EU that I find particularly interesting is that many Irish public figures, who I am sure think of themselves as liberal intellectuals, have assumed a nakedly hostile attitude to popular involvement in decision making, other than the duty to occasionally score names on a list and then gratefully waiting for the chance to do it again.

Any article by Gavin Barrett is a a good example of the elite sneer but today’s is a real gem, the contempt for restrictions on executive powers forced by the possibility of the ignorant and excitable hoi polloi getting involved in matters beyond their ken permeates the piece.

The part of the article that deals with the long term economic implications of the fiscal compact is characteristically disingenuous (we are required to practice austerity now anyway, this just makes it permanent and sanctionable…) but the “you the exceedingly ordinary people” hate comes early on:

The Irish legal system has again proven itself uniquely insistent among EU states on direct democracy when it comes to European developments – and correspondingly uniquely restrictive in the scope it gives its democratically elected government to pursue the national interest.

If only our political and administrative elite could be left alone to pursue the national interest to the best of their abilities, eh? As with the bank guarantee or the Lisbon treaty.

To me it seems that the vision of the national interest in the upper echelons of European society and the average citizens are now very badly out of whack and that is part of why the EU is where it is, a brutal and unloved agent of enforcing market discipline and tight finances on anything that is not a market or a bank….

@Eureka @Sarah

“But im with Eamonn O Cuiv on this one. The pact makes sense but Europe sucks.”

With all due respect and ,IMHO, I do not think you do yourself or Eamonn O`Cuiv justice with that sweeping generalisation.

I agree 100% that we have a very serious deficit in the EU which needs to be addressed quickly and effectively however I am not sure that is sufficient critera to consign the entire continent permanently to “sucksville”.

Whatever the eventual result of this referendum I hope the fact that Ireland is subjecting the treaty to democratic scrutiny and debate will start a process of effectively dealing with the specific rotten parts of European Governance which “sucks”. 🙂


Pardon me if I disagree with your contention that Germany is a model democracy. Their govt is dysfunctional-look at the relationship between the CDU & the FDP. Policy has flip- flopped as in the nuclear issue. Moreover, but for the intervention of Sarkozy, Monti and Draghi the euro and the EU would have been destroyed by German intransigence.
Lastly, you are an staunch advocate for allocative efficiency. Ask your self, if we were bereft of The ESM and possibly outside the euro but inside the EU would it be more less likely to happen. For one thing, the current leadership of the permo govt would be so discredited that they would have to go.
The more I think about the issue, the more I conclude that there are no good outcomes but that a rejjection of the status quo is the least worse.

@ PR Guy (10.35am)

“I was speaking to my old mother-in-law last night. She hasn’t got a clue what this is all about. She’s not alone.”

Have you a new mother-in-law? Unless, you are on your second marriage, I suspect you mean “I was speaking to my elderly mother-in-law …”

A well paid senior retiree receives signs of his PS retirement papers at 2.00 on Wednesday. He signed back on PS staff at 4.00. Same organization.
There are probably hundreds like him.

The whole matter is very depressing.
The message to the young people of Ireland is that you are not wanted. Get out while you are young. The pleasure of refusing to pay the pensions of the generation that betrayed you would be cold comfort. Get out now.

When Merkel and Sarkosy opted to not use the relatively transparent and inclusive process of treaty provision (laid out in article 48 TEU) they turned the process of ratification into a a traditional case of inter-governmental bargaining (the European parliament has not been formally involved at all).

Given this intergovernmental bargaining (and contrary to what Enda Kenny says) it is perfectly legitimate for the Irish government to seek a better deal. By not doing so they have effectively opted out of the bargaining process.

Historians will probably look back and conclude that the FG government not only transferred significant autonomy and accountability of fiscal and economic policy from the national parliament to European institutions but made a point of principle out of not driving a hard bargain on debt relief.

The good pupil syndrome.

@ Livonian
Fair point – it’s an emotional as opposed to rational position at this stage.
But emotion will win out here.
I have a visceral disgust for European institutions at this point – I suspect I’m not alone in this country.
The referendum might not be a vote on the pact – it might end up being a vote on Europe.

Van Rumpoy – ‘National Parliaments are now effectively, if not politically, EU Institutions’

Yes, the vote will turn out to be, for most, a vote on the EU rather than the specifics of the pact.
Most people either want a partial involvement with the EU – ie; something not proceeding much past the EEC stage, which is what they were sold at each referendum under false pretences.
Or short of that, withdrawal; and membership of the EEA.

It amazes me; the blasé attitude of many people here who exaggerate the economic consequences of withdrawal (for most people, we’d be in a better financial situation within 8-14 months), and see nothing wrong with the nature of the emergent regime for which they are willing to dismantle the nation state (‘obsolete in a globalised world’; according to the same Rumpoy. Hitler said something similar to the Czechs when they were annexed) in order to affiliate their own interests to it.

As for the referendum, I think the biggest concern we should have is making sure that the boxes are handled as per proper procedures, unlike Lisbon II when there were stopovers in private houses, removal of boxes from counting centres, etc.

This government would be exhibiting a lot more fear if they were intending to proceed with this vote honestly.

@ Aidan R

The process of any treaty negotiation, whether within a formal EU context, or intergovernmentally as in this instance, follows a fairly standard and predictable pattern. First, agreement that an issue is to be negotiated, then reference to a technical group of negotiators, with recourse to a higher political level at intermediate and final stages, agreement, final technical preparation of texts in the agreed languages, signature by the representatives of the parties and then ratification by them in accordance with their respective constitutional procedures.

We are presently at the penultimate stage as the treaty will be signed tomorrow.

All countries negotiate to get the best deal. In this instance, one country, the UK, decided that it did not wish to participate (although, in reality, it was actively involved as an “observer”) and one was not satisfied with the outcome and has decided not to sign (the Czech Republic).

The UK was not willing to allow the matter to be negotiated in an EU context and, indeed, placed a veto on such a step.

Historians may, indeed, look back on what transpired but it is unlikely that they will be able to overlook these facts.

Eureka – ‘Regional differences exist in all entities re jobs etc. But the US has a US government elected by US citizens. We’ve just got Germany – its that democratic deficit piece again’

– I’d argue, and most I’m certain would agree, that even if there were a representative, democratic government in place over the entire continent, an Irish Republic is preferable.

For those who exhibit (not yourself) in response the oscillation of stupidity and corruption that typically hold the political reins here as argument to the contrary, may they consider for a moment both the deep attachment to the ambition for full political union (where a republic ceases, in fact, to exist) by that same spectrum of imbeciles and cute-crooks,
and also the less than exemplary nature of the nascent regime in europe.

Karl has posted above on Enda Kenny’s insistence that the PN deal will be a totally separate issue from the vote.


I think he is a fabulous Taoiseach. How did he manage to keep a straight face? Will he turn out to be the most cunning of them after all?

And as for Tom Sheahan!

“Deputy Martin isn’t the first Cork man to be shot in the back by a de Valera,” said Mr Sheahan.’

Up with this sort of thing!!

@Sarah, @What Goes Up

Surely Deputy Martin is more of a Redmondite figure than a Collins. Not much fight in him.

Now which member of the coalition gets to be Carson?


Excellent 🙂 After 3 and half years of unremitting misery, the treaty is certainly delivering a few laughs.


I’ll have to read that in the morning. I can only process cheap political one-liners at this hour.

@ Sarah Carey & Tom ‘bovine’ Sheahan

I wouldn’t besmirch the man’s memory with a ‘Smart Alec’ comment like that.

Obviously ‘never been there’.

The BUBA comments are further evidence that German governance is dysfunctional. The only thing holding the euro and the global economy back from the cliff edge is Draghi’s pragmatism.
We are proceeding on the basis that the Germans are spoofing on austerity and will agree to Eurobonds when everybody promises to be good boys and girls but that looks like wishful thinking on the part of the rest of Europe.
As regards Enda separating the PNs from ratification. Well any self respecting negotiator would say that publically. It is amazing how many people in the commentariat that have been fooled. Surely they ain’t that stupid. Now privately, he will be warning his collegues in the EPP of the risk of no progress. But then maybe they want us to vote no.

@Yields or Bust

I do not think that adopting the Punt will mean we can crank up the printing press and ships bales of Punts to Frankfurt, Brussels, Paris, Milan and London. The debt is denominated in Euros and payment will have to be made in Euros or Euro equivalents. We can run but we can’t hide. I have visions of the time at the end of the Weimar Republic when debtors were chasing down creditors with wheel barrows full of worthless notes. Echoes of Sweet Molly Malone.

The Government is wise not to make public demands/threats on the Anglo promissory notes.

Whatever the impact on politicains, engaging in megaphone diplomacy with the ECB woould seem counterproductive.

The EU isn’t a dictatorship despite the cant of calamity howlers.

German finance minister Wolfgang Schäuble last month was caught on video promising Portugal an adjustment to its programme after a deal with Greece is sealed, the first time an EU minister has publicly spoken of such plans.

Schäuble unaware of the rolling camera, is seen telling his Portuguese counterpart Vitor Gaspar that after the Greek deal is done, Berlin will approve a loosening of the conditions attached to Portugal’s €78bn bail-out programme.

“If at the end we need to make an adjustment to the programme, having taken large decisions about Greece … This is essential. But then, if necessary, an adjustment of the Portuguese programme, will be prepared,” he says.

The Portuguese minister is grateful saying: “Thank you very much.”

“No problem,” Schäuble replies. “It is that members of the German parliament and public opinion in Germany does not believe that our decisions are serious, because they don’t believe in our decisions about Greece.”

Some hurlers on the ditch complain about ‘democratic deficits’ and voters being ignored; they also want political leaders to show courage by ignoring their electorates — that’s a luxury of being on the sidelines.

@Bunbury@PR Guy

“Have you a new mother-in-law?”

Well for the purpose of making his post if he doesn’t, he could take my mother-in-law for example. I mean, seriously – take my mother-in-law.

This post is in memory of Frank Carson RIP, and doesn’t not necessarily reflect the views of the poster or the character of any actual mother-in-laws living or dead.


Yes, I broadly agree.

But the fact that this is explicitly based on intergovernmental bargaining changes the context of negotiations. Kenny, in my opinion, is too close to Merkel and the European Peoples Party (EPP) to drive a hard bargain.

The UK position (or more precisely, Cameron) was primarily for domestic tabloid consumption and the appeasement of a virulent Europhobia on his backbenches.

I don’t know about Redmond not having much fight in him. He sent more young Irish men to die on the continent than were killed in the little kerfuffles of 1916 and the War of Independence.

I think there are parallels with Martin, Kenny and the others though.

The traumas of sacrificing Ireland for the good of a supernational Empire, so as to build up brownie points with its dominant government, did for Redmond and his party. The masterstroke of the Sinn Fein of WWI years was to capitalise on this politically. It’s not out of the question that the same could happen again with the folks who call themselves Sinn Fein these days if the Redmondalikes, like Redmond, fail to repent.


I don’t know about Redmond not having much fight in him. He sent more young Irish men to die on the continent than were killed in the little kerfuffles of 1916 and the War of Independence.

You are absolutely right, we forget how the enthusiastic slaughter of the first world war makes the casualties in the War of Independence and the Irish Civil War seem utterly insignificant. It is a testament to who gets to write histories, or perhaps who selects which ones we are recommended to read, that we spend our time bickering over domestic villains when the real crimes were being perpetrated elsewhere.

In that spirit of open mindedness can I suggest the pro fiscal compact forces be known henceforth as the “European Unionists”?

Michael Hennigan
“The EU isn’t a dictatorship despite the cant of calamity howlers.”

But this really isnt the argument, and is little more than a strawman.
It appears, perhaps unfairly, that the response to 2008 by Euro leaders has been counterproductive, heavy handed and slow, that ‘Europe’ has shown itself to be politically dysfunctional, and for a variety of reasons (geographic, cultural and political) the Euro is not sustainable.
Sure people make inane comparisons to 1939 or, for some reason, the Franco/Prussian war, but youre engaging in the same hyperbole by caricaturing this is as the position of any and all ‘sceptics’.
(I think we have internalised to much Realist international relations theory and so misdiagnose the reality, that the situation is complex with no easy answer, with the idea the Germany is engaged in cold eyed geopolitical posturing. However the fact remains, with no Euro, our options would not be so limited.)


Sadly, I have had 3 mothers-in-law during my short stay on this planet. This is one of the benefits of not being catholic (you can trade in the current spouse for a newer model, more or less when you feel like it and not be damned to whatever forever)…. you pedantic little t*at.


I will swap you 1 of yours for 2 of mine.

A default is a default – I agree anything less then externalising losses would be even more catostrophic.
However they could have not defaulted on “sovergin” money back in the day and traded internal punts to facilitate commerce but once our sovergin debt became credit deposits it was game over.

“On July 5th 1932, in the middle of the Great Depression, the Austrian town of Wörgl made economic history by introducing a remarkable complimentary currency. Wörgl was in trouble, and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless.

The mayor, Michael Unterguggenberger, had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. These included repaving the roads, streetlighting, extending water distribution across the whole town, and planting trees along the streets.

Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as ‘stamp scrip’. This requires a monthly stamp to be stuck on all the circulating notes for them to remain valid, and in Wörgl, the stamp amounted 1% of the each note’s value. The money raised was used to run a soup kitchen that fed 220 families.

Because nobody wanted to pay what was effectively a hoarding fee [technically known as ‘demurrage’ and often referred to as “negative interest”], everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though.

Of all the business in town, only the railway station and the post office (sov holders ?) refused to accept the local money. When people ran out of spending ideas, they would pay their taxes early using scrip, resulting in a huge increase in town revenues. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cashflow they would receive from the trees.

The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the schilling. This in turn increased trade, creating extra employment. At the time of the project, Wörgl was the only Austrian town to achieve full employment.

Six neighbouring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the ‘miracle of Wörgl’. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea.

Unterguggenberger was opposed to both communism and fascism, championing instead what he referred to as ‘economic freedom’. Therefore, it was deeply ironic that the Wörgl experiment was first branded ‘craziness’ by the monetary authorities, then a Communist idea, and some years later as a fascist one.”

@Tull (and rf)

I see you are leaning more towards Boston than Berlin. History, culture, goegraphy and economics lock us into the Anglo-Saxon, trans-Atlantic axis. The dysfunction you highlight in German politics and policy is a function of many things. Chancellor Merkel and her government are trying to do many, perhaps, too many, things simultaneously. For example, trying to stabilise the Euro Area without properly addressing the internal imbalances, seeking to repair the damage done by rabid Anglo-Saxon financial capitalism, trying to close the gap between the Eurocratic elite pursuing its vanity projects and the voters who were lied to, seeking to secure the global position of Germany and the EU viz-a-viz the major emerging economies and, above, seeking to secure re-election.

This agenda, most certainly, doesn’t resonate in Ireland. So we have, and will have, a ‘debate’ with each side majoring on the negative implications of the course advocated by the opposing camp. But a positive case can be made for both sides – and that’s what I’m seeking to pursue, because I’m geuinely turn between both options. But neither side has the guts, gumption or honesty to make it.

If Ireland were to vote ‘no’ and EU ‘support’ were diminshed or reduced after the existing programme it is unlikley, as Brian Lucey has pointed out elsewhere, that the IMF would fail to provide the necessary support. But the fiscal deficit would have to be reduced more rapidly, the structural refroms that the Government was avoided or watered down would have to implemented and the Irish economy would have to be integrated more closely with the British economy. All three are an anathema to most in the ‘no’ camp.

So all we’re getting from both sides is cant, hypocrisy and bluster and we can parade our failures of democratic governance before the world. I’m sure external observers, to the extent that they might have any interest, are simply bemused.

And as for this ‘Ireland won’t be bribed’ – and the post on which Karl has closed comments – it’s simply Claude Cockburn’s ‘confirmed by official denial’. The cute hoor tactics – there’s no strategy – comprise the hope that a piece of paper will be extracted from Frankfurt that will be waved on return to Dublin and that the self-interest of the huddled middle classes will prevail.

Dear Mr Kenny
I am prepared to be bribed. 30b should do it….
A Voter….

@ Michael Hennigan – Finfacts Says:
March 2nd, 2012 at 10:15 am

Statistically is BeeCeeTee mistaken?

Is 1 + 1 still 2 if proposed by a SF person ?

The rest is the kind of political snobbery that can leave one deaf to a deliverable solution from whatever source – suprised at you.

Article 17 is particularly dodgy, if not nefarious. On the surface its pleasing enough. Member states eg Ireland unable to sell their bonds on the open market, ESM purchases them, Ireland gets its money. Or does it? The question re bonds purchased on the open market at a discount is not addressed. Is the ESM going to act as a speculator profiteering from the lack of confidence the bond markets have in Irish bonds? This question is not adequately addressed.

“ARTICLE 17 Primary market support facility 1.

The Board of Governors may decide to arrange for the purchase of bonds of an ESM Member on the primary market, in accordance with Article 12 and with the objective of maximising the cost efficiency of the financial assistance.

2. The conditionality attached to the primary market support facility shall be detailed in the MoU, in accordance with Article 13(3).

3. The financial terms and conditions under which the bond purchase is conducted shall be specified in a financial assistance facility agreement, to be signed by the Managing Director. “

First objection to the above is effectively the ESM will be allowed to invest in foreign debt eg US treasury bonds. It has no mandate to either purchase the debt of members of the EMU or to make direct investment in public companies in the EMU. As far as I know, it has complete freedom to choose where it invests its money. You don’t need to watch the Dragons to see the crucial need for investment across Europe. The potential to be influenced on a political and commercial level is too high for safety and because of the lack of regulatory oversight the ESM in one scenario could turn out to be Super Anglo run by the croney golfing club.

Consider the following hypothetical figures/scenario: Interest rates changing in the economy, interest rates going up/down. Interest rates going up, yields go up, prices of bonds go down.

If Ireland goes back to the market and the only buyers that will buy the bond are the ESM. Say the bond is purchased at an interest rate of 10%. Five years later bonds are trading at a yield of 20% because of growing uncertainty re Ireland as an investment prospect. No one will buy those earlier Irish bonds because they were sold at 10% yield; but now anyone can buy Irish bonds which are required to be sold reflecting current market rates, ie now gone up to 20%. In order to sell those earlier 10% bonds the Irish bond seller has to discount the price of the bond itself. The face value of the bond in such a scenario may have to be discounted to 80% of its face value. Such a situation has already arose in the case of ECB purchase of Greek sovereign debt.

The point I wish to make is that there is profit and loss opportunity in the above both for the buyer and the seller. But because of the ‘house always wins’ condition where the house can use its resources and power to influence markets particularly on the decision to purchase or not to purchase, to issue or not to issue bonds, based on factors that may be influenced politically, based on sensitive information it has acquired in dealing with competing interests and ‘chinese walls’, the ESM lies open and vulnerable to potential charges of misuse of information. The fact that the ECB has a primary mandate to bring down interest rates and curb inflation, its ability to set interest rates, renders the ESM privy to market information uniquely valuable and uniquely vulnerable to misuse and abuse. In the purchase of sovereign debt its easy to comprehend a situation where the ESM privy to confidential information interest rates will fall, goes into the market to purchase Irish sovereign bonds that traded some months previous at 10%, but because of catastrophic employment stats including the withdrawal of some MNC’s and Obama new legislation preventing transfer pricing, Irish sovereign bonds now trade at 20%, and purchase that Irish sovereign debt at a 40% discount on its face value. But the ESM is privy to information that ECB is going to forgive the PN’s and set the Promissory Note obligation to nil.

Some days later this information is released and Irish sovereign bonds go up in value and now trade 20% higher than their previous value leading to opportunity for a vast profit. The profit of course will not be put into Ireland’s pocket. Its this unique access to information that can be used to manipulate sovereign markets in the EMU that should require the ESM be sent back to the garage for brake pads on all four wheels to prevent it crashing the ECB.

Another criticism of the ESM is that the ESM is not a programme for equity investment. Its interest lies only in the issuing and management of debt. This makes loads of money for traders but makes the debt all consuming and vulnerable to the shifting tide of interest rate changes and the shifting price of debt. For sovereigns issuing the bonds it sucks when rates go up, less ability to borrow money in the future, new bonds then need to be sold at a higher interest rate.

In the case of the IBRC, the ECB has stuck us with a bill for ¢31 bn which along with promissory note repayments of ¢3bn + over X number of years has spiked us with an unconscionable bill for ¢47 bn as part of our odious ‘bailout’. Because there is no profit to be made in another form of equity stake investment, namely, eg 50%, which would reduce the bill to ¢15.5 bn, the ESM is ruining its core function to bailout countries such as Ireland.

Equity stake investment would provide opportunity for recovery much more so than the provision of stupid bond purchasing schemes and similar bailout mechanisms that provide boats of stones for titanics like Ireland sinking under the deleterious influence of the ECB and its ill omened response to meltdown.

Question, whose the most autocratic, anti free speech, (except his own?) of Irish economists 🙂

mandate above …meaning although it has freedom to do so, this is entirely it seems at its own discretion, shuda perhaps used ‘defined mandate’ or ‘mandate determined by regulated policy’

@Paul HUnt

re “Chancellor Merkel and her government are trying to do many, perhaps, too many, things simultaneously. For example, trying to stabilise the Euro Area without properly addressing the internal imbalances, seeking to repair the damage done by rabid Anglo-Saxon financial capitalism, trying to close the gap between the Eurocratic elite pursuing its vanity projects and the voters who were lied to, seeking to secure the global position of Germany and the EU viz-a-viz the major emerging economies and, above, seeking to secure re-election.”

It must be one of the most novel ways I have ever hear of repairing the “the damage done by rabid Anglo-Saxon financial capitalism”.
Ensure that those involved get every cent of their money back and a cast iron guarantee that if they ever invest again, they will be guaranteed every cent of their plus interest.

@Joseph Ryan,

I realise you have your tongue in your cheek – at least just a tad. But this is the excessive price that has to be paid to unwind the Faustian pact that many governments entered into with banks and the financial sector more generally. Ask Mr. Eoin Bond. He described this best on this blog many moons ago.

The ultimate objective is to reduce the reliance on bond market funding over time or, at the very least, to ensure that the bonds in issue or issued are priced to reflect the risk involved. In this way the power of the bondmarkets to intimidate everyone will be reduced. These are the objectives of the so-called ‘institutionalised austerity’ of the left’s fevered imagination.

But the pursuit of this objective must be accompanied by meaningful, pro-growth structural reforms whose specification will vary from economy to economy, but which will have to range far wider than the sitting ducks in the labour market. That’s the hard bit and it’s where politcians lose their nerve.

The craven, cowardly shower we have in government are not unique. They are no worse nor no better than most of those in power in all other EU member-states.

@ Colm

dude, that was a ramble even by your standards. Any chance you could condense that into something readable? All i really got was you think there’s some grand conspiracy for the ESM to be some sort of hedge fund, which funds Ireland and then makes a profit when the PN’s get written off, so not sure what your complaint is about bizarro-fantasy-situation? And then a weird bit at the end about anti-free speech. Odd.

But Joseph Ryan has a point, Im not sure why youre so confident that this is Merkels intention. And I dont know if its achievable, either within the EU, (surely there are other centres of power that dont share this objective..I have no expertise on this so perhaps yourself or Aidan R might be able to enlighten me) domestically (as has been noted, the poor decisions taken so far have a domestic political context and I would imagine implementing the project youve outlined above would involve considerable investment of north european money in the struggling states) and domestically in the struggling states (is such EU micro managing really going to be tolerated)
I dont know if this is the moment we have to choose Boston or Berlin, if so give me Berlin anyday of the week, but our options are rarely so clear cut and definitive. My problem is, and Im willing to acknowledge Im probably wrong on this, that there really isnt that much of a difference between Boston and Berlin.
So id probably vote yes, with reluctance and an eye on reconsidering that option when this all dies down


Above was directed at Paul Hunt and the project I made reference to was

” a restoration of the German social market economy in the modern era.”


I assume you’re addressing my contentions in your comment. (The integrity of the B-E-B/CB engagement is rapidly assuming the indefatigability of Churchill’s ‘dreary steeples of Fermanagh and South Tyrone’.)

I’m not denying there aren’t huge grey areas. I’m merely using ‘Boston or Berlin’ because it resonates in an irish context and might help to frame the discussion in a more positive manner – as opposed to the current conflict of armageddons.

And I’m claiming no expertise, merely observing what I see and hear and drawing on many years dealing with our continental neighbours. DOCM, our constant quide here, is far more informed and perceptive. But I think we both discern a momentum building that is cohering around abroad strategic vision for a more intgerated EU project with enhanced democratic safeguards and democratic legitimacy. It is not without wrinkles and difficulties securing the necessary sublimation of some national interests in the interests of the Union (and the over-riding desire of governing politicians to secure re-election is often the biggest spanner in the works), but one can see the emerging shape.

My question is: can Ireland engage positively with this or will it define engagement in terms of the benefits it can gain with minimal commitment (Ireland’s position since joining in 1973) and fall back on the tried and trusted of the trans-Atlantic Anglo-Saxon axis?


Can anyone with a better knowledge of the inner workings of the EC explain please…..

I was just reading that van Rumpuy has been ‘elected’ to another 2 1/2 year term. Does anyone know exactly who ‘elected’ him and whether there were any other candidates running in this obviously democratic race?
I must admit…. that one completely slipped past me.

Paul Hunt

Thanks for the reply. Okay, I can see your position better now. Im not sure Im as optimistic, if thats the word, but your comments are often well informed and insightful so its food for thought.
I do agree we need to move on from the hysteria that has surrounded this topic the past number of years, dividing everything into the “return of the Reich” vs unending collective punishment with no discernible endpoint.
It would be nice to think that public debate over the next few months is going to embrace the complexity and uncertaintity of the situation were in and the choices we face. But Im not holding my breath

@PR Guy
Simple…Angela Sarkozy did it.
Just reading Paul Hunt’s post above yours on where we are going..democratic legitimacy etc, I wonder…the imposition of Von Grumpy is not a good start. I see Davis Cameron is not impressed.

@Cet. Par.

It is for the HoSG to decide who presides over their gathering and manages the activities between gatherings. The bigger issue is the empowerment of the European Parliament to elect, scrutinise contunuously an to hold to account the Commission. And a further issue is the requirement to have MEPs answerable to their national parliaments in the same way that governments are – or, at least, in the better governed countries. Some thought is being given to the former, but none to the latter. And the latter is crucial to square the circle of democratic legitimacy.


Thank you. We won’t be able to avoid what I describe as this ‘conflict of armageddons’, but it would be in the public interest to have some apsect of the ‘debate’ focus on the positive elements of the cases advanced by both camps – if they can be found.

It would be wonderful if the ‘grown-ups’ here – and who have, with one exception, been remarkably silent – were to open two threads, one restricted to presenting a positive case for the ‘yes’ camp and the other restricted to presenting a positive case for the ‘no’ camp. TINA, TOGIT and negative attacks on the other camp would be prohibited. Summarising the arguments presented on both threads might form the basis for more fruitful and productive subsequent exchanges.

@ PR Guy

The relevant procedure for the election of the President of the European Council is in Article 15.5 of the TEU (decision by the 27 heads of state or government deciding by qualified majority).

Van Rompuy has, in fact, been quite a success in the role and this is why he has been reappointed for another 2.5 years. He has managed to reconcile the disparate aspects of his brief. He made a very thoughtful speech which helps explain this.

It is a pity that the same could not be said about Barroso.

The famed EU founding father Monnet said something on the lines; “Nothing is possible without men, nothing is lasting without institutions”. Van Rompuy has demonstrated the truth of this remark as he has worked from a very narrow institutional brief while Barroso’s failings have been overcome by the much wider brief of the Commission and talents (mixed) of the other members of the college of commissioners which, alone, can take decisions on behalf of the Commission (by simple majority).


The Fiscal Treaty Files: What the Government Really Thinks About What’s in the Treaty

A kind of surprising question, you might think. Sure, they’re the ones who negotiated it, signed it and now asking people to vote for it. They must think it’s great. Yet they publish documents criticising one of the main elements in the Treaty; namely, the structural deficit. In short, the Government’s position is: ‘these are bad measurements, now please put them into the constitution.’

330 comments so I’m sure this has already been added but here goes with an appalling vista:-

June 14th Referendum fails – Likely
June 22nd Government goes to Europe for non-bribe bribe. – Likely
August 30th Second referendum fails. – Conjecture
Sept 7th Government steps down – Conjecture/ Probable
Oct 2nd New Election. 4 way tie between parties. SF are kingmakers
Oct 16th Turn off the lights.

Just saying like.

An excerpt from an article in today’s NY Times. For those of you who hoard your free accesses.

“But the agreement could yet pose significant difficulties.

Ireland, which depends on the euro zone for financial support after its banking system collapsed, will hold a referendum on whether it should be party to the pact, a vote the country’s finance minister has compared with asking the nation whether it wants to remain inside the euro currency bloc.

Irish voters have rejected new European laws in referendums in the past. But if they were to do so again in a plebiscite expected by June, it could ruin plans to return to borrowing on financial markets next year and regain financial sovereignty.

This in turn would most likely mean the country needs a second financial bailout. If it does not sign the pact, however, it would not qualify to receive assistance under the euro zone’s permanent rescue scheme, the European Stability Mechanism.

This vicious circle could have profound implications for a still fragile euro zone. Ireland is seen as the most successful of the three countries to be bailed out by the euro zone and International Monetary Fund during the sovereign debt crisis.”

Would it not be more correct to say there is a move towards increased EZ integration without democratic legitimacy… No functioning parliament , increased domination by one power with a poor track record of governance both long and short term, no automatic stabilisers and with monetary policy on a currently pragmatic course but with a bunch of nuts hanging at the edge.

@ Bond,

🙂 🙂

Re mine re 12:11

Yeah, I did decide to take it out for a little walk, didn’t I ? I told you I’d occasionally concentrate on some of the troubling aspects of ESM. I know its a bit of a canute project in Ireland. You’re up against
a lot of don’t knows reinforced with ‘don’t want to knows’. Dudes overseas familiar with the shenanigans and bond market strokes have before me made similar crique of Goldman Sachs. If you are familiar with the boringly vague means of market manipulation I refer to above, here’s a link to some out of control banking, market manipulation, in the real world, rather than at the conceptual/abstract zzzz level above:

“We discuss pirating Repo Man and jack-booted accountants here to help you. In the second half of the show, Max talks to J.S. Kim of about silver, gold and market manipulation.”

Plenty here on the list, get it though, some dudes would rather we just did not get into the nitty gritty of this ESM financial send up, which won’t help the EMU out of its current difficulties one iota.

One way of seeing it is a contractual noose for participating peripherals to prevent them going for default later; contractual bindings are there to ensure the bankers will get their money back.

Re ” And then a weird bit at the end about anti-free speech. ” I wasn’t talking about Kim Il Sung, Kim Jong Il…..But we all know in Ireland there would be no great official support or wish for the coming referendum. Efforts will be made to ignore it as much as possible. Thanks to Attorney General Máire R. Whelan they’ll have to deal with it.

If certain people had their way, no comments at all would be allowed, apart of course from the occasional official edict they might grace us with in Tir na NÓg Nuacht Eachnamaíochta 🙂

Did I really call for a 50% purchase of an IBRC equity stake in Anglo for ¢15.5 bn ?

Time to get real, dude, and stop chasing leprechauns 🙂


Re the mixed talents of the current Commision, it is one these delicious little ironies that the retention of a commissioner per member-state rather than reducing the number to a more manageable and sensible, I think, 15 was deemed to be necessary to ensure Irish voters would consent to Lisbon II. This has led to such a slicing and dicing of portfolios and the inclusion of some commissioners that shouldn’t be left near the management of the proverbial whelk stall that it is surprising the darn thing functions as well as it does – and it may explain why van Rumpoy, rather than Barroso, has been more insistent and effective on the Community Method – and facing down the Merkozy predations.


In my book that is a tad jaundiced. You may not have seen my response to Cet. Par above at 2:42pm. Some serious consideration is being goven to enhancing democratic legitimacy, but, imo, not enough. As for Germany, most of the great powers got caught up in their versions of blood lust and jingoism prior to WWI. The losers suffered, Germany, perhaps more than most and, tragically, was able to vent its retribution on most of Europe and then, ultimately, on itself. We have to believe and to live with the determination to ensure “Never Again”. Leave it go. Over mamy, many comments I’ve tried to present my take on why current German governance appears dysfunctional, but, in reality, in a crab-like fashion, this ‘policy of small steps’ is intended to secure major political and strategic objectives that are ultimately in the interests of the Union.

You may believe that Ireland should not be fully part of this ‘grand project’. I have my doubts about whether it can even if it wanted to.

Is this Fiscal Compact thingy a road of clap? The announcement today by the Spaniards that they were not going to even try to meet their target of 4.4% surely points to an agreement that is dead on arrival. Who is next to announce they won’t meet the targets. Greece is a definite candidate and probably Portugal. As for ourselves, Mickey and Enda have assured us we will meet our target, so all is well and we won’t need that ESM thing. Meanwhile, in the real world……………..

@ Paul Hunt

I regret to say that I could not agree with you less.

As the saying has it, “if you are not at the table, you are on the menu”. It is absolutely vital that each member state retain a pair of feet under the Commission table if they wish to avoid even greater calamity befalling them. A level of mediocrity is a small price to pay. (There are 27 commissioners for half-a-billion people in the EU. How many superfluous ministers of state does a bankrupt country of 4.5 million people need?)

The ‘Community method’ is a process of democratic checks and balances between different institutions the prerogatives of which are set out in law, misuse of which can be challenged before the ECJ. This is a detail that Merkozy may have tried to overlook but, even in the context of the fiscal pact outside the EU treaty structure, have failed.

FYI Recommended Reading for Irish Citizen-Serfs

Author: Kenneth Haar of Corporate Europe Observatory
Published: March 1st, 2012

10 Things You Need to Know About ‘the Fiscal Compact’ aka ‘Angie’s Fiscal Corset’

On the 2nd of March 2012, 25 EU heads of state or government will sign a new treaty, and if all goes as planned, it will enter into force early next year. The so called ‘Fiscal Compact’ was conceived in next to no time, and had a dramatic start when it was vetoed by the UK at a meeting of the European Council on 9 December, preventing a regular change to the EU treaty. Instead, governments opted to create a new legal vehicle – which can be adopted more quickly with less risk of annoying interference from democratic debate and the public; a separate EU-treaty that’s not really an EU-treaty.

The treaty is about strengthening the rules to ensure signatory states apply strict budgetary policies. Notably, so called ‘structural deficits’ are to stay permanently below a limit of 0.5 % of GDP. News of the treaty was applauded by the business community, including the European employers’ federation BusinessEurope, but trade unions denounced it emphatically, with the European Trade Union Confederation for the first time rejecting a new treaty outright.

@ Ceterisparibus

There is, indeed, less to the fiscal pact than meets the eye. Readers can get the full flavour of the Spanish attitude below.

The key is the reaction of the markets. They will go with what they consider to be sensible steps by governments, not the blind following of the “Gospel according to Merkel”. Irony of ironies, the Dutch are also now in difficulties with their deficit target.

@paul quigley

“There is a better way.”

You are probably right – it was a manic day and pedants annoy me but there was no need for me to be rude.

@Bunbury – I apologise.


“There is, indeed, less to the fiscal pact than meets the eye. ”

Actually, the problem is there is a lot more to the Fiscal Pact than meets the eye. We do differ often, don’t we; but I often enjoy reading opinions and ideas that differ to my own 🙂

Ta for the time and effort you put in, enjoy:


The perils of attempting to engage with a number of people at one time!

I know we don’t have it, but I believe the EU should be working towards a democratic ‘triple lock’ – and there is some evidence that thought is being given to it by Commissioner Reding. This involves the Council acting as an upper house (with governments when in Council getting their riding instructions from their national parliaments – as do the Danes do explicitly now) and the Parlaiment as a lower house with the Council requiring the consent of Parliament on the policy objectives that provide direction to the Commission on the legislation required. The Commission, yes, a smaller college, would be elected by and answerable to Parliament. And MEPs would be answerable to their national parliaments as governments are – or at least in most well-governed polities.

You may say I’m a dreamer…

IMF Survey: Continued Recovery for Ireland After three years of recession, Ireland’s economy is on a slow recovery path. Led by a pickup in exports, it saw growth turn positive in 2011. But the crisis is not over, with unemployment unacceptably high at more than 14 percent. The slowdown in other eurozone countries also hampers Ireland’s efforts to fully recover from its 2008 housing bust.

@ Paul Hunt

Re “I know we don’t have it, but I believe the EU should be working towards a democratic ‘triple lock’”

Unfortunately events show its moving in the opposite direction with democracy becoming a blur in the rear view mirror.

Time we had a little bit of a ‘democratic’ Arab Spring in Dublin and bid adIEu to the increasingly undemocratic EMU and its fiscal corset 🙂


The markets have reacted swiftly with Spanish yields now higher than Italian.
I see the banks parked 775b with the ECB overnight so maybe they are having second thoughts about their recent sovereign bond buying.
The Spanish forecast of 24.3% unemployment is the really worrying number.
That 775 billion sitting in Mario ‘s bank could do wonders for European unemployment….but don’t hold your breath.

@Colm Brazel,

Since Mr. Bond seems to be taking break, I’ll bite…

If Ireland had a properly functioning parliament, an empowered and resourced system of local governance, a fully accountable government apparatus and effective representation of the collective interests of consumers it could thumb its nose at all and sundry. It has none of the above and the main reason it is in the mess it’s in is because it has none of the above.

Oh the ability to see the speck in one’s brother’s eye…

@ David O Donnell 4:41

Re ” Led by a pickup in exports, it saw growth turn positive in 2011 ”

We already went through all this type of ESRI massaging and buffing re soft landings and growth cycles continuing; the IMF need to vindicate they have some chance of getting their money back. Plain fact is the economy is bust with GNP in a minus, bust apart from some financial GDP massaging that Obama intends to call a halt to.

The growth nonsense does nothing to help debt relief but as a form of Stockholm syndrome, only vindicates sheriff of Nottingham penal interest rate policies to further hollow out this economy.

Wow, IMF want promissory note payments deferred.
@Karl Whelan. Its getting legs.

“There is a more substantial need for market funding in 2013. Whether the government manages to meet its financing needs next year will depend not only on continued strong policy implementation on its part, but also on developments in the euro area. Because of this uncertainty, the IMF is encouraging the European authorities to proactively take steps to reinforce the prospects of Ireland having adequate market access in 2013.”

Are you reading too much into this?

@ Paul Hunt

“Since Mr. Bond seems to be taking break, I’ll bite…”

I miss him also 🙂 Wake him up from zzzzz.

I agree with everything you say there.

I should point out I’m philosophically coming from a Kantian point of view of looking at moral imperatives => describing what ought to be. But

What we have is the mess we’re in and shit stinks. We should try to prevent it getting shitier.

On the positive side, sometimes a pile of shit can be turned into fuel that can be made useful. But maybe I’m overly optimistic; maybe not?

@ Eamon Moran,

Re “Wow, IMF want promissory note payments deferred.”

Surprised they havn’t grabbed that bone before now. Its a ridiculously childish idea. Really going to impress the markets …….the fools actually agree to pay the ¢47 bn but only if you pass the money onto further generations of debt….the IMF know this place is a turkey for Xmas anyhow….even they were shocked there was to be no debt writedown or haircut on interest rate payments….in fact the whole role of the IMF would have benefited us more if we left the EMU, devalued, and paid what could be paid…..acknowledging my ‘ought position ‘ and the Paul Hunt critique of government earlier..

Good idea if we could parcel up all debt in the world and send it on to 3012 for payback 🙂

We need instead 50-75% write down of odious, unconscionable PN’s effective straight away and funded through ESM.

Not this I’ll pay you when I get my wages rubbish; more like I’ll pay you when I win at the casino tables.

In France, Mr Sarkozy has decided not to rush the ratification of the pact by parliament, preferring to wait until after the presidential election (April 22 & May 6) and the legislative elections (June 10 & 17). But he intends to schedule the ratification vote quickly if he is re-elected. On the other hand, if Mr Hollande is elected, many leftist leaders do not want to ratify the pact as it exists. They hope to strengthen, as of the June EU summit, the growth and economic governance chapters of the pact, which they see as, first and foremost, a way to etch in stone the notion of budgetary discipline so close to Ms Merkel’s heart.

July 14th anyone?

Eamon Moran,
That is, if true a minor victory for the governments patient negotiating stance. More Importantly, it is a major vindication of Prof. Whelan’s dogged campaign.
It probably explains why An T wants to keep the PN issue out of the debate. He probably feels that if he keeps kicking, he will eventually boot the PNs into row z. PH might also have to admit governance here is better than he believes.

@ Paul Hunt

Nobody, but nobody takes Reding seriously!

@ Colm Brazil

Could you drop the smileys? Some of us are no longer teenagers!


Not all who use smileys are teenagers, they do provide a useful function though. For example, the following:

Good idea if we could parcel up all debt in the world and send it on to 3012 for payback.

Some serious dude might take me seriously, much better to have something like:

Good idea if we could parcel up all debt in the world and send it on to 3012 for payback.
😉 🙂 🙁 😕

You either hate em, or you love em. Some don’t like them preferring to kiss the ring of the serious ‘Compact’ instead. I use them to indicate where I’m being humorous; unfortunately, my humour, irony, even cynicism, is sometimes lost by the receiver. Every little bit helps 🙂

“In an answer in Irish to reporters earlier, the Taoiseach said: “The public will be focusing on the question which will be on the ballot paper – do they wish to be members of Europe, the euro and the eurozone from now on, or do they wish not to be?”

I thought this was about a Fiscal Compact???

Or maybe his response got lost in translation.

Bond 2:03

Re “me and CB enjoy sparring, it keeps both of us sharp….”

Me too, but I’m the wolf fish, your the piranha ha ha

Also appreciate your posts as I can be lazy at times. Look forward to your views on the CACs on Monday, have a good weekend all.

We need smilies

Here are the facts:
1: The PN issue is being engineered to seem like a bigger and tougher victory than it actually is. We’re 12:0 down and they’re letting us score a goal….

2: Despite all our austerity the exchequer figures show no serious improvement

3: There is a 50% chance of Israel attacking Iran leading to a major external shock with rise in oil prices

4: We are about to be shafted with a crazy damned if you do damned if you don’t referendum

Point 2 is possibly the most worrying. So bring on the smilies!

@Paul Hunt

Your idea that Merkel is some sort of brave knight crusading against the Anglo-Saxon financial industry, while presumably trying to promote some form of kinder, gentler, EU-Core banking model, is laughable.

Take a look at the speed and extent of financial industry reform in the USA and UK, compared with the EZ. How long will it be before we have the EU Commission defending the scope and reach of their reforms in open debate with the Economist magazine? The Economist’s view is that the USA’s Dodd-Frank reform law is too big – here is the Dodd from Dodd-Frank in a letter published today:

A comprehensive overhaul of our regulatory structure was required to keep up with a 21st century global financial marketplace. To limit our response to 30 or 40 pages would have made easier reading, but that would have been the height of irresponsibility. You suggest that we would instead be better off repealing Dodd-Frank, returning to a world where taxpayers bail out failing financial firms, predatory lenders and unscrupulous brokers prey on vulnerable homeowners, the public absorbs losses because of Wall Street’s risky behaviour, and regulators are left in the dark, unable to prevent another global financial meltdown

In the USA in addition to Dodd-Frank/Volker etc there have been other actions taken, for example a couple of weeks ago banks were fined $25bn for mortgage industry fraud and deceptive practices. And what has the EU institutional response to financial reform, led by Merkel, been? Where is the EU’s Dodd-Frank? Even on increased capital requirements the French and German banks did their best to water them down and drag them out. Can you imagine Deutsche Bank and SocGen being fined €25bn?

And onto perhaps the most pressing issue – taxpayer exposure to financial irresponsibility. In the USA (excepting for the oddball hybrids of Fannie and Freddie) the taxpayer cost of bailing out commercial Wall St. firms has been – zero. This is in part because of other reforms that were made previously as a result of the S&L crisis. It is also because of close cooperation between the Treasury and Fed.

In contrast the EZ must be the most bank-friendly jurisdiction in the world, with the ECB ensuring that no bank bondholder will ever, under any circumstances, be left behind, no matter what the taxpayer cost.

German attacks on Anglo-American institutions, values and practices are just part of a spin machine designed to demonize others and to provide cover for policies that among other things are designed to protect German banks, and deflect attention from the fact that there has been no real reform of the banking system in the EZ, nor of the tight relationship between that banking system and EZ sovereign governments, which provide extensive implicit and explicit guarantees to that system.

@ CP

“The markets have reacted swiftly with Spanish yields now higher than Italian.
I see the banks parked 775b with the ECB overnight so maybe they are having second thoughts about their recent sovereign bond buying.”

1. You could read it as Italian yields lower than Spanish – there has been a big squeeze lower in Italy yields over the last week
2. The overnight figure at the ECB is meaningless, and is a direct function of the LTRO. Think about it like this – I’m a bank, i hit the LTRO, i buy an Italian government bond off you. What do you do with the money?? Place back in your bank account, which places it at the ECB….

So on the day the the wonderful Fiscal Compact Treaty is signed, Spain says that it will break the rules. Time to whip out the rulebook now and see how much Spain should be fined. See you in court Mr. Rajoy….

If only someone had figured out before that making economic negative feedback loops illegal was the answer it would have saved so much trouble. Perhaps the Spanish economist that said this should also be fined for incitement:

“It’s not a moment to go for very, very drastic cuts. We could go into a spiral of cuts, drops in GDP, worsening credibility and worsening deficits that could be extremely damaging

@Bond Eoin Bond
Not so sure. The net increase in overnight deposits is about 300b since the latest tranche of cheap money. Previously reported figures were about 400b.
Maybe it will take time to disgorge all that money but it seems they are just accumulating more and more.
Good article by Jack Ewing today in the NYT which goes some way to explain what’s going on.


“I think he is a fabulous Taoiseach. How did he manage to keep a straight face? Will he turn out to be the most cunning of them after all?”

It would certainly not surprise me and he certainly seems to know how to handle EU colleagues with his “speak softly and carry a big stick” approach. I wonder if he plays chess? 🙂

@The Dork of Cork
The Worgl experiment with scrip is interesting.
Similar initiatives were taken in Juy Juy (pronounced hoo hooey) and Buenos Aires Province (not Buenos Aires City which is the Capital Region) in Argentina in during their flight from the $US to the Arg. Peso. It works temporarily when the Central Bank is paralysed and retail banks are limiting withdrawals or freezing accounts. Conditions have to be really desperate before the County Councils in Ireland issue scrip. Another issue is the legalistic mindset of our people and their innate distrust of regional and national politicians. It would be a case of what are the chancers up to now and how are they gaming the public. Acceptance of currency is very much reliant on trust in the payable to the bearer clause. These days of course one piece of paper replaces another or even worse digital deposits and digital withdrawals. If we were all wide awake we would be in a state of high anxiety.
We could transition to the Punt if the public were presented with the plain facts in language they understand. For example there is a widespread perception that the state can renege on its debt obligations using the Punt printing press. Another issue is the transition itself has to take place unexpectedly early on a Monday morning, banks have to limit withdrawals and freeze accounts. To exchange Punts for foreign currency an application has to be made to the Government (DoF) who can issue an approval permit or deny it. Remember this would not be going to a sound currency it would be abandoning a sound currency for one prone to uncertainty and fluctuations. The Argentinians are experienced in dealing with unstable Gov’ts and currencies so the shock was not as bad as what we would experience in Ireland. If it comes to pass facing up to drink will be easier than facing up to reality.

A “sound” currency token(whatever that means for a paper means of exchange – maybe a treasury silver cert is closest to that ideal) is one that is seperate from Credit & fixed to a PM , Once it gets mixed up with that credit Gal it is no longer a “sound” currency token – it becomes a vehicle for & of credit.
The Euro boys have gotten us via our politicians (fiscal authorities) to save their buddies credit deposits – its no longer is a viable currency because we now no longer have enough money to pay our debt obligations and thus facilitate efficient commerce.
The Euro maybe a harder non govermental currency then most but this also makes it a very brittle & vulnerable when compared to the now more normal & elastic semi – govermental money that declares quite openly its legal tender for all debts both public and private.
Remember Irish debt / money is not Euros – it is just denominated in euros.
This is a huge difference from more Government type currencies such as the pound and dollar.
The only possible change in that relationship is if the US or UK Treasury divorces itself from the CB – very unlikely but possible I should think, making FRNs null & void I suppose.
Anyway we can default anytime we grow a pair as we don’t have euro goverment debt ,we have Irish debt denominated in Euros.

@Bryan G,

I can understand why you might consider my contentions to be ‘laughable’, but it sometimes pays to scratch the surface. In order to function, every politcial system requires some doses of cant, hypocrisy, bluster and grand-standing – in other words, BS. Better governed polities are able to limit the extent to which BS is required. Problems arise, as in Ireland, when BS comes to define the political system.

Chancellor Merkel is as adept as any leading EU politician, and probably more adept than most, at employing a measure of BS while simultaneously convincing many of her voters that it actually isn’t BS. But my opinion – and that’s all it is – is that she is deploying this BS in varying ways both to conceal and to advance the achievement of her objectives. And for Germany, and the core EU economies in its orbit, these objectives make perfect sense – but not without some dissent, variations on a theme and the requirement to refrom and employ the EU’s institutions fully and effectively.

(It is a diversion to lambast the EU for not having the institutions and procedures that have evolved over more than 200 years in the US. ‘The Economist’ is simply playing to the gallery that provides much of its sales revenue in the US – its biggest source of sales revenue by geography. But Messers Dodd and Frank, in their letters to ‘The Economist’ are being equally disingenuous. They wish to airbrush from the historical record the fact that it was Clinton Administration appointees or re-appointees – Greenspan, Levitt, Rubin and Summers – who ignited the bonfire of banking and financial regulation. The system was creaking and needed reform, but not the comprehensive dismantling authorised by these gentlemen. They also wish to airbrush the complicity of the Clinton administration with the banking and financial sector to expand a proeprty-owning, docile electorate – a policy that was followed through enthusiatically – and ultimately disastrously – by the two succeeding Bush Jnr. administrations. Let us use the US as a guide and template that might present replicable features, but not as a scourge. And let us not ignore the extent to which BS and dysfunction disfigure US politics and public administration.)

The real question here is the extent to which it is in Ireland’s interests to subscribe to this ‘project’ being advanced, with varying degrees of core economy support, by the German Government – and which will require considerable time and effort ot establish the necessary institutions and procedures. And again, in this context, I will make a point I have made previously. The primary objective of the impossible to quantify precisely and potentially excessively constraining fiscal measures in this ‘fiscal compact’ is to compel all consenting governments to stay well away from the edge of the fiscal cliff. It is only those who want to dance at the edge of the fiscal cliff or who fear that politically they will be unable to prevent themselves from dancing there sometime in the future who have a problem with it.

I see very good reasons why Ireland should subscribe to this ‘project’, but I see equally good reasons why it should not. I just want the debate to focus on the conflicting positive elements of both cases, with due consideration of the downsides of both, rather than the focus being the other way around without hardly any consideration of the respective positive features.

@Paul Hunt

It is absolutely not a diversion to compare the changes made to limit financial system excesses in different jurisdictions. Had Merkel put a fraction of the effort into this that she has put into creating narratives about feckless, lazy Southern Europeans and greedy, evil Anglo-Saxons, then some real changes might have occurred. Instead banks have been protected at all costs, and the status quo maintained.

Again on the fiscal treaty itself it needs to be remembered that it is 90% a restatement of existing obligations, and 10% bad economics. The political context was to create a symbol for domestic German consumption, and if it meant totally ignoring the community method and existing procedures, so be it. Back in December, 26 countries *opposed* Merkel’s approach with the treaty – it was only through a quirk of the voting procedures that Cameron’s veto meant that Van Rompuy’s “protocol 12/14” trick could not work, as it required unanimity – this meant that the intergovernmental treaty approach was all that remained. Nobody except Germany wanted this, and the EU Commission then spent the next four weeks desperately trying to align the treaty with the SGP, and to avoid having yet another similar but different parallel set of institutional bodies and procedures.

Germany has now backed itself into a corner whereby if the treaty is rejected in Ireland it will take a position that boils down to “we are refusing to fund Ireland, a country that has met all of its obligations under its programme, but continuing to fund Greece, a country that has failed to implement much of its programme”. This will be seen as insane by the US, China etc, and Germany will be under extreme pressure not to allow an unnecessary default in Ireland, since both the US and China want a stabilized EU that buys their exports. Germany will learn that one problem with the politics of bullying is what happens when a bigger bully comes to town.

@Bryan G,

I sense we are more in agreement than in disagreement. But I remain convinced that Chancellor Merkel, by her lights, is trying to do the ‘right thing’ for the EU, but is trying to do too much – and one of these is to position the EU strategically in a global context – while seeking to secure re-election. Voters in most countries are used to politicians lying routinely to them, but they tend to get quite cross when their wallets are being hit or could be hit as a result of these lies. Therein, in the context of an over-riding desire to be re-elected, lies her problem.

I am also dismayed that liberals, repelled by the antics of most social democrats and progressives, have been sucked in to this centre-right hegemony that is dominating the EU. Constructive engagement between liberals and social democrats/progressives secured popular consent for much of the post-war advances in economic prosperity and social well-being – and for effective restraint on financial capitalism.

But the ‘debate’ which is beginning to take place in Ireland is totally surreal and totally divorced from any sensible consideration of these matters. Germany, clearly, wants Greece out and Ireland to consent to be committed. I agree. It is a dangerous strategy. But dissismulating politicians invariably paint themselves in to corners. Ireland’s politicians have an ability to go though walls to find a smaller corner in another room.

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