Wording of the Proposed Constitutional Amendment

might be somewhat missing the point but I think its likely to be a question many might have.

Is the inclusion of the treaty into the const. not effectively the inclusion of all its fiscal rules into the const.

@ John McHale

Bit like a person sent to jail now deciding they don’t like it and wanting to get out 🙂 As Fiscal Responsibility Act not yet published, don’t think you can quote it in support of your view there. Wonder why they havn’t published it yet ?

They might want to change the amendment so that the date of the Treaty is correct, it was “done” in Brussels on 2nd February 2012, not March

It is, you know, the Constitution and should be accurate.

@Cetirusparibus

From a layman’s reading, that does appear to be a startling concession. Any lawyers out there?

Wether or not the treaty is signed ,there will be austerity.To make the poors pay for the rich is a political choice ,no less than the decision to say “yes” or “no” to the referendum.

The second sentence of the constitutional amendment affirms the primacy of TSGC laws above the constitution. It says that any such laws will be immune from constitutional challenge. Whether the TSCG/Fiscal Responsibility laws are in violation of the rest of the constitution is immaterial, since TSCG laws will take precedence.

Or will the MSG go out, no point in voting NO, he’s already signed it 🙂

@all

I find the ‘timing’ here strange; foolish even:

(i) a Thursday will exclude many younger workers/students who will not return to where they are registered to vote; is this perchance latently strategic to favour certain interests?

(ii) this is essentially a child of Germany/France the so called ‘merkozy abberation’ – so why not wait until it has at least been debated (ongoing) and ratified in the Bundestag (see below) and after the French Presidential election and a new man (hopefully) at the helm? Further, cross national debate thus far has been seriously lacking on this little insular enclave of the global financial system occupation ….

May 31 is a foolish date ….. it ignore developments in other parts of the EZ

The Debate in the Bundestag is ongoing – and no way will the Bundestag have voted on this by May 31 …

See: Anglela’ Korset, The SPD/GP forced compromise, the debat on including measure for growth etc …. & [Hi Olly!] the superior Wisdom of Festina Lente in this case which appears to have escaped the locals:

Der Spiegel International yesterday….

Separately, the main opposition parties on Tuesday rejected plans by Merkel’s government to push a European pact on budget discipline, the so-called fiscal pact, through parliament by June, saying more time was needed to complement it with measures to boost growth.

http://www.spiegel.de/international/europe/0,1518,824104,00.html

Finally, I have to find a serious economist that finds its economic content coherent or demonstrating social scientific validity … the oppostite in fact, the equivalent of Edward Lear’s famous nonsense rhyme – The Owl and the Pussycat … as noted previously.

Post script: it would represent a futher insult to hard pressed Irish citizen serfs if the ESM blackmail clause/treay is pushed through the Dail before the Referendum Result.

PPS: I make my position known on April 1 – following low level discussions with Blind Biddy, Seven_of_9, Joe & Joan Citizen_Serf, and Patricia the Irish Sovereign_in_Exile.

+1 Tull. I think forcing the government to start living within their means is the best reason to vote no.

Previously I said I will vote yes if there is a successful prosecution of just one of the household names behind the numerous well documented frauds that occured in and around the 2008 collapse. I expect to be voting no in this referendum as nobody has even been charged yet.

@ Bryan G

The first part seems innocous enough if there is a yes vote: “No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by the obligations of the State under that Treaty”

I agree with your analysis re the 2nd part: No provision of this Constitution “prevents laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State.” This essentially overrides the Constitution on a carte blanche, ongoing (ever changing) basis…..Essentially, incorporates the day-to-day, changing treaty mechanisms into (actually above) the Constitution.

@ John McHale: “There would be no constitutional barrier to a future Government changing the fiscal rules through a change in the Fiscal Responsibility Act.” So long as Ireland is in the Programme, it won’t be the Govt who changes the fiscal rules…..Changes in contravention of the Treaty can be challenged….but would apply unless successfully challenged….Nightmare scenario in policing that I would think.

@Paul W

I do not agree with your middle paragraph. Again, I am not a lawyer, but I do not see how changes to the Treaty would have automatic constitutional sanction. The proposed constitutional amendment relates to this particular Treaty.

@John Mch

“@Tull

That is a coherent position. But it is interesting that some plan to vote no because the Treaty will “institutionalise austerity; you plan to vote no to bring on austerity in spades.”

Tull may be voting that way to obtain a speedier route to what he thinks is inevitable after a long drawn out process which will be damaging to different groups in different quantities to the speedy option. If that was the choice there would presumably be future economic policies available to future governments that, given market funding, need not adhere to the ‘institutionalised austerity’ – or ‘Keynesian limiting’ if you prefer.

“Do it now and retain more options” might be his thinking.

John,

I plan to vote no to force the govt to live within its means and not to keep accumulating debt it cannot pay. The outcome of that will be the end of the current situation where the median household receives more from the state in transfer than it pays to the state in direct taxes.

Since income will be crunched through the ending of universal payments (welfare for the middle classes if you will) , it follows that the tax base will be pressured and debt sustainability will come front and centre. That is the point at which we can have a realistic conversation with our Overlords about debt restructuring.
At the moment we are on methadone when we probably should go to rehab.

This Newsnight programme should be required viewing for those interested in the fiscal compact and EZ economics in general. Very insightful on Angela and her electoral and social base. It is on i-player so you may not get access easily, but there is some stuff on it here:

http://www.bbc.co.uk/news/world-europe-17497656

Background in the programme itself is excellent.

my view would be that the ESM treaty should be subject to referendum here in Ireland because the huge implications it will have on the result of an irish vote no to the Fiscal treaty to this country in having access to ESM funding because of the klaus stipulating that all countries need to be signed up to the Fiscal treaty in order to access monies if need be this is a blackmail klaus in which to beat the irish people into submission

@ Bryan G: Agree with the “above” the constitution bit (actually thought about clarifying my language subsequent to my last post).

Don’t agree on the second part. There is no qualification /limitation to (even alignment with) the Treaty. It is simply “laws enacted, acts done or measures adopted by bodies competent under that Treaty”. If same are completely inconsistent with the Treaty, they are open to challenge…but in the meantime are “above” the Constitution.

Given how important this is, it is “amazingly” loose. There is no reason that I can see whey the second part could not be incorporated in the first part, if required (and if that is what one wants). But that is not even what John seems to envisage…?

@John McHale

John, were you to review this ‘fiscal treaty’ for a 5* Macroeconomics Journal of the Objective Realist variety – would you recommend its publication, without any revisions, based on relevance, rigor, and social scientific validity?

@Bryan G

I broadly agree with your analysis. Although I don’t see the Treaty as being “above” the Constitution. Both the Constitution and the Treaty are primary law. The amendent is considered necessary by the AG to ensure the latter is not inconsistent with the former.

@David

No reviewer will ever not suggest revisions — if only to look like they are smart.

@Paul

If there are consequences to a particular choice, I don’t think it is scaremongering to point them out. I do think the public would have grounds for complaint if foreseeable bad things resulted from a No decision, but no one pointed it out because they were afraid of being accused of “scaremongering”.

@ Tull
I used to agree with you and think that I would vote no. At the moment I’m not so sure.
We are all going to die (for example) but that doesn’t mean we have to go out and kill ourselves.
This China thing is a little bit of a game changer. No – I’m not an idiot who thinks that it will be the start of something wonderful but it brings with it new opportunities.
Yes – the current system is illogical. And yes the current system is unsustainable. But isn’t all life in essence unsustainable – else it would never end. Let’s just use the illogic to our own advantage.
Having said that though (I could have changed my mind again by tomorrow!)

@Eureka
“This China thing is a little bit of a game changer. No – I’m not an idiot who thinks that it will be the start of something wonderful but it brings with it new opportunities.”

Two stories in the WSJ today which caught my eye.
The first concerned the ability of regional government to invest pension funds. Apparently they are to be restricted to investing in government bonds. It doesn’t say highly rated but I think the gist is only AAA.
The other concerns FDI…that is the government has loosened rules on foreigners investing in China in order to combat the slowdown…so it looks like FDI is in the opposite direction.
So much for the spin of the last few days.

@ Ceteris
Yes but China isn’t a miracle fix. We are a good deal better off with connections that will allow us access that market than without. The opportunities for Irish business are good.
China has interesting challenges ahead. But that’s their problem. Our biggest challenge is to continue to engage as equals. We cannot sell state assets outright but should instead look for joint control. Hard bargaining and tough negotiation is what’s needed (and expected) here.
A yes vote in the treaty buys us stability from which to negotiate

The draft wording seems ‘over the top’ and will be seized upon by the ‘NO’ camp.

@John McHale

Blind Biddy would love to review your suggested revisions to the so-called ‘Fiscal Compact’, as an academic economist, on (i) relevance (ii) rigor, and (iii) social scientific validity.

Biddy, similar to Joe and Joan Citizen_Serf, only gets to select “Yes” or “No” on the ballot paper.

@ceterisparibus

Wolfgang and Angela continue to cross all those ‘red lines’ … (as distinct from red cents)

More Money for the Euro Rescue

Onward, to the Next Red Line!
The euro bailout funds will be enlarged, and Germany’s guarantees will rise further as a result. Once again, Berlin has exceeded its own self-imposed limit in crisis talks. Coalition members are grumbling, but seem to have lost the will to fight. Finance Minister Schäuble has promised this will be the last concession, but experience indicates otherwise.

http://www.spiegel.de/international/europe/0,1518,824279,00.html

@DOD
“Now yet another red line has been overstepped. Contrary to initial assertions, the euro-zone bailout fund will be effectively increased, and with it the formerly untouchable German contribution of €211 billion. Coalition leaders in Berlin are trying to play down the move. Overall, the risk has fallen, says Volker Kauder, parliamentary group leader for the conservative Christian Democrats (CDU). It may not look that way on paper, but somehow it’s factually true, he says.”

The risk has fallen from 211b euro to 280 b. Euro. Now that take some genius math.
Maybe he could do something for our debt mountain…growing by 50 m per day according to Joan….and convince the markets that the risk has fallen.

And I thought those Germans were clever.

@John McHale

My reading is that the purpose of the amendment is to ensure that the proposed Fiscal Responsibility Act that will establish the rules is not in violation of the Constitution.

Surely the effect of this amendment is to make any law that the AG says is required by the Fiscal Compact impossible to challenge constitutionally? Not forgetting that the government can additionally protect any acts done or measures adopted related to the treaty from constitutional review. That is a very broad set of protected activities to meet some rather badly defined metrics.

It is however a marvelous way for Merkel’s fifth columnists in Ireland to never again have to deal with the unpleasantness of consulting the Irish hoi-polloi while reconfiguring our economy to meet Germany’s (and the banks) needs.

In addition the Fiscal Compact represents the hijacking of the EU by a politically very radical and frankly fringe view of economics. When you remember that the compact was rammed through by Angela Merkel for her own domestic political needs at a time when Europe’s real problems (its part of the global financial crisis, the failings in EMU and German consumption) went unaddressed it makes it absolutely unforgivable.

The Fiscal Compact also sets an awful precedent for policy making in Europe and it is doubtful that a majority of citizens in most Eurozone countries would approve this market faith based economics if given the opportunity to. The ULA have it exactly right when they describe the Fiscal Compact as an attempt to institutionalize austerity and allowing this kind of political imperialism to succeed threatens Ireland’s position in the EU more than lack of access to the ESM.

Lastly does anyone imagine that after having successfully cajoled and bullied the Eurozone into making European policy for the CDU’s domestic political benefit and forcing other countries to write conservative dogma into their constitutions that Merkel will then turn over a new leaf and reinstitute the community method? The peripheries crisis has been a godsend for the middle European right and until there are political costs to them it will not be dealt with.

@Paul W.
+1
Precisely.

@ Shay Begorrah

It is however a marvelous way for Merkel’s fifth columnists in Ireland to never again have to deal with the unpleasantness of consulting the Irish hoi-polloi while reconfiguring our economy to meet Germany’s (and the banks) needs.

Maybe there’s a comma misplaced or in the constitutional referendum demanded by the rejectionists, there should be no reference in the amendment to the actual treaty?

So you want more referenda when the European Council approves related regulations drawn up by the European Commission?

So where is a citizen’s right to petition a court in future on the application of the treaty, abrogated?

The reality of course is that after 90 years, using the Irish judicial system is mainly a rich man’s game under our own control. However, it’s always more therapeutic to blame the foreigners rather than confront the home-made failures.

An artificially high standard of living is being propped up by Germany and other countries while this month we had our senior leaders effectively begging for help from the world’s two biggest economies. Richard Bruton is giving money to US VC companies to open Irish offices in a desperate but futile attempt to show some results from innovation investments.

House prices are down almost 70% as is the income of many in the domestic private sector while part of national output is smoke. Meanwhile, there is no shortage of pub-stool proposals (i.e where inconvenient downsides are ignored) that seem to assume that we had invented the free lunch after all, but nefarious foreigners have stolen it.

@ Paul W

So we threaten to default and the rest of the EMU gives us a choice of staying or leaving as was given to Greece?

What then?

A special restructuring deal could be cut for Ireland while ignoring Italy with its 120% debt/GDP ratio?

Merkel is already under pressure and on Tuesday, the conservative Frankfurter Allgemeine Zeitung wrote: “First the cabinet member swore allegiance to the Maastricht treaty according to which no Euro country may be held liable for the debts of another. Then they ruled out the option of IMF help saying that Europe could help itself. Then they promised automatic sanctions for countries that exceeded the debt limits. … Bankers and EU commissioners viewed the restructuring of Greece’s debt as a red line the overstepping of which would lead to the collapse of the monetary union and even a global financial crisis. But neither of these things happened. … When red lines are overstepped they perhaps serve a different purpose. The constant expansion of liability for the debts of other countries has a logical conclusion: the mutualisation of all the debt in the Eurozone. From this perspective a red line leads to the goal of the ‘debt sinners’: euro bonds.”

You say: “The lack of National leadership is depressing (many other adjectives).”

Maybe but the outrage is a bit late. I challenged the economic arsonists in real time while some here no doubt voted for FF.

In 2009 a minister had the gall to tell Fianna Fáil party members, that a small number of “money manipulators” had endangered Ireland’s economic survival.

“There’s no parallel in history for the damage they have done to this nation — except perhaps Cromwell.

“And even Cromwell was motivated by reasons other than personal gain,” Noel Dempsey said.

Brass neck may come to mind but there were many cheerleaders of treason.

@Paul W

“The first part is qualified by the words: “that are necessitated by the obligations of the State under that Treaty”. The second part has no such qualification.”

I see your point. The words are basically a cut and paste of the existing immunity clause that establishes the primacy of EU law over national law. However since it seems the “Fiscal Union” itself may not be a legal entity they just left the “competent bodies” part. I agree it is very odd that the immunity is not restricted to actions taken within the scope of the Treaty. For the broader EU case, perhaps it could be argued that any actions taken were implicitly within the scope of the EU treaty. The Fiscal Compact is quite a different beast however. This is definitely one for the lawyers.

@ Michael

‘Beyond the nitpicking and pedantry that may excite some in the safety of comfortable armchairs, keep in mind that the Eurozone is the main market for those American companies that make the difference between Ireland and Albania.’

That’s an extreme point of view. For all it many faults, Ireland is not, and has never been a banana republic. The MNCs make a contribution, but you are the first to point out that we may expect no net increase in the current level of FDI jobs. Export-led recovery, even if we get it, will be a jobless recovery. In short, there will be few solutions from that quarter.

One could argue is that the FDI sector exerts a highly disorting efffect on the Irish economy, and conceals the historic failure to develop a domestic economic base. That underlying problem has its roots in uneven historical/regional development, and was exacerbated by British policy over several centures.

The resulting path dependence has turned out to be extemely difficult to reverse, and the proper points of comparison are probably other peripheral Euro regions, such as Scotland or the Languedoc, rather than national entities.
We have had our own state, but we haven’t made the best use of it. Now we are faced with the knackers.

FWIW, we are not the only ones in the sh1t. Wider points made by the Dork about the likely implosion of the Euro economy are also highly relevant, as well as the fact that the era of US MNC dominance is probably drawing to a close.

@all

In how many parliaments in the EU has this ‘Fiscal Compact’ been legislated on and passed? If not, when are these votes expected, and what is the update on the state of play?

I have posted above on the state of play in The Bundestag – where a vote is certainly not expected before May 31.

@The Oireachtas

Citizen David O’Donnell is not happy with the timing of this Referendum – neither with the date which I believe is too soon, nor with the day (Thursday) which will make it impossible for many younger workers and students to vote.

@DOCM

The fundamental question, in much more specific terms, is whether the ‘Fiscal Compact’ is social scientifically valid or not.

@ Tull,

“Still voting no as this will force the necessary catharsis here”

Congrats on your wise decision to vote no. Lisbon 11 gained 2:1 in favour http://www.rte.ie/news/2009/1003/eulisbon1.html

For a comic look at 100 reasons to vote Yes to Lisbon 2 and hands up, I got conned
2.

“100 Reasons to Vote Yes to Lisbon II takes a comic and politically independent look at what the treaty means to the Irish. It clearly outlines how this pivotal reform protects Irish neutrality, supports our social values and enhances Ireland’s power and influence within Europe.”

Note “enhances Ireland’s power and influence within Europe” The compact filled with majority clauses sanitising the Core against the influence of the periphery, ironically with 12 votes is already passed.

“http://www.rte.ie/news/2009/0708/eulisbon.html”

“A two-day EU summit last month agreed to legally binding guarantees on the application of the Treaty in Ireland.
The summit also agreed to an Irish request that the guarantees also be incorporated as a protocol to the EU treaties.
The guarantees ensure Irish control over tax rates, military neutrality and the Irish Constitution’s provisions on social and family law, including the right to life.”

Doesn’t it bring a lump in your throat when Herr Compact is compared with Lisbon 2, nostalgia for the past maybe or seasoned acknowledgement of the Venus Fly, Honey Trap it turned out to be.

http://www.rte.ie/news/2009/1003/eulisbon1.html
“Minister for Foreign Affairs Micheál Martin has said a Yes vote in the referendum would put Ireland back at the heart of Europe as opposed to the periphery.”

We’re for the Compact dustbin with a divide and conquer Compact to segregate the periphery from the core. Irony as well re the commitments above on The Troika to pay back odious IBRC debt and current efforts to reinforce the repayment of 40% of GDP through new financial paper to replace dodgy PN’s !

John’s batting average batting in favour of policies of the previous administration with ‘on balance’ assurances we would not be having the Troika for tea, not good. His erudite and considered views always welcome, but I’m thinking he’s put his leg before the wicket again on this one.

@John 7:33
“…. But it is interesting that some plan to vote no because the Treaty will “institutionalise austerity; you plan to vote no to bring on austerity in spades…” Leaving aside the arguments re pay now or pay more later, there is a wiser council
that should prevail that can use the No vote to get a better deal.

From a tactical viewpoint, if only to focus attention on a better way to handle ‘burden sharing’; to agree subject to Ireland specific Treaty clauses re burden sharing and other supports to remove odious debt and through ‘burden sharing’ set the debt profile of this country to manageable proportions. Eh, did I say ‘burden sharing’, there’s a phrase unheard of in ‘The Dail’.

The ‘Compact’ trades not only Irish leprechaun Inca gold in Tir Na N’Óg but also hard won democracy for EZ debt diseases.

Re May 31, The EZ ‘poster boy’ debtors are rushing to sign it before letting it interfere with their holidays June – November. This allows them to dream away the Summer on the prospects for Bailout 11 under ESM.

You couldn’t make it up!

Thank you John for focusing on this important topic. Doesn’t always have to be groundhog day making the same mistakes all over again. This time you can head for Thermopylae and and join the fun of voting NO 🙂

To say that this doesn’t include detailed rules in the constitution is as tendentious as saying that guns don’t kill people, bullets do. Now, do we want Chris rock to be our economic model?

@ paul quigley

Paul,

I was drawing attention to the fact that exports to the Eurozone, mainly made by US-owned firms at about 40% of the total exceed the combined total Irish origin exports to the UK and US.

I will have more to say about the MNC sector shortly.

In terms of measured valued added as a ratio of GDP, the rate for Ireland is double the next highest — Singapore.

You are correct about the further impact etc but up to now, the relatively low paid indigenous sector, is not a significant exporter.

@John Mch

What do you mean there by “llender of last resort”?

“I suppose, the best chance that we will be able to exit the bailouts is if potential investors are convinced that the money to pay them back can be reliably sourced from somewhere.”

I don’t think, for example, investors are likely to buy in size at low enough yields if the stock of outstanding debt is too high (at some point increasing awareness of contingent liabilities linked top politics also enters the calculus) because of standard sustainability / fiscal drag considerations.

I think investors have to be convinced the money to pay them back can be sustainably raised from Irish tax receipts, not ever cheaper official funding – at that point they can work out they are extraneous.

Sustainability is, at some point, going to require the at least partial normalisation of certain high costs and salaries. Much of today’s real politic is about delaying that for reasons that rational economic agents would approve of, if you know what I mean – the unions are in the same position as Chuck Prince was at Citi in 2006 “While the music is still playing, you gotta get up and dance”.

The apparent absence of a mechanism for turning on the lights is something that should concern all public spirited economists.

@ Hoganmahew “It should be borne in mind that Greece is running a primary surplus and that reduction of the debt burden and of the interest payments in Greece = a return to fiscal balance (whether that is the right thing to do or not). Ireland is still some way from a primary surplus…”

Is that the nub of it (yes or no vote)?

It is a most difficult issue, I agree, and needs to be resolved…..but is simply being denied and ignored (Croke Park Agreement, etc, I’m alright Jack Syndrome, etc) The fact that a huge number of Irish people are nowadays dependent, directly or indirectly, on EU “super-welfare” i.e. EU funding (dole) is hardly a great banner for the yes camp.

@ h

So a yes vote is effectively a vote for the Irish people to remain longterm on the troika dole?

@John McHale

As to guaranteeing more bailouts, I don’t agree. As I have argued quite a few times on this blog, having a reliable lender of last resort is a key contributor to market creditworthiness. Somewhat paradoxically I suppose, the best chance that we will be able to exit the bailouts is if potential investors are convinced that the money to pay them back can be reliable sourced from somewhere.

On the opposing side the actual economic implications of the Fiscal Compact for Ireland (and arguably any Eurozone economy not both adjacent to and tightly coupled with Germany) are very bad indeed, basically a debt deflation spiral until staying in the EU becomes impossible or Europe’s economy recovers from the effects of GFC/Merkozy/EMU. We will have access to funding that will have conditions attached which increases the risk we will need more funding as we will be committed to an economic strategy more or less predicated on being Germany.

Furthermore (and this is, as they say, the kicker) we will have tacitly agreed that European economic policy is made without regard to the welfare of the states on the periphery – this is is an abject surrender, not a tactical retreat and life under ordoliberal occupation promises to be difficult for non insiders.

Lastly whether more bailouts are required or not we will still be faced with a situation where in twenty years time Irish people not born now will be paying for the current EU mandated bank bailout and will be constitutionally bound to tailor our fiscal policy to the same highly dubious economic ends.

Does that sound like something a sovereign nation with even a shred of self respect or concern for the future should submit to? Change our constitution to maintain a consensus marked by extremist and fringe economic policies, dysfunctional and unaccountable monetary union and Mitteleuropean political imperialism?

@John
are we going to see the Fiscal Responsibility bill before the referendum? As you say this is crucial information. it might make it clearer to people what we ae voting on (however given this can be changed by the Oireachtas in future maybe it would be a red herring).

@Paul W

If investors always require a troika backstop (because the borrower remains uncreditworthy), there is no exit from baliouts. The creditworthiness for bailout exit must come from the underlying borrower. That is fundamental credit.

I feel slightly nauseous reading that, like someone who just found a lump where a lump should not be. The theory behind the compact (that we will all be such lean, uncaring, neoliberal states we will not need much market funding) is at odds with why we are considering implementing it – there is no plausible exit from ESM funding.

Would anyone disagree with me that you can only have three of the following four outcomes?

1) Economic recovery with market financing.
2) Paying in full the portion of our debts that relate to the banks in Ireland’s currency du jour.
3) Ireland remaining part of EMU.
4) Implementing the Fiscal Compact and committing ourselves permanently to constitutional neoliberalism (with German characteristics).

Since (4) is only required by (2) perhaps we need to decide which of 1-3 we need to ditch. I think that the Eurocracy/financial sector insiders preferences lean towards giving up on (1) – after all Europe and the banks can still flourish without us.

@ MH In one of those dark places in your mind again, I see.

We do have choices, just not very pleasant ones. The country is on the troika dole at present….with all the negativity that goes with that. One can choose to stay there, but the dole “benefits” will only last so long in any event….

It’s not a matter of threatening anyone. Fundamentally disagree with you on that.

@Michael Hennigan

You shouldn’t waste too much energy in trying to impart rationality to people who will reject any fact because they will always vote No in an EU referendum.

My patience is shot. Another tirade that more or less boils down to this country causing the global financial crisis and everything else in the EU being just peachy. Why can we not be like those well governed Italians?

It is to laugh.

Do we have any right to threaten the likes of Sweden and Finland?

Straw man down! Straw man down!

Also, Sweden is not in the Euro, and they enjoy a debt premium over Finland because of it, as does every EU country not subject to the insanity of the current EMU arrangements.

Do you think that just possibly Michael you are the one wearing Ireland only blinkers, not almost everyone else? Reading your contributions it would be easy to imagine that the crisis in Europe (which affects, not at all coincidently, every Eurozone country not sharing a border with Germany) was a disease of the feckless and corrupt Irish. We are half the size of London and our contribution to this crisis would have been a footnote if Europe firsters here did not spend so much time breast beating, making excuses for the EU’s inaction and structure and recommending we try to single handedly stave off the exposure of the Eurozone financial sector as a reckless casino funded by trade imbalances.

@ Eureka “this could mean anything”. Yes, that’s the point made above. The lack of qualification of the 2nd part of the wording leaves the situation openended to my reading, such that even acts and measures not in compliance with (“not necessitated” by) the treaty are unchallengeable. If that is confirmed, those responsible for the drafting should be fired. The question also is why it is drafted in the way it is.

The Unword of the decade: Bailout

@ Michael Hennigan

“You shouldn’t waste too much energy in trying to impart rationality to people who will reject any fact because they will always vote No in an EU referendum.”

What facts are you talking about? We are awash in propaganda, coverups, delusion, falsehood, denial, ‘rocket growth’ and black/white nonsense. The entity, NAMA, is locked down in commercial secrecy. The whole financial IFSC and banking context is locked down under a cloak of veritable secrecy. We havn’t had a proper garda led investigation into the banking meltdown. 19% of GDP debt is hidden away by NAMA in an SPV, our GDP/debt ratios are getting at 140%. Instead we have the politics of propaganda, illusion and above all, denial.

We’ve precious few facts to go by. “This report endeavors to expose the facts, identify responsibility, unravel myths, and help us understand how the crisis could have been avoided. It is an attempt to record history, not to rewrite it, nor allow it to be rewritten” (xv) ‘Conclusions Of The Financial Crisis Inquiry Commission’

Suggest you have a read of Financial Crisis Inquiry Commission, Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States”. To get at the facts, we need a similar report written for here. Then we can talk about facts:

Re “to suggest that leaders of well-governed relatively corruption free countries from 25 that assented to the treaty, are part of a conspiracy to support German and French banks.”

I presume you mean the Merkozian supporters of FC. I must have missed the ‘burden sharing’ clauses or ‘fiscal transfer’ clauses or ‘LTRO’ 3yr 1% refinancing of ¢31 bn of odious debt….I’m thinking that instead of facts, we got a lot of denial going on.

Comment 101: Focus on the validity or tautology of the content of the actual treaty.

@ Shay Begorrah

I kind of know which countries are in the EMU or not. I also know the odd thing about Sweden having worked in one of their MNCs for 13 years.

Anyway, both it and Finland have surpluses rather than debt.

So any downsides to voting NO?

For those working in firms that are struggling to survive after 4 difficult years, will it improve job security and prospects or lessen it?

Are you in a secure job?

Will a NO vote improve the deposits situation in the banks or worsen it?

Would you be surprised if there was speculation in foreign media for example about leaving the euro making new FDI investments seem risky?

So with no private sector involvment in your expected restructuring of debt, isn’t it a bit naive to expect a special deal to be given to Ireland as a reward for not accepting new governance measures?

Wouldn’t it also be naive to expect folk in the US Congress who want their 1934 era export finance bank shut down to pony up funds for Ireland after telling Europe to PFO?

It’s a carte Blanche. But still undecided. Do we want to be seen to be lighting the fuse that will blow up the Euro? It’s going to blow anyway – maybe just say yes and let social unrest in Spain and Greece do the needful.
I dunni

@ Grumpy

Correction

“with national” should read “and national”.

@DOCM

A simple authorisation in the Constitution to ratify the treaty would appear, even to the layman, to have been sufficient. This would have avoided the debate which is now opening on this thread and elsewhere and which is likely to generate more heat than light.

It wouldn’t be there if it wasn’t needed. If fact if it wasn’t there, I see no point in having the referendum, as any TSCG legislation would simply be subordinate to the constitution, like any other laws.

All of this is, however, rather by the way. The fundamental question is whether the Irish people wish to ensure that public spending can never again get out of hand on the basis of ephemeral bubble tax income. Those that do should vote yes, those that do not should vote no.

Of course this is not true at all. The SGP/6-pack will continue to apply. The question is whether the changes to the rules introduced by the Fiscal Compact are for the better or the worse. They are for the worse since they will drive pro-cyclicality with a rigid automatic correction mechanism. It seems that a majority of economists would consider these changes a step in the wrong direction, and with papers like DeLong’s recent paper and recent statements by the IMF, there is more and more concern with the “faster is always better” approach towards fiscal adjustment that the Fiscal Compact aims to institutionalize.

@hoganmahew

“Yes, I think so. Without a primary surplus, there is no game to be played, we are watching, not participating.”

The Irish government, IMF and EU Commission all separately estimate that Ireland will be running a primary surplus in 2014, so Ireland can stop its watching mode then.

However, given that Germany and other core countries would have a choice in 2014 of
(a) allowing Ireland to default, with German banks and treasuries etc. taking the hit or
(b) lending super-senior debt at profit, so that Ireland pays everything back over time, via the Irish taxpayer

it just doesn’t make sense that they will choose (a). Yes there would be some political inconveniences for Germany, but at the end of the day, money talks.

Greece had no say in the timing or size of its default. The change in policy from “no default” (until May 2011), “small default” (June 2011), “medium default” (Nov 2011), “large default” (Feb 2012), was entirely driven by the EU/IMF. Greece just had to go along and implement whatever was decided. Why do you think Ireland would be allowed to default if the basic debt dynamics and tax administration capability showed there was still a chance that the debt could be serviced?

@ Bryan G

What TSCG legislation?

As to your second point, it is accepted by all at this stage that the strengthened SGP will apply. What the TSCG attempts to copperfasten is that the countries of the EA will implement it.

The point I make is entirely valid. Either people wish to ensure that the country lives within its means or they do not! This will be the decisive consideration for individual voters, not the the intricacies, both legal and economic, of a treaty that is a very curious hybrid because of the need to overcome the UK veto of simple amendment of the existing EU treaties.

@Eureka
Actually, it’s probably unconstitutional to blanket guarantee the constitutionality of something. Might come in handy in future…

Sorry that last post seems daft. The question is:
Does this amendment render certain individuals (competent under the treaty) above the constitution? Surely it couldn’t do that.

@DOCM

By TSCG legislation I meant the national legislation that will be introduced as required by the treaty.

You are making a very basic and totally incorrect assumption that anyone opposing the treaty just wants to spend and spend and get the party started again (i.e. does not want the country “to live within its means”). However I note that sweeping misrepresentations are par for the course for many on the “yes” side.

The SGP has many enforcement mechanisms, with more to follow in the two-pack. Ireland was already at the point of introducing domestic legislation on fiscal responsibility. What matters when assessing the Fiscal Compact treaty is what changes it makes to this baseline. There will be some more national legislation, but I don’t think this will in itself make much difference, at least in the case of Ireland. In terms of compliance to the SGP, Ireland was one of the top performers in the EU until the crisis hit.

In short the SGP and previously planned domestic legislation in combination form an adequate basis for fiscal responsibility laws. The changes introduced by the treaty go in the wrong direction, as they are driven by ideology and local German politics rather than sound economics.

@ DOCM
The issue is not about living within our means. It’s about a badly worded trojan horse amendment.
Regarding blame – think we have moved on from this too.

The context of this should not be forgotten. Some facts:
1: Germany’s unemployment is at a record low
2: Deutschbank is strongest bank in Europe
3: German business confidence at a high

This is a tale of two diverging Europes. It is not sustainable. Something will give. I would be happy to take that bet and vote yes to this pile of rubbish just so that we cannot be blamed when the thing starts crumbling. Not sure if that’s the right thing to do though

@ DOCM

‘The counterparty to “living to within one’s means” is failing to do so which is the case at the moment. The consequences are obvious. Unfortunately, there is still a marked reluctance to face up to them.’

Thought provoking stuff.