Mrs Merkel gives Ireland the perfect reason to postpone the referendum

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In this interview, Mrs Merkel gives the forthcoming Irish referendum as a reason why the treaty should not be renegotiated.

Almost no-one in Ireland thinks this treaty is a good one, and that includes the people who believe that we have no realistic option but to ratify it. Indeed, almost no-one outside Germany seems to want it, including the governments who signed it. It follows that if M Hollande were to lead a push to have it renegotiated, we should support that effort. If our May referendum is an obstacle in the way of achieving that goal, we should postpone it.

42 Responses to “Mrs Merkel gives Ireland the perfect reason to postpone the referendum”

  1. What Goes Up... Says:

    It’s an open goal.

    If they don’t postpone it – then you can guess who really set the timetable… along with the budgets!

  2. PR Guy Says:

    17.05 BREAKING …

    Ireland has almost halved growth forecast for this year, and said its government debt will peak next year, but at a higher level than previously estimated

  3. wow Says:

    Its a treaty that no one thinks is good. The Govt. totally disagrees and like the Fianna Fail/PDs coalition the Fine Gael/Labour coalition is just playing a masterful game of strategy.

    I refuse to believe they are floundering around without a plan. Whatever mess the Greeks made at least when it came to improving their lot the sheer brass neck with which they negotiate is something our govt. of teachers could learn from.

    Fine Gael always seemed content with home rule. Its so much easier. The linkage has changed but the appeal is still so strong.

  4. wow Says:

    PR Guy,

    An awkward fact when entering into a referendum campaign about austerity.

  5. Ceterisparibus Says:

    It’s simply a no-brainer. Having a referendum at this time on a Treaty that is unlikely to be ratified by a major Eurozone power in its present form is tantamount to economic suicide.

  6. The Dork of Cork Says:

    Not if you want to see this European market state experiment destroyed.

    No fear.
    http://www.youtube.com/watch?v=jq31TnU278w

    Blitzkrieg only worked effectivally when people feared the sound of those Jericho sirens.
    After about a year of that shit the Russians began to think differently.(they also had nothing left to loose)
    A country that needs to project this level of aggressiveness must by it very nature be very weak – at least from a strategic perspective.
    It has had a good few years of campaigning but it is a spent force.
    High value Mercantile states during a depression are very very vulnerable – without Quisling like characters in the various Euro states it would be dead in the water already.

  7. Colm Brazel Says:

    @PR Guy

    I heard Noonan use the figure 0.75% the other day, rather optimistically.

    Re ” It follows that if M Hollande were to lead a push to have it renegotiated, we should support that effort. ”

    Judging by what I’ve heard Gilmore say of Hollande so far, I think he regards Hollande comments on the Compact as a flight of fancy during an election campaign that, when elected, he will row back on; in the same manner as Gilmore is used to doing :-)

    It makes no sense to have a Referendum on a Treaty whose draft is clearly not finalised. Apart from fools rush in where angels fear to thread and all that stuff, I think the Y group would be prepared to agree to anything including a troika clause named ‘whatever you are having yourself’, that Hollande, the troika could fill out to suit themselves, later :-)

  8. Shay Begorrah Says:

    @Kevin O’Rourke

    Almost no-one in Ireland thinks this treaty is a good one, and that includes the people who believe that we have no realistic option but to ratify it.

    Would it be fair to divide treaty positions into three groups?

    1 – Those who think that the new treaty’s serious economics shortcomings are accompanied by even worse political ramifications that outweigh any short term budgetary benefit.

    2 – Those who think the treaty’s negative economic and political ramifications are outweighed by immediate budgetary necessity. (John McHale, Patrick Honohan, and less charitably anyone planning on retiring on their ministerial pension in the near future….)

    3 – People who are not concerned so much with the effect of the Fiscal Compact on the well being of people, the real economy or nation states but with advancing the agenda of their own class interests (EU neoliberals, the ECB, EU insiders and those involved in the feudal network of the financial sector). More or less anyone whose first concern is the stability of the financial sector, ever closer union and the ‘hardness’ of the Euro.

    Of these groups only the third think the Fiscal Compact will actually work, but the thing they see it working at is not the same as the first two groups.

    The third group are irredeemable so we in the first group now have to ask how we can best persuade those in the second that it might be time to re-evaluate their position. I think a start might be if those outside the German/ECB consensus adopted two new policies.

    Pensions and wages, first ministerial, then senior civil service, will be cut in proportion to the decrease in median wage or employment if any further state monies are spent on bailing out private investors in the financial sector. We are all in this together after all.

    To concentrate minds further anyone supporting the treaty who currently works in government or policy circles who plans to work for the financial sector can expect to be the beneficiary of a Fincial Sector Charge – no more Peter Sutherlands.

    It is all about incentives after all.

  9. Ceterisparibus Says:

    Worth a repeat…I think…
    It seems clear from the relevant paragraph of the Bloomberg article that Angela is stuck on her “structural” fix but that Draghi envisages more..
    “The change in tack was signaled yesterday by European Central Bank President Mario Draghi, whose call for a “growth compact” was quickly endorsed by German Chancellor Angela Merkel. Francois Hollande, the French Socialist presidential election front-runner, welcomed Draghi’s remarks as evidence of the need for treaty changes to boost growth, while questioning the means of getting there.
    “It’s not the same idea of growth,” Hollande said in an interview on France Info radio today. Draghi is “adding even stronger competition, liberalization and privatization.”
    That contrasted with Merkel’s reaction. Europe needs growth “in the way that Mario Draghi, the president of the European Central Bank, said it today, that is in the form of structural reforms,” the chancellor told a conference of her Christian Democratic bloc in Berlin yesterday.”

    I’m betting Hollande will get a compromise.
    It’s crazy to have a referendum at this time.

    Postponing the Referendum now could have beneficial effects….for instance, the alleged talks on the PNs could be brought to fruition before we vote.

  10. Michael Hennigan - Finfacts Says:

    Good idea to drag the issue out as long as possible….and hopefully some of the domestic problems can be put on a longer long finger.

  11. Ceterisparibus Says:

    @Kevin O’Rourke

    Another reason to postpone…Enda supports Hollande…

    “Mr Kenny refused to be drawn on the size of any fund for a growth programme, after Siptu earlier mentioned a figure of €10 billion.

    He said Ireland “has to have a stimulus package” and he said he shared the views of the Socialist frontrunner in the French presidential election, François Hollande, who has repeatedly declared he will change the treaty in favour of growth-oriented policies if elected.

    According to Mr Holland, this could be done by inserting a legal “protocol” into the text of the treaty, which was signed by EU leaders as recently as last month. ”

    So why is he persisting with an incomplete ill-designed Treaty that is rapidly losing support across Europe. The essential growth element has to be incorporated into the Treaty.

  12. DOCM Says:

    @ All

    I re-post here what I posted in reply to Ceterisparibus on the ‘Troika Press Statement’ thread.

    @ Ceterisparibus

    Herewith the link to the RTE interview with the Paris correspondent of the IT. It tells one more than the swathes of inept print media coverage available this morning.

    The interview starts 12 minutes in.

    http://www.rte.ie/radio/radioplayer/rteradiowebpage.html#type=radio&rii=9%3A3269140%3A83%3A27%2D04%2D2012%3A

    Debating the Irish idiosyncrasies that have given rise to an untimely referendum would be a mammoth task in itself. My own view is somewhat ambivalent. The one positive is that a ‘commentariat’ incapable of setting issues in anything other than a domestic context is having its bluff called.

    Hollande is not going to start drafting his letter to the other government leaders on the morning after his election. It is clearly already largely drafted and the subject of intense advance manoeuvres if not actual negotiation.

    @ All

    I would heartily recommend to all listening to the interview with the IT journalist. I, for one, found it very enlightening. The contents are confirmed by another French media report (also posted on the other thread).

    http://lexpansion.lexpress.fr/economie/les-non-dits-du-debat-sur-la-croissance-en-europe_292557.html

    In short; what else could Merkel be expected to say?

    The intriguing questions are (i) how exactly she will react to the promised letter from Hollande (assuming that he is elected) and (ii) how will this impact on the Irish referendum campaign? She says in her WAZ interview that the issue of what can be done by way of stimulus is scheduled to be discussed at the June European Council as already agreed.

  13. Ceterisparibus Says:

    @DOCM

    If Frau Merkel is prepared to discuss stimulus in June then why not bring it forward to,say, May 7th.

    As I posted above, our glorious leader has said “Ireland has to have stimulus package”. What better opportunity is he going to get?

    The 39% undecided could decide that voting for Austerity alone is foolish given the changed circumstance…as acknowledged by our leader yesterday.

  14. Tullmcadoo Says:

    What is the rational alternative to the current fiscal adjustment in Ireland. Clue it ain’t more borrowing as there is nobody in private markets to lend to a peripheral alternative. The Only viable alternative is default, exit from the euro and massive cuts in public spending.

  15. Colm Brazel Says:

    @Kevin

    Re
    “Mrs Merkel gives the forthcoming Irish referendum as a reason why the treaty should not be renegotiated.”

    I read the article/translation, didn’t make that point as far as I could see. More or less set out that already signed by 25, it was not for renegotiation.

    @DOCM

    The above makes your point there very interesting:

    “It is clearly already largely drafted and the subject of intense advance manoeuvres if not actual negotiation.”

    My own view is that, unless Hollande backs off, possible uTurn after election (happens all to frequently), or Merkel same, then we have a possible stalemate, flash point, it will be interesting to observe how this pans out.

    @ Ceterisparibus ” If Frau Merkel is prepared to discuss stimulus in June then why not bring it forward to, say, May 7th. ”

    They’re hoping the Merkozy alliance will continue and Hollande will go away when results are in May 6. But a month later Also in June “The French legislative election of 2012 will take place on 10 and 17 June to elect the 14th National Assembly of the Fifth Republic”. They’ll want to see how that pans out.

  16. The Dork of Cork Says:

    @Tull
    It will or at least should not work like that…… your punt will merely buy less foregin goods.
    There will be huge efficiencies withen the domestic economy because of this ……and the wasteful credit “investments” post 1987 will be exposed as white Elephants dependent on a vast / crazy amount of resourse inputs.
    The positive money supply will flow into items that are less credit senstive.

    The Motorway network will for example look even more absurd… (it does already)

    Y2007 : 269 KM
    Y2010 : 900 KM

  17. DOCM Says:

    @ Ceterisparibus

    If only life were that simple!

    I am no fan of Merkel. As Schroeder implied in a recent major speech, her dilatory tactics have made the eventual solution much more expensive than it needed to be. In fact, stalling seems to be the only tactic that she has as she knows that it corresponds to the general mood of the German electorate which has had its fill of paying for re-unification and has no desire to bail out the Southern periphery (and its honorary Northern member).

    The situation in the Netherlands has blown her cover.

    The positive aspect to all of this is not the timing of particular electoral events – Irish referendum included (but outcome of French presidential election excluded) – that the political mood music has changed. Merkel spends most of the time in her interview defending her domestic political position. She must know that her Achilles heel is that, while she is popular with the electorate personally, the record shows that she has great difficulty in translating this into tangible electoral results. And, ironically, any political party associated with her suffers considerable electoral damage. Both the FDP and the SPD know this to their cost.

    Schroeder seems set on ensuring that history does not repeat itself.

    http://www.egmontinstitute.be/speechnotes/12/schroeder%20april.pdf

  18. Ceterisparibus Says:

    @DOCM
    Indeed.

    Austerity Backlash….

    http://www.spiegel.de/international/europe/0,1518,830185,00.html

  19. DOCM Says:

    @ All

    As an assist to finding Schroeder’s mea culpa, herewith the relevant extract.

    “There are two places in the Agenda 2010 which, with the benefit of hindsight, I would now amend if I had the opportunity to do so.

    From the middle of the 1990s onwards the low-wage sector in Germany continued to grow. Whilst the labour market reforms did not create this sector, they certainly strengthened the trend, and did so quite deliberately.
    The idea was to use the low-wage sector to enable people who were not particularly well qualified to gain access to the primary labour market.
    To a certain extent this was a success, but – and one must be quite open about this – it is being abused by employers who are trying to reduce their labour costs. I think a meaningful way of redressing this fault would be to introduce minimum wages.

    However, I can understand the position adopted by many trade unionists who are of the opinion that a law which stipulates a basic minimum wage constitutes a threat to the German system of autonomous wage bargaining. That is why I believe that precedence should be given to sector-based minimum wages.

    Or let us take another example, temporary work. With this part of the reform agenda we wanted to make it easier for companies to cope with peak workloads.

    But if companies are going to use the law in order to replace parts of the core workforce, then that is an abuse which must be stopped.
    A temporary worker at a workbench who is doing the same work as a fellow worker from the core workforce must get the same wages.

    And by the way, this demand must apply to both men and women. There is still a 20% difference in wage levels between men and women, and that really should be a thing of the past”.

    The CDU has now adopted a policy favouring the introduction of a general minimum wage but “adapted” – as Schroeder also states – to sectoral requirements including the possibility of paying LESS than the agreed minimum wage. The FDP, incapable of thinking of anything else, remains in a position of blanket opposition to any change in the present situation.

    Incidentally, the recent report of S & P (on the Spanish downgrade)includes this comment (hat tip Eurointelligence);

    “In our view, the strategy to manage the European sovereign debt crisis continues to lack effectiveness. We think credit conditions, and hence the economic outlook for Spain, could now deteriorate further than we anticipated earlier this year unless offsetting eurozone policy measures are implemented to support investor confidence and stabilize capital flows with the rest of the world. Such measures at the eurozone level could include a greater pooling of fiscal resources and obligations, possibly direct bank support mechanisms to weaken the sovereign-bank links, and a consolidation of banking supervision or a greater harmonization of labor and wage policies.”

  20. ceterisparibus Says:

    @DOCM

    We love the BoJ’s no-nonsense approach to amendments. If you’re doing something wrong, or not doing enough, just cross it out and change it:

    So what’s behind the largely expected decision to boost asset purchases to 40 trillion yen from 30 trillion yen?

    Just Japan’s endless battle with deflation

    from FT

  21. Damien Walsh Says:

    If the woman bothered to mention the Irish Referendum, then it would appear the serfs here have more of a say on the treaty than our glorious leaders would let on (insert sarcasm here). We keep getting told that Europe will just move on regardless of the outcome of the treaty. Not so sure now.

  22. Damien Walsh Says:

    Would a failure to ratify the treaty here finally push the government in to breaking the Croke park deal. No more money folks. Time for cuts (finally) to the privileged public service workers.

  23. grumpy Says:

    @Kevin OR

    Careful now, watch out for the third paragraph

    “…….But then they send me away
    To teach me how to be sensible
    Logical, responsible, practical
    And then they showed me a world
    Where I could be so dependable
    Clinical, intellectual, cynical

    There are times when all the world’s asleep
    The questions run too deep for such a simple man
    Won’t you please, please tell me what we’ve learned?
    I know it sounds absurd but please tell me who I am

    I say, “Now what would you say for they’re calling you a radical,
    a Liberal, oh a fanatical, criminal?”
    Oh Won’t you sign up your name? We’d like to feel you’re
    Acceptable, respectable, presentable, a vegetable
    Oh, ch-ch-check it out yeah

    At night when all the world’s asleep
    The questions run so deep for such a simple man
    Won’t you please, please tell me what we’ve learned?
    I know it sounds absurd but please tell me who I am
    Who I am, who I am, who I am

    ‘Coz I’m feeling so illogical
    D-d-digital
    Oh, oh, oh, oh
    Unbelievable
    B-b-bloody marvelous”

    Extract from ‘Yes’ campaign song, penned with considerable prescience in the seventies by Supertramp.

    In light of this, from the interview, and in particular the honourable mentions for Portugal, Greece and Ireland:…

    “”The fiscal pact has been negotiated, it has been signed by 25 government leaders and has already been ratified by Portugal and Greece,” she told the WAZ media group in an interview.

    “Parliaments all over Europe are about to adopt it. Ireland has a referendum on it at the end of May. It cannot be negotiated anew.””

    I am reminded o some prescience of my own, from last November. Nothing, nothing has changed:

    “I think there are two distinct fantasies about ‘fiscal union’.

    One is that you get transfers from Germany to subsidise the cost of debt / sustain costs, inefficiencies and employment terms (for the right people) superior to those in Germany, in exchange for little more than a re-named ’stability and growth pact which essentially says: ‘we really, really mean it this time’.

    The other is that the other, dysfunctional, states have the elite’ commando receiver force’ abseil in through the windows with stun grenades to veto all the non-Germanic behaviour – thereby turning them into proper countries and negating the need for all those fiscal transfers from Germany.

    I suspect the updated ‘pact’ will be a bit of a fashion victim via the austerity-everywhere fad, and that periphery governments won’t be able to sign up to it quick enough, so long as the show stays on the road for a while.

    What a shower.”

    Here is another reason to postpone the referendum. Nobody advocating a yes vote has offered a satisfactory explanation of this part of the constitutional amendment:

    ““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.”

    And anyway, K-dude is right when he says of Ireland’s “internal devaluation”:…..

    “You can argue that adjustment is happening here, but it’s painfully slow — and not remotely fast enough to avert catastrophe on the current course”.

    How can the ‘Yes’ guys campaign on the basis that you should vote yes because we reckon the treaty will in effect be improved a bit – by making some noises about what Germans think means reforms of work practices and wage costs, and what the French think means more state financed jobs – but we are not really sure, but hey, its only a referendum to change the constitution…

    Honestly, the Strategy-team-of-the-Marie-Celeste strikes again!

  24. hoganmahew Says:

    @Tull
    “Clue it ain’t more borrowing as there is nobody in private markets to lend to a peripheral alternative. The Only viable alternative is default, exit from the euro and massive cuts in public spending.”
    You couldn’t be more wrong. The country has plenty of toilet-paper factories. If Coillte are unable to provide enough trees, we can recycle all the leaflets that Mr. O’Snodaigh must have stacked somewhere. 3 million pages at ten notes a page. They’d have to be carefully arranged. Start with hundreds, then get up to millions, then billions, then… http://www.flickr.com/photos/yoganmahew/2452169589/sizes/l/in/photostream/

    No cuts required. Best of luck to all those wishing to buy wheelbarrows from me (I’ve just cornered the market) so they can buy a loaf of bread. I’ll take all sorts of precious metals, including tin foil…

  25. Frankfartergilmore Says:

    The FG top brass in government are putting party before country. Even their own supporters know the terms of the treaty are set by the German Banks/ECB and their own Financial backers. Gilmore will be retired and Enda can go back to sleep either way

  26. grumpy Says:

    Friday’s BBC Newsnight featured this fascinating clip.

    It seems to epitomise the thesis that:

    politician = sock puppet.

    It its a classic.

    http://www.youtube.com/watch?v=GFELLK8htKM

  27. Michael Hennigan - Finfacts Says:

    While agreement on growth measures are important, it seems naive to expect that the fiscal compact treaty would be reopened.

    What would be the point of including some broad principles i.e. aspirations? If there is an argument that specific measures should be detailed, wonder how long that would take to get agreement? For example, would Ireland agree to stop stealing the corporate taxes of other members? France would want a retirement age of 60; Germany 67 (already legislated for and a sensible measure because of ageing).

    On growth measures, Germany is often seen as the key in terms of doing x, y or z to boost demand in other countries. However, the growth crisis is not new ; Germany’s own record over the past decade is not impressive. It has benefited from demand from emerging markets in recent years [trade with China (exports and imports) in 2011 valued at €141bn; €169bn with France; €125bn with the US; €159bn with the Netherlands and €147bn with the UK] but with the trends in globalisation increasing, competitive pressures in a world of finite resources, will only intensify. Can Europe continue to support an expensive social model through debt?

    Excluding construction, Ireland had no real growth in the past decade; Italy only managed 3% in 2001/2010 — 0.3% per year; US 16% (worst since 1945); UK 15%; France 12%; Germany and Japan 8%. Japan had a per capita annual GDP of 1.6%; US 0.7%; France 0.6% and Germany 0.8%.

    For most of the decade, there was a huge international credit boom.

    As for Spain, the unemployment rate was 21% in 1997 and in some regions such as Andalucía, it was above 30%. According to the IMF, high unemployment was persistent in some regions because of centralised wage setting, giving business no incentive to move to such areas, where inevitably there would be a shortage of skilled workers. Collective bargaining dating from the Franco regime mostly takes place at the industry or province level and collective agreements have the status of a law, affecting all workers and firms in the relevant area. This leaves little scope for small firms to adjust wages. Temporary jobs represent on average one third of employees because of the high cost of cutting permanent staff – - as in Ireland, there are two classes of citizens.

    The construction boom began and unemployment fell to a record low of 8% in March 2007.

    There needs to be flexibility in the application of austerity rules but it should be tied to reform. Even Germany has cartels; the level of infringements of EU single market rules is at a ridiculous levels; more funds for the EIB could be another option.

    It’s very difficult to implement change and in countries with dual labour systems, trade unions are now usually among the vested interests, defending priviliges.

    The growth crisis cannot be solved alone by Germany increasing demand.

    In Italy, household incomes are lower than they were ten years ago. The public debt is larger. In the US, the inflation-adjusted median wage of the full-time American male worker is at the 1969 level.

  28. DOCM Says:

    @ All

    I would agree 100% with the points made above by MH. If I am not mistaken, the German export surplus to the other countries of the EA has halved. Is the re-balancing necessary to enable the single currency to work correctly seems to be actually happening?

    On the wider issues of what can be done by (i) Germany (ii) countries individually and (iii) the EU as a whole, I would say that the increase in German demand will flow from the pressure to alter the terms of the present agreement between government, employers and unions (cf. comments by Schroeder) but there cannot be an engineered boom. The state of the government’s finances does not allow this.

    On the second point, countries of the EU insisted on retaining national sovereignty over most areas of domestic social and economic management and it is up to them to correct the flaws and lacunae. If they fail to do so – as is increasingly evident in Ireland – they cannot blame anyone else.

    On the last point; what will actually happen at the level of the EU, I am puzzled as to why there should any questions on this as Hollande has spelt them out. At the risk of creating a very long post, herewith the extract from his newspaper interview linked to above which list them;

    “Un recyclage de propositions existantes

    Les quatre idées avancées mercredi par François Hollande visent surtout à donner une nouvelle impulsion à des dossiers européens déjà en discussion. Tous ces points “font partie soit de notre stratégie soit de propositions que nous avons faites”, a d’ailleurs commenté jeudi la porte-parole de la Commission européenne, Pia Ahrenkilde.

    Il en va ainsi de sa proposition de lancer des emprunts européens, non pour financer la dette des Etats, mais pour favoriser des grands travaux d’infrastructures. L’exécutif européen pousse à de telles “euro-obligations de projet” et l’idée “progresse bien”. L’Allemagne n’a pas mis son veto, même si elle reste toutefois prudente sur le sujet.

    Toujours pour financer des grands projets, Hollande veut également augmenter la capacité de prêts de la Banque européenne d’investissement. Mais, là encore, cette piste est discutée par les pays européens depuis plusieurs mois. Elle bute toutefois sur les réticences de certains à mettre la main à la poche pour augmenter le capital de l’institution.

    Il en est de même pour l’utilisation des fonds structurels non utilisés de l’UE. La Commission milite depuis des mois en ce sens, notamment pour aider à sortir la Grèce de la récession. Et la France et l’Allemagne ont soutenu l’idée en début d’année. Problème, certains Etats membres préféreraient récupérer les crédits non employés.

    François Hollande parle enfin de créer une taxe sur les transactions financières, “avec les pays qui le souhaitent”, afin d’alimenter le budget européen. Or Nicolas Sarkozy s’est battu pour elle, annonçant même la mise en place rapide d’une version édulcorée en France, afin de montrer l’exemple. Et Angela Merkel y est également favorable. En Allemagne, le SPD en fait même une condition pour ratifier le pacte budgétaire cher à la chancelière…”

    As a final point, it is not excluded that the UK might sign up to a version of an FTT which corresponds to the tax it already has domestically. (I am not familiar with the details). As a major row is, however, looming with the UK with regard to how to finance the next seven year multi-annual financial framework, finding some form of new financial resource seems a possibly useful approach to avoid it.

  29. Michael Hennigan - Finfacts Says:

    Angel Gurría, OECD secretary-general, said this week in Seoul that Korea remains one of the most dynamic economies in the world. It emerged from the worst global downturn since the Great Depression with an unemployment rate of 3.4% in 2011, less than half of the 8% rate for the OECD area; and a gross public debt of 33% of GDP, far below the 100% for the OECD area. However, about a third of workers in Korea are working under non-regular contracts, earning less and enjoying less benefits, which, Gurría says, must be evened out for future generations.

    “We have to break down the difference and perhaps have a more level benefits for both. If a group of workers, in Korea, or in Japan, in Mexico, in Turkey, in Italy, has very high benefits, this is fine for them. The only problem is there is a tendency not to create any new jobs.

  30. Joseph Ryan Says:

    @DOCM / @MH

    While your arguments appear reasonable real-economique and realpolitic is rapidly overtaking failed agreements, failed approaches and the very idea of a single market itself. For Real-economique read unemployment.

    Of what particular use is a single market to a country that has a continuing and seemingly permanent BOP deficit?
    Of what particular use is a common currency to a country where capital flight is given free reign to destroy its financial system?

    While there are a multitude of rent seekers in Ireland and presumably in other peripherals, I have no doubt that the same is true of Germany. The difference is that Germany can afford the rent seekers.
    But all this talk of ‘structural’ issues will do little to reverse the trade imbalances that have built up between core and periphery. And they will do absolutely nothing to reverse the capital flight which is the source of a major trade advantage to Germany at this point (possibly 4%- 5% against some countries).
    Added to which we have the ECB, despite Asmussen’s speech to the contrary, acting as debt collector in chief in a massive deleveraging of indebted countries.

    A few European structural projects, grudgingly conceded while debts continue to be being called in, will not a significant impact on peripheral unemployment. They are far more likely to take up the slack now being felt in large German (Siemens down 13%) and French engineering companies.

    I see little in the way of a solution that can halt the slide towards chaos.
    Perhaps a new EU wide VAT rate on luxury good (35%) would be much more beneficial in rebalancing the ‘consumer’ structural deficit and ergo the trade imbalances. But that is unlikely to happen.

    The next step would appear to be protectionist measures.

  31. grumpy Says:

    @docm

    ” If I am not mistaken, the German export surplus to the other countries of the EA has halved. Is the re-balancing necessary to enable the single currency to work correctly seems to be actually happening?”

    No, I don’t really think so. Germany has pulled bac on vendor financing for it’s EZ never never customers who are in or near recession.

    Nothing has fundamentally changed in the German approach and the points you correctly make about some political noises being made about maybe having overdone it a bit are a long way from anything like a real re-balancing being contemplated, let alone supported by the German establishment and people.

  32. The Alchemist Says:

    Similar to most politicians in a government, Mrs Merkel cannot admit that a policy has failed. Spain is heading towards a whopping bailout, not to mention Portugal, and that will drag in or under Italy. In this context the fiscal compact is still born.

    That some fiscal agreement is necessary or was post Maastricht, is generally accepted but the argument in favour is not helped by both France and Germany being the first tot violate the old deficit ceiling.

    The problem here is that events are rapidly overwhelming its ambitions. Whether it is postponed or not is a red herring in the sense that the EU and the eurozone cannot continue has been been the custom.

    The Irish government is still putting the recovery malarky about while at the same time cribbing that Anglo promissory notes must be repaid. Draghi finally saw that line off.

    Is there any compact that could bind politicians to a treaty with reality?

  33. tullmcadoo Says:

    Hogan,
    yes,hat tip, there is a third way. When Gerry the Barman cryptically alluded to money being available from other sources to fund the deficit post a No Vote, I was thinking of a long terrm interest free “loan” from Danske Bank. It all fits now, 3.5 million pages and….

    Grumpy,
    Even our lowliest gombeen Backbencher would stonewall in a more competant manner. Appointing Slippery Pete to the Spreaker’s Chair is straight out of the CJH playbook. He sent Dick Burke off to Brussels but then FF lost the by-election to the eccentric Liam Skelly.

  34. DOCM Says:

    @ grumpy

    As it happens, in googling to try and get the facts, I found that Finfacts had a detailed piece on German exports recently.

    http://www.finfacts.ie/irishfinancenews/article_1024173.shtml

    It is clear that it is demand from third countries that is driving German exports, followed by non EA countries, with some evidence of a re-balancing with EA countries and definite evidence of increased German imports.

    This crisis is incredibly complex. For me, there are only two obvious facts; developed economies in Europe have been living beyond their means for years and the euro has exacerbated this situation for the weaker economies within the EA. As the crisis has taken years to develop, it will take years to unwind. Generalisations about the causes otherwise, or the likely course of future events, seem to me to serve no useful purpose. The concentration has to be on what politicians see as feasible in terms of solutions.

    German policy makers must be aware that the situation is fragile and failure to make progress could easily rebound on the German economy.

    With regard to what may happen in the financial sector, Draghi had an interesting comment recently which some mistakenly read as support for an EU-wide bank resolution scheme. Readers can judge for themselves.

    http://www.finfacts.ie/irishfinancenews/article_1024173.shtml

  35. Michael Hennigan - Finfacts Says:

    The following is from a report posted on the Finfacts premium site in Feb. in respect of 2011:

    The contrasting trade fortunes of the two biggest economies in the Eurozone were vividly illustrated this week (February) when France reported that the negative gap between exports and imports had widened in 2011 to €69.6bn from €51.5bn in 2010. Germany reported that its foreign trade balance showed a surplus of €158.1bn in 2011. In 2010, the surplus amounted to €154.9bn.

    France’s previous record deficit was €56bn in 2008.

    France’s export growth of 8.6% in 2011 was offset by a 12% rise in imports, and was weaker not just than that of Germany but also of Italy, Spain and the UK resulting in a further fall in France’s global export market share, which has dipped to 3.6% from 6.2% in 1990.

    “The market share we have lost over the past 10 years has been lost to Europeans,” Trade Minister Pierre Lellouche told journalists in Paris.  “The problem is at home, it is not abroad. It is up to us to reform.”

    In Germany, commodities to the value of €420.9bn (+8.6%) were dispatched to the Eurozone countries in 2011, while the value of the commodities received from those countries was €401.5bn (+12.9%). German had a deficit in service exports of €7.8bn.

    The goods trade surplus with the other 16 Eurozone member countries was €19.4bn while two-thirds of the surplus related to trade outside the EU27.

    A unified Germany has been running a trade surplus since current records began in 1992 while France has been in deficit every year since 2002.

  36. rf Says:

    Its been four years since this crisis began, and still there is no real effort to resolve it. Four years is a long time in someones life, especially if you’re dealing with the stress of debt, possible house reposession, children to feed and educate and long term unemployment (most of which I’m not)
    So to be honest i couldnt give a shit at this stage. This endless faith that the global political, financial and intellectual elite will eventually make the correct decisions is all very well and good, but its to late. Frustration has given way to pure anger, and, in my opinion, we are now on a slow march into the Abyss (both domesticaly and internationally) And we deserve it
    If you cannot politically implement the ‘solutions’ that are needed to sustain your economic system, then it has failed, regardless of hypotheticals and counterfactuals.
    We need to recognise the fact that if our political systems can’t deal with a genuine, balls in our face crisis, then they aren’t going to deal with all the slow burning issues that are going to come to the fore this century. And if any ‘recovery’ is not going to create jobs over the medium term (and its not) then socially and politically we are going to begin to resemble a mid twentieth century Latin American country.
    Every generation that gets political power likes to believe they are not as callous and incompetent as those that went before (this time its different!), but after the last decade of war, legalised torture, corrupt elites and now this, you’ve got to be fucking kidding me. (This is not directed at K O Rourke so much as a general rant)

  37. Ceterisparibus Says:

    Another reason = perpetual recession.

    http://www.economonitor.com/blog/2012/04/the-ecb-is-on-mars

  38. Ceterisparibus Says:

    Spain following Ireland?

    http://www.economonitor.com/analysts/2012/04/23/spain-following-in-irelands-footsteps/

  39. grumpy Says:

    @ MH,DOCM

    Germany has a model which from their point of view just ain’t bust. There is a view that after decades of running surpluses Germany should now permit labour to take a bigger share. Inflation go somewhat higher, and that Germans will go all Anglo Saxon shopping centre fetish and run several years of deficits with the EZ.

    It ain’t bust, and their model ain’t going to be “fixed” in this way unless the Germans start taking a very different view. France and the UK export in competition with eachother in the defence industry, but outside of this neither they nor Italy nor Spain have built export machines that can compete sufficiently in general.

    It is entirely understandable that German politicians,public, and business leaders continue to believe that it is up to other countries to emulate their model.

    It may suit the English if the German football team had a go at kick and rush tactics for a few World Cups, or the Portuguese if they were to try gagging about twenty five yards out for ten mins at a time without shooting. But it ain’t going to happen. They have a model that works and thats that.

    Joining the Euro was a statement by the South that they were going to compete with Germany. They didn’t. They had a cheap credit fuelled boom that allowed them to think that they were economically at least GermNys equal. The tide has gone out a bit and the pennies are dropping.

    What happens now?

  40. rf Says:

    And this, (shorter my above) Except for the perplexed part, because of course we arent perplexed, we have had a system that did work,at least better than this, but we sold it of to a cabal of anti government ideologues paid for by….

    “The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn’t deliver the goods. In short we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.”

  41. DOCM Says:

    @ All

    FYI

    http://www.euronews.com/newswires/1498960-frances-hollande-says-his-ideas-winning-in-europe/

  42. Caitriona Says:

    At this stage I don’t give a damn what happens; I can not, despite a huge effort and at great cost to myself, get a job. My situation is so serious that the only reason I’m not homeless or in poverty is because my mother is subsidizing me. My only achievement is that I’m just about managing to stay out of debt, should I have to move to get a job then I am in serious trouble as the savings are gone.
    There are plenty of people including politicians, ECB and the IMF who want to continue to make people such as myself pay for situations beyond our control. I still do not know what I’ve done to deserve to be treated in such a shoddy arrogant manner.
    Employers are taking the mick, after 3-yrs of unemployment the government introduced Irish-styled slavery.. sorry internships. Then and only then did I get 4 interviews in the space of 6 months. None ended in a slave-placement I took any feedback from the employer.
    As it turns out there was nothing wrong with my skills, work experience, knowledge to do the job. My CV was perfect, presentation of myself at the interview was commended; did the background info on the company etc. Said in the interview that I was willing to put in the effort and work hard. That was noted and praised by employers. So, perhaps someone can come up with a suggestion on what I should do next. I have to continue to apply for jobs, TBH it’s a waste of time as unemployment is held against applicants.
    I’m enrolled on a distance learning MSc, at cost to myself. I’ve, unsuccessfully, applied for 2-computer courses from the spring board imitative.

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