The Fiscal Treaty in the Sunday Papers

The Sunday papers/blogs have some good contributions to the Fiscal Treaty debate.    In the Sunday Independent, Colm McCarthy cuts through much of the confusion with his usual clarity:

This referendum has consequences and is not just an opinion poll on whether people are pleased that we have an enormous debt and an ongoing deficit.

There are two net issues. The first is whether a ‘Yes’ vote would result in additional constraints on Irish budgetary policy in the years ahead.

The second is whether a ‘No’ vote would make the financing of the Government more difficult once the EU/ IMF programme ends in December 2013.

 

You should read the full article for Colm’s analysis of the two issues.   But it is worthwhile to note the conclusions:

The fiscal treaty does not, in the short or long term, create new commitments to budget cuts beyond what is in store anyway. But rejection could result in a sudden drying up of access to finance — and hence an immediate requirement to balance the books — and would be highly disruptive.

This treaty will not solve Ireland’s problems, but voting it down could make a bad situation worse, for no obvious gain.

Cliff Taylor echoes these conclusions in the Sunday Business Post.   The article is behind a paywall, but a fair-use quote gives the gist:

So there is no additional austerity for Ireland which will result from voting Yes.   Austerity is inevitable – we just have to hope that some pick-up in growth will make the sums easier.   And let’s not fool ourselves that a vote here would in some way change the course of what might happen in Europe.   That will depend on the big countries.  Full stop.

If a No vote brings no obvious advantages, it does bring risks.   As the rules stand, we would not have access to the European Stability Mechanism, the new permanent bailout fund.   So, if we need more cash after this bailout runs out – or other forms of support, such as further underwriting – we will not qualify if we vote No.   Sinn Féin has argued that the EU and IMF will not see us stuck.   But why try to find this out?

Finally, Nama Wine Lake, our new national treasure, provides a useful overview of the arguments here.

138 thoughts on “The Fiscal Treaty in the Sunday Papers”

  1. So a No vote will deny the government more cash? There’s a lot to be said for that. Take the training-wheels off the bicycle and let the little blighter peddle or fall.

  2. @Kevin

    From comments you have made in the past, you have appeared to be an advocate of type of Keynesian policies advocated by Paul Krugman. I would be interested in how you reconcile these positions.

  3. While I give full weight to the economic expertise of Colm. I think Cliff is just a journo if not mistaken – no disrespect intended. But the point is that this is not as much anymore a treaty about finance but about tactics.

    There are no fans for the treaty and Colm in effect argues we are doing it anyhow so lets just play the game.

    This is as much a referendum about political strategy. In that regard we are very much off an economics playing field

  4. @John
    I’ll be astonished if you can find any statement by Paul Krugman suggesting that Keynesian deficit spending makes sense for an economy as small as Ireland’s. His prescription (which alas we can’t follow) would be devaluation.

    I’d add that Colm McCarthy is leading his younger readers astray when he says that the early 1990s “period of austerity (sharply reducing deficits) lasted only a few years” without mentioning the crucial role that a devaluation played in that turnaround. The absence of that remedy will make a big difference.

  5. @Kevin

    You are right that Paul Krugman’s view of the possibility of stimulus policies in more nuanced (in terms of who has the room) than often portrayed. But I think you will agree that it is unlikely he would advocate an unnecessary “cold turkey” approach for any country.

  6. Looking at all those faces staring out at me from the Indo rag its hard not to escape the conclusion of how truely inadequate the Irish “elite” really is.

    Their only function in life is to farm international credit flows and turn it into Grot for themselves and their chums.

    I want nothing more to do with this wretched european market state experiment – the only outcome of its “devleopment” was the creation of masses of Pond scum that blocked the light from this once not so bad country.

    No Fear.

  7. @ Kevin
    Out of curiosity (and asked in good faith, I dont have a clue of the answer) why would deficit spending make no sense in a country with an economy as small as Irelands?
    Also didn”t EU structural funds play a part in the turn around? (if not deficit spending then certainly a ‘stimulus’?)

  8. @John,
    Of course Krugman is no fan of the cold-turkey approach. I’m not that eager for it myself. But I do think it’s time that Irish commentators started paying more attention to the possibility that the debt we are taking “for medicinal purposes only” is becoming addictive. I agree with Krugman most of the time, but when I listen to Irish politicians there are times when my inner Milton Friedman rises to the surface.

    @rf
    In a small open economy, fiscal stimulus boosts imports, thereby diluting the job-creating benefits. Back in the 1980s a younger Colm McCarthy used to joke that the Irish government was making valiant efforts to pull Europe out of recession.

  9. @RF
    Tarrifs /capital controls or Punts.
    The European market state experiment does not do such antediluvian but effective measures as it does not represent nations in any shape or form – its a crime syndicate that feels it has outgrown the confines of the nation state that it itself constructed.
    We are now a economic & intellectual curiosity….the lets see how far you can open up a country to international capital flows experiment was interesting anyhow – so long as you lived somewhere else.

    It however completly destroyed the landscape & society of the place and indeed for the first time in its history took vast areas of good agricultural land out of commission.

    Its time we Finish this debt sentence don’t you think ?
    The Post 1979 / 1987 construct has reached its terminus.

    Its also time we recognize that there is nothing there …..the asset values of this country was a complete fiction.

    I along with many other No voters do not wish to be a conduit.

  10. I thought Colm McC article had many good points, but overall, it was poorly reasoned in many respects. Basically, its shortcomings may be reduced to two : debt write-down and ‘exiting the euro’.

    Crucial point being overlooked is the question of debt write down. You are signing up to pay in full the ¢47 bn eg of PN’s for IBRC, no debt write down is the policy of the ECB and through them the troika. Effectively you are signing up to pay back odious debt which according to the latest IMF research papers with growth at .5% means we will be unable to pay this back as debt levels will become unsustainable. The question then becomes the rather ludicrous one of designing another bailout when the present one is failing, inefficient and unsustainable, this is to be the function of an second bailout under the ESM? Lets simplify all of this. We don’t need a second bailout. We need the current bailout to be redesigned to provide for debt writedown. So we got a straight forward Boolean choice; either they give us a debt writedown, or they don’t. If they don’t, we should leave the euro and negotiate unilateral debt write down based on Icelandic conditions of ability to repay. Let’s stop the austerity nonsense and end this false propaganda we do not require debt writedown. Why look for further bailouts to fund a programme that currently fails? This is only a ruse to make sure banks do not have to share in the loss and do have to join the austerity queue. Why mention as Joan Burton does the need for water wings, that on examination under the microscope, are anchors taking Ireland to Davy Jones’s locker

    “This is a misunderstanding and it is timely to remind people that Ireland has been here before. At the end of the 1980s, the Irish debt ratio was well over 100 per cent and there were fears that the Government would lose the ability to finance itself. Budget cutbacks were introduced and the deficit fell sharply — a period of austerity.

    I was rather surprised to see the following argument put forward:

    ” But the period of austerity (sharply reducing deficits) lasted only a few years and the 1990s saw small, but stable, deficits turning into small surpluses at the end of the decade. ….

    When the economy begins to grow, even at modest rates, a low deficit is enough to get the debt ratio quickly on to a declining path. Ireland took care of the deficit and the debt ratio took care of itself.”

    Unfortunately, for Colm McC, he is not comparing like for like. There are distinct differences between the era of stable and manageable deficits in 80’s, 90’s for Ireland and Irelands state of economic collapse as we struggle under the present programme from the Troika.

    All differences boil down to the question of debt. Current and prevailing conditions of private debt added to the weight of external debt also fueled by rising costs of imports and low growth rates, mean Ireland, based on current IMF research is facing into a critical situation of debt levels rising to unsustainable levels. The 80’s and 90’s did not have our level of unsustainable private and external debt to hobble recovery.

    We need to write down both public and private debt, rid ourselves of the NAMA manacle by liquidating property asap, remove growth brakes such as upward only rent reviews. We need new management teams from the business sector eg Michael O Leary, min for Tourism, to be the engine for growth, not perpetual decline.

    Colm McC makes the excellent point here:

    “Traditional investors in what were seen as low-yielding but safe European bonds have learned the expensive lesson that they face a material risk of default. They are also sore about the preferential status of bank bondholders, who have queue-jumped the lenders to governments at the insistence of European authorities. Some major world bond funds have announced that they will buy no more bonds from the peripheral eurozone countries, since they feel the game has been rigged retrospectively against them.”

    The current response of policy makers at european level has been by the banks, of the banks, for the banks. The euro is pretty much finished as a currency because of the fracking of its design by banks and financial institutions. They have leveraged globally loose credit facilities fed by the Greenspan era of deregulation in the false belief the markets will take care of themselves. The problem is that lack of regulation has meant that markets will destroy the euro as markets take care of this and other design faults such as the inherent asset/liability differences between the core and the periphery pushing the self destruct button.

    Ireland needs to press its eject button and leave the euro Zeppelin that has caught fire. We need to rejoin the sterling area, or PuntNUA seeking IMF support and the support of neighbours and friends, Canada, US, China, Russia.

    The notion that we should stay in a poorly designed currency, presently crashing under the weight of a bailout that has failed, blackmailed by conditionality that we must endure the european court system for failure to pay odious debt, submit to the rules of a debt collection agency more interested in recovering debt than the protection of the right to sovereignty,
    denied a fair bailout that has forced us to be lured by the promise of another bailout under ESM and refused to burden share with bondholder speculators, has turned the euro into a loan shark environment our economy needs to turn its back on.

    Euro exit and debt write down will have this economy on its feet again in a short space of time. Voting ‘yes’ is a vote for ‘roast pig for supper’ with champagne for the banks 🙂

  11. @ Dork,

    “We are now a economic & intellectual curiosity”

    Good point. I believe the IMF see the writing on the wall for this economy. At growth rates of .5% denied the prospect of burden sharing, the game is up. The lure of being part of another programme under ESM having endured the transfer of IBRC debt in full without any write down of PN’s for that casino, should give anyone the economic shivers for what lies ahead from the small committee of bankers that is proposed to be above the law and at the heart of the euro distortion of reality.

    No thanks 🙂

  12. @Dork

    “Its time we Finish this debt sentence don’t you think ?”

    I do. I also agree with….

    “Looking at all those faces staring out at me from the Indo rag its hard not to escape the conclusion of how truely inadequate the Irish “elite” really is.”

    The INM are a joke, virtually all (present company excluded)that write for them are contemptible hacks, and Tony O Reilly is one of the most inept Plutocracts in recent (global) history. Might make a good column next Sunday…..

    @Kevin

    Okay,thanks

  13. Both Colm and Cliff qualify their assessment of possible loss future funding….”But rejection could result in a sudden drying up of access to finance” and “But rejection could result in a sudden drying up of access to finance”, respectively.

    Do they really think that France and Germany will destroy the euro by cutting off our funding given the lengths they have gone to to preserve Greece ( and the euro) .

    The Referendum should be postponed pending developments in France .

  14. @Colm
    The other Colm could not be more wrong

    “This is a misunderstanding and it is timely to remind people that Ireland has been here before. At the end of the 1980s, the Irish debt ratio was well over 100 per cent and there were fears that the Government would lose the ability to finance itself. Budget cutbacks were introduced and the deficit fell sharply — a period of austerity.

    But the period of austerity (sharply reducing deficits) lasted only a few years and the 1990s saw small, but stable, deficits turning into small surpluses at the end of the decade. However, the ratio of debt to GDP fell like a stone, ending up in 1999 below the EU’s 60 per cent limit.

    When the economy begins to grow, even at modest rates, a low deficit is enough to get the debt ratio quickly on to a declining path. Ireland took care of the deficit and the debt ratio took care of itself.”

    There was no Austerity post 1987 /1988.
    There was a great waste of resourses which these guys call Growth.
    Credit for cars grew exponentially.. there was a Great Car credit binge in this country until Iraq & subsequently the first EMU crisis called a tempory halt to this further privatisation of the states money supply.

    There can be no fiscal crisis withen sovergin countries … there never was & is.
    (During the Bretton woods era countries currencies would be worth less not worthless against the $ / Gold proxy.)

    I remember Glandore in the summer of 1990 … it was awash with Mercs , BMWs & Volvos….. thats where the counties sacrifice went…. up in smoke.

    People must understand… that to prevent the devaluing of currencies these Bozos engage in credit hyperinflation policies.
    Why ?
    What do you think pays the interest on sovergin debt …. your credit deposits baby.

    We need a major localisation of the economy via devaluation now….. this will cut off the characters that we see on the Indo today from the credit soup.

    They are merely the modern wannabe versions of King Herod.. the local guvs with aspirations for greater power.

    I say enough with these leeches…. Enough.

  15. Ceterisparibus

    But perhaps developments over the last few years mean that cutting of funding wouldnt destroy the Euro?

    http://www.project-syndicate.org/commentary/reversing-europe-s-renationalization

    At the onset of the crisis, the eurozone’s breakup was inconceivable: the assets and liabilities denominated in the common currency were so intermingled that a breakup would cause an uncontrollable meltdown. But, as the crisis has progressed, the eurozone financial system has been progressively reoriented along national lines.

    If this continues for a few more years, a eurozone breakup would become possible without a meltdown – the omelet could be unscrambled – but it would leave the creditor countries’ central banks holding large, difficult-to-enforce claims against the debtor countries’ central banks.

  16. @rf
    Thanks for link.

    Why vote yes for a Treaty that is about to be altered significantly? And is in anyway part of a scheme the is unworkable.

    “The only way to escape the trap is to recognize that current policies are counterproductive and change course. I cannot propose a cut-and-dried plan, but three observations stand out. First, the rules governing the eurozone have failed and need to be radically revised. Defending a status quo that is unworkable only makes matters worse. Second, the current situation is highly anomalous, and some exceptional measures are needed to restore normalcy. Finally, the new rules must allow for financial markets’ inherent instability.”

    Soros has it right.

  17. From the outset of the campaign, the Government should publicly state that it will take full account of the outcome to the referendum when contemplating ratification of the related European Stability Mechanism (ESM) treaty.

    In the event of a “no” vote, Ireland would appear to be cut off from ESM funding because of a condition within the Fiscal Compact. Whilst Ireland doesn’t have a veto on the Fiscal Compact, the Government with the full support of the Dail must defer ratification of the critical ESM treaty over which Ireland would have a blocking vote if supported by other States who together contribute at least 8.5% of the ESM’s capital. This would force the EU and ECB to implement meaningful proposals to ease Ireland’s unfair and unsustainable bank debt burden which, to date, has been effectively ignored by them. Arguably, this could lead to a second referendum on the Fiscal Compact which might also lead to ratification of the ESM treaty.

    In the event of a “yes” vote, the Government would be entitled to proceed with ratification of the ESM treaty as this would reflect the democratic will of the majority of voters.

  18. Is there any opinion as to whether a “yes” or “no” vote will affect our negotiations to reduce the burden of the bank bailout? And if so, if any outcome will improve, damage our prospects, or do you think our prospects will remain the same regardless?

  19. This was Colms Austerity…. expressed as waste elsewhere.

    At any given time the available money / energy must be spent wether you spend it on unleveraged base / fiscal money or credit Grot…. we spent it on credit grot.
    88 to 93 was our first boom / bust post Basle fling.

    New private cars registered
    Y1988 : 61,188
    Y1989 : 78,383
    Y1990 : 83,420 (peak)
    Y1991 : 68,533
    Y1992 : 67,861
    Y1993 : 60,792 (through)

    Back in 1986 nearly everybody was driving 1 litre cars – so post 87 we reduced goverment expenditure and wasted it on 2 /3 litres.
    Modern credit expansions are all about dragging oil from the future into today.
    They do not create wealth , they destroy wealth (oil reserves)
    We registered a increase in GDP during those years because consumption increased , core domestic wealth capacity did not increase.
    We simply took wealth from the sands of Arabia and expressed it as a rise in GDP as import costs were low back then.

    The 91 to 93 period was characterised by the first Gulf war mini oil shock and the subsequent EMU crisis.
    Consumption rises slow until more oil / gas comes on line.

    As for oil consumption in Irish private cars – well even during the mini boom of 1990 things were tame when compared to today.
    And despite new lower growth car numbers growth in the early 90s oil consumption in private cars grew every year until the 2007 crisis.

    Y1990 : 926KTOE
    Y1991 : 981KTOE
    Y1992 : 1012KTOE
    Y1993 : 1054KTOE
    Y1994 : 1114KTOE
    Y1995 : 1176KTOE
    Y1996 : 1259KTOE
    Y1997 : 1348KTOE
    Y1998 : 1421KTOE
    Y1999 : 1504KTOE
    Y2000 : 1562KTOE
    Y2001 : 1642KTOE
    Y2002 : 1697KTOE
    Y2003 : 1746KTOE
    Y2004 : 1817KTOE
    Y2005 : 1891KTOE
    Y2006 : 1977KTOE
    Y2007 : 2070KTOE (PEAK OIL / CREDIT)
    Y2008 : 2062KTOE
    Y2009 : 1974KTOE
    Y2010 : 1899KTOE

    Colm wants to get back to creating credit hyperinflation so as to pay back external sov bond holders.
    But the resourses are simply not available to waste on such clearly catostrophic polices.
    Post 1987/88 the growth was a illusion….. it was a increase in waste production.

    The last time I checked the $ was still the reserve currency and it is saying oil is $100 + dollars a barrel.
    The brand spanking new motorways that Colm likes so much are White Elephants.
    Artifacts of the post 1987 credit binge.

  20. @Jagdip

    I would venture that if we vote Yes it is tantamount to accepting Draghi’s line…
    Pacta etc. or in the words of the Indo…Drop Dead.

  21. @John Mch

    “@Kevin

    You are right that Paul Krugman’s view of the possibility of stimulus policies in more nuanced (in terms of who has the room) than often portrayed. But I think you will agree that it is unlikely he would advocate an unnecessary “cold turkey” approach for any country.”

    I suspect Paul Krugman would indeed not “advocate an unnecessary ‘cold turkey’ approach for any country”.

    It is a fact that PK is in effect a part of the political scene in the US, having a role as intellectual point man for the anti-GOP / ‘all economic problems everywhere are caused by government – ban it, ban it, ban it!!!’ brigade – and so can’t say anything that could be used out of context against Keynesianism for the US. To the Tea Party, he is just as much as a political hack as Greenspan was one of the opposite persuasion.

    If he wasn’t, then he just might be willing to “advocate a necessary ‘cold turkey’ approach for a country which has:

    a) unassailable sheltered sectors which will continue to soak up IMF/EU official credit, and
    b) “within the Euro, faces years of grinding deflation” meaning that a) will result in a ludicrously distorted economy / non-sheltered underclass / emigres, and
    c) after making this sort of observation:

    http://krugman.blogs.nytimes.com/2012/04/25/the-unbearable-slowness-of-internal-devaluation/

    “What we see is that even in Ireland, which has made the most progress, wages have fallen only slightly. Since wages have risen in the rest of the euro area (that’s the bar labeled EA17), the actual internal devaluation is bigger — about 5 1/2 percent in Ireland’s case — but still only a fraction of what’s needed.

    Oh, and Germany — which should be experiencing substantial internal revaluation, a rise in its relative costs — hasn’t.

    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.”

    Krugman has a wonderfully insightful take on US politics. I imagine that if he were Irish he would be scathing of the Irish political class and the transparent self-interest of various powerful lobby groups in the country. I think he would have lost patience long before now.

  22. Seamus Coffey put up the following preso recently

    http://www.corkeconomics.com/wp-content/uploads/2012/04/CSO-Presentation.pdf

    Nothing better to illustrate how much of an open economy we are , than the slide ( exports and imports as a % of GDP, Ireland 150% almost twice next highest in Germany 2006, a function of the propert bubble to a great extent, but overall we can still make the point, Ireland is a small, open economy, it needs tools such as devaluation to respond to fiscal conditions in the outside world. Now through the ‘Compact’ we’re going to give a small committee in the ESM of bankers decision making powers to determine any changes we make internally re budget deficits as a flash point concern for the euro, plus deny us the response an open, agile economy needs, as it sterilises our economy in order to extort maximum debt return for banks ? Its time for the young to emigrate to Canada or elsewhere; only away to avoid being stuck for the bills and mess being made by our new ‘guarantee’, this time of the whole European banking system

  23. Just following up on Kevin O Donoghues point about devaluation as opposed to stimulus (and directed at anyone that knows, I don’t want to hassle Kevin)
    It’s a basic, and probably ignorant, question but to devalue (depreciate?) a currency, doesn’t that entail printing money and pumping it into the economy? And if so how can that be removed from a stimulus? (From what I can gather devaluation occurs on a fixed exchange rate, depreciation on a floating one, so devaluation wouldn’t be available to us now, so we would have to depreciate by printing money rather than just changing the exchange rate? If that makes sense)

  24. Colm McCarthy states:
    ‘Some opponents of the fiscal treaty have asserted that the long-term target of a lower debt ratio implies a long period of austerity, that is, budgets tightening year after year into the distant future. This is a misunderstanding and it is timely to remind people that Ireland has been here before’

    Au contraire, neither Ireland, Europe or the global economy has ever been here before. As @ DOCM observed very recently, this is an incredibly complex crisis, so, even with the best will in the world, prescriptions based on previous experience are likely to be flawed.

    Colm has also usefully linked to a paper of his, in which he refer to the Noughties boom:
    ‘While this growth appears reasonable in the light of the equally remarkable GNP growth, it is less so when one recognises how some of the measured output growth was ‘borrowed from the future’ through building a large unsold stock of houses, retail and office space, which will overhang the market for years’
    GDP growth for 2012 was projected at 4% in that paper, so the current reality is very different. We can’t get the ‘locally borrowed growth’, and we can’t get the globally borrowed growth’. It’s gone.

    As @ Colm Brazel notes, this is big stuff. We are witnessing the unwinding of 30 year global debt bubble, involving unprecedented private debt to GDP ratios. Peripheral country public services, businesses and families will all be casualties of a long, harsh deleveraging process. Whistling past that graveyard is not really helpful, IMHO.
    http://www.debtdeflation.com/blogs/2012/04/25/tonight-with-vincent-browne-18-04-12/

    EA stagnation means downside risks to exports, while our domestic economy is being hammered both by cuts to capital and current state spending, and the steadily increasing burden of new taxes. We already have a credit crunch, while the full extent of our Irish bank bust is far from fully determined.

    As Namawinelake notes. ‘International investors for the long term are just as likely to be interested in the deterioration of health, education and security as they are in what may be just a temporary “no” vote’.

    By all means let us have realism, but not just the partial and self-serving ‘fiscal realism’ spun by global financial and political elites. That means the real economy, energy, and the physical and social environment, as mangled by the credit boom, and relentlessly outlined by the Dork and Steve from Virginia. We can’t emigrate from the planet.

  25. Currently the IMF are advocating European financial institutions eg EFSF take a debt for equity stake in Irish banks,

    http://www.irishtimes.com/newspaper/breaking/2011/1220/breaking2.html

    They know the game is up. We may get an announcement 7 days before the Referendum to nudge the Y along, some offer to enter into further ‘complex negotiations’. This won’t alter my own ‘No’ in favour of debt write down, devaluation and restoration of fiscal balance with lessons to be learned and applied from the experimental mashup that didn’t work for Ireland’s failed elite. If the Y’s win it looking for insurance from the euro, an ECB version of Quinn Insurance,(think about ) , this may be a pyrrhic victory only, as the Treaty will be altered by Hollande. Signing the Referendum Y means Ireland writes a blank cheque, business as usual. On the wider European stage, there are developments taking place that may sideline our concerns as the euro has far bigger problems to contend with in Spain. I forget who posted this link a short while ago(apologies) worth putting here again,

    http://krugman.blogs.nytimes.com/2012/04/15/insane-in-spain/

    ” I’m really starting to think that we’re heading for a crackup of the whole system. “

  26. @ rf

    You raise an interesting question about devaluation and stimulus.

    I doubt if devaluation was ‘crucial’ as Kevin O’Donoghue claims.

    Total exports of goods and services were 54% of GDP in 1987 and 71% in 1994. The change related to a big influx in FDI projects that were unrelated to currency changes.

    As regards structural funds, receipts in 1991 more than offset the servicing of the national debt – – handy free money at the time.

  27. @rf

    Don’t have too much respect for the words used. Devaluation tends to be used where either deliberate policy results in a depreciation, or there is a step-like repricing down by the fx market, or a reduction in a fixed exchange rate.

    You can effect a devaluation simply by saying certain things if you hold certain public offices…

  28. @ Colm B

    “Currently the IMF are advocating European financial institutions eg EFSF take a debt for equity stake in Irish banks”

    I’ve called you up on this before – they are not advocating any “debt for equity” swap. This is a lie, bollx and bullsh1t. Stop making stuff up. They are advocating either a direct ordinary equity infusion or, more likely, a preference share equity infusion. There is no debt swap being suggested. Stop claiming there is. Even the article you link to notes that there is no debt write down being suggested.

  29. The IMF would hardly be enthuasiastic about a solo funding of a Eurozone member when recent money commitments from member countries are not in respect of bailing out individual euro countries.

    The Economist comments in an editorial in this week’s issue:

    “Although you would never know it from the platforms the candidates campaigned on, France desperately needs reform. Public debt is high and rising, the government has not run a surplus in over 35 years, the banks are undercapitalised, unemployment is persistent and corrosive and, at 56% of GDP, the French state is the biggest of any euro country.
    Mr Hollande’s programme seems a very poor answer to all this – – especially given that France’s neighbours have been undergoing genuine reforms. He talks a lot about social justice, but barely at all about the need to create wealth. Although he pledges to cut the budget deficit, he plans to do so by raising taxes, not cutting spending. Mr Hollande has promised to hire 60,000 new teachers. By his own calculations, his proposals would splurge an extra €20 billion over five years. The state would grow even bigger.”

  30. @Michael H

    The odds on a German exit through the attic really ought to be shortening somewhat.

  31. @Colm Brazel

    “This won’t alter my own ‘No’ in favour of debt write down, devaluation and restoration of fiscal balance with lessons to be learned and applied from the experimental mashup that didn’t work for Ireland’s failed elite.”

    So your voting intention is predicated on the basis of action that our creditors will take, AND you think their largess will extend to balancing the country’s books at a time we’re targeting an 8.6% deficit, AND you think the morons that got us into this position are capable of learning from it… Wouldn’t it be easier to just take the gold off the Leprechauns.

  32. @Micheal
    They stopped returning the interest to the goverment about that time Micheal….. debt rather then money is therefore needed for growth….. as growth is expressed as a rise in the money / debt stock.
    No rise in the money /debt stock = no growth.

    France is in slightly better shape from a energy perspective then any other non oil producing country because of its wise fiscal investments of the 70s…. it is however experiencing tourism / goods shocks from the rest of the more exposed periphery.
    Irish Dorks won’t be spending any money down in the South of France this year.
    All these euro economies are too integrated making any redundencey from outside shocks far less effective.

  33. @grumpy
    “The odds on a German exit through the attic really ought to be shortening somewhat.”

    Doubt it. Angela is laughing all the way to the Bundesbank. She can borrow all she likes for practically free….10 yr last week at 1.65%, not even covering inflation. Why would she change anything.

  34. @Ceter
    “To obtain coal the Germans borrow against the accounts of their trading partners” – Steve from Virgina

    When or if we eject you will find Germany in a energy pit….. it needs to export to afford those massive imports or import to afford those exports …….(its a circular argument)
    Unlike our Pharmaceutical products these exports are very energy input senstive.

    We are essentially exporting our capital to Germany so that they can make cars and we can buy them….. forming a entropy loop – however this leads to a decline of collective wealth over time.
    They are now trying to export high value items to Asia as demand collapses in Europe and lower value cars are made elsewhere but their enterprises are Industrial dead ends.

    Once we & others pull out of this currency union Germany will be exposed….as all high value mercantile countries are during depressions .. we should have done this Yesterday.

    The European car Industry is bigger then the American car industry — its terminal fate and refusal of goverments to dump this loss maker is throwing the entire European continent into destitution.

  35. A group of friends set off by car on a journey. Someone they know slightly, called ‘Financial Authority’ offers to drive their car as he wants to go to the same place. ‘Let me drive, ye can all relax.’

    The friends agree, seems like a good offer. So off they go.

    Unfortunately, in the middle of nowhere, they run out of fuel. ‘Financial Authority’ wasn’t paying attention to the fuel gauge.

    They are wondering what to do when a limo comes along. The owner, Mr Banking Elite, stops & asks if the friends need help.

    ‘Yes, have you got any petrol you could sell us?’

    ‘No’, replies Banking Elite, ‘but I’ve got a couple of bicycles I can sell you.’

    ‘Oh, ok, how much?’ Ask the friends, thinking that they could use the bicycles to at least get fuel, if not get to their destination.

    Well, said Banking Elite, ‘you’re in a pickle stranded out here, & I’m a follower of the Ayn Rand ‘free markets’ school, so my price is your car in exchange for the bicycles, tho’ I’ve only two, so some of you will need to walk.’

    The friends are taken aback. They don’t know what an ‘Ayn Rand free market school is’, but they are fairly sure Banking Elite is something unprintable on an internet blog.

    It doesn’t look a good deal, the car is worth multiple times what the bikes are worth. Some of the friends, being frightened of being in the middle of nowhere (don’t get out much) think they should take the deal. It could take years to buy a car again, but what else to do? The others aren’t so scared & figure, even tho’ it’s a lonely place, they could just try & get lift or fuel off another passing motorist. To be fair, they haven’t seen another one, but they haven’t been stranded long & there may be other options if they banged their heads together.

    So, they decide to take a vote on it, calling it, for some obscure reason, a ‘referendum on a fiscal compact’……

    (Unfortunately, unbeknownst to the friends, their seemingly friendly driver, ‘Financial Authority’, was friends with Banking Elite & had done a deal involving some siphoned fuel & a second hand car at the last town ‘Euroland’ that they stopped at…..)

    So, should the friends swap their car for a couple crappy bikes & an argument over who has to walk, because some of them are scared of being out on their own or doing a little thinking?

  36. If voting No means that our legislators have to face the prospect (sooner, rather than later) of significant changes in their unfettered, unsustainable and irresponsible spending of the taxpayers money, then I shall vote No!

    The world will not stop if the overspending has to stop. Probably would mean that many of the current clowns would not be re-elected – and that we cannot have!

    Any comparisons with previous debt/deficit experiences are invalid.

  37. @Eoin

    Re “So your voting intention is predicated on the basis of action that our creditors will take, AND you think their largess will extend to balancing the country’s books at a time we’re targeting an 8.6% deficit, AND you think the morons that got us into this position are capable of learning from it… Wouldn’t it be easier to just take the gold off the Leprechauns.”

    Well, there would be a different set of books with a Grecian type debt component writedown. But we would be targeting a deficit writedown with severity as severe as the current one, but it would have to factor in light at end of the tunnel; I dont believe there is any light at the end of the troika tunnel.

    Remember Kennedy’s speech

    “We choose to go to the moon. We choose to go to the moon… (interrupted by applause) we choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too..”

    But I got to agree with your final point re “easier to take gold off Leprechauns” I expect it’ll be water wings for everyone in voting Y for tickets on the euro ghost train. Don’t see any Kennedy’s of Grimsson’s around.

  38. Regarding CMcC’s article, two important points that would detract from the argument made are simply ignored.

    1) There is a political agreement in place at EU Council level since last July that Ireland will continue to receive official funding provided it meets programme targets (bailout & EDP) until market access is regained. It has been stated in the Dail on multiple occasions that this prior agreement takes precedence over the Fiscal treaty. These statements were made before a referendum was deemed to be necessary – the government have since gone very quiet on this matter, since it undercuts one of the main arguments for a “yes” vote, yet the statements were very clear. What would the funding vehicle be? It would likely be the EFSF, which now runs in parallel to the ESM until July 2013. There would be a full year after a “no” vote to make arrangements to implement the political agreement. The EFSF has a much wider range of instruments at its disposal now other than simply providing loans. Some form of credit line or co-insurance of Irish debt are possible options. After all, agreements must be kept – isn’t that how things are supposed to work in the EU?

    2) Ireland will be running a primary surplus in 2014, the first year after the current bailout ends, according to the Irish government, IMF and EU estimates. So current and capital spending would be covered from tax and other revenues. However debt repayments would not be. If Ireland defaulted, this would directly impact other EU countries, via write-downs in banks, insurance companies etc, and more generally this action would drive spreads wide again, putting funding stresses on other weaker countries. The alternative to this is to ensure that costs are instead borne by Irish taxpayers, and that the problem is contained within one country, by continuing to fund Ireland with loans to ensure that all creditors are paid. A disorderly default will simply not be allowed to happen.

    In addition, as has already been pointed out by wow above, the Fiscal treaty is primarily a political instrument, not an economic one. This is clear from many recent German comments (e.g. Schauble) which are along the lines of “we’ve done everything that needs to be done – the diagnosis has been made and the remedy has been provided – this is accepted by 25 countries – now get with the program”. It is intended to draw a line under how far Germany will move, and is used by itself as an argument against other proposals (e.g. direct EFSF recapitalization of banks). Hollande is not playing along however, and his views are gathering momentum. Since the treaty is primarily a political instrument, that is the field of play that is important. A “no” vote would add to this political momentum for a more balanced approach to be taken at EU level. A “yes” vote will be used by Germany as a reason not to move any further – “Look – the Irish people agree with our diagnosis and prescription; this validates the approach we have been taking all along – just implement what has been agreed and everything will be fine”.

  39. Ireland, between a rock and hard place, believes that keeping well larded rear ends on soft seats is the best way forward. That is one predictable outcome of a YES vote.
    Government calls for the yes vote would ring more sincere, if they were accompanied by calls to out the rent seekers once and for all.
    [I do not include Colm McCarthy or Cliff Taylor in that observation as both to my knowledge have advocated much more stringent cuts a top levels]

    @Grumpy

    You are becoming more persuasive by the day. I still have not seen any response to your query on the powers given by the treaty itself to ‘bodies competent under that treaty’:

    “No provision of this Constitution invalidates laws enacted, Acts done or measures adopted by the State …or measures adopted by bodies competent under the treaty from having the force of law in the State.”

  40. Michael Hennigan

    What are your own views on a stimulus? (If it was possible of course) Could it be directly invested in a national works program (infrastructure spending etc) a national investment bank lending directly to struggling businesses and possible private debt relief?
    I understand that with our political system this would be rife with waste, corruption, cronyism and possibly unconstitutional/illegal, but FDR managed it, although his successes are exaggerated now of course, in a political culture every bit as corrupt as ours.

    Grumpy

    That was more a longwinded way on my part of wondering how we devalued in the 80s/90s. Was it primarily through printing money or one of the mechanisms you mentioned?

    In general the default setting of ‘realism’ when speaking about international politics is apt. Realism is a throwback to the IR ‘paradigm wars’ of the 80s/90s and has little relevance today. Most of what has passed for solutions the past 4 years seems to be coming from the same context.

    It’s about time we began to seriously look at our institutions, as Paul Hunt has consistently been saying.

    http://whynationsfail.com/

    We’ve had four years to change the record but have instead decided to put the 80s greatest hits on repeat. And it’s got us nowhere. (And that’s generous, we’ve quite obviously gone a good deal backwards)

  41. I think we are over-intellectualising the whole thing.

    A lot of people feel a big disconnect from the EU and associated institutions (and even our own government and institutions) but believe that it’s not even worth turning up to register a ‘no’ protest vote because nobody in power will take any notice of them anyway. Then there’s the probably even larger number who can’t be bothered to even think about it and are distracted because they can’t find the remote for the TV.

    The ‘yes’ vote will win it relatively easily so let’s focus on how we best manage that outcome/the consequences of that to our advantage?

    Personally, I will be voting ‘no’. But that’s because I’m a gobshite who thinks that tptb should be listening to me.

  42. @Joseph/grumpy

    ….or measures adopted by bodies competent under the treaty from having the force of law…..

    So any measures adapted at any time in the future by ” foreign bodies “would be deemed constitutional as long as they are ” competent” under the treaty.

    Wow…pigs, pokes etc.

    @ Bryan G

    +1

    Our leaders have very short memories.

  43. Turning corners…an alternative perspective…
    “David Cameron today warned the eurozone’s debt crisis was not even halfway through as he blamed the continent for Britain’s double-dip recession.

    The Prime Minister said economies struggling across the channel, which receive 40% of all UK exports, were harming the UK’s prosperity.

    He said: “I don’t think we are anywhere near halfway through it because what’s happening in the eurozone is a massive tension between the single currency that countries are finding very difficult to adapt to.

    “It’s going to be a very long and painful process in the eurozone as they work out do they want a single currency with a single economic policy and all the things that go with it, or are they going to have something quite different?”

    Read more: http://www.irishexaminer.com/breakingnews/business/cameron-eurozone-crisis-not-over-yet-549487.html#ixzz1tTHMuXbb

  44. @ All

    It does not take much of a crystal ball to imagine events in the coming weeks turning out as follows;

    (i) Hollande wins the French election

    (ii) he issues his promised memorandum immediately, the contents of which are already largely known and in respect of which Merkel has indicated some flexibility (her biggest difficulty being in relation to the FTT which is a ‘casus belli’ for her FDP coalition partner and could cause the collapse of her government)

    (iii) the reaction of the markets will, however, be the decisive consideration.

    In short, the typical parochial Sunday debate on this thread will be overtaken by events. (Some of the commentary, notably on the Marian Finucane Show, was worthy of the film “The mouse that roared”).

    @ Bryan G

    It is hardly a major revelation that the fiscal compact is a political instrument. All treaties between states by definition are.

  45. Dork

    The last thing I’ll say, in relation to:

    “Looking at all those faces staring out at me from the Indo rag its hard not to escape the conclusion of how truely inadequate the Irish “elite” really is.”

    The five year anniversary of the below article is coming up at the end of July. Interesting to see the Irish meritocracy still producing such world beaters

    http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

  46. @ All

    If this Le Monde article is to be believed, the penny has dropped with Merkel that she cannot stall until the the European Council at the end of June. An emergency earlier meeting is seemingly envisaged. Who will be in attendance remains the open question. (The Irish Sunday media will have to find some other hare to chase while awaiting for the outcome of the French vote).

    http://www.lemonde.fr/economie/article/2012/04/29/la-commission-europeenne-planche-sur-un-plan-de-relance_1692841_3234.html

  47. One thing puzzles me about the UK. Why has its currency not weakened more? The BoE have tried very hard to achieve this (negative interest rates) and failed. Is the weight of FX derivatives such that it is impossible to move a large currency beyond certain bands?

  48. http://www.rte.ie/news/2012/0429/no-access-to-imf-funds-if-treaty-fails-ministers.html

    I think the webpage name gives the gist of the story. As alluded to on this blog and elsewhere, Ireland already has 1,000+% of quota or €22.5 bn euro. As I said on another thread, the only reason I can see for more IMF funding is to soften the cough of a very short return to structural surplus.

    The question then would be would Germany and France permit a eurozone country to fail? I would say the answer is yes. Sticking with the program is, to use a tired phrase, the only game in town. The Greeks thought that getting rid of Papandreou would see a change of course. I don’t see that that has happened in any meaningful way. Greece would have been the sacrificial victim had there not been agreement (from the Greek side).

    Spain and Italy are much bigger fish with much larger knock-on consequences. Any response to an Irish ‘no’ will be with them in mind. The calculation will be that Spain and Italy cannot be allowed to choose the destiny that suits only them. Making an example of the soft-corporate-tax Irish will fit in with too many agendas for it to be resistable.

  49. @rf

    “That was more a longwinded way on my part of wondering how we devalued in the 80s/90s. Was it primarily through printing money or one of the mechanisms you mentioned?”

    Keeping it brief, Punt and Sterling diverged a lot post link, with £ strengthening, largely due to North Sea oil and the Thatcher “A-level economics” (remember that jibe?) experiment of thumping the table and whacking up interest rates in order to do whatever was necessary to halt high inflation. The fx market bought into the idea and sterling spiked.

    Ireland continued to have high inflation for about two years after it went down in the UK & lots of public sector borrowing.

    The 1992 devaluation was really the market recognition (and eventual political acknowledgement of the apparent reality) that the ERM rate was too high for Ireland to keep up with Germany – particularly after the UK had accidentally done itself a favour by withdrawing and Spain had devalued.

    The realities that occurred to people during the ERM crisis should be ringing bells currently. Germany’s economy is ‘too good’ for the non-core.

  50. @Bryan G

    On 1), it seems likely the “political agreement” reached last July has been superseded by subsequent events. The EFSF is being rolled into the ESM on an accelerated schedule. And we now have the Treaty and the revisions to the ESM that make access conditional on signing up to compact. That July “agreement” seems now like a very weak reed on which to pin hopes on secure access to funding.

    On 2), it is possible that fear of contagion would lead to an extension of support even if we reject the shared discipline structures. But it is also possible — I would think likely — that the extra required efforts would be focused on reinforcing the firewall for countries within those structures. At the very least, we could expect much tougher conditionality on any extended loans.

    The most coherent argument for a No vote comes from those like Tull, Grumpy and Kevin O’Donoghue who recognise the risks that funding would be severely constrained. Their abhorrence of how some vested interests have captured the State makes them willing to deliver a very deep shock to Ireland’s economy and society. But, make no mistake, there would be massive collateral damage. They are willing to cut off our nose to spite the vested interests. Deep reform is needed; but the effects of an economic meltdown are likely to be poorly targeted indeed.

  51. @Michael H

    “As regards structural funds, receipts in 1991 more than offset the servicing of the national debt – – handy free money at the time.”

    Also some bloke called Honohan calculated in 1995 that the NPV of the subsidy on EIB loans to Ireland was 3% of GNP

  52. @John McHale
    re
    “Their abhorrence of how some vested interests have captured the State makes them willing to deliver a very deep shock to Ireland’s economy and society. ”

    Any possibility of a little divesting of those vested interests in the next few weeks? All in the spirit of ‘we’re all in this together’ you understand.

  53. @Grumpy
    Germany is not as strong as it once was…. as Steve says it borrows from our accounts.
    It has become more mercantile as its domestic energy resourses has dwindled , socialising these effects & malinvestments throughout the union.
    Total Energy self suff.
    Y1990 : 0.53
    Y2009 : 0.40

    Coal self sufficiency
    Y1990 : .947
    Y2009e : .639

    When Germany is withen the union , when it shuts down those Nuclear plants… we pay for it.
    Its time to bring back more rational national economies …. it will reduce the power of the financial sector somewhat as rational trade flows rather then capital flows is what is needed in the Europe of today.

  54. @John McHale

    How do you get the message to the political liars we elected who promised commercial tenants market rents and then lied and supported an organised cartel who wrecked our economy. How in a democracy do you punish political liars, who supports an organised cartel .

  55. If a NO vote and subsequent need for Bailout#2 put us in a deep enough hole where we would have to embrace the REFORM agenda which has so far been absent I could live with voting ‘NO’. Nobody doubts that it could get nasty but it may be the only circumstance in which we properly re-structure Irish society. The vested interests and conservatism run too deep.

  56. @JMch

    Whatever about people who might think Ireland should perhaps not ratify it, nobody is actually just being asked if they think Ireland should ratify the Fiscal Compact Treaty – though that is what is filling the media.

    The actual question is below. It is quite possible for many people, mild-mannered macro-economists included, to think that Ireland would be wiser to sign up to the Treaty than not to, but think that the answer to the following question should be ‘No’. Just because it might embarrass Enda, doesn’t mean the question is badly drafted and should be re-drafted rather than voted for:

    “Specifically, you will be asked to vote YES or NO to adding the following to Article 29.4 of the Constitution of Ireland:

    “10° The State may ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. 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 or prevents laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State.”

  57. Paul W,
    Depends what you mean by reform. In the absence of the ESM you get a very high probability of sovereign default and exit from the Euro. You also get a mean reversion in welfare spending back to about 2002 levels. I also speculate that the income tax code regresses to pre McCreevy levels with middle income earners paying more as that is where the money is.

    JC,
    You don’t get many people who borrowed excessively during the boom calling for house prices to be pushed back up to pre boom levels so they can get out of their bad trades.

  58. I am more concerned with the political consequences of this trearty as we are told the economic criteria have already been adopted at EU level.

    The political landscape will dictate our (i.e. the EU’s) capacity and willingness to pull ourselves out of this hole.

  59. @grumpy

    I take it from earlier comments that your worry relates to possible looseness in the Constitutional permission granted to “bodies competent under that Treaty”. Needless to say I am not a lawyer, but don’t you think a Sumreme Court would interpret that in terms of particular competencies outlined in the Treaty — for example, the competence of the Commission to set out the adjustment path to the MTO? But it is certainly important to ask these questions.

  60. John

    The fact that we are left to speculate about that is reason enough for men in grey suits to have a word with Enda. How could you vote ‘Yes’ to that question unless you are genuinely certain what set of ‘bodies’ could be granted exactly what competencies under the Treaty, and what set of ‘acts’, measures’ and ‘laws’ could possibly follow at some point down the line?

    Isn’t is bog standard procedure for academics to say to exam candidates:

    “Read the question. Answer the question asked. Do not answer a question you would like to have been asked”.

    The media is full of answers to a question that hasn’t been asked. Beta minuses all round I’m afraid.

  61. @John McHale

    On 1), it seems likely the “political agreement” reached last July has been superseded by subsequent events. … That July “agreement” seems now like a very weak reed on which to pin hopes on secure access to funding.

    The relationship between the July agreement (which has been reaffirmed at every subsequent EU Council meeting) and the treaty has been explicitly addressed by the Irish government afterthe treaty was signed. This is not just a half-forgotten one-time event that occurred back in July. For example on Feb 1, Enda Kenny:

    This was endorsed again by the conclusions of Monday’s meeting where the Heads of Government specifically referred to the fact that a country leaving a programme will continue to receive funding so long as it measures up to the conditions for which it signed on. That is the story.

    Feb 9, Noonan:

    In this context it is important to note that the Euro Area HoSG, in their conclusions of 21 July and again on 30 January 2012, committed to continuing to provide support to countries under a programme until they have regained market access, provided they successfully implement their programmes. This reaffirmation is a welcome confirmation that commitments in relation to provision of funding will be met.

    There is a political commitment to provide funding until market access has been regained, and this has been reaffirmed after the treaty was signed. Ratifying the treaty is not required for this support, since it is not part of the programme conditionality (bailout or EDP).

    Also you wrote

    The EFSF is being rolled into the ESM on an accelerated schedule.

    The EFSF schedule has not been changed – it is, and always has been, scheduled to end in July 2013.

    Regarding the desirability, or otherwise, of the short, sharp shock argument – it would be less of a short, sharp shock if the country has a primary balance. However, more significantly, Ireland will simply not be allowed to go ahead with a disorderly default, which would be the consequence of a sudden cut-off of official funding. Greece has had absolutely no say itself in the timing or extent of its own default – this was all determined by the EU/IMF. It is an illusion to think that Ireland would be allowed to default as a result of a decision made in Dublin. The decision will be made elsewhere, and allowing such a default would make matters worse, not better, for the other EU countries. A method will be found to force-feed the prisoner – nobody wants to lose control of events, or create any martyrs.

  62. @Bryan G
    “Ireland will simply not be allowed to go ahead with a disorderly default, which would be the consequence of a sudden cut-off of official funding”

    This is the crux of the matter. We are being fed nonsense…and not only by politicians.

  63. @ Bryan G

    A method will be found to force-feed the prisoner – nobody wants to lose control of events, or create any martyrs.

    @ Paul M

    Nobody doubts that it could get nasty but it may be the only circumstance in which we properly re-structure Irish society.

    This is akin to the old story of the Chinaman burning his house to roast the pig.

    Following a No vote, only fools could believe that it would not trigger at a minimum, months of uncertainty.

    Or maybe Chancellor Merkel would resign and the rest of Europe prays for eurobonds to appear like manna in the desert, in step-march behind President Hollande and his aide-de-camp, Ms Thirty-five-hour-week ?

    Of course in Ireland, the usual trench fodder would be on the firing line while the comfortable with a grip of the public megaphone also pray for a return of the tooth fairy.

    Just wonder for a moment about a strange world to some: a struggling trading company, surviving fours years of a brutal recession, each month just able to collect enough from debtors to meet the payroll.

    Just tell me if you even once had the direct exposure to experiencing the fear of unemployment etched on the faces of employees in such a firm, that they again have to be the expendables on a toss of a coin?

  64. @ rf

    There is already a lot of public supported stimulus – – public procurement with many services still at bubble prices; grants to farmers and others; public pay and pensions and so on.

    The inspired proposal is to raid banjaxed pension funds again but in a system where clear evidence of failure in public funding of the ‘smart economy’ cannot be acknowledged then why believe that public funds would be better deployed on other projects?

    Four ‘taskforces’ were used in as many years to find a winning formula for innovation policy.

    My father used to wisely say that it’s not possible to make a racehorse out of a mule.

  65. @The Dork of Cork Says:
    Looking at all those faces staring out at me from the Indo rag its hard not to escape the conclusion of how truely inadequate the Irish “elite” really is.

    +1

  66. @John McHale,

    You may not have been precisely accurate in identifying the suspects, but, in the following, you have articulated a perfectly rational view to which, I suspect, quite a few people would subscribe:

    “Their abhorrence of how some vested interests have captured the State makes them willing to deliver a very deep shock to Ireland’s economy and society.”

    And you are right to sound a cautionary note:
    “They are willing to cut off our nose to spite the vested interests. Deep reform is needed; but the effects of an economic meltdown are likely to be poorly targeted indeed.”

    But again the good old “briathar saor” is employed. “Deep reform is needed”. Someone, somewhere, should do something some how. Deep reform indeed, but by whom?, to whom? for whom? when? and how?

    At the end of January, Colm McCarthy sounded a magnificant blast:
    http://www.independent.ie/opinion/analysis/colm-mccarthy-austerity-yes-but-where-is-reform-3002934.html

    But since then…silence.

    Do people really think that the grevious policy and regulatory failures were confined to the ephemeral tax revenues-banking-property nexus? And that policy and regulation is every other area, if not hunky dory, do not exhibit the same problems – even if their impact is never going to be as suddenly damaging as the property/fiscal/banking crash?

    Why does there have to be a car crash – and the inevitable panic, sound and fury (and the rash and ill-thought through implementation of reforms that could have been implemented in a considered and measured manner previously)?

    But Official Ireland doesn’t want to hear or know. It’s steady as she goes. Reasoned arguments and cautious warnings have no effect.

    I’m waiting for a few wheels to come off, and then they might sit up and take some notice. But it’ll probably be the usual blind panic – and the underlying problems will remain unresolved.

  67. @grumpy:

    It is the words “necessitated” and “obligations” that worry me most. Who is going to decide that a particular act is “necessary” in order to fulfill our “obligations”, and on what basis?

  68. @grumpy

    I asked precisely this question on ““bodies competent under that Treaty” on my show on Saturday. Gavin Barrett, the UCD European Law lecturer said that the phrasing is the same as used under all the treaties so far.

  69. @ Paul Hunt

    You’re right of course to suggest that on reform, the timidity of the Celtic Tiger years continue.

    There is a reluctance to directly challenge authority including what is under their own noses.

    In The Irish Times today, John McManus says that the ‘superstar’ economists want to have their cake and eat it.

    There is certainly a problem in playing to the public gallery.

    An individual who wishes to have a durable impact cannot have long-term relevance by seeking public approval through reinforcing simple and delusional narratives.

    The penny can eventually drop for even the gullible.

    I’m not advocating that people should seek to create enemies but the bitter truth should be presented unvanished.

    http://www.irishtimes.com/newspaper/finance/2012/0430/1224315361496.html

  70. @ All

    Some status angst may be creeping in as ‘celebrity journalists’ are rather few on the ground.

    Crredit given, however, where credit is due; Karl Whelan gave an excellent account of himself on Morning Ireland and may have succeeded in stopping at least one wild goose chase (identified by one ‘celebrity journalist’ as a “game changer”).

    @ KOR/Sarah Carey

    The language is a carbon copy of that used when the Constitution was amended when we joined the EU. It is now fairly generally agreed that it was too tightly drawn and the source of much difficulty since precisely because of the difficulty in deciding the meaning of thw word “necessitated” and the idiosyncratic Crotty judgement on restrictions in relation to ceding “sovereignty” (the last-mentioned being, almost certainly, the reason why the AG recommended that “on balance” another referendum was required, this time for an international rather than an EU treaty).

    However, it cannot be said that it applies to all treaties as most such treaties are ratified by the Dáil. In this instance, because of the close linkage of the TSCG to the EU, and the clear understanding among the parties that it is ultimately to become part of the EU treaty structure (cf. relevant article), and discretion being the better part of valour, having an identical text text should avoid further constitutional complications in the future.

    The answer to the question posed by KOR, however, is a rather simple one; the Supreme Court.

  71. John McManus is one of the few credible journalists we have got. Good to seem him out the economist cartel who failed to spot the bubble and who predicted a soft landing. Why should anyone listen to them now?

  72. On what basis, DOCM? We are talking I suppose about actions which help balance the books, and which might have constitutional question marks surrounding them. Will the Supreme Court take the view that anything that helps balance the books is necessitated by the treaty, or will it take the view that no individual action is necessitated by the treaty, since there are always many ways of balancing the books? (Honest question.)

  73. @Kevin OR, sarah

    “It is the words “necessitated” and “obligations” that worry me most. Who is going to decide that a particular act is “necessary” in order to fulfill our “obligations”, and on what basis?”

    You seem to be concentrating on the first three quarters of the wording of the constitutional amendment, ie this bit:

    “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”

    Have a close look at the the last couple of lines – after the word “or”. Editing so as not to be distracted by the first part gives:

    ““Specifically, you will be asked to vote YES or NO to adding the following to Article 29.4 of the Constitution of Ireland:

    “10° The State may ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. 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.”

  74. Hollande is likely to win. He will need a win for ‘growth’. Merkel will not be seen to turn back on the treaty. The result will likely be some hybrid, with the EIB getting more cash to splash, and the splashing of that cash being conditional on adoption of the fiscal rules.

    If we vote no and then goodies are added by France. Will we vote again? If we vote yes and the thing is torn up, will we vote again? Besides this, either result will make us a political stick for someone.

    It’s a mess, we shouldn’t be voting, defer the bloody thing citing events in Europe or problems with voting machines or anything. It’s not in our interests to vote now.

  75. @ Michael Hennigan,

    The word ‘delusional’ in the context you use it there deserves some comment. Fortunately, history has a way of revealing itself in a way that can measure the term. So, we can look back at the target of Berties

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

    “sittin on the sideline..cribbin and moanin..is a lost opportunity’ attack on delusional critics and we now know who the delusional one was.

    Tks for the link you provide there. I agree with the tenor of the article by John McManus. On the other hand, its a tip off that views and commentary should be carefully examined and filtered with due care from all sides. But economists should be very careful not to be led into some machiavellian conspiracy should they aspire to the role of Rasputin in the court of Enda The Defaulter 🙂

    For example, this morning Morning Ireland had a featured item on the role of the IMF led by the Sunday Times article front page by Mark Paul. Clearly, Karl Whelan was interviewed to refute the substance of the article. As it happened, Karl Whelan supported the view I expressed on an earlier blog on the same matter, I’ll add this here for fyi. But Karl was clearly critical of the role of the IMF in a post sovereign default for Ireland a la Greece. He agreed the IMF could come to Irelands aid, but this was not guaranteed and aid could be small and subject to harsh measures.

    Clearly this was a biased view, there is no way to predict the IMF involvement in a post sovereign default situation. KW did not allude to the probability of support from the UK, China, Canada, other sources. So, overall, I regarded the interview as rather one sided.

    The interview did reveal that points raised by the No campaign are capable of grudging extraction, the more the debate continues, the more that will be revealed in favour of the No Campaign. Truth can be hidden but it doesn’t go away 🙂

    “Its true what RTE have said re the IMF position; it is joined at the hip with ECB and EU for EMU programme countries. But who is talking of staying within the EMU as part of their No position. I’ve no doubt many in the no camp are. For example, I wonder how far SF would travel with the No position that holds the view we should default, exit the euro and rejoin sterling. Propaganda is so overwhelming that ‘default’, ‘leaving the euro’, ‘debt writedown’ are verboten in the Goebels like wave of propaganda that will neither discuss these issues nor allow them enter into the Compact debate. If you want to see the propaganda at work, use those words. Let’s see now, use ‘leaving the euro’ and the ‘IMF’ in the same scope and what does it give you. Hmm, Ireland is no longer a member of the EMU so does not fall within the parameters of ECB, EU, IMF programme for the EMU. Does it then fall within the criteria for a unilateral IMF programme. Yes it can. Similarly, outside the euro, Ireland can argue a debt write down it has failed to achieve as a member of the EMU.”

    http://www.irisheconomy.ie/index.php/2012/04/29/reminder-imf-loans-more-expensive-than-eu-loans/#comment-274689

    The debate will only mature when we debate the whole question of exiting the euro and renegotiating our loans in an ability to pay scenario following sovereign default. But the ‘Yes’ campaign may yet succeed in burying those issues behind a wall of Goebbels like propaganda which, according to media reports, threatens to become nasty. Both sides need to show maturity in the service of obtaining the best outcome for the coming generations saddled with these debts.

  76. @MH

    “Just wonder for a moment about a strange world to some: a struggling trading company, surviving fours years of a brutal recession, each month just able to collect enough from debtors to meet the payroll.”

    Michael, I can almost hear the phone call from Sean Fitzpatrick to Brian Lenihan in Sept 2008 saying something similar to pressurise him into “doing the responsible thing” and guaranteeing all the bank’s liabilities.It is easier to make a decision that avoids risks in the short term in exchange for risks in the long term. Ireland is amazingly good at that sort of co-out decision-making.

    The referendum will probably be passed in the end because the ‘human shields’ tactic will be deployed by the countries powerful groupings. Lets not do their work for them at this point.

    Both you and Paul Hunt should realize that Croke Park 2.0 is going to be ‘negotiated’ soon to further entrench the costs of TDs and PS services. The sheltered private professions have a symbiotic relationship with them. Do you two really think there will be real reform, of the type the dogs in the street know is appropriate, while the gravy train is absolutely guaranteed to arrive on schedule all the time?

  77. The other pitfall of a ‘no’ vote is of course that (regardless that it was inevitable anyway) the need for the second bailout will be blamed on voting ‘no’.

    You can just picture Noonan next year: “We were recovering well…. on track…. poster boy…… weren’t even heading there….. economy about to take off like a rocket….. then silly people who should never have had a vote anyway voted against….. that was what really threw the spanner in the works…… is my teaching job still open? Wow, is that how much my ministerial pension will be worth? I hear property is cheap in Spain at the moment.”

    I don’t know why I’m even entertaining the idea. A ‘no’ vote is as likely as Ulster winning the Heineken cup.

  78. @ PR Guy

    Well now that is where we are going to have to part company – I will be there on the 19th for the ‘All Ireland’ Final with my boy + 40,000.

    I look forward to providing some tomato sauce to accompany the words you are going to have to eat. 🙂

  79. @PR guy: whichever way we vote, it will be misinterpreted.

    If we vote yes, Merkel and her dwindling band of allies will interpret this as providing democratic legitimacy for their mad low inflation-high austerity strategy; when in fact if we vote yes it will be because of the big bazooka pointing at us.

  80. Would 10 billion be too much to expect?

    My wish list:

    Dart Underground.
    General rail upgrades, including spur off dart line to the airport.
    National fibre network.
    ‘Dublin Bike’ scheme expanded in Dublin as well as rolled out in Cork and Galway.

    ….. One can wish.

  81. @Ordinary Man

    Good response! We shall see. Best of luck. I think it’s great we have an all Ireland final. Allez les blues.

  82. @docm. kevin, sarah

    The second part of this wording is giving a wide ranging constitutional get-around to ‘bodies’ that derive their competence from an international treaty which is all about one particular vision of “discipline” and subscribes to one particular wing of the spectrum of economic beliefs. It is also being pushed through by Ireland’s great and good effectively under duress. It is not a run-of-the-mill change to allow an EU treaty that people by and large think is a good idea.

    Is it sensible to combine:

    “We have to sign the Fiscal Compact Treaty, even though it is bad economics, because we have a gun to our head”

    with such powerful and future-proofed constitution-proofing for anything that might follow from or be set up under the Fiscal Compact treaty down the line? Wouldn’t it be more sensible to do the minimum necessary to allow it to be signed (that is, if you think it should be signed)?

  83. @John
    I will not be bought.
    Once you accept you are dead anyway ..things become a lot easier.

    Besides many areas of Europe don’t need investment .. they need tokens / base money – think of all those half empty Spanish high speed trains….

    The Anglo world has a different problem of course… it does not do investment….. it has a fiscal rather then a monetary problem by and large.
    For example – Despite explosive growth in rail passenger numbers the British (GB) rollong stock is aging rapidily.

    Y2007 -2008 Q4 : 15.13 years
    Y2011 -2012 Q3 : 17.55 years.

    NIR seems to be one of the few exceptions outside of London with its brand spanking new DMUs

  84. @ PR Guy

    “silly people who should never have had a vote anyway voted against…’ I’m sorry, but I don’t regard myself as silly. But I did receive similar blanket accusations from Bertie Ahearne’s soft landing brigade. The “Y’ camp will reap a similar FF harvest..

    @DOCM re James Downey article,


    Experts say that Europe must have “a real central bank” with an expanded mandate and enhanced powers. That implies debt-sharing and, quite likely, debt forgiveness.

    And as if this were not sufficiently dramatic, it implies a giant step towards federalism.

    At the time of the Lisbon Treaty debate — and before that, during the debate on the aborted European constitution — I saw Lisbon as a compromise, the maximum degree of federation the peoples of the European Union would accept. Since then the arrangement, to put it mildly, has not worked well. We have to come closer together or risk dissolution. ”

    Think of it, what is James Downey advising there, this is part of the ‘Yes BUT’ campaign…

    1. Vote ‘Yes’ because experts say ‘ “Europe must have “a real central bank” with an expanded mandate and enhanced powers. That implies debt-sharing and, quite likely, debt forgiveness”

    Don’t want to make too much fun of this, but its a bit like advising someone to invest all their money in Anglo after the bank’s collapse because ‘experts say the bank should be recapitalised and its lending book losses paid for by taxpayers..Lol, oh no, that’s what happened. Alright, just, I need another analogy, stick with ‘that’s black, vote for black because experts say it should be white’ 🙂

    2. But James Downey seems to have lost the head totally on advocating federalism, even though he acknowledges since the Lisbon Treaty Debate, to put it mildly, it has not worked well.

    3. Don’t tell Downey the Compact will disenfranchise the periphery and seal up the core from future political and economic influence by the periphery by restricting voting to members of the core.

    http://www.independent.ie/opinion/analysis/james-downey-mr-hollandes-opus-to-change-face-of-europe-3094841.html

    It just goes to show there are some who are so brainwashed they’ll sign a blank cheque, debate on the merits or otherwise of EU membership, is of no consequence whatsoever to them, they’ll sign anything with Y on it 🙂

    Simply Say No especially if you don’t understand what you are signing up for and especially if presented with delusional and ludicrous fantasies re federalism, burden sharing, when you have evidence based information on how such non existing policies have stuck Ireland with the bill it has.

    The ‘Y’ vote will be led by those on comfortable Croke Park salaries who want to keep onto them. Their pockets will be picked if Y is passed in a far bigger and more profound way than if they voted NO. But hey, any short term gain obtained will prove to be very short sighted. Mark my words 🙂

    Downey does draw attention to the role of SF. It is unfortunate SF with their political baggage appear to be fronting the No campaign. It is unfortunate an alliance of FF and SF as an enlightened new party of the future are not fronting the No campaign. And so it is, we’re turkeys for XMas, fellow Thermopylites but hey, its great to be a member of the NO campaign 🙂

  85. @PRguy

    Handy that Ireland doesn’t have a stroppy media like those rude Australians. How’s my […] editing?

    http://www.smh.com.au/opinion/politics/credibility-gone-pm-should-fall-on-her-sword-20120429-1xt3a.html#ixzz1tW6NYPC3

    “JULIA Gillard [Michael Noonan] should consider falling on her [his] sword for the good of the Labor Party [maybe leave this as is], because she can no longer present an even slightly credible face at the election. Her [his] spectacular U-turn on everything she’d [he’d] said before on Craig Thomson and Peter Slipper [the possibility Ireland might require a second bailout] has left her [him] looking nakedly expedient, and further exposed the state of crisis within the government.

  86. @Colm Brazel

    I’m not implying you are silly. Just a tilt at Noonan. I am also voting no.

    @grumpy

    10/10 and a good idea to leave ‘Labor’ in there.

  87. @MH. Paul H

    On the effect on ‘reform’ of gravy-train availability (sorry if I’m overdoing it but..):

    “The UK Treasury accused the commission of “wilfully ignoring” member states’ calls for restraint. “It is unacceptable for the commission to propose an inflation-busting budget increase when governments across Europe are making difficult decisions on public spending,” said Mark Hoban, the Treasury minister.

    A French government spokesperson dismissed the proposal as “impossible, unjustifiable and unacceptable” while a diplomat from one of the EU’s northern member states called it “hilarious”.”

    more of similar at
    http://ftalphaville.ft.com/blog/2012/04/27/978021/the-eu-budget-no-solidarity-during-austerity/

  88. @ grumpy

    Do they not realise austerity does not apply to the financial sector and gravy-train bureaucracy

    Here’s Michael O Leary on the EU gravy train 🙂

  89. @Colm Bazel

    Of course, the main reason I am voting no is simply to see if they would have the brass neck to make us vote again if the no’s won. That really would be hilarious.

  90. @ PR
    We do have a school classroom reaction to votes, etc.
    But we presume there is a teacher in there too!

  91. @grumpy

    There’s nothing new in the proposed construction at all – in incorporating the Stability Treaty the wording is otherwise identical in terms of ‘necessitated’ ‘obligations’, ‘bodies competent’ and ‘force of law’ to the current article 29.4.10°:

    “No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.”

    The raison d’etre of that article has always been to constitutionally fireproof obligations arising under treaties that would otherwise be unconstitutional – but not in a carte blanche manner. The Supreme Court has restricted the ambit of necessitated to strict (non-discretionary) legal obligations required to comply with EU law in duly established areas of competency. Also the means of implementing any obligation must be maximally constitutional ie. where any constitutional means exists to give effect, it must be chosen over an unconstitutional interpretation.

    See Section II – (pp. 130 – 135):

    http://www.jsijournal.ie/html/Volume%204%20No.%202/4%5B2%5D_Tomkin_Implementing%20Community%20Legislation%20into%20National%20Law.pdf

  92. Unfortunately the quality and qualifications of TDs is average to poor. I doubt if any TD has created a business or a job ever. Economics used be referred to as political economy and a knowledge of this subject should almost be a pre requisite for our TDs. The quantity of TDs is excessive and the quality inferior. The majority of the current cabinet were in the Dail for the bubble years and never flagged it. Therefore they failed the 95 mark question and should consider apologising and resigning immediately.
    David McWilliams in 1999 told Gay Byrne live on the Late Late show that there was a property bubble and was ignored. The rate of pay should reflect the skills needed to be an educated and informed legislator and should be abated by the honour and power of representing your country at the highest level.
    Most of the current cabinet presided over the destruction of our economy. Failure should not be rewarded.

  93. “We need new management teams from the business sector eg Michael O Leary, min for Tourism”

    “Here’s Michael O Leary on the EU gravy train”

    “I doubt if any TD has created a business or a job ever.”

    I’ve been out of the country for a while, but are the Irish people still mythologising ‘job creators’?
    I might give it a couple more years.

  94. Again there is a illusion of stability and “growth” as projected by our dear leaders such as Gilmore on RTE etc etc.
    As I have tried to convey – beginning for us with the first Post Basel / post EMU credit crisis of the late 80s early 90s …. these events are caused by a wastage of valuable resourses by the commercial bank credit sector via credit hyperinflations.

    They somehow comicaly refer to this depletion of capital as Growth.
    The Euro is a bankers currency…. it is not a Treasuries currency which means it is not a fiat currency.
    Therefore the only “growth” can come from commercial bank wastage of now scarce resourses.
    Gilmore and the lads may really believe they can grow out of the suburban wasteland that the Euro project has created…. but bank credit needs to take more resourses from the future…. thats mostly gone now…. i.e.it needs a vast amount of energy to create even bigger suburban wastelands.

    When a Treasury as opposed to a commercial bank produces unleveraged currency that currency will find the most efficient avenue available.
    We can clearly see this happening in the States with a rise in rail freight traffic & the UK with a rise of rail passenger traffic.

    The fiscal austerity espoused by the neo liberals in both the Anglo world and the more extreme Euro boys club is the Ponzi…or more accurately the tactic to bail out the Ponzi.
    The revenue of our Politicians , Bankers , oligarchs etc is dependent on this monster somehow sustaining itself on the blood of people who are thrown under this monetary bus as they run out of money to pay Fraudulent debt.
    As the bigger the base money component the less leverage they have to play with.
    We must reject everything that we have been thought .. as it is all lies.

  95. @NEL

    Thanks for that link. (Sarah, cant open your recording – but will for the mo assume it doesn’t deal with the question definatively.)

    “There’s nothing new in the proposed construction at all – in incorporating the Stability Treaty the wording is otherwise identical in terms of ‘necessitated’ ‘obligations’, ‘bodies competent’ and ‘force of law’ to the current article 29.4.10°”

    The point I am trying to make above
    http://www.irisheconomy.ie/index.php/2012/04/29/the-fiscal-treaty-in-the-sunday-papers/#comment-274742

    is that this protection from interference by the Irish constitution is being applied to a rather different thing. The leap of faith in granting this to who knows what bodies may order who knows what measures under the Fiscal Compact is not the same as that that the country made previously in relation to the EU generally.

    “which are necessitated by the obligations of membership of the European Union or of the Communities”

    is swapped for

    “which are necessitated by the obligations of the State under that [Fiscal Compact] Treaty”

    The FCT is an International Treaty, not an EU Treaty. Should the level of trust and commitment to the ‘gun to our heads’ agreement be the same?

    The second part

    “No provision of this Constitution … prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State”

    has to be compared with:

    “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.”

    What you have to satisfy yourself of is that it is appropriate for the original wording – which deals with ‘the force of law in the state’ and the authority of what most people would understand as “the EU” – to be robotically applied to this new, controversial and unwillingly signed international Treaty. This does not seem to me to be directly equivalent to membership of the EU – a club Ireland willingly joined.

    Whatever presumably German hard-money inspired “bodies” can be said to derive competence from the Fiscal Compact Treaty will have the same authority (so far as the Irish constitution is concerned) to enact laws, do acts, and carry out measures that will all have the force of law in Ireland.

    What “bodies” are going to be or might at some point be ‘competent’ under the FCT? How are they going to take decisions on these acts, measures or laws? How is the voting going to be handled? What majorities will be required and on what type of matter?

    If a body competent under the FCT (note not subject to this part “laws enacted, acts done or measures adopted by the State that are necessitated by the obligations of the State under that Treaty” ) lost the run of itself and voted to take a measure that was not “necessitated” by the FCT, where is the constitutional protection?

    Does any one think it is impossible or very, very unlikely that the FCT could result at some point in some controversial diktats given the existence of the European Fiscal Crisis and some very hotly contested economic ideas which currently hold sway – thus making these considerations a bit ‘cribby’ and ‘moany’?

    Has all of the above been sorted out – or do you just take it all on trust?

  96. @ Colm Brazel
    ‘Downey does draw attention to the role of SF. It is unfortunate SF with their political baggage appear to be fronting the No campaign. It is unfortunate an alliance of FF and SF as an enlightened new party of the future are not fronting the No campaign.’

    Scaremongering about Sinn Fein is mandatory at the Indo.

    ‘Mr O Caolain’s delivery is pompous and off-putting, but his speeches read well; read like the words of someone who knows what he is talking about. So do those of Mary Lou McDonald.
    The time cannot be far off when Sinn Fein changes its leader. Will that help it to establish itself as the second party in the State, in electoral terms, not just in opinion polls? A scary thought’

    OMG. The terrible danger that Shinners might actually be talking sense. This is 2012, and the country is in crisis. Every party has baggage, so the key to progress is mutual respect.

    It’s hard for Fianna Fail to progress from a position where they got used to being the ‘natural party of government’. Perhaps they have forgotten how to do opposition.

  97. @ grumpy

    On comparisons with the once celebrated Seanie, there should be a slight difference between a leading insider seeking another political favour, in a desperate situation and for example pointing out that people who may have never made consequential decisions in their professional lives, may well propose such in respect of national policy that will not impact themselves but would likely inflict the greatest pain at the bottom of the economic pyramid.

    Reform is boring to many apart from the vested interests and this time in 2017, Marine Le Pen may well be heading for le Palais de l’Elysée.

    Some of the ‘people of standing’ who get heard in our partly-democratic system are against what they term ‘austerity’ but there is seldom references to the kleptocracies, because those who have the priviliges believe that they can maintain them.

    We once viewed Ulster Unionaists as unreasonable with the ‘”What we have we hold,” attitude.

    In time, fiscal contract or not, as in Afghanistan, where there is little point for outsiders to try and speed up transitions to recognitions of human rights, accountability and democracy, it may well be best to let people do as they wish.

    So in Europe, the deity cannot decide on sustainable growth; Japan had two remarkable transformations since 1868. It hasn’t been able to manage a third.

    There is no politician or group of politicians that can do it as it’s not a closed system.

    Governments can agree on short-term measures but that is not a guarantee for long-term growth.

    Last year Irish farm incomes rose because of international prices but there was no rise in output.

    After 60 years, Ireland’s exporting sector is overwhelmingly dependent on American firms and Bruton is in America this week looking for jobs.

    Are we in a position to take dramatic steps that may not suit our owners?

    During the bubble, we were never a wealthy country. Living standards in Ireland and elsewhere will take a long time to adjust to more realistic levels.

  98. This site could go one further and conduct a poll or organise a structured debate that answer the questions head on. Now that would be useful.

    At present, it appears debates on the legal, social and economic implictions of the treaty are pointless – nobody is really qualified to make assertions as to whether the ECB would lock us out or not.

    Our government has sold us down the river by retrospectively agreeing on the blackmail clause. It is unethical and right now it is in our interest to at least try to have it removed so that we can openly discuss the economic implications of the treaty, rather than the political.

    This is the constructive/reasoned advise I would like to read from our “superstar” economists.

    If an economist is truly independent and concludes that the “economics of the treaty are terrible”, he/she would leave it there and resist the temptation to put on the game theory hat, especially when outcomes are so far from certain.

  99. One possible outcome is that Europe is heading towards a collapse of peripheral banks.
    The LTRO has been a sneaky mechanism to transfer liability from the core to the periphery – essentially allowing the periphery banks to buy junk govt bonds.
    The spectre of full blown depression in Europes periphery is becoming very real.

    Before I vote yes to this thing – can someone give me a cast iron guarantee that it can be undone?

  100. @Micheal
    Maybe if we sent the Naval service on a courtesy call to Brest…..(its not that far so I guess we can just about afford the Diesel)

    When they least expect we can steal one of those Boomer Subs ….and dictate terms.

    But then again it might not work as the Ranger wing is busy patrolling the Bogs for internal turf cutting subversives.
    We must throw the FCA into the Fray…. a weeks training in the Curragh should cover it.
    http://www.youtube.com/watch?v=4j7UioHgcd8

  101. @ Shay

    I’m starting to understand how my father felt about the Catholic Church/Irish nationalism, not so much hostile as very, very bored.
    Michael O Leary is Irelands answer to Ariel Sharon, pretty good at what he does but give the man any sort of power and your looking at a f@@king disaster in the long run.
    I’ve never understood how people have failed to take his public utterances for what they are, the result of either naked self interest or fullblown idiocy.
    It’s about time his disgraced world view was put to bed

  102. @paul quigley

    Scaremongering about Sinn Fein is mandatory at the Indo.

    The levers of both class and status anxiety are liable to be applied in order to try and roll the populace into the Fiscal Compact, you can be sure that both of the right wing establishment papers will be heavily hyping the “loony left” and “former gunmen” angles of the treaty opposition.

    The campaign for the treaty will necessarily be the campaign against the treaty’s opposition. Everyone accepts that the Fiscal Compact is a hare brained solution to a problem that nobody except Greece had, its only potential benefit is that it makes us better able to weather the crisis that current German/ECB dogma has brought apon us. Even at the Irish Economy, and we have some fairly unrepentant right wingers/financial sector apologists here, no one thinks that the Fiscal Compact is other than a distraction.

    Also coming up in the Irish Times and Independent’s Fiscal Compact coverage:

    * A vote “Yes” is a vote for jobs*[1]
    * A vote “Yes” is a vote to remain at the heart of Europe*[2]
    * A vote “No” will mean not being taken seriously by our betters in Europe.[*3]
    * A vote “No” will see the ATM’s shut down and the great unwashed eating each other’s brains.*[4]

    Notes:
    [1]: Well paid jobs in the ECB, European Commission and IBRC at least.
    [2]: As a punching bag for whichever alliance of large countries is dominant.
    [3]: Everything that DOCM has ever written.
    [4]: Exactly the reason we continued with the genius of the great financial sector bailout after it turned out the banks were dishonest, greedy and incompetent.

  103. @Eureka

    “essentially allowing the periphery banks to buy junk govt bonds.”

    I have posted on another thread that this is the agenda, get periphy banks to buy up as much of their own sovereign debt as possible while banks in core countries unload it as quickly as they can.

    They have however overlooked the fact that banks in the periphery are running up against their own internal risk management limits about just how much of that junk they are actually allowed to hold. Those limits were put there for good reason.

    Outcome… pretty soon nobody is going to be buying any periphery sovereign debt? Their borrowing costs go up? Back to square one but having sent out a trillion Euros in the meantime.

  104. @Eureka

    “One possible outcome is that Europe is heading towards a collapse of peripheral banks.”

    The FT are saying that Spain is setting up one or maybe several Manamas
    But the Gov are not putting in any money. Maybe the will go for PNs. That would cover it..defer payment and then look for a discount.
    Maybe Nama should offer consulting services.

    Btw, Angela says it “forever”. One good reason to say no.

  105. @grumpy @Kevin O’Rourke

    One of the specific goals of thise negotiating this Treaty was to avoid an Irish referendum.

    If they had succeeded we would not have to be so wary of the serious consequences of amending our constitution.

    Our Attorney General and our Civil servants have let us down badly by not being able to provide sufficient back-up to the Government to enable the Giovernment to negotiate a Treaty which would not require a referendum. We would have had the rest of the countries support on this.

    The fact that the Giovernment did not know if a referendum would be needed after concluding negotiations was damning. It showed the rest of Europe just how complete incompetent our civil service is.

    The Govt may have been partly to blame as the Minister for Justice is a competent lawyer. If he was not involved or consulted then that is Taoiseach/Minister for Finance’s fault.

  106. @Grumpy

    Maybe our (8) former Attornies General could voice an opinion on this constitutional amendment. After all they were quick to ensure the proposed Oireachtas committees did not encroach on fair procedures.
    So perhaps they could voice an opinion on ceding power to “bodies competent” in perpetuity.

  107. @ Grumpy @ 12.50
    +1
    The point also is that Ireland retains a veto in the EU context. Not so under the FC. So, there is no veto “safety net” to protect Ireland’s future interests under the FC.

  108. @sarah

    Got your link to work asnd wasded past all the adverts.

    You did a good job of asking the question, but your interviewee didn’t really engage. You got a rather glib, reassuringly if not dismissively intoned reply to the effect that:
    a) this form of words has been used in respect of EU Treaties
    b) there are no new institutions [currently] being set up.

    Both oif these we already know. I don’t want to repeat myself, there is detail in the above comments, but the questions about this form of words for the constitution amendment arise from both the fact that this is not a constitutional work around for the EU, it is an inter-governmental Treaty [hmm, but not nothing] and [more pertinently] also from the future-proofing from interference by the constitution, for any new “bodies” set up, or existing ones emporeded to administer the Treaty. It is entirely appropriate that consideration be given to the possibility the way the Treaty is enforced could in the future be different to how FC optimists imagine.

    Is it sensible and necessary to give a total constitutional exemption for anything a body administering the Treaty decrees – no matter, according to the wording, whether that decree is necessitated or not by the Treaty.

    Just to take a quick and dirty flyer, say a FC administering body decreed in 3 years time that Corporation Tax should be harmonised, or that people with red hair should pay more income tax?

  109. @ KOR, Sarah Carey, Grumpy et al

    I happen to think that the points made by Grumpy are largely valid. I am simply hazarding some guesses as to why the wording was chosen, especially the reference to “competent authorities”. It seems to me that the lack of precision is a function of the TSCG itself which, as I have remarked upon on several occasions, has a Janus-like character i.e. it faces towards both the EU and national capitals with what involves the first being already part of the EU legal order and what is substantively new being what countries have bound themselves to do nationally. The reference to “competent authorities” covers all the bases and ensures that there cannot be any constitutional doubt.

    If such exists, only the Supreme Court is empowered to decide under the Constitution itself.

    In fact, I cannot see any real difficulties with regard to the actual substance. These will only arise in the event of failure by participating countries to live up to certain obligations accepted and then it will be for the ECJ to adjudicate.

    The question that should really be posed is; why is Ireland alone in having to amend its Constitution? But that is another story.

    @ Paul W

    That is exactly the point! If every country saw its role in the same light, the EU would come to a halt. The other countries are clearly no longer prepared to accept this situation.

  110. On the political front fate is unfolding as it should. The trend to elect left wing governments is becoming well entrenched. Poor Angela is losing Nicolas and is in danger of losing herself in Sept./Oct 2013. Italy’s next national election is Apr. 2013, Monti has stated decidedly that there will not be a second round of austerity. Spain’s Peoples Party (right wing) has 186 seats in a 350 seat legislature and is likely to call an early election in response to widespread unrest. The Netherlands 3 party coalition is on shaky ground.

    The result is that by the end of the year the political climate will thaw, money will flow the periphery will grow. All Ireland has to do is sit back and do nothing. Our present gov’t should be able to do that.

  111. @grumpy

    sorry for not replying yesterday. Was having bit of a meltdown.

    So look, here’s where I am and I think this will break my 3 ” rule. Apologies.

    First, my political concerns have reduced to: what outcome will make companies more likely to invest in big projects that will result in jobs? Because for hundreds of thousands of people in this country, the ONLY thing that matters is a job.

    So with that as the baseline – here are my thoughts
    – I am deeply pissed off that we have to mess with our constitution to make life easier for Angela Merkel. As a point of principle, it’s just wrong
    – I understand that (re Zhou Enlai) we actually probably don’t need to put this in the constitution but the government had to take into account the near certainty that if they tried not to have a referendum Sinn Fein would have them up in the SC and the political damage regardless of the decision would have been significant. As Gavin Barrett said “just in case” the SC said we had to have a referendum, we had to go ahead.
    – I think we are absolutely entitled to a bank debt write off and that has got to come soon.
    – I believe that if a deal CAN be done Enda Kenny and Michael Noonan will get it. No one can try any harder than them. I don’t think they are fools. They have the toughest jobs, (and Sinn Fein have the easiest).
    – I have no primary skills that enable me to interpret for myself either the significance of the wording of the referendum or the treaty itself, so I am hugely dependent on the opinion of the experts I trust.
    – If Gavin says “nothing to see here” , then the wording must be ok.
    – Then I’ve got the troika 😉 of Whelan/McCarthy/Coffey etc all saying – yes is less evil than no. So boys, I place my faith in thee.

    Except, except, except.

    I wish KO’R was on board and the fact that he’s not, is making me deeply uncomfortable.

    All I can say so far is – I know the current policy emanating from Germany is wrong. I know this could all end in crisis yet. But I don’t want it to be now, and I don’t want it caused by us. Give us 1 year without a shock, so that a couple more companies will press the “invest” button and get us a few jobs and let the French sort it out. Or wait til Angela loses power. (But who will take over? someone who thinks Angela’s a lightweight?)

    Anyway, I suppose I’m saying – let’s keep kicking that can. If it’s going to explode, let’s not have everyone looking at us.

  112. Hi there this is all good getting the support from the E.U. but what are we giving them as security, also must add there is worse off cunterys in the E.U. than Ireland and with this treaty it says to tackle the economic crisi and to restore international investor confidence. so If some one was intrested in coming to ireland and the E.U. thinks ireland is ok and the jobs are need more in spain, will then the investor mite get a bitter deal from the E.U. to move the investor to spain, also on the first page of the book it says “ensures that your government doesn’t spend more than it can raise in taxes over time” then down on the end of page it says ” do not effect the role of Government and national parliaments in decision making on tax and spending” so again the people at the top gets more money and do what they want with the money. let the EU run us and get read of our government we will save money who will say yes to that because that is what is happing. thanks i say NO

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