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55 Responses to “FT Editorial: Let Ireland Succeed”
Below is the link to the video of the Late Late show in 1999, in which the Irish economist David McWilliams tells the Irish people that there is a massive property bubble in Ireland. What did the distinguished Irish government do?. They believed the auctioneers puff pieces in the Irish Times property supplement and told him and other economists of a similar view,to commit suicide:
God rest ye merry Irish folk, let nothing ye dismay!
The FT and the IMF say we must have our day!
We had our knocks and taken shocks,
But for banks we should not pay!
Oh, tidings of a reasonable request,
O-Oh tidings of a reasonable request.
God rest ye merry ECB why don’t we called it quits?
To sort out Prom Notes after all is not beyond our wits!
Inflation risks are over stressed
And growth must have its day
Oh, tidings of a reasonable request,
O-Oh tidings of a reasonable request.
And to our merry bloggers all I wish you Christmas Peace,
Except, perhaps, DOCM who would see our people fleeced,
Let’s not forget poor Mr Hunt
Who should surely be released,
Oh, tidings of a reasonable request,
O-Oh tidings of a reasonable request.
In fairness to the FT they have been very solid on the dumping the bank bonds on the plain people . Mais il faut punir Irlande pour encourager L’Espagne et L’Italie.
Because there is no such thing as an Irish economy. There is a sub economy of a much bigger dysfunction. The profits are globalised. The costs are localised.
“A comment by the then minister for finance, Brian Lenihan, made at that dramatic press conference on September 30th, 2008, unveiling the guarantee stands out. I asked him how the State could afford to cover a €400 billion guarantee when it was 10 times the national debt. “We have to have faith in ourselves as a nation and a people that we are capable of having a viable banking system,” he replied. “Faith” was an interesting choice”
What a risible answer. Will we ever know what happened ?
What is it with the cynicism on this thread? As I said on the FT page to John Corcoran, what’s the point?
So what if it is not 100% factually accurate (if it were to be 100% accurate it would need to be 100,000 words long to take into account the full circumstances of the bank bailout)? So what if Fianna Fail were incompetent and FG/Lab have been supine in their approach?
This is a good editorial from the FT, where they have chosen to highlight the inequity and illogical nature of the current situation and sensibly call for some debt restructuring. The more international srutiny brought to bear on this issue, the better.
If the FT wrote an editorial suggesting that Ireland should not get any debt relief what would be the reaction here?
A partial default of debts while remaining in the Euro will not work.
Since starting this monetary journey in 1979 a increasing amount of our people have been unable to find work as we needed to be more “dynamic” to pay off the stock of debt.
We must now import pointless call center jobs which have no productive function other then farming the global petro $ss which reside outside national borders in the financial stratosphere.
This pointless activity helps to pay off the stock of debt but adds nothing to our society.
Our people need local real jobs for real people that can service real domestic needs.
This cannot be done within the Euro cage as it destroys all rational domestic activity both during credit inflations & money deflations.
The Euro is a nation killer
Because it was designed as such.
The FT has been drawing attention to the Irish debt issue for some time. It has also been looking for some cop on from the creditor countries in the form of increased demand to offset the heavy loading of correction in the PIIGS but there doesn’t seem to be much happening in this area either.
Ask yourself lads how are these people meant to pay off a stock a debt from the hard but brittle Euro which prefers to export fuel / capital to the 4 corners of the world so as to earn a wage arbitrage……..for useless financial eaters ? and perhaps members of the fourth estate.
That is a legitimate point. But the question is why the FT is pushing this editorial line. One can only speculate. A sudden belief that the financial markets operate on the basis of fair-play? Unlikely!
The second point is whether it is helpful to the Irish case to couch it in the concertinaed and incorrect manner in which the FT does. Almost certainly not!
As to the attitude of the IMF, this is by now well-known and undoubtedly very helpful.
The fundamental problem remains unchanged. Debt relief, at this stage, means that the taxpayers of the other EA countries have to go beyond the present stage of credit guarantees and soft loans which is helping the countries in difficulties and put up their own cash via their governments through the ESM. Germany is inisistent that whatever the country agrees, it cannot be an open-ended commitment i.e. there must be a certain identifiable limit to the country’s liability. This is now a constitutional requirement.
The UK is not involved.
This is not to belittle the case that can be made by Ireland, something which I have never done. It simply is an attempt to situate it in the real world. Urging one’s champion repeatedly into a brick wall on the basis of unjustified expectations - as many seem to do - is not a good way to go.
June 1st, 2012 at 5:05 pm
Firstly I would like to thank BBC radio which allowed myself and Paul Krugman to simultaneously address the people of the UK and Nothern Ireland and advocate a No vote. Unfortunately if the joint broadcast had been a day earlier I feel it might have been a swing factor.
We have thrown all our gambling chips away and betrayed our fellow european neighbours who are struggling with austerity. Raymond Crotty must have turned in his grave when the result was announced. We betrayed Raymond as well. In a country that elected the corrupt Charles Haughey and continues to vote Michael Lowry to top the poll it is of no great surprise. The most sophisticated electorate in the world–what a joke. The logic was simple if you vote No you get two votes –if you vote yes only one. Two is greater than one. Simple maths.
The train has left the station for Ireland and we have our bank debt forever tied to our throats. The oligarchs and their fellow travellors who frightened our people into buying vastly overpriced houses etc used the exact same tactics to frighten the voters into voting for a disastrous deal for Ireland. The soft landing professors and the other useful idiots did the rest. A sad day for Ireland. We betrayed ourselves and our fellow europeans.
The No people –fought the good fight–finished the course–kept the faith.
I symphatise with your argument. However, your base argument is based on a properly functioning national economy. It is clear that Ireland’s economy is not functioning properly.
“Capital must essentially destroy its capital base so as to get a return.”
Ireland’s capital is simply being extracted to service debt. Period. I agree that that by definition implies a dysfunctional, deteriorating economy. The slippery slope of Debtors’ Prison. What people don’t seem to acknowledge (widely) is that Ireland’s recovery is not the Creditors’ primary concern. Ireland’s continuing (but declining) health is only of concern to the Creditors in the debt service context. All additional ‘productivity’ , or more accurately ‘cash extraction’ is merelt debt service related. Similarly, the benefits of any ‘improvement’ go to debt service. Hence, the recent €3.5bn budget extraction is largely and increasingly aimed at debt service.
What’s the point therefore in ‘recovery’? Seems to be part of the underlying ‘rationale’ for non reform of the PS (or anything).
In short, Ireland needs a ‘Big Solution’, to rebase the country to a sustainable level. Without that, there is only decline of economic health as the capital base of the country to extracted by its Creditors.
Yet, the lie of ‘recovery’ persists.”
Your argument to exit the euro is a difficult one on many fronts, particularly given the extent of reliane of our exports on the euro….It’s not just about currenycy, market access is also key (although leaving the euro does not automatically mean EU Exit).
“A partial default of debts while remaining in the Euro will not work.”
It might, if the € debt level was sustainable. Hence, even Greece could stay in the euro if its debt did not take so much of its resources. However, to stay in the €, there would need to be a very substantial write-off of the odious debt element for Ireland.
“Since starting this monetary journey in 1979 a increasing amount of our people have been unable to find work as we needed to be more “dynamic” to pay off the stock of debt.
We must now import pointless call center jobs which have no productive function other then farming the global petro $ss which reside outside national borders in the financial stratosphere.”
Call centres are part of a very large international economy in Ireland. They are perhaps on the least attractive end…Still, they give many jobs. That international economy is very large relative to the domestic economy. Perhaps therefore the vision of the future economy is not based on the current domestic model? As a ’satelite’ in a bigger Europe, workers will flow to where there are ‘real’ jobs as you put it. In this ‘vision’, Ireland would then remain as a Carribean-type financial centre, which still retains an important gateway to the EU /€.
You you are possibly right in saying “the Euro cage as it destroys all rational domestic activity both during credit inflations & money deflations.” Accepting your argument the question becomes - is the domestic economy worth saving?
Really DOCM, no one outside of Lorenzo Bini-Smaghi has been less supportive of Ireland’s case, and I often wonder whether you might be on his staff!
How dare you sir! The likes of DOCM are far more likely to been on the DoF payroll.
Ireland will not be allowed to succeed. It must remain in the euro. And remaining in the euro means only eternal failure. It means the continual drain of money, wealth, and people from the periphery to the core, and abroad.
The domestic economy is not efficient - it can never be.
However it is more redundant.
The rise in the $ oil price since ( price of capital) has been the result of the euros accent in my opinion.
It works by bypassing labour (much more so then sov countries which have at least the option however reluctantly of producing greenback like currency)
Also Chinese coal consumption went vertical in 2002 (year of physical euro )
But trade relationships are now beginning to break down.
The externalties of trade without defined political borders is becoming all too real.
The “international economy” produces nothing on a net basis - it farms the declining worlds capital base.
When global supply lines begin to break down we will all starve as our workers will only be able to pick up a phone to soothe your nerves rather then fix real physical problems.
Globalization is now extractive.
The 2 billion euro protection money we give to the Pharmaceutical Industry is another case in point.
Ryanair may sue the state for not selling their stake to a private rather then public monopoly.
Its a corporate nightmare which will always seek to run down a capital base as that is the most efficient mechanism to extract the capital and express short term profits.
The call centers capture this declining capital in a fleeting moment of time before it is lost to the thermodynamic ether.
“Ireland’s capital is simply being extracted to service debt. Period. I agree that that by definition implies a dysfunctional, deteriorating economy. The slippery slope of Debtors’ Prison. What people don’t seem to acknowledge (widely) is that Ireland’s recovery is not the Creditors’ primary concern. Ireland’s continuing (but declining) health is only of concern to the Creditors in the debt service context. All additional ‘productivity’ , or more accurately ‘cash extraction’ is merelt debt service related. Similarly, the benefits of any ‘improvement’ go to debt service. Hence, the recent €3.5bn budget extraction is largely and increasingly aimed at debt service.”
That’s about it.
The debts were socialized by an incorporeal cabinet and a ill-informed and misled Dail; then the debts were nailed to the Irish body under threat from the ECB; then an extraction team put in to make sure the ‘money’ was extracted.
Meantime, in Ireland as in Greece, free capital has flown the coop, to remain untouched. Our Swiss partners seem to be the location du jour.
It is indeed a strange system. One could hardly label it capitalism or the free market.
Again, given that, my unanswered question remains whether it is worthwhile saving the domestic economy if terminal decline is inevitable in any real i.e. not theoretical) scenario? What’s so great about an inefficient GNP economy where many, many people ultimately have no work and ’starve’ as you put it? That definition seems somewhat based on an old insular Irish nationalistic viewpoint (of which we Corkonians and Irish generally grew up with). Was it that great in the 1980s?
er… I think you’re forgetting about inflation. CPI is up 40%+ since 1999 according to the CSO (and the average wage has increased even more).
As for house prices being back to 2002 levels, they were there in 2010 when the PTSB index was stopped (http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/) and were at 2000 levels last year (http://www.finfacts.ie/irishfinancenews/article_1023541.shtml) so are probably in or around 1999 levels today.
Paul W points to a possible Phantastical Phantasmagorical outcome of the euro construct.
People with money claims lets say based in Dublin will have little physical world relationship with the rest of the country.
A dearest wish of the Pale inhabitants for sure but how sustainable is this Super efficient monetary system ?
Their physical wealth will in reality be claims on German & Chinese production alone !!!!
A quite extraordinary outcome.
Dublin opinions musings on this detachment of money claims from the local economy is worth looking at.
Although I disagree with him about the tax thingy
Its got nothing to do with tax - its about the declining supply of local money.
It is true that the population would centre in the main cities, mainly Dublin and Cork for instance. Financial ervices, IT, the virtual economy dominate (new economy, high skills with small local services’ population. The remainder of Ireland becomes a bit of a Disneyland, based on tourism, holiday homes and the like. No more trying to industrialise The West.
In fact, not unlike Florida! Except without the sunny weather.
Our newly emigrated return for holidays and have fond memories of the ‘1980s’.
We remain Irish, but one downside is that the youth of the country mainly leave (happening anyway)…Danger of becoming an old country in time, with loss of Irishness?…the way NI seems to be losing its Protestentism.
“You seem to think the domestic economy has no value because it does not have tokens……Other societies with the tokens have value.”
No the Irish economy (on a sustainable debt basis) has tokens…just not enough to live the lifestyle of the Celtic Tiger era. Much to sort out in saying that.
“But the real physical economy has been distorted by these false money claims.”
The claims are claims. Don’t know where you get “false”. Agree that there is an ongoing distortion of the physical economy….but what’s worth saving remains?
“Still there is no need to pay interest on the medium of exchange.”
You will note that I still think that there is a need for a Big Solution e.g. debt restructure.
Beyond that, it seems to me that Ireland is well on its way anyway to the place I outline above. It may not be Florida (I prefer Arizona), but people will still be able to afford to go on a sunshine holiday!
I look forward to visiting with my children and grandchildren from the US.
“It represents capital which is now declining ironically as a result of the euro bypassing labour. It does not represent domestic money tokens.”
Ultimately, there will be a need for € transfers from the have (Germany et al) and the have-nots (PIIGS). Let’s bake that into the picture….
So Ireland doesn’t have to change so much…It remains a [EU] Welfare Culture State.
Seems to me that many in Ireland (if not the majority who e.g. voted for the Fiscal Compact) would be quite content with that. Far less hard than breaking away from the €, with the financial status quo for many having to fundamentally change.
Self-determination doesn’t seem Ireland’s destiny under the €…that’s for sure.
Are we far too western Europe oriented in our perspective. Listening to this BBC radio programme
(Europe Moves East, http://www.bbc.co.uk/programmes/b01p9l5f),
which highlights the different view of eastern and baltic Europe states, which are are demanding more and quicker centralisation of powers in the EU and can’t wait to join the Euro, makes me think so.
As I wait to do a call this afternoon with a large US institutional investor this afternoon, interested in Ireland right now (because investor value is beginning to emerge and the clean up process at root level is potentially beginning) it occurs that Ireland’s investor base, in the US and Europe, would prefer this status quo, ‘picture of stability’ also.
Surprised that more haven’t taken up the sword in this debate!
You can get growth as in the UK through rail passenger numbers increases to now historic levels but no net energy growth.
The Euro however must grow through increased energy expenditure - if not a country shuts down and the euro which represents capital rather then domestic money must move somewhere else so as to find a better return.
It is simply too efficient - it must remain efficient even to the point of destroying productivity.
Diesel moves elsewhere as local people run out of money tokens
Before this public transport figures were declining in Italy.
In a national economy public transport numbers would increase
But the euro spits on labour which may supplement energy
Its needs techno growth even if it kills the patient.
So imagine the Euro Soviet has a political tectonic fault which builds up seismic forces as it reaches out to produce more and more stuff with less and less (mainly labour) inputs……..
Eventually the system snaps and leaves its vassal states in a form of monetary & physical world breakdown
With Greece the extreme example but Italy will follow as it realizes it can no longer give any more blood.
What will really be a killer blow is the realization that all those euro sacrifices were for a nothing.
Empty robotic values.
Indeed they will have found it has systematically destroyed your internal supply chains & cohesive culture for a false idea.
With respect, Ireland is miniscule in comparison to the UK. Our punt could not easily survive on a stanalone basis (even the Icelanders are thinking about joining it, despite all the imperfections).
There are many forms of growth, yes. But as MH has indicated, the strong side of the economy, the international side, has plateaued…It is now mature. It may not grow much more, as he in details always illustrates. On the other side, there is a domestic economy which is in terminal decline as you say.
Again, is the domestic economy worth saving? It’s a simple question.
But there is also a socialist govt in Ireland (in the US, it would be regarded as being very Soviet-like in may respects)….So let’s not pretend that Ireland is so ‘unique’ economically-speaking.
“What value do you put on the domestic physical economy ?” That is part of my question! Exactly…It seems though as if Official Ireland will sacrifice it and the domestic economy generally if we don’t get that Big Solution to the absolute sov debt level. I have not seen any feasible solution from anyone other than (1) leave the €, or (2) restructure the sov debt. (1) doesn’t look as if it will happen anytime soon in Ireland. remote. the lack of a solution to (2) is deleting the GNP economy anyway…needs resolution urgently.
Yes, there is an imperefct monetary value in GNP terms…certainly helps give a picture of the size of what we are talking about.
In my Disneyland, Welfare Culture State (with sustainable sov debt level), the euro remains the currency in which monetary value is measured.
You have to do extraordinarily impolite things, like pointing out someone is a serial liar, to get posts deleted here.
No, seriously - blogging software on a site like this could do with some kind of threading and folding but this can often be quite ugly.
As a halfway measure I favour everyone having two “free” posts until their tag is mentioned by another poster, if everyone ignores you you get to say two separate things which would make people craft their responses a little more carefully, if you provoke comment then you get to respond but again have to wait until you are mentioned again after your response. It would also discourage people from responding to trolls/schills.
In cases where a bit of a discussion gets going on subject matter not closely related to the post this still is not a help obviously.
My flabber was also ghasted earlier, so I reminded myself of this comment at 8.34:
There is a touch of Gollum in there. They wants their monies, and we owes it to them.
Alas my carefully crafted comment is gone, a bit like tears in the rain, and slightly less like sixty five billion euro of opportunity cost down the gaping maw of the blind but influential idiot god Mammon.
@The Dork of CorK
Its because I am not a member of the party Shay
Is it not ?
Not at all Comrade Dork, just trying to promote an on line environment in which dissimulation, disingenuousness and distraction is more difficult, not focused on you at all. Your bigger resource allocation/debt farming picture stuff is good, even if it might do with being expressed more accessibly (and why BTUs - get with the SI-ification!).
No amount of opining by the FT or anyone else will change where we are now. Massive value has been taken from the system of assets and liabilities dealt with by “markets”. Conspirators consist of the media, politicians, most economists and those who direct the banking and investment systems. The victims are the fools who found out that a chain letter c an never cover everyone involved and those who put their assets into the hands of others. Those assets are now represented by shares in banks and insurance companies!
The debts created are far too massive to be resolved, so the Irish will ‘pull a stroke’ to ‘make out like bandits’. Or not. The booty is so massive that it takes a long time to replace it, with paper promises from all quarters, each more worthless than the last. And over these years, as people are distracted by this and that, commissions and fat salaries are paid. NAMA and debt resolution! Ireland is merely the last to join the credit boom and now, inevitably, the bust.
This time, it is different! Well, no, it is not. The most obvious feature of economics is that it does not deserve the prestige it attracts, unless of course, you fully understand what it is designed to do. That it does quite well! For those not in on the scam, it must be quite bewildering? Banking and a fortiori, shadow banking with money laundering, us a devastating weapon.
What about the elephant in the room? The Jewel in the Crown? The IFSC……