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18 Responses to “Ireland and the European Union—Shared Determination, Shared Destiny”
There is some hopeful stuff about the banks at the end but its unreconstructed austerian hogwash with a distinctly reactionary flavour and up to there:
Firstly we will need to implement conservative reforms and continue shrinking the state:
Ireland should strive to provide high-quality public services and meet its social justice obligations to all citizens. But given budgetary realities, it will need to focus on meeting core public needs, especially in the most important services like health, education, and social protection.
And then comes the stupid:
Fiscal policy is trickier. With public debt so high, the direction must be down, not up…. This means reforms to boost the supply capacity of the economy.
And of course there is a mention of “labour reforms”, neoliberalish for “reducing employment rights”.
It’s good to see that she makes the effort to get some direct impression on the ground, even though of course limited to interaction with the fawning elites.
Whoever wrote this speech is aware of the local appetite for bromides and fantasy.
The speech reveals a generation gap. She flatters the audience with references to Yeats, Heaney, Columbanus, and Peig, and the obligatory cupla focal. Not exactly outreach to the people bearing the brunt of the adjustment process. No doubt the audience left on a high. But as Ned Flanders once said, “Now just a Maud Gonne minute!”
On the other side of the pond, US payrolls data broadly as expected - but for that the US has exported its anti-deflationary bubble.
Reports today that in Hong Kong (pegged to US$) a small rooftop space for hanging out washing or holding a barbeque which sold for 10,000 in 2004 is now selling for 113,000.
She calls on Europe to moderate its austerity efforts:
‘“Measured and steady” also means coming up with credible medium-term plans with durable measures and sticking to them—rather than focusing on headline deficit targets and fighting any fall in tax revenues or rise in spending due solely to slower growth … I believe that the current fiscal framework in Europe has enough built-in flexibility to get the adjustment right.’
She calls on Northern Europe to do allow inflation and wage growth to help rebalancing:
“When we talk about demand, we must understand that it is unbalanced across Europe—much stronger in the North than in the South. Much of this reflects relative competitiveness problems. Restoring a sense of balance means lower inflation and wage growth in the South, but it also might mean allowing somewhat higher inflation and wage growth in countries that can afford it. This too is an aspect of pan-European solidarity.”
And she calls on Europe to get a move on with banking union and to help Ireland by swapping bank-related debt for equity.
Sure, she pays lip-service to fiscal sustainability. but she seems pretty clear to me on where her priorities lie.
A bit nauseating, too many pats on the head and playing to the ‘aren’t we great’ gallery for my liking.
My favourite parts are the latter halfs of these 3 paragraphs i.e:
More expansion/inflation in the north.
Sharing of the legacy bank debt.
Shift the state banks on to ESM and so insulating the state from any further re-capitalization requirements.
‘Much of this reflects relative competitiveness problems. Restoring a sense of balance means lower inflation and wage growth in the South, but it also might mean allowing somewhat higher inflation and wage growth in countries that can afford it. This too is an aspect of pan-European solidarity’
‘Yes, Irish banks borrowed too much and were poorly supervised, but banks in Europe also lent them too much. It is two sides of the same coin, and we need co-responsibility….’
and
‘Direct recapitalization of the viable Irish banks can lower public debt—by switching some debt owed to Europe with equity—and help insulate the government from further potential drain if the economic situation gets worse’
“The banking system toppled over, leaving the taxpayer to carry the can, amounting to 40 percent of GDP. On top of collapsing revenue, this led public debt to rise by an astounding 100 percent of GDP in just five years.” [,,,]
“The size of the bloated banking sector has been reduced, and recapitalization is well advanced—with €24 billion in new funds injected into the banks to help them get back on their feet. And here, the burden on taxpayers was limited to €17 billion by mobilizing private investment and burden sharing with subordinated debt holders.”
Minor point: it is also worth noting the €30+ Billion into 2 dead banks.
Now, a simple question: why should the Irish Citizenry (’burden on taxpayers’ as you put it) take on the almost entire burden of bailing out the odious debts (~50% GNP) of the financial system?
She came, she saw, she brought no money! Quelle déception!
@ John Foody
The section that you quote is the most important element of a poorly judged speech in Irish terms. It is, in effect a (French?) plea to Berlin to recognise that some reflation in the North is absolutely essential. There are some promising signs in the context of the debate on the introduction of a minimum wage in Germany, for example. But it all depends on Angela, as the British are finding out.
There is also the point that the new chair of the Euro Group comes from a country of the core - the Netherlands - which is finding it extremely difficult, if not impossible, to live up to the rigour demanded of the periphery.
We are more than a poster child of austerity. We are the sole example under “justification” in Wikipedia.
Justifications
Austerity measures are typically taken if there is a threat that a government cannot honor its debt liabilities. Such a situation may arise if a government has borrowed in foreign currencies that they have no right to issue or if they have been legally forbidden from issuing their own currency. In such a situation, banks and investors may lose trust in a government’s ability and/or willingness to pay and either refuse to roll over existing debts or demand extremely high interest rates. In such situations, inter-governmental institutions such as the International Monetary Fund (IMF) may demand austerity measures in exchange for functioning as a lender of last resort. When the IMF requires such a policy, the terms are known as ‘IMF conditionalities’.
In some cases, governments became highly indebted after assuming private debts following banking crises. For example, this occurred after Ireland assumed the debts of its private banking sector during the European sovereign debt crisis.[6]
6- ^ Heard on Fresh Air from WHYY (2011-10-04). “NPR-Michael Lewis-How the Financial Crisis Created a New Third World-October 2011″. Npr.org. Retrieved 2012-07-07.
Irish pension funds agree to kick start the Irish residential property market?
At last some good news. The government called in the Irish pension funds and encouraged them to kick start the Irish residential property market.
Five pension funds control 85% of the Irish pensions market and they conferred amongst each other and have agreed a plan. The five funds will create a five billion euro residential property fund and will focus on the top end of the residential market starting with Dublin 4. They will start with Shrewsbury, Ailesbury, Clyde, Raglan,Waterloo and Wellington roads. This five billion spend will cascade through the economy and will have a large multiplier effect.
They will buy these houses when they became available,refurbish them to a high spec and let them on 25 year ratchet upward-only rent review leases with full maintenance,repairing and insurance costs to be borne by the tenant. It was agreed they would never alter these terms unless all five agreed. The government have agreed to sign three of these leases,one each for the Taoiseach,the Tanaiste and the Minister for Finance to legitimise them. Soon after embassies will likely sign them, then large multi-national companies for their senior executives and then high net worth individuals etc. The leases themselves will be much sought after and will likely change hands for large premiums. Over the next number of decades private landlords will decide to drop their one year lease and adopt the institutional 25 year lease and eventually they will become the standard residential lease. Could this happen?
Residential and commercial lease lenghts in all other eurozone countries are the same. Why not Ireland?.
In Argentina the government confiscated the pension funds. In Ireland they order the pension funds to put a floor under the banks unsound collateral.
Fumbling, bumbling and grasping at straws. If the pensioners have any gumption they will be protesting loudly and clearly. It is bad enough to screw the taxpayers but to screw people who in many cases will not be able to recover from setbacks is right out criminal.
March 8th, 2013 at 2:36 pm
Gag worthy.
There is some hopeful stuff about the banks at the end but its unreconstructed austerian hogwash with a distinctly reactionary flavour and up to there:
Firstly we will need to implement conservative reforms and continue shrinking the state:
And then comes the stupid:
And of course there is a mention of “labour reforms”, neoliberalish for “reducing employment rights”.
It is EuroTory-lite.
March 8th, 2013 at 2:42 pm
It’s good Christine Lagarde is in Dublin.
It’s good to see that she makes the effort to get some direct impression on the ground, even though of course limited to interaction with the fawning elites.
Whoever wrote this speech is aware of the local appetite for bromides and fantasy.
March 8th, 2013 at 3:04 pm
“Shared Determination, Shared Destiny” by Justin Bieber.
It doesn’t sound raunchy enough for Rihanna.
March 8th, 2013 at 3:06 pm
The speech reveals a generation gap. She flatters the audience with references to Yeats, Heaney, Columbanus, and Peig, and the obligatory cupla focal. Not exactly outreach to the people bearing the brunt of the adjustment process. No doubt the audience left on a high. But as Ned Flanders once said, “Now just a Maud Gonne minute!”
March 8th, 2013 at 3:18 pm
On the other side of the pond, US payrolls data broadly as expected - but for that the US has exported its anti-deflationary bubble.
Reports today that in Hong Kong (pegged to US$) a small rooftop space for hanging out washing or holding a barbeque which sold for 10,000 in 2004 is now selling for 113,000.
March 8th, 2013 at 3:25 pm
@Frank Galton
Well observed. I wonder if the demographics of the upper levels of the Irish government and civil service is older than on average in Europe?
The attempt to change the narrative on banking could be very helpful though, as Gavin Kostick pointed out in another thread (Taking a Step Back)
March 8th, 2013 at 4:16 pm
The ‘independent’ OBR slightly more independent than DC’s speach writer thought:
http://budgetresponsibility.independent.gov.uk/pubs/Letter-from-Robert-Chote-to-Prime-Minister.pdf
March 8th, 2013 at 4:40 pm
@grumpy
Simon Wren Lewis puts the boot into Lord Cameron of Leafyness in a robust way in this post.
It appears that the “There is no alternative” brigade are looking vulnerable in the wider EU and in blighty. It’s the facts wot won it.
March 8th, 2013 at 6:02 pm
As Ms Lagarde once put it to the late Minister for Finance Brian Lenihan -
“Mind your banks!”
Sure did.
March 8th, 2013 at 6:28 pm
Are we reading the same speech?
She calls on Europe to moderate its austerity efforts:
‘“Measured and steady” also means coming up with credible medium-term plans with durable measures and sticking to them—rather than focusing on headline deficit targets and fighting any fall in tax revenues or rise in spending due solely to slower growth … I believe that the current fiscal framework in Europe has enough built-in flexibility to get the adjustment right.’
She calls on Northern Europe to do allow inflation and wage growth to help rebalancing:
“When we talk about demand, we must understand that it is unbalanced across Europe—much stronger in the North than in the South. Much of this reflects relative competitiveness problems. Restoring a sense of balance means lower inflation and wage growth in the South, but it also might mean allowing somewhat higher inflation and wage growth in countries that can afford it. This too is an aspect of pan-European solidarity.”
And she calls on Europe to get a move on with banking union and to help Ireland by swapping bank-related debt for equity.
Sure, she pays lip-service to fiscal sustainability. but she seems pretty clear to me on where her priorities lie.
March 8th, 2013 at 7:00 pm
A bit nauseating, too many pats on the head and playing to the ‘aren’t we great’ gallery for my liking.
My favourite parts are the latter halfs of these 3 paragraphs i.e:
More expansion/inflation in the north.
Sharing of the legacy bank debt.
Shift the state banks on to ESM and so insulating the state from any further re-capitalization requirements.
‘Much of this reflects relative competitiveness problems. Restoring a sense of balance means lower inflation and wage growth in the South, but it also might mean allowing somewhat higher inflation and wage growth in countries that can afford it. This too is an aspect of pan-European solidarity’
‘Yes, Irish banks borrowed too much and were poorly supervised, but banks in Europe also lent them too much. It is two sides of the same coin, and we need co-responsibility….’
and
‘Direct recapitalization of the viable Irish banks can lower public debt—by switching some debt owed to Europe with equity—and help insulate the government from further potential drain if the economic situation gets worse’
March 8th, 2013 at 7:22 pm
@Ms Lagarde
Firstly, Welcome to Dublin.
From your speech:
“The banking system toppled over, leaving the taxpayer to carry the can, amounting to 40 percent of GDP. On top of collapsing revenue, this led public debt to rise by an astounding 100 percent of GDP in just five years.” [,,,]
“The size of the bloated banking sector has been reduced, and recapitalization is well advanced—with €24 billion in new funds injected into the banks to help them get back on their feet. And here, the burden on taxpayers was limited to €17 billion by mobilizing private investment and burden sharing with subordinated debt holders.”
Minor point: it is also worth noting the €30+ Billion into 2 dead banks.
Now, a simple question: why should the Irish Citizenry (’burden on taxpayers’ as you put it) take on the almost entire burden of bailing out the odious debts (~50% GNP) of the financial system?
March 8th, 2013 at 8:24 pm
Sometimes when my hairdresser is dutifully dyeing my greying roots, I say, why can’t I be Christine Lagarde?
Sarah, he says, you’ll NEVER be Christine Lagarde.
If this austerity keeps going, I will.
March 8th, 2013 at 8:26 pm
@ All
She came, she saw, she brought no money! Quelle déception!
@ John Foody
The section that you quote is the most important element of a poorly judged speech in Irish terms. It is, in effect a (French?) plea to Berlin to recognise that some reflation in the North is absolutely essential. There are some promising signs in the context of the debate on the introduction of a minimum wage in Germany, for example. But it all depends on Angela, as the British are finding out.
http://www.economist.com/news/europe/21573138-britains-defeat-over-bankers-bonuses-sign-declining-influence-anatomy-failure
There is also the point that the new chair of the Euro Group comes from a country of the core - the Netherlands - which is finding it extremely difficult, if not impossible, to live up to the rigour demanded of the periphery.
March 8th, 2013 at 8:38 pm
@ All
Reality continues to bite in France (core or periphery?)!
http://lci.tf1.fr/economie/conjoncture/ayrault-veut-5-milliards-d-euros-d-economies-nouvelles-en-2014-7869421.html
March 10th, 2013 at 5:14 am
We are more than a poster child of austerity. We are the sole example under “justification” in Wikipedia.
Justifications
Austerity measures are typically taken if there is a threat that a government cannot honor its debt liabilities. Such a situation may arise if a government has borrowed in foreign currencies that they have no right to issue or if they have been legally forbidden from issuing their own currency. In such a situation, banks and investors may lose trust in a government’s ability and/or willingness to pay and either refuse to roll over existing debts or demand extremely high interest rates. In such situations, inter-governmental institutions such as the International Monetary Fund (IMF) may demand austerity measures in exchange for functioning as a lender of last resort. When the IMF requires such a policy, the terms are known as ‘IMF conditionalities’.
In some cases, governments became highly indebted after assuming private debts following banking crises. For example, this occurred after Ireland assumed the debts of its private banking sector during the European sovereign debt crisis.[6]
6- ^ Heard on Fresh Air from WHYY (2011-10-04). “NPR-Michael Lewis-How the Financial Crisis Created a New Third World-October 2011″. Npr.org. Retrieved 2012-07-07.
March 10th, 2013 at 10:27 am
Irish pension funds agree to kick start the Irish residential property market?
At last some good news. The government called in the Irish pension funds and encouraged them to kick start the Irish residential property market.
Five pension funds control 85% of the Irish pensions market and they conferred amongst each other and have agreed a plan. The five funds will create a five billion euro residential property fund and will focus on the top end of the residential market starting with Dublin 4. They will start with Shrewsbury, Ailesbury, Clyde, Raglan,Waterloo and Wellington roads. This five billion spend will cascade through the economy and will have a large multiplier effect.
They will buy these houses when they became available,refurbish them to a high spec and let them on 25 year ratchet upward-only rent review leases with full maintenance,repairing and insurance costs to be borne by the tenant. It was agreed they would never alter these terms unless all five agreed. The government have agreed to sign three of these leases,one each for the Taoiseach,the Tanaiste and the Minister for Finance to legitimise them. Soon after embassies will likely sign them, then large multi-national companies for their senior executives and then high net worth individuals etc. The leases themselves will be much sought after and will likely change hands for large premiums. Over the next number of decades private landlords will decide to drop their one year lease and adopt the institutional 25 year lease and eventually they will become the standard residential lease. Could this happen?
Residential and commercial lease lenghts in all other eurozone countries are the same. Why not Ireland?.
March 10th, 2013 at 10:17 pm
@John Corcoran
In Argentina the government confiscated the pension funds. In Ireland they order the pension funds to put a floor under the banks unsound collateral.
Fumbling, bumbling and grasping at straws. If the pensioners have any gumption they will be protesting loudly and clearly. It is bad enough to screw the taxpayers but to screw people who in many cases will not be able to recover from setbacks is right out criminal.