This excellent post by Karl deserves a thread of its own.
Author: Kevin O’Rourke
Karl is quoted here as saying that the Franco-German proposal that we insert borrowing limits into the Irish constitution will not solve our current debt problems. This is obviously correct, as is the point that such an amendment would not have made a blind bit of difference during the bubble years.
There is also the point that a constitutional amendment is a much bigger deal in Ireland than in some other countries, since it can only be changed by means of a new referendum.
Here are two questions:
As per Derek Scally in the Irish Times, is this a taste of things to come, or much ado about nothing?
What are the chances of the Irish government winning such a referendum?
Nick Cohen is gloomy here.
Roger Bootle gives a market perspective on potential endgames, one of which echoes Paul Krugman, here.
And here is Kantoos, echoing Olivier Blanchard, Ken Rogoff, and many others.
To those who think that an inflation rate of 5%, say, for a few years, would mean the end of the world, one has to ask: is this really the worst potential scenario that you can envisage us facing in the years ahead?
This report from the Guardian is consistent with Thomas Klau’s argument that current eurozone governance arrangements are pushing “democratic debate and voters’ choices to the margins”. It also suggests that in the long run the present way of doing things will prove politically unsustainable, in a union of democratic states. Whether Klau’s preferred solution is likely to come about is another question entirely.
Jacopo Ponticelli and Hans-Joachim Voth have just published a CEPR Discussion Paper looking at the relationship between austerity and social unrest in Europe between 1919 and 2009.