If people are really concerned about loss of sovereignty, they should look at this.
http://www.irishtimes.com/newspaper/finance/2009/0225/1224241774325.html

http://www.irishtimes.com/newspaper/breaking/2009/0225/breaking59.htm

A fixation on the Lisbon Treaty could lead to overlooking much bigger encroachments on national independence, while much of Lisbon is open to being implemented piecemeal.

Government members are throwing the term "traitor" around, but their management of the economy in favour of money-gouging has opened us up to the threat of a toxic IMF / ECB regime.

Mansergh is right of course in a way - if we don't implement cuts or make savings or experience massive growth yet again then it's likely that an outside influence to some degree will start making us make those savings and implement those cuts. I really think the Government believe that Germany will unleash a stimulus package their way worth 10 or 15 billion and similar sized packages if not bigger to the other PIGS .. Does anyone know exactly what the hell will happen when the country does run out of money ???

Are we going to start borrowing more soon to tide us over until the BOOM picks up again or until we get those cuts going or what ? And if none of these things happen do we know what help if any is going to come from somewhere else - didn't the IMF say we were sorted there recently ?

Is there another way of making the massive deficit become less massiver and should I merge this thread with the IMF one as we'll be talking about that a lot here....

This thread is about the role of the EU in intervening in national economies. Its going to be a big topic over the next while - the G20 are meeting on it April 1.

I think the thread should try and look at the issue of EU / ECB regulation of national economies, even if there is a bit of overlap.

If the IMF and EU both come in to run our economy, maybe that would be the time to merge.

cactus flower wrote:

This thread is about the role of the EU in intervening in national economies. Its going to be a big topic over the next while - the G20 are meeting on it April 1.

I think the thread should try and look at the issue of EU / ECB regulation of national economies, even if there is a bit of overlap.

If the IMF and EU both come in to run our economy, maybe that would be the time to merge.

Hmm. If you mean that if we want to borrow from the EU/IMF, we might have to accept the strictures they put on those loans, that's certainly the case. There is, however, another, totally sovereign option.

ibis wrote:

cactus flower wrote:

This thread is about the role of the EU in intervening in national economies. Its going to be a big topic over the next while - the G20 are meeting on it April 1.

I think the thread should try and look at the issue of EU / ECB regulation of national economies, even if there is a bit of overlap.

If the IMF and EU both come in to run our economy, maybe that would be the time to merge.

Hmm. If you mean that if we want to borrow from the EU/IMF, we might have to accept the strictures they put on those loans, that's certainly the case. There is, however, another, totally sovereign option.

Leave the Eurozone, repudiate all our debt, find and then clean out the 'offenders', rename Parnell Place Place de la Concorde Le Deux, establish a new currency based on the rich natural resources we have and obvious work ethic given how we performed during the BOOM and trade that currency on the international currency markets and not care how it trades there as we already have imported plenty of SUVs and other warehoused crap which can be traded at home now via the PuntNua which will deliberately be pegged to sterling at a level where sterling-users will find us way too expensive. All we need is to be able to produce our own oil and we'll be flying once we get enough windpower up and running. There will be plenty of ____ in the current elites who will be made to farm our land, clean out the slurry tanks that still need repaying, insulate the homes of the poor which were never insulated, perform janitorial and gardening duties in the schools that we never built, do the recycling, the dull and tedious factory and civil service work that may still need to be done. Me I wouldn't let one of them within ten miles of my car if it needed something done unless they were to wash it and that would be reluctantly.

Pity we spent that 7bn on nothing as we could have bought 175,000,000 barrels of oil with it.

Is that what you had in mind ?

On that score, I started a thread over yonder on this:

Interviewed by Jeff Randall on Sky News this evening, Karl Otto Pohl,
former Bundesbank head, says that the level of borrowing by Ireland
(and Greece) has led to a real danger of default. He says that he hopes
it will be the IMF rather than Germany or some such Eurozone member
that goes to the rescue. He blamed lack of regulation in these
countries for the situation the whole Eurozone now finds itself in. The
option of leaving the Euro was, he said, a non-starter, the currency itself
would be destroyed and interest rates would run sky-high. When asked
what would happen if they did default, seeing as how they could not
leave, he said he did not know.

Quote :

Professor Pohl said German politicians are concerned they will be expected to pick up the bill at the end of the day.
In his view the right organisation to mount any financial rescue would
be the International Monetary Fund. Although the IMF itself would
require more funding to do the job.

Sky News

He is only saying what everyone outside Ireland is saying. The pre-G20 was focused on it. The debate has been whether it will be the IMF, the Germans, the ECB/EU or nobody.

CF's first link wrote:

JUNIOR FINANCE Minister Martin Mansergh warned last night that failure to implement the pensions levy and other savings this year would leave the Irish economy requiring emergency support from “inside the euro zone or outside”.

This would leave Ireland at risk of being run by outside forces and current complaints would look like a “storm in a tea cup.”

This, despite the traitor's intention when he said it, is accepting the fact that Ireland is neither a sovereign entity and nor is it a democracy ruled by the representatives of the will of the people. There was a time in our not so distant past, that such a pleading on behalf of one's foreign masters, would earn one a bullet delivered by airmail. Times change though and a bullet is way too good for Mr Mansergh and his accomplices. Prison is what they need.

Between Government and private borrowings there is no way we can pay what we owe off.
Hyperinflation would be the only way of burning it off (with a great deal of pain and poverty), but there is no sign of an end to deflation.

We're on track for strains on the euro and possible devaluation or break up.

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

cactus flower wrote:

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

That's the trouble with a demand-led economy, though. If people buy 100 things this year, and 105 things next year, you have growth. If they buy 95 next year, you have a recession.

If they buy 105 next year but could only really afford 102, then you have unsustainable growth, because they need to borrow to buy the extra 3. They should then buy 97 the following year - which causes a recession. The recession means people lose jobs and/or wages, and actually wind up buying less than 97.

That's why this recession seems to have no obvious cause - because it's an intrinsic property of the system, resulting from the built-in positive feedback systems. Credit-based capitalism has been blowing up like this at multi-decade intervals for several centuries. In between, people remember that capitalism is full of positive feedback systems, and requires lots of negative feedback imposed by regulation. Unfortunately, FF and the PDs spent much of the last decade pulling out the regulatory inhibitors.

ibis wrote:

cactus flower wrote:

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

That's the trouble with a demand-led economy, though. If people buy 100 things this year, and 105 things next year, you have growth. If they buy 95 next year, you have a recession.

If they buy 105 next year but could only really afford 102, then you have unsustainable growth, because they need to borrow to buy the extra 3. They should then buy 97 the following year - which causes a recession. The recession means people lose jobs and/or wages, and actually wind up buying less than 97.

That's why this recession seems to have no obvious cause - because it's an intrinsic property of the system, resulting from the built-in positive feedback systems. Credit-based capitalism has been blowing up like this at multi-decade intervals for several centuries. In between, people remember that capitalism is full of positive feedback systems, and requires lots of negative feedback imposed by regulation. Unfortunately, FF and the PDs spent much of the last decade pulling out the regulatory inhibitors.

Yes, and the various attempts at preventing or curing these events in the 1970s, 1990s and 2002 just built up the pressures that are blowing now.

I don't think this is about regulation. The poor regulation has been revealed by the recession. My guess is that its pretty well always been there.

Quote :

We declare the right of the people of Ireland to the ownership of Ireland, and to the unfettered control of Irish destinies, to be sovereign and indefeasible. The long usurpation of that right by a foreign people and government has not extinguished the right, nor can it ever be extinguished except by the destruction of the Irish people. In every generation the Irish people have asserted their right to national freedom and sovereignty; six times during the last three hundred years they have asserted it to arms. Standing on that fundamental right and again asserting it in arms in the face of the world, we hereby proclaim the Irish Republic as a Sovereign Independent State, and we pledge our lives and the lives of our comrades-in-arms to the cause of its freedom, of its welfare, and of its exaltation among the nations.

The Irish Republic is entitled to, and hereby claims, the allegiance of every Irishman and Irishwoman. The Republic guarantees religious and civil liberty, equal rights and equal opportunities to all its citizens, and declares its resolve to pursue the happiness and prosperity of the whole nation and all of its parts, cherishing all of the children of the nation equally and oblivious of the differences carefully fostered by an alien government, which have divided a minority from the majority in the past.

LINK

There was a time when the above was a declaration of purpose. It's no longer even an aspiration.

ibis wrote:

cactus flower wrote:

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

That's the trouble with a demand-led economy, though. If people buy 100 things this year, and 105 things next year, you have growth. If they buy 95 next year, you have a recession.

If they buy 105 next year but could only really afford 102, then you have unsustainable growth, because they need to borrow to buy the extra 3. They should then buy 97 the following year - which causes a recession. The recession means people lose jobs and/or wages, and actually wind up buying less than 97.

That's why this recession seems to have no obvious cause - because it's an intrinsic property of the system, resulting from the built-in positive feedback systems. Credit-based capitalism has been blowing up like this at multi-decade intervals for several centuries. In between, people remember that capitalism is full of positive feedback systems, and requires lots of negative feedback imposed by regulation. Unfortunately, FF and the PDs spent much of the last decade pulling out the regulatory inhibitors.

What do you mean by positive feedback here ? The more there's growth the more there can be more growth ?

Did we need some negative feedback loops then ? Should we have been internationally regulating it with caps on consumption e.g. not everyone can have a McMansion + SUV and floors on stuff like education e.g. try to get a minimum of population through school and consumption using tax and social policies.

Some countries weren't growing at the same rate as we were pushing ourselves though - we "concertina'd twenty years growth into ten" one guy on Pat Kenny said one morning. We ate all the chocolate cake and now we're throwing up.

It won't be easy to fix.

Have ye seen this ???

Japan’s Recession May Deepen After Exports Drop Record 45.7%

There's demand collapse for you.


"Demand-led" - demand for what though ?? We've flooded the world with all sorts of stuff and now no one wants it so everything's spiralling down. We got too good at production as cactus said before and the problem is distribution.

This IS madness as the p.ie character had it. This is based on a framework which protects a certain citizenry only; if the demand were demand for education or experience then there might be a recovery.

But you can't base GDP and currencies on good stuff like that, can you ?

ibis wrote:

cactus flower wrote:

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

That's the trouble with a demand-led economy, though. If people buy 100 things this year, and 105 things next year, you have growth. If they buy 95 next year, you have a recession.

If they buy 105 next year but could only really afford 102, then you have unsustainable growth, because they need to borrow to buy the extra 3. They should then buy 97 the following year - which causes a recession. The recession means people lose jobs and/or wages, and actually wind up buying less than 97.

That's why this recession seems to have no obvious cause - because it's an intrinsic property of the system, resulting from the built-in positive feedback systems. Credit-based capitalism has been blowing up like this at multi-decade intervals for several centuries. In between, people remember that capitalism is full of positive feedback systems, and requires lots of negative feedback imposed by regulation. Unfortunately, FF and the PDs spent much of the last decade pulling out the regulatory inhibitors.

Quite correct, it is the inherent contradiction of capitalism, one that Marx said would lead to more and more violent swings between one and the other until the system could no longer function. Unfortunately his prescription wasn't quite in the same class as his diagnosis...

Auditor #9 wrote:

Have ye seen this ???

Japan’s Recession May Deepen After Exports Drop Record 45.7%

There's demand collapse for you.


"Demand-led" - demand for what though ?? We've flooded the world with all sorts of stuff and now no one wants it so everything's spiralling down. We got too good at production as cactus said before and the problem is distribution.

This IS madness as the p.ie character had it. This is based on a framework which protects a certain citizenry only; if the demand were demand for education or experience then there might be a recovery.

But you can't base GDP and currencies on good stuff like that, can you ?

Have being saying and seeing this for months now - folks all over the world now are looking around them and saying " do I really need this gimmick or that" and "why the hell should I buy a new one and when the one I have is perfectly good for what I need".

Thus the collapse in car sales,computer sales,Hi-Fi sales,Toy sales and furniture and interior decor sales etc etc etc.

We will not be getting out of this recession selling X-boxes.

As I have said on other threads - this recovery will be led by Governments all around the world using borrowing to invest in transport,environmental,health,Defense,energy and scientific/R&D/educational infrastructure - the whole world is going to have to borrow from their children and you can be damn sure that Governments will want to get as big a bang for their bucks as possible.

Thus any nation that possesses a good engineering base and with a wealth of machine tool shops practiced in producing specialised and hi-tech machinery, a vibrant R&D base and known record for investing in green technology and is not afraid to get its hands dirty in producing weaponry and avionics - will be among the first to move out of recession.

On first glimpse in Europe - that country would be Germany - followed by the Swedes,Fins,Danes,Dutch,French etc etc - the last countries will be a tossup between Ireland,Portugal and Greece.

Its quite a sobering thought - we better hope Global warming speeds up - if we got the good weather here plus the fact that most Irish people will be prepared to work for peanuts in 12-18 months time - we might make it a holiday getaway for the rest of Europe.

I'm banging my head against the table here: did none of you read your Albert Bartlett??? There is NO such thing as 'sustainable growth'. There is NO solution within the current system that can possibly work. 'Recovery' means 'back to growth' and it cannot, will not work.

Marx's prescription wasn't perfect, but it was a whole lot better than this (Stalin and Mao were not Marxists btw.)

cactus flower wrote:

ibis wrote:

cactus flower wrote:

Easy Tiger said on P.ie

Quote :

The world is in good shape - no world wars, no famines (here) no shortages, it's really ridiculous. Cars are rotting in fields and productive workers being made idol. Why? It's fupping ridiculous! Why in the name of sod is there want and abundance side-by-side. Someone figure out this nonsense!

That's the trouble with a demand-led economy, though. If people buy 100 things this year, and 105 things next year, you have growth. If they buy 95 next year, you have a recession.

If they buy 105 next year but could only really afford 102, then you have unsustainable growth, because they need to borrow to buy the extra 3. They should then buy 97 the following year - which causes a recession. The recession means people lose jobs and/or wages, and actually wind up buying less than 97.

That's why this recession seems to have no obvious cause - because it's an intrinsic property of the system, resulting from the built-in positive feedback systems. Credit-based capitalism has been blowing up like this at multi-decade intervals for several centuries. In between, people remember that capitalism is full of positive feedback systems, and requires lots of negative feedback imposed by regulation. Unfortunately, FF and the PDs spent much of the last decade pulling out the regulatory inhibitors.

Yes, and the various attempts at preventing or curing these events in the 1970s, 1990s and 2002 just built up the pressures that are blowing now.

I don't think this is about regulation. The poor regulation has been revealed by the recession. My guess is that its pretty well always been there.

Well, not really. The problem is that unregulated, a credit-based demand-led economy tends to swing mightily, because without regulation, effectively an infinite amount of credit can be created. That's why the libertarians constantly call for a return to the gold standard - although it would actually be meaningless without credit regulation.

Usually, if you keep credit growth within reasonable limits by enforcing prudent lending, the banks will only lend on things that have some hope of offering a real return - actually growing, rather than simply being valued at higher and higher prices. That makes it hard to create a bubble. However, after a while some government or other invariably takes the cap off, because that limiting regulation also limits the rate at which the economy can grow.

Say we had an economy producing 100 stuff and buying that 100 stuff. If we take the cap off the lending, people might well be tempted to buy more stuff - say the 105 again - and they borrow to do so. Businesses need to expand, so they also borrow, in order to produce the 105 stuff.

In theory, as long as we have an equal number of units of money in the system as stuff, the system can expand without inflation. 105 units of money chasing 105 units of stuff is the same as 100 units of money chasing 100 units of stuff. Assuming the population stays stable at 100 people, everybody feels 5% richer.

Unfortunately, it doesn't happen like that. First, people borrow the extra money, so we have 105 units of money chasing 100 units of stuff - which means prices rise 5% (1.05 money per 1 unit of stuff).

Businesses must try to expand to meet the increased demand (since they were able to make a profit at 1, they can certainly make a profit at 1.05, so they should ramp up) - that means borrowing money and hiring more staff. Since there's only a limited pool of people, that means businesses are chasing the same staff, so they increase the wage offers. That feeds back into the system - more money, and in turn, higher prices, and in turn, higher wages. That's kind of the virtuous bit of the cycle, though, because people's wages are really growing, probably a bit faster than inflation, and the businesses are really growing, so the real economy is growing.

Eventually, such a feedback effect has to top out, because it eventually hits the point where everyone is fully employed, has been sorted into their most efficient/satisfactory job, people can't be hired for love nor money, and inflation is simply rampant. Fianna Fail essentially tried to get around this by derogating from the 7-year moratorium on free movement that Nice provided. They imported people to prevent the economy tightening up, allowing it to continue growing at full tilt.

However, once there's enough money sloshing around the system, there's nearly always some kind of asset that starts to get over-valued. Usually, it's an asset in wide demand, but where supply can't keep up with demand easily - houses are the usual suspect, because even if you build billions of houses, you can't build them all in the nicer places. So money starts to funnel into that asset, and more and more people turn their attention to this amazing asset that offers the dream of getting rich quick for minimal effort - and away we go.

If you like, you can consider that as being a bit where 105 money is chasing 100 stuff - where stuff in this case is the bubble asset. Prices rise, but overshoot, because more people borrow money than actually get the stuff (which is why it has to be an inelastic sort of good, like houses), so there's a potential for prices to rise to, say, 110 money for 100 stuff. Since prices of the asset keep going up, the banks abandon prudence, and are willing to lend yet more money, so we see a rapidly growing money supply chasing a slowly growing asset that everyone is convinced only goes up in value.

The bubble part of the economy starts to drain money away from the productive part of the economy, because the returns are greater and faster than actually producing stuff. That, in turn, means that the supply side of the economy can't grow to meet demand, and we're back in a general inflationary situation. Not only that, but because of inflation and the asset bubble, people's demand for wages continues to increase as people feel their purchasing power eroding. So businesses start going out of kilter - they're not really competitive, they can only survive by overcharging, because they're over-paying, and their access to money is significantly lower than the bubble part of the economy.

All of that comes back to regulation - not regulation of interest rates, as the eurosceptics like to think, but regulation of lending practices, of lending to asset ratios, of asset valuation. Only regulation can actually prevent the system moving so fast it goes really badly out of kilter - and once it goes sufficiently far out of kilter, it must eventually crash.

All of that aside, Aragon is quite right - there is, on a finite planet, no such thing as 'sustainable growth'.

Quote :

Quite correct, it is the inherent contradiction of capitalism, one that Marx said would lead to more and more violent swings between one and the other until the system could no longer function. Unfortunately his prescription wasn't quite in the same class as his diagnosis...

His diagnosis wasn't all that hot either. The swings are an inherent feature of capitalism, but that doesn't mean they there never has been a soft landing.

A lot of good stuff to talk about there, but Marx is dead and unable to reply, so I will point out that he certainly never said that every crisis of capitalism was terminal.

"sustainable growth" - yes but only in so far as it does not depend on non-renewable resources. It also depends on how you define "growth" - another day's work.

Speaking at the European-American Press Club in Paris on Friday, he said: “There is no weak link. The euro area is a very intertwined, single-market economy with a single currency. Speaking of any particular country in the euro area as a weak link is an error of judgment.”

It certainly would be. It would invite a run on the weakest economy, whichever it was.

Quote :

The European Commission on Wednesday initiated disciplinary procedures against Ireland, France, Greece, Latvia, Malta and Spain for running excessive public deficits. Mr Trichet did not mention any of the six by name but said that “the fact the commission has initiated excessive deficit procedures is a good thing”.

The fact that we had to live with an interest rate set to suit the German economy of course does not come into it.

Germany are outrageous hypocritical about the whole thing and they are using Ireland as a scapegoat... but then again who are we to talk, our Government is using international factors as a scapegoat for a decade of mismanaging.

Some issues to be considered by Germany:
1. Ireland has had to live with inappropriate interest rates, which suited Germany, since the date of our entry to the €uro.
2. If Germany, Japan and China had actually spent a bit rather than the manner in which they acted over the past decade the crisis would not be so bad. If they began to spend a bit the crisis would pass quicker.
3. All those BMW, Mercedes, Audi and VW cars, along with all those Siemens and Neff ovens bought in Ireland during the boom did plenty to keep Germans in jobs so a bit less of the nonsense from them.

But as I said, what they are doing is no different to what our Government does, just our crankiness won't damage their economy whereas their's will our economy.

cactus flower wrote:

Speaking at the European-American Press Club in Paris on Friday, he said: “There is no weak link. The euro area is a very intertwined, single-market economy with a single currency. Speaking of any particular country in the euro area as a weak link is an error of judgment.”

It certainly would be. It would invite a run on the weakest economy, whichever it was.

Quote :

The European Commission on Wednesday initiated disciplinary procedures against Ireland, France, Greece, Latvia, Malta and Spain for running excessive public deficits. Mr Trichet did not mention any of the six by name but said that “the fact the commission has initiated excessive deficit procedures is a good thing”.

The fact that we had to live with an interest rate set to suit the German economy of course does not come into it.

I'm sorry, but that's a lazy cop-out, blaming someone else.

The interest rate would have made little difference to even our house prices if the banks had stuck to the lending formula of 2.5 x principal salary + 1 x second salary, maximum 90% mortgage. They didn't, and that had nothing to do with who set interest rates.

ibis wrote:

cactus flower wrote:

Speaking at the European-American Press Club in Paris on Friday, he said: “There is no weak link. The euro area is a very intertwined, single-market economy with a single currency. Speaking of any particular country in the euro area as a weak link is an error of judgment.”

It certainly would be. It would invite a run on the weakest economy, whichever it was.

Quote :

The European Commission on Wednesday initiated disciplinary procedures against Ireland, France, Greece, Latvia, Malta and Spain for running excessive public deficits. Mr Trichet did not mention any of the six by name but said that “the fact the commission has initiated excessive deficit procedures is a good thing”.

The fact that we had to live with an interest rate set to suit the German economy of course does not come into it.

I'm sorry, but that's a lazy cop-out, blaming someone else.

The interest rate would have made little difference to even our house prices if the banks had stuck to the lending formula of 2.5 x principal salary + 1 x second salary, maximum 90% mortgage. They didn't, and that had nothing to do with who set interest rates.

Throwing epithets, Ibis. There is a lot more to an economy than mortgages.

cactus flower wrote:

ibis wrote:

cactus flower wrote:

Speaking at the European-American Press Club in Paris on Friday, he said: “There is no weak link. The euro area is a very intertwined, single-market economy with a single currency. Speaking of any particular country in the euro area as a weak link is an error of judgment.”

It certainly would be. It would invite a run on the weakest economy, whichever it was.

Quote :

The European Commission on Wednesday initiated disciplinary procedures against Ireland, France, Greece, Latvia, Malta and Spain for running excessive public deficits. Mr Trichet did not mention any of the six by name but said that “the fact the commission has initiated excessive deficit procedures is a good thing”.

The fact that we had to live with an interest rate set to suit the German economy of course does not come into it.

I'm sorry, but that's a lazy cop-out, blaming someone else.

The interest rate would have made little difference to even our house prices if the banks had stuck to the lending formula of 2.5 x principal salary + 1 x second salary, maximum 90% mortgage. They didn't, and that had nothing to do with who set interest rates.

Throwing epithets, Ibis. There is a lot more to an economy than mortgages.

Not in our case - building for the asset bubble was a quarter of our economy, and at least half our current misery.