Part of Ireland’s problem but only part of it. But the lady has a fair point in my view.
Balanced budgets give a basis for more sustainable (if delayed) growth.
Germany is the testament to that – we can’t just keep putting the boot into them for all our ills just because their banks over-lent to our banks.

Gagsy, no disrespect intended towards the Germans and their economy. But their economy is fundamentally different than the Irish one. Germany’s economy is more divergent than Ireland’s and should be able to support a more continuous level of growth. Ireland’s economy is by it’s very nature more a fluctuating one and will always have a more peak and through nature to it. Having a balanced budget every year would make no sense for for Ireland, maybe balancing it over the lifetime of a government would though.

Sorry, I misused the term ‘balanced’ – the treaty does allow deficits within parameters.

But your point gets to the core of the euro’s fundamental problems (and one which Merkel continuously raises). If we want to have a common currency then there has to be more fiscal harmonisation and I think that has to mean more fiscal discipline in terms of budget deficits. And probably means more tax harmonisation too.

Jason, No big fan of Mrs Merkel but If I lend you money, I would expect you pay it back. Its true German banks lent money to Irish banks who lent it to Irish developers who built loads of houses and paid billions in taxes to the Irish Goverment who gave it back to the Irish people through tax reductions, medical cards, pension and social welfare increases etc… Its not quite as simple as ‘Lets just blame the Germans’

Declan, you are forgetting on of the basic tenets of capitalism – risk. When a bank loans money, to individuals, businesses, or even nations, there is a risk that the borrower will default so interest is charged accordingly. it’s why Ireland’s rates in the bond market are so high yet Germany’s is so low. It is the responsibility of the lender to lend responsibly or risk losing out.

What do most people think about Greece in Germany Klaus. Do they think Greece should leave?

@ Kerry – difficult question. Last year German and Dutch media was very nasty and anti-Greece. Much more negative than to Ireland or Portugal. This has stopped. There are many Greeks in Germany, and the German military have a contract with Greece to force Greece to buy equipment at high prices, so it would be bad for Greece to leave. But normal people ( apart from bigots and crazies ) think bad times are coming, and Sunday’s election will not change this. So in or out is not important, the damage is done. Thoughts are changing in Germany, we are looking inwards now not outwards. We are looking at the sickness in our own economy. This is new. We are tired of Merkel telling Europe what to do, because it has not helped the people on Germany either.

Fagan’s – that comment should be put in the oven

@ Fagan – Not so funny. I do not make jokes about Bloody Sunday.

Very true Klaus. I have reported it and asked it be taken down. Apologies.

@ Fagans – Thank you :-)

What happens then Begrudgy? Its seems to me that you crave this failure.. Do you want the whole of europe to break down into chaos? What is you end game ?

I believe in the idea of european union, of countries coming together to help each other to grow while staying individual. Problem is europe is not helping each other. They are looking after themselves. Its like something out of animal farm. Some are more equal then others. The european union as it is now with all this power control is not what was set up in the first place.

How have we helped anyone in the EU Begrudgy? What money have we given to Germany? Of course countries like Germany are going to have more influence, they have 90 million people for Gods sake. How undemocratic would it be if 4 million people had the same weight as 90 million.

We have opened up our economy for german and other eu states to sell their goods easier here. Likewise vice versa. We have handed over alot of our fishing waters. Jaysus start thinking man. Yes we are only 4 million but in that 4 million, profit is still made by foreign companies.

but they should shove in the money?

Give us some wisdom Martin.What would you do?

The spin within Germany is not that Merkel wants to control Europe, it is that she has been forced to take charge as the other EU leaders are doing nothing. I am not agreeing with this but it is important to see that Merkel’s interference is sold not as domination but as cleaning up pollution before it gets to Germany’s part of the beach. There is no selling of a dream of a new Reich to the German people, because the German people will not buy that.

Not same old story, first time she has said that Germany has not enough money. This is new.

The basic thing is as you say. They are in now, and if they aren’t willing to do what is normal in a currency union, then they should never have agreed to the Euro.

They want a currency union with all the ups for them, but refuse to continence normal currency union action, such as strong regions subsidizing weak. If the Americans tried the German approach to currency union, the southern states and the heartland would have to leave the dollar.

why not do the decent thing and blame ourselves and our own actions!

Paddy. Every unhappy family is unhappy in their own way. Yes we had a gombeen criminal Govt. in FF over 13 years, people borrowed too much etc etc. but how does that cause Italy, with its surplus, its massive savings, strong global brands and heading down the tubes. How does the mismanagement of this country account for the mass insolvency of German and French and Spanish banks.

The continent is insolvent, just over a decade after the Euro.

Paddy O / Declan,
You guys are of the opinion that it was the Irish people who caused this crises and are therefore responsible for own mess. The fact that German banks lent to Irish banks without due diligence etc is irrelevant in your mindset.
Let me give you a real parallel example, that shows the fallacy in your arguments.
Last year, when the French breast implant fiasco broke, and unsafe implants were found to have been exported all over Europe, it was the responsibility of each Government in the EU to compensate and replace the implants for the victims. In other words, a company in Europe made a total screw up, yet the Irish Government stepped in to help the victims.
Compare that to the Irish banking sector. They went nuts lending money to 200 developers (70 billion euro between them). They borrowed this money from German and French banks primarily.
Yet, its the Irish tax payer that is being asked to pick up the pieces from this mess.
How come a breast implant company (supposedly under the license of the French Government) can mess up totally, and each country has to respond by supporting its own nations citizens, but when 4 Irish banks mess up, its up to only the Irish citizens to pick up the pieces.
Am i missing something on this?
In reality, all the banks should have been allowed to fail, and have the knock on to the European banking system, which in turn would have forced each country to respond accordingly. But it was the Germans,French and British Banking system that was going to suffer, so they insisted that the Irish people be made suffer.

I can tell you, i did not borrow excessively, i did not contribute to the mess, and yet i am paying excessive taxes to clean up the mess of a European Banking system. Why is that fair? I didn’t party. I am an Irish citizen.
The German people did not party, so i agree that they should not have to shoulder the responsibility of their Banking system lending without due regard for consequences.
In a proper system, the banks would have failed. The Dutch let a number of their banks fail, and the world did not end. Iceland let their banking system collapse and have rebuilt it, and their world did not end.
Why not wipe the slate clean, and start again. Its only imaginary money anyway. It never existed and never will.
I can tell you why, the German Government (rightly or wrongly) are using this crises to strengthen control of the European Union. They are going against the wishes of the Americans, British, Chinese and obviously the Euro Zone as well. They know exactly what they are doing.

“Boom and Bust.

A lot of the Stock Market crash can be blamed on over exuberance and false expectations. In the years leading up to 1929, the stock market offered the potential for making huge gains in wealth. It was the new gold rush. People bought shares with the expectations of making more money. As share prices rose, people started to borrow money to invest in the stock market. The market got caught up in a speculative bubble. – Shares kept rising and people felt they would continue to do so. The problem was that stock prices became divorced from the real potential earnings of the share prices. Prices were not being driven by economic fundamentals but the optimism / exuberance of investors.

This was not the first investment bubble, nor was it the last. Most recently we saw a similar phenomena in the dot com bubble. Here, the effects were much less because it was confined to a small sector of the stock market.”

The current bust as with the Wall St crash is a product of the preceding boom.
In the 1920’s this was caused by unsuitable interest rates, which fuelled a speculative boom. This crisis likewise inappropriate monetary policies created excess cheap money.
Both public and private spending has reached unprecedented and dangerous levels. Both public and private debt has reached unprecedented and unsustainable levels.

Martin can you explain your reference to a “cheap Euro”. I am a Brit living in Ireland since 2006. Back then I could buy Eros for around £0.70. Since 2008 it has been costing me between £0.80 and £0.90. It is currently back where it was in 2008 at £0.81. Still not “cheap” by comparison with 2006/7. In my case Ireland is the loser as I have less Euros to spend here.

Hi Frank, when Germany joined the Euro it effectively devalued to meet the common denominator level of the new currency; thereby it’s products became effectively cheaper to by than previous. Add that to the availability of lots of money supplied through German Banks, and we all then have the means to go out an buy BMW’s, Boch Tools Neff Kitchens – hence Germany has a wicked economy – the plan couldn’t fail, until now that is. Now if we all had a bit of a devaluation (those of us in trouble) that is where our ‘rescue ‘ growth would come from. That is the ‘normal’ way the capitalist system works. But everyone in the Eurozone is tethered together, The Eurocrats are dithering, and Germany doesn’t want to loose its current status.

Because we (Germans) think we better at serious things than other people. Not always true! :-). It is also that we are taught to be very direct and other people see this as impolite and arrogant. A problem is a problem, not a challenge or an opportunity. I think many Euro politicians are happy that Merkel is there because they do not have to say what they think. Germans do not care about being popular and liked by all.

The German economy was decimated by hyperinflation during the Weimar republic. Merkels concern is that if they go down the road of money printing inflation will take off like wildfire. Europe is currently extremely prone to this. Due to extremely high levels of low velocity liquidity in Europe even relatively low levels of inflation would rapidly increase velocity and result in uncontolled rampant inflation.

Its built on an excellent work ethic, good resources , highly innovative workforce and the fact that they produce quality products year after year… Lets not make this another ‘ Lets bash the Germans session.

are you a German in disguise?

Sorry Elish, I find that farcically simplistic.
It has to be acknowledged that they have got their (conservative, counter-cyclical) economic policies somewhat right in retrospect.
We’ve had some signmificant capital inflows and a few devaluations of our own over the decades without becoming a powerhouse……

I am not German. Irish and proud but I do find the constant blaming of Germany for the mistakes of Irish goverments, irish banks and yes the irish people difficult to stomach.

Re-do your analysis with all the property development activity taken out….

When Germany’s loan books are forced to mark investments to market value. Then Germany will have difficulty in bailing out its own banks.

Germany is roaring ahead at the moment, thanks to very effective business practices, ECB having set rates to meet its needs over last decade, blind eye turned to and a weak Euro to sell to the world. However 40% of its market is in the Euro and that is a market that is under severe pressure.

This is a Euro Zone crisis, a currency crisis. It is not a crisis of a few nations on the edge, it is systemic. Germany will go in to recession in the next 12 months, Germany is not immune to this, it may be able to defer it.

No new Reich. Germany will not grow stronger, it will be the opposite. It will become weaker. It will not push outwards, it will collapse inwards. More demos, more riot police, more extremists, more Pepper Spray and water cannons.

People need to consider what having a single currency means.
Fiscal management has to be somewhat harmonised for it to work.

If we’re not prepared to embrace that principle we should leave the euro and accept the consequences of that.

@klaus Last thing we need is more German extremists thanks I’ve seen the documentaries of the last time.

@ Jono – from 2 weeks ago in Wandsbek? That was most recent.

No klaus from 20′s to 40′s

That will not happen again. It will be more as the RAF activity in the 70s. Internal terrorism, not fascist stability. It has always been in the background of Germany since the 1960s. The time of the Nazis is not an accurate model for today. Easy to say, but wrong.

I don’t agree with alll of it but that is a refreshingly balanced analysis/opinion compared to the usual polarised hysteria when Germany is discussed here.

@ Econ – there are other, less good reasons why the German economy is strong. No minimum wage. Very low wages compared to other countries. In Berlin the average wage is € 1000- a month. High taxes. Health service mostly outsourced to private business. Pension age increased. Many German people do not understand the anger at austerity, but only because austerity is normal in working class Germany.

Fair enough I am certainly no expert on the internal dynamics of the German Economy but it seems wage suppression is another way to keep exports cheap. Apart from enforcing a minimum wage how else does government suppress wages. I am not suggesting we all follow German society but economically they compete on merit or are you of the view it is akin to China where they keep citizens less well off to keep the export machine fully lubricated and delivering huge trade surpluses.

Yes, That is what Mean, like China, but not as severe. The winnings from the successful economy do not go directly to the hands of the workers. The benefits to the workers have been in social systems and infrastructure. It was a good plan and it worked for a long time, but no longer. German workers get angry when they see that their lifestyles have not risen as they did in other European countries before the crisis. Their lifestyles have been dropping but they read that Germany is successful.

German elites could destroy Europe maybe, but they will destroy Germany as well. The average German person is not winning. It is not a competition. Bad decisions were made because the politicians want it to be a competition. Soon it will be clear that we are all in the same situation and we have wasted so much through competing. Unite and survive. Divide and fall.

How can we blame Germany for our Banks, Goverment, developers and indeed people who spending money like idiots for 10 years? Please explain that to me??

Declan. If Ireland sank in to the sea today, with all its economic loss and disruption it would still not even be as great a threat to the Euro as Germany and France’s insolvent banks, never mind Spain and Italy. 2 bankrupt global giants.

I had a neighbour when I was young, who was a volunteer in the Black and Tan war. He said that FF always blamed the English for everything that went wrong and that Fine Gael always blamed the Irish.

Same here, yes their was woeful mistakes made here, criminal mistakes and theft, but to say that the EU/ECB has not at every turn made the Euro crisis worse at every turn is just a different form of denial.

It’s usually more complex than that.

Merkel did not cause this problem, but she has made the problem much worse by pointing a finger at other countries, pretending that Germany is wealthier and more stable than the reality, and lowering Germany’s risk through giving “bail-out”s and highering other countries’ risk. She was not transparent about her strategies and her plan is failing. All of the EU, including Germany, will suffer.

I used to be pro Europe … But not any more. It is turning into a nightmare and will get way way worse , ever before it improves. All these shower of current politicians will be well dead from old age along with the rest of us before this ever improves. I just can not see how all of this could have happened . It is a nightmare !

Silly comparison.