So we have just wasted the last couple of years on austerity seeing as according to the NTMA we could not have returned to the markets anyway?

Mean while Gilmore has repeated his belief that Ireland would be able to return to the international bond markets at the end of the current EU-IMF programme. Government speaking out of both sides of its mouth again.

You couldn’t make this stuff up…….

Well this isn’t scaremongering anyway, nope, not scary at all. But some people might believe the sh1t that come out of Noonans mouth.

I don’t care what other ‘impartial’ groups ask for a yes, its a no from me.

So the policy of austerity imposed to ensure we can return to the bond markets at an affordable rate looks likely to have failed, necessitating a second bailout that this government insisted we wouldn’t need up till the referendum was called. And their solution, further austerity to ensure we won’t need a third bailout?

The definition of madness is doing the same thing over and over and expecting different results.

Time to change direction. Vote NO on the 31st

More Gun to the head rubbish from Feta Noonan !
If you told me tomorrow is Thursday Feta , I would check the calendar .

Vote NO

I notice that rte don’t even mention or entertain David McWilliams anymore great article today in Irish independent ‘Fiscal Treaty is Kamikaze economics for most of EU’ exception being Germany of course

I love it. It’s like when you catch a brat child out for telling a lie and in desperation they just keep on trying to lie their way out of it. Keep it up you shower of losers. It has become so transparent now that the public can see through it.

We know our government has been threatened to get this referendum passed, so in turn they try to threaten us. Unlike these cowards we will vote NO to this Instability Treaty. We are not afraid.

They want to heap more debt upon debt. Who benefits from debt? Bankers! As McWilliams said “piss on us and tell us it’s raining”! No more. We live on a beautiful fertile island here. I’m not selling that for a bag of bankers’ debts.

Relying on the ESM for funding is like buying on a car on the strength of some fellow in the pub promising to lend you the money.
Currently there is no fund. It is aspirational.
It is doubtful that Europe could raise €800 billion for the fund. The BRIC nations have more or less laughed off any suggestion of funding this. The US has it’s own woes. That leaves the markets and greater uncertainty. Remember, the EFSF, had only stuttering success selling bonds for a smaller fund.
In addition, the €800 billion fund is dwarfed by potential claims for aid. Bloomberg today quantified European bank exposure to the periphery at €1.2 trillion. France and Belgium also have designs on tapping the fund.
Big players (Italy, Spain, France) will be given priority assistance with Ireland well down the list. Left to fight for scraps with Portugal and Greece.
http://www.bloomberg.com/news/2012-05-22/european-banks-unprepared-for-pandora-s-box-of-greek-exit.html

Check out Punk Economics 4 on YouTube from David McWilliams the EU are pissing down our backs and telling us it’s raining

The only bond Market we will be returning to is the Basildon Bond Market .
There is no way rates will return to below 3 % (the promised esm rate we are told) so let’s have a bit of honesty and admit 2 nd bail out on the way with god knows what conditions attached.
The other way is to print our own money a practice I believe is well know to certain ministers.
Roll on the bray head forum

i want to know who made this access to the esm based on ratifying the this treaty, which has nothing whatsoever to do with the esm, i firmly believe it was fg, varadker (the fool) blamed it on norway of all places, i would like at least one fg supporter to please explain why they still believe anything these scam artists say, by the way norway could not have been involved in the negotiations as they are not eu members, he didnt even bother to research what lie he would tell

This is total horse manure out of Noonan. The markets are lending to Iceland again and a default is much bigger “credit event” than voting no to the ESM. This had now descended to farce with govt trying to play two sides of the same coin. How much more lies and scare tactics and total BS are you willing to take?????

Recent reports have already said we couldn’t return to bond markets anyway.

More lies from the spin doctors

The biggest problem this treaty has is that this government and FF are supporting it. They have the collective political gravitas of the Marx brothers and the economic talents of a young Nick Leeson (no offence Nick). What Noonan and the rest of his Cosa Bistro buddies should do is oppose the treaty thus ensuring its success. Personally I would not vote yes to this if it had been carved in stone, delivered by the hand of god and presented to me by Jesus, Buddha and Mohammed at the wedding of Canae.

Still voting NO, couldn’t care less what this baldy f***er or any of his sheep/cronies/apologists/ think or say.

wait for it next the yes side will be telling us if we vote no we will all be dead the next day hahahahahha. Imagine if we could devalue our own currency and set our own vat rates, All of those american and chinease companies looking for a Euopean hub would be all over us, lets not forget that people accross the border would then spend their money in our shops < JOBS JOBS JOBS VOTE NO,

hahaha half to laugh at them they have no plan at all other than borrow , borrow borrow, sure how will they pay there outrageous wages and all there perks without borrowing cash. Is’nt it terrible that they have to wait for us silly Irish people to get what they want. NO,NO,NO,NO,NO,NO,NO,NO,NO,NO,NO,NO,NO,NO. Lets not forget Iceland wwwwwwwhhhhhhhoooooooaaaaaaaaaa hahaha O hang on thats right they returned to the markets after burning all their bondholders hahhahah

But sher that’s obvious, as obvious as the fact that the same will happen should we vote yes? Very carefully chosen words and sneaky tactic!

James bond more likely

Is’nt it amazing that the political elite keep telling us to vote yes,they recite the fact that we won’t be able to pay our teachers and guards and nurses etc….
The real reason they want a yes is to pay there own wages and that of the top civil servants,
Enda Kenny is still paid more than Merkel,Hollande and Cameron,FACT
The biggest problem in our country,is the bank debt that was socialised, I didn’t have an Anglo Bank account did you?
The next biggest problem is our cost base,energy prices,transport,food etc none of which is being tackled
Then the mortgage problem , if people had more money in there pockets to spend in the real economy ,ie.buying goods and services that would be the biggest job strategy imaginable
But hey , what do I know I’m just one of those unemployed people that no government listens to!
Vote no, it’s time for people to stand up to this elite class,we need a new direction ,because more of the same simply won’t work! Just look at the past four years of evidence

Why on earth would markets lend to us at reasonable rates if we didn’t have the ESM to back us? Those of you who bought a house more than ten years ago will remember the strict criteria required: you need at least 12% deposit, could only borrow 2.5 times your salary. In other words, the risk had to be minimised. What part of risk management do people not get when it comes to government borrowing today? It’s simple maths at the end of the day…

Does the ESM exist yet? It shouldn’t exist when it answers to no one. It’s an illegal entity if no one can be held to account if any wrong doing occurs. So if we don’t vote yes we will not be able to borrow from a entity that answers to no one, that’s great. Vote no.

Did they tell the NTMA to say this?

Sorry for the long comment. I’ve tried to keep it as short as possible.

This is about two fundamental flaws of the Euro system, neirther of which are addressed by the fiscal compact. If anything, the fiscal compact will exacerbate these flaws. They are broadly the same as David McWilliams talks about in his excellent ‘Punk Economics’ series on youtube, but I wanted to emphasise certain aspects that I believe we should all understand.

My position is this. We should vote NO because the fiscal compact is very poor macro economics. We should also vote NO to be demanding a root & branch reform of the Euro currency system in its entirety. That will need to incorporate some shared fiscal rules (but not those offered), but the overall package +must+ be based on maximising prosperity for Eurozone citizens. The best (& likely only) guarantee of that is an institutional & +real+ commitment to (near, say 98%) full employment.

The Euro system was deeply flawed from the beginning & what we are seeing is precisely what a small number of ‘heterodox’ (non orthodox) economists predicted.

The most prominent among these flaws are twofold.

The first is trade imbalances, & ‘mercantilist’ competition.

Countries like Ireland & Greece (& others) are not industrial power houses like Germany. Arguably, they never could be, for a variety of demographic & geographic reasons. This means, in pure monetary terms, some countries are, & will never be, as economically productive as others.

This fact should not surprise us. The same is true of regions within countries. Over long periods of time, certain productive activities have concentrated in particular areas, for reasons that become mutually reinforcing. Labour skills tend to concentrate. Infrastructure & transport links play a part.

In Ireland, for example, rural County Clare will never be as ‘per capita’ productive – in money terms – as industrialised County Dublin. Citizens in both areas enjoy, broadly, the same standard of living. They both have a similar standard in provision of public services, access to education, health services etc. They have no problem sharing a common currency. Why?

The reason is simple. There are net, automatic fiscal transfers between Dublin & Clare. No way could Clare’s public services be provided solely from the economic activity in their own county.

Of course, we share a national identity, so sharing the national wealth, shared use of our national resources is naturally accepted. We don’t (as far as I know) even collate or examine the accounting data that would tell us what counties are contributing more, or less.

But, there is more to it than just this. We are all consumers. Dublin can have as much high value, economically productive capacity as it likes, but without +customers+ in all parts of Ireland without (equally) valuable currency to spend, it cannot prosper to the same extent. If the Irish counties had separate currencies +and+ the separate fiscal budgets that would inherently accompany that, the respective currencies would have higher & lower values. Dublin’s would certainly be higher than Clare’s. Which means that Clare’s import trade from Dublin would be much less. Dublin’s producers would have fewer customers, make less profit & employ fewer people.

Trade is mutually beneficial, between Dublin & Clare, just as it is between other regions of the world. Most especially in modern, developed, industrialised regions. Specialisation in production, using long developed skills, resources & other natural advantages usually works to enhance the living standards of everyone.

Well, I think you can see now what this 1st flaw in the Euro is?

We shared a common currency without any other means of balancing the increased trade flow imbalances that were bound to occur. Germany, in particular, gained immediate advantage in selling its industrial produce (notably, massive amounts of military hardware to Greece, which included an (ongoing!) supply of state-of-the-art submarines) at a lower ‘exchange rate’ (now fixed at parity) to less industrially developed Eurozone countries. (Moreover, this advantage also extended to export sales outside the Eurozone.)

However, the trade surpluses thus generated by net exporters, like Germany, had no monetary recycling mechanism. Arguably, Germany should have allowed the wages of it’s workers to increase, so that it’s goods became costlier (reducing sales) and/or Germans could have increased their imports from other Euro countries. But this did not happen. In fact, Germany did the opposite. It deliberately reduced its wages, terms of service & social benefits. (The ‘Hartz’ ‘reforms’.) Where Germany should have been, effectively, running inflation at a (moderately) higher rate than other Euro countries, it was, by its fiscal policy, choosing to run it lower. (As former German Finance Minister, Heiner Flassbeck has pointed out in various conference presentations – see youtube.)

So, what happened is that Euro trade ‘surplus’ countries threw back their capital surplus as credit to trade ‘deficit’ countries at rock bottom interest rates (at the macro level). Although credit in massive amounts was offered to any ‘consumer’ with a pulse in Ireland, in fact the largest actual take up was primarily for commercial lending to speculative property developers. (A lot of it for ‘projects’ outside Ireland.) Banking regulators, public servants & politicians all looked the other way as the ‘bubble’ grew to many times the size of Ireland’s real economy. Quite a few were themselves on the speculative ‘pyramid’ bandwagon. Spain, a much larger economy is in similar trouble.

But the point is that the trade imbalances with an artificially set exchange rate parity were always going to blow up at some point. It was never a sustainable structure. Having launched the Euro experiment, one might have thought ‘authorities’ would have been keen to monitor the situation for what should have been an obvious area of risk. After 4 years, little of this has been examined in the mainstream of economics, media or politics. I think we should be asking why, and, as always, ‘following the money’ to see who benefitted?

Ok. The second major flaw. Government debt financing.

With the exception of Greece, a mere 2% of Eurozone GDP minnow, the economic crisis began with the bursting of a private sector debt bubble (significantly commercial sector, plus some household). By both bailing out banks facing bankruptcy & the immediate recession effect of lost taxes & increased unemployment benefits, Eurozone peripheral governments were forced to increase their previously modest debt burdens by a large amount. Austerity fiscal policy & household deleveraging both added to the downward spiral in spending. Which, in turn, fed in to more unemployment cost & tax loss, even extending now to the stagnation & trending recession of Germany itself. Recall, all the ‘periphery’ consumers are also Germany’s customers.

Government debt in most Eurozone countries has thus risen dramatically, as a result (not a cause, note, except for Greece) of the crisis & the recession of the last 4 years.

But, the government debt of countries like US, UK & Japan & others has risen to far higher levels. Yet, it is the Eurozone that is threatening to break up & implode the global economy. Why is it other countries’ such debt is clearly sustainable, yet much lower levels in the Eurozone countries are not?

This is another major flaw in the Euro system.

Whereas countries like the US, UK, Japan etc. all have their own (+sovereign+,+fiat+, +free-floating+) currencies (lets call them SFF-F) Eurozone countries do not. The SFF-F countries are currency +issuers+, the Eurozone countries are currency +users+. Big difference.

SFF-F countries have their own fully functional Central Bank. When their governments borrow, their Central Banks (Fed, BoE etc) determine the interest rates, +not+ ‘markets’. (Yes, you read that right, even tho’ many pundits still BS us otherwise…)

(SFF-F Central Banks do not, in fact, have to ‘borrow’ at all – they +issue+ currency. There are ‘monetary operations’ reasons to do so, but in functional terms, borrowing to allow a government to spend is not one of them. However, for the purposes of comparison with the Eurozone I will continue to consider matters within the present ideological construct that taxes & borrowing are required before spending.)

In a period of recession, or natural downturn of the business cycle, Central Banks reduce the ‘base’ interest rate, in order to reduce the cost of borrowing for investment (or household) spending in order to stimulate the economy. This reduces the cost of government borrowing too. It’s an automatically ‘counter-cyclical’ process. Just as rising unemployment in recession necessarily increases budget deficits, the cost of doing so comes down. (Note, it’s only the interest cost that really matters here. There is otherwise no necessity to repay the principal. Economic growth always makes increasing debt sustainable, which is why it’s always the debt/GDP +ratio+ that is discussed.)

For our SFF-F countries, which are considered to have, in the long run, fundamentally sound economies (all major ‘developed’ economies), ‘financial markets’ always desire the risk free ‘liquid’ facility of government bonds, and accept whatever interest rate is offered, as set by the Central Bank. (I won’t go into all the reasons for this, but the empirical evidence & statements of central bank executives are 100% on this point. But see below also.)

However, the same is not true of the Eurozone countries. Financial markets decide on the interest rate for individual countries & tend to behave in a similar way to what we might experience as business or household borrowers. That is to say, the more you actually +need+ the money, the less creditworthy they deem you to be, and the more they will charge in interest. Of course, as private citizens, not national economies, our income does not grow indefinitely, so as +we+ must pay back the principal as well, a little extra interest cost does not change our financial position much. But for governments, the interest cost +is+ the total cost.

Whilst the difference between an interest cost of 1%, and, say, 4%, sounds very little (& is very little in total debt cost to us citizens), it is a +multiple+ of +4 times+ in cost for a government. And in terms of debt carrying +capacity+, the difference is also +4 times+. To emphasise, a country that can carry €100 billion debt at 1% interest, sustainably, can only carry €25 billion at 4%.

So, when a country experiences an economic downturn, for whatever reason, its budget deficit & total debt will rise. If its government also wants to be ‘responsible’ & care for the welfare & prosperity of its citizens, it should also further extend its borrowing to act ‘counter-cyclically’ to stimulate the economy & avoid a downward spiral of recession, rising unemployment & lost economic output.

In the case of the SFF-F countries, the cost of borrowing (semi) automatically goes down & its sustainable debt capacity goes up.

For a Eurozone country, precisely the opposite is true. At the very time a government should be acting to maintain the economic wellbeing of its citizens, it faces an impossible economic equation – its interest costs go up & its sustainable debt capacity goes down.

Inevitably, and by design, Eurozone countries experiencing a downturn were always going to be in trouble.

When that downturn is a severe recession after the worst financial sector caused mess since 1929, well, the disastrous results we are witnessing now were also inevitable. And it must be said that after 4 years of continuing such deeply flawed thinking in the face of one crisis point after another, the authorities are either deeply incompetent or still pandering to the vested interests of those (in the financial sector) responsible, or both.

For months the Minister for Hardship and Feta Cheese has guaranteed the public, the markets and any business channel who could bear his face, that Ireland was on course to return to the bond market at the end of next year. Austerity was working, the economy was turning the corner, and whatever you’re having yourself. It was always baloney, but anyone who said otherwise was shouted down and their views rubbished. Funny old Ireland.

It is a funny old Ireland. We were shouted down when saying the property bubble was out of control too – but as usual those in power needn’t listen. To Kenny and Noonan it’s just another day at the office (hence the smiles and jokes in the Dail and elsewhere) to us it’s our homes, our livelihoods and the cash in our pockets. We can join the debate on the internet but will we do anything about it? That’s an even better question. Look up sli-nios-fearr.com, and join this movement because it’s about time we cut the cost of this ruinous governance. Not joining in is simply allowing the same old rituals and routines to rule our future.