Eurozone Sovereign Debt Crisis part 2 - Ireland

[dandelion]

complain to jason if you dont like the logic?

 

[eurotop40]

Get real! It the EU has united europe it's only because citizens feel at one fighting this corrupt and inept institution.

Can you prove that?
It is as if I said that you should fight your inept and corrupt royal family.

 

[Drifterwood]

Can you prove that?
It is as if I said that you should fight your inept and corrupt royal family.

Don't bother, Euro. Captain Mainwareing is much happier bitching about the speck in the European eye than getting to grips with the plank in his own.

The proud Nation that stood between freedom and Nazism, that industrialised the world (for better or worse), that has more innovation to it's name than any other, that has the highest pro rata Nobel Laureates and published academic works, has become a bunch of whingeing entitlement fed mutton heads.

 

[Speculator]

Can you prove that?

Errr, no. Do you not know the difference between an argument and science? It's impossible to prove, all you can do is make a case for your point of view. Out of the 8 most recent referendums 5 of the results were "No" votes, and support for the EU is at a 9 year low according to the EU's own statistics agency. The British government are determined to prevent the public from having their say on anything euro related because they know what the answer will be, the populous has been disenfranchised since 1975. The EU has changed an awful lot since then.

It is as if I said that you should fight your inept and corrupt royal family.

I wasn't responding to your point, I was talking to Dandelion.

 

[Jason]

This story has gone behind closed doors - the discussions in Dublin and elsewhere - and we are not being given a blow by blow account. However two quotes strike me as interesting:

The UK is "considering all options" (George Osborne).
Bilateral loans "is part of the options" (Christine Lagarde).

This quotes do seem to suggest that a bilateral loan from the UK to Ireland is being discussed. Presumably this is part of the solution (along with ECB and IMF support) and what is going to be interesting (if it happens) is how big a part of the solution it is. This scenario suggests that Ireland will have a substantial sterling denominated debt, which is going to have future consequences for Ireland.

Whatever is happening, markets are now calmer. However recent Greek data has been much worse than just about anyone expected. Portugal sold bonds this week at just under 7% (more than 4% premium over German euro-denominated bonds). The good news is they sold them - but this is painfully high (for comparison 8% seems to trigger disaster). There is a growing realisation that the very best that can be hoped from Portugal is that it services its debts - paying them down just isn't possible. But this leaves Portugal in permanent breach of eurozone requirements.

Once again the eurozone have shown their ability to buy time. It may be that Ireland can be stabilised, Portugal kept ticking over, and the real show down postponed until next spring. Alternatively it is possible that Portugal will go past the tipping point - and it is very hard to see how Portugal wouldn't take Spain with it.

It's like watching a horror film - but I can't stop watching.

 

[Jason]

Out of the 8 most recent referendums 5 of the results were "No" votes, and support for the EU is at a 9 year low according to the EU's own statistics agency.

Interesting statistic Speculator. 49% of the EU's citizens support EU membership. Hardly ringing support. I wonder what percentage of US citizens support their state being part of the USA? Or what percentage of Scots support Scotland being part of the UK?

In 2005 France and the Netherlands voted against the European Constitution. A simple understanding of democracy would be that this was the end of the matter - the people have spoken. But then we had the device of a Treaty substantially the same, and the gerrymander of the Irish voting twice on the same question, and the UK government's betrayal of their manifesto promise of a referendum. We appear to have a new definition of democracy as the will of the people as the bureaucracy believe them to be. IMO this is dangerous.

 

[D_Tim McGnaw]

But then we had the device of a Treaty substantially the same, and the gerrymander of the Irish voting twice on the same question

You really have swallowed lots of UKIP propaganda haven't you? There was no gerrymandering, democracy prevailed in fact. Please stop talking about Irish politics your ignorance on the subject is embarrassing.

 

[798686]

You really have swallowed lots of UKIP propaganda haven't you? There was no gerrymandering, democracy prevailed in fact. Please stop talking about Irish politics your ignorance on the subject is embarrassing.

I have to disagree on this one dude. The Irish were put under a lot of pressure to vote yes, on much the same document they'd voted no to only months earlier. Lisbon had much the same effect as the Constitution, in a different format.

They were required to do the same over Nice Treaty in 2001. Not really democracy if the first answer is rejected and you're required to vote favourably the next time.

Bending over backwards on Lisbon didnt seem to do them any good either, unfortunately - still being forced into things now, such as accepting a bailout in exchange for economic sovereignty.

 

[D_Tim McGnaw]

I have to disagree on this one dude. The Irish were put under a lot of pressure to vote yes, on much the same document they'd voted no to only months earlier. Lisbon had much the same effect as the Constitution, in a different format.

They were required to do the same over Nice Treaty in 2001. Not really democracy if the first answer is rejected and you're required to vote favourably the next time.

Bending over backwards on Lisbon didnt seem to do them any good either, unfortunately - still being forced into things now, such as accepting a bailout in exchange for economic sovereignty.

Seriously Joll how do you know what the Irish were put under? Did you actually experience either campaign first hand? Did you witness the total bullshit propaganda and lies campaign which was financed by a British self made millionaire Declan Ganley http://en.wikipedia.org/wiki/Declan_Ganley who has a bee in his bonnet about the EU which substantially contributed to the first no vote? And the total lack of conviction those on the Yes camapaign used to try to counter it?

Did you witness the fact that in the second vote the Irish government had been forced to negotiate exemptions from things the Lisbon treaty never even contained just so that they could refute this guy's lies, which by then had become bullshit folk wisdom? And that by the second vote a number of unsavoury facts had come to light about Declan Ganley which showed him to be a decietful weasle who'd made most of his campaign up off the top of his head?

And who the hell says we're being forced to take a bailout? We're actually begging for it, because if we don't get a bailout soon our economy is going to be totally banjaxed for a very long time indeed. You need to stop believing everything you hear or read about Ireland in the British press (which is notoriously ignorant about Irish politics) or from halfwits like Jason.

I really like you Joll so it pisses me off to think that someone who I think of as intelligent and thoughtful has been so woefully misled about this subject.

 

[Speculator]

Seriously Joll how do you know what the Irish were put under? Did you actually experience either campaign first hand? Did you witness the total bullshit propaganda and lies campaign which was financed by a British self made millionaire Declan Ganley Declan Ganley - Wikipedia, the free encyclopedia who has a bee in his bonnet about the EU which substantially contributed to the first no vote? And the total lack of conviction those on the Yes camapaign used to try to counter it?

Did you witness the fact that in the second vote the Irish government had been forced to negotiate exemptions from things the Lisbon treaty never even contained just so that they could refute this guy's lies, which by then had become bullshit folk wisdom? And that by the second vote a number of unsavoury facts had come to light about Declan Ganley which showed him to be a decietful weasle who'd made most of his campaign up off the top of his head?

And who the hell says we're being forced to take a bailout? We're actually begging for it, because if we don't get a bailout soon our economy is going to be totally banjaxed for a very long time indeed. You need to stop believing everything you hear or read about Ireland in the British press (which is notoriously ignorant about Irish politics) or from halfwits like Jason.

I really like you Joll so it pisses me off to think that someone who I think of as intelligent and thoughtful has been so woefully misled about this subject.

Despite the 2nd "Yes" vote I've never met an EU supporter that has anything good to say about the EU. I get the feeling that it's not so much a Yes to europe as it is a No to (what they see as) rampant nationalism and right wing idealism.

Any good that does come from membership has been lost under a sea of corruption, inexplicable new laws, bureaucracy and remoteness.

It's funny how supporters always agree entirely -and without question- anything the EU has to say and immediately defend it's demands for further integration, without addressing any of the potential downsides. It makes me suspect that it's a knee-jerk ideological reaction rather than a well thought out response. And if the left aren't thinking it through but just adhereing blinding to ideology it gives me all the more reason not to trust their views.

 

[D_Tim McGnaw]

Despite the 2nd "Yes" vote I've never met an EU supporter that has anything good to say about the EU. I get the feeling that it's not so much a Yes to europe as it is a No to (what they see as) rampant nationalism and right wing idealism.

Any good that does come from membership has been lost under a sea of corruption, inexplicable new laws, bureaucracy and remoteness.

It's funny how supporters always agree entirely -and without question- anything the EU has to say and immediately defend it's demands for further integration, without addressing any of the potential downsides. It makes me suspect that it's a knee-jerk ideological reaction rather than a well thought out response. And if the left aren't thinking it through but just adhereing blinding to ideology it gives me all the more reason not to trust their views.

Where did you see me agree entirely and without question with anything the EU has to say? Who says some of us who may be pro-EU don't have plenty of concerns about its future direction? The fact that we constantly have to deal with the concerns of those who are anti-EU means our own concerns are almost never aired.

But don't presume that even with concerns that there aren't many EU supporters who still view integration as a good thing, and do not feel their support for integration has been demanded of them at all.

 

[Jason]

The people of Ireland rejected ratification of the Lisbon Treaty 12 June 2008. In the Irish constitution this outcome is binding. However in a subsequent referendum 15 October 2009 the people of Ireland voted to ratify the Lisbon Treaty. The circumstance of a referendum being re-run on an almost identical question just 16 months apart is most unusual. No system ordinarily permits two votes on the same issue. Often language used is that a referendum result settles a question "for a generation". The Irish re-run is an odd situation, very hard to square with concepts of democracy as usually understood.

***********

Something I've not heard discussed is the constitutional implication of an Irish bailout. Ireland has a constitution which requires referenda on anything affecting the Irish constitution. I suppose the points are:
1) Would a "Memorandum" (as Greece has signed) transferring substantial parts of sovereignty to ECB/IMF (which is a constitutional change) require a referendum? IMO this is a bigger issue than any of the 30 or so constitutional issues Ireland has had referenda on.
2) While an immediate bailout may well be necessary as an emergency measure, does it need subsequent ratification through a referendum?
3) Is responsibility for calling a referendum down to the politicians or the courts? My impression is that it can be the latter.
4) Is there a scenario where a bailout is announced, and a group immediately announce that they are starting a legal challenge demanding a referendum? If this happened would it destabilise the bailout?
5) Does the constitution of Ireland make a Greek-style bailout all but impossible because of the referendum requirement on all constitutional issues. Is this why we are now hearing about bilateral loans? The latter may not require a loss of sovereignty.
6) ICeland has recently voted in a referendum not to repay its debts. There is therefore a recent precedent for a country not going along with bailout terms.

 

[D_Tim McGnaw]

The people of Ireland rejected ratification of the Lisbon Treaty 12 June 2008. In the Irish constitution this outcome is binding. However in a subsequent referendum 15 October 2009 the people of Ireland voted to ratify the Lisbon Treaty. The circumstance of a referendum being re-run on an almost identical question just 16 months apart is most unusual. No system ordinarily permits two votes on the same issue. Often language used is that a referendum result settles a question "for a generation". The Irish re-run is an odd situation, very hard to square with concepts of democracy as usually understood.

You clearly haven't understood how the system works here, referenda can be brought on substantially the same issues repeatedly, witness the numerous abortion referenda we've had.

How is holding a referendum ever incompatible with democracy btw? There are forms of pure democracy in which all major issues are decided by referenda.

1) Would a "Memorandum" (as Greece has signed) transferring substantial parts of sovereignty to ECB/IMF (which is a constitutional change) require a referendum? IMO this is a bigger issue than any of the 30 or so constitutional issues Ireland has had referenda on.

This isn't what's being proposed though so all these other questions aren't really apropos of anything.

2) While an immediate bailout may well be necessary as an emergency measure, does it need subsequent ratification through a referendum?
3) Is responsibility for calling a referendum down to the politicians or the courts? My impression is that it can be the latter.
4) Is there a scenario where a bailout is announced, and a group immediately announce that they are starting a legal challenge demanding a referendum? If this happened would it destabilise the bailout?
5) Does the constitution of Ireland make a Greek-style bailout all but impossible because of the referendum requirement on all constitutional issues. Is this why we are now hearing about bilateral loans? The latter may not require a loss of sovereignty.
6) ICeland has recently voted in a referendum not to repay its debts. There is therefore a recent precedent for a country not going along with bailout terms.

The bailout doesn't need a referendum.

The courts can require the government to hold a referendum but it is always the responsibility of the government to call it.

A legal case challenging the bailout (even though there's absolutely no reason for one to be brought) would not destabilise the bailout why would that be the case?

There is no conflict between the bailout and the constitution because there isn't any loss of sovereignty being suggested, Ireland did not do what Greece did by lying to the world about it problems and therefore no one is asking to run our country for us. Ireland is in this situation by having made good faith decisions, many of which were applauded internationally at the time, therefore there will be no need for a referendum.

You need to stop lumping Ireland together with Greece the two are completely different.

There would never be a circumstance under which the Irish would be asked to vote on whether or not to service their national debt.

 

[Speculator]

The people of Ireland rejected ratification of the Lisbon Treaty 12 June 2008. In the Irish constitution this outcome is binding. However in a subsequent referendum 15 October 2009 the people of Ireland voted to ratify the Lisbon Treaty. The circumstance of a referendum being re-run on an almost identical question just 16 months apart is most unusual. No system ordinarily permits two votes on the same issue. Often language used is that a referendum result settles a question "for a generation". The Irish re-run is an odd situation, very hard to square with concepts of democracy as usually understood.

***********

Something I've not heard discussed is the constitutional implication of an Irish bailout. Ireland has a constitution which requires referenda on anything affecting the Irish constitution. I suppose the points are:
1) Would a "Memorandum" (as Greece has signed) transferring substantial parts of sovereignty to ECB/IMF (which is a constitutional change) require a referendum? IMO this is a bigger issue than any of the 30 or so constitutional issues Ireland has had referenda on.
2) While an immediate bailout may well be necessary as an emergency measure, does it need subsequent ratification through a referendum?
3) Is responsibility for calling a referendum down to the politicians or the courts? My impression is that it can be the latter.
4) Is there a scenario where a bailout is announced, and a group immediately announce that they are starting a legal challenge demanding a referendum? If this happened would it destabilise the bailout?
5) Does the constitution of Ireland make a Greek-style bailout all but impossible because of the referendum requirement on all constitutional issues. Is this why we are now hearing about bilateral loans? The latter may not require a loss of sovereignty.
6) ICeland has recently voted in a referendum not to repay its debts. There is therefore a recent precedent for a country not going along with bailout terms.

Good point(s)! Could the EU/IMF get around this though by simply offering a bi-lateral loan without any strings attached? Then we'd see if is really was about a stable Ireland, or whether it's because the EU see it as an opportunity to grab sovereign powers for themselves.

Or, as eurozone members agreed to certain conditions anyway (under Maastricht I believe) that stated something like they wouldn't run a deficit over 3% of GDP and have total state debt over 60% perhaps they could just reaffirm that. No extra laws needed.

It's certainly an interesting predicament though,

 

[Jason]

My points above have lots of question marks - I don't know and can't find the information.

The bailouts we are familiar with are those by the IMF. While each is different, the bailouts do require that nation states implement an ongoing programme set out by the IMF, including tax, spend, social policy, exchange rates and much else - and the policy on these is subject to change for the duration of the IMF's involvement. While there is usually much co-operation between the nation state and the IMF, the IMF is the one in control. This does require a transfer of parts of sovereignty, and therefore cuts across national constitutions.

The Greek bailout is the only one under the new ECB/IMF hybrid. Here the transfer of sovereignty has in effect been to the ECB (not the IMF). It is set out in the "Memorandum" and is substantial.

If Ireland accepts a bailout it has accepted that part of its former sovereign rights are now exercised by someone else. It seems to me that this has impact on the constitution and requires a referendum. I'm sure someone who is an Irish citizen will think the same. It probably wouldn't take much effort to get this issue to a court. As for the wonders of Irish Constitutional Law and the decision that would be made, that's for the experts.

(The issue of abortion has resulted in five referenda between 1983 and 2002, but they are on different questions - 3 on issues thrown up by the courts, 1 an effort to resolve previous weaknesses. While it might well feel to the people of Ireland that they keep voting on the same topic this isn't actually so - the topics are different).

 

[Jason]

Could the EU/IMF get around this though by simply offering a bi-lateral loan without any strings attached? Then we'd see if is really was about a stable Ireland, or whether it's because the EU see it as an opportunity to grab sovereign powers for themselves.

Lisbon replaces all previous treaties - so any EU action is under the framework of Lisbon. I don't see the ECB or IMF could give unconditional loans.

The IMF works under agreements reached with the nations of the world, and can't just change these to suit one nation. The ECB is prohibited by the Lisbon Treaty from giving subsidies (except in cases of national disaster) so the ECB has to be sure that a loan it makes will be repaid. Now I suppose it would be reasonable to say that they have made loans to Greece which the recent data from Greece shows will not be repaid, so maybe the ECB operates with wriggle room. However I just don't see how the ECB could convince the eurozone nations that they should simply give Ireland the money with no control on how it is spent.

I don't think there is any doubt that an ECB/IMF bailout means these organisations camped in Dublin and setting the budget. I hear the view expressed that Ireland's 12.5% Corporation Tax is "non-negotiable". Yet if the ECB/IMF are in control it is not a matter for negotiation - the ECB/IMF can do what they want.

An interesting idea is that the ECB bailout the banks directly, not the nation. This might satisfy some issues (including Irish pride) but it is also messy. Would it satisfy the markets? Would Ireland still need some funds? It also leads to a situation where banks are owned not by a nation state but by the ECB. When the UK banks got in trouble they were bailed out by the UK state through bond issue and not (directly) by the Bank of England. I don't know whether anyone has envisaged the ECB directly bailing out banks.

I wonder if the delay in the announcement of just what Ireland is doing is because of the time it is taking to put together something complex - perhaps even something that the people will vote on. I can't see that the uncertainty can go into next week, so I think we must have a decision by Sun eve.

 

[B_crackoff]

Maybe they'll be another Irish diaspora.

At least they'll have some cracking bands, like this one I saw last night!

YouTube - Maybe It's Because I'm An Irish Londoner live at Reading Madeijski Stadium St Patrick's Party 2009

 

[MarkLondon]

Maybe they'll be another Irish diaspora.

The BBC mentioned today that Irish emmigration rates are rising.

 

[798686]

Seriously Joll how do you know what the Irish were put under? Did you actually experience either campaign first hand? Did you witness the total bullshit propaganda and lies campaign which was financed by a British self made millionaire Declan Ganley Declan Ganley - Wikipedia, the free encyclopedia who has a bee in his bonnet about the EU which substantially contributed to the first no vote? And the total lack of conviction those on the Yes campaign used to try to counter it?
Did you witness the fact that in the second vote the Irish government had been forced to negotiate exemptions from things the Lisbon treaty never even contained just so that they could refute this guy's lies, which by then had become bullshit folk wisdom?

And who the hell says we're being forced to take a bailout? We're actually begging for it, because if we don't get a bailout soon our economy is going to be totally banjaxed for a very long time indeed.

I was aware of Declan Ganley's campaign, but I'm not sure it's valid to re-run the vote because one side's campaign was more effective than the other (incidentally, the Yes campaigns for Britain joining, and voting to remain in the EU were both heavily skewed and disingenuous, yet those results stayed). It's up to the Irish whether they believe him or not, and judging by the lack of conviction you mention on behalf of the Yes campaign, it seems that the pro-Lisbon side weren't entirely convinced of its merits either. Forcing the public to re-vote (twice, including Nice) when they return the 'wrong' answer, isn't in the least bit democratic, imo. :/

The Irish may have been forced to negotiate opt outs 'to counter Ganley's arguments', but they may also have been equally important in assuaging genuine fears that the Irish themselves held about voting yes to the document - and as sops to persuade them to vote yes to something they'd already rejected.

Obviously, being on the ground there yourself, you have much more detailed knowledge of the campaign than I do - however, the main thrust of it was reported in the European press as well as the UK one (on impartial Brussels-based sites such as Euobserver.com, for instance). I can only judge on the information I have - and I can't really take your word for things I have no evidence for (as to whether Ganley's campaign was bogus, whether the opt-outs were due to his campaign or genuine Irish fears, etc...).

Judging from comments and behaviour coming from the Irish government, it seemed they were pressed into accepting the bailout (earlier than required, if nothing else), by various parties including Merkel, the Portugese/Spanish governments, ECB/IMF etc - more as a means of stopping panic spreading to other countries than due to any immediate Irish need. Yes, the Irish do need bailing out, but from the Government's stance, it seemed they would've preferred to wait until they themselves felt it was the right time.

And I like you too, btw - but that doesn't alter my opinion on this subject (so far, anyway lol). :tongue:

 

[Jason]

Yesterday's editorial in The Irish Times is worth reading. Under the heading "Was it for this?" the first paragraph reads:

"IT MAY seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side. There is the shame of it all. Having obtained our political independence from Britain to be the masters of our own affairs, we have now surrendered our sovereignty to the European Commission, the European Central Bank, and the International Monetary Fund. Their representatives ride into Merrion Street today."

Right now we are getting just whispers about whispers from the bailout discussion. Perhaps most interesting is that it wasn't all decided at the start of the week - something is being discussed. My reading of the whispers is as follows:

1) The ECB/IMF package has been described by the Irish team in Brussels as the "Oliver Cromwell Solution". The ECB/IMF is demanding an end to the 12.5% corporation tax rate (which is key to Iteland's prosperity), austerity on a scale which will wreck Ireland and wreck lives, and an end to aspects of Ireland's sovereignty. It may be that a deal will be phrased in such a way that Ireland can claim some sort of negotiating success (eg the bailout is for the banks, not the country, or the 12.5% CT rate will stay). But such a deal will just be the first round - Ireland faces funding problems throughout 2011. In a few months the ECB will be taking yet more control, and once the ECB is in the driving seat Ireland will not have the power to stop changes in Corporation Tax or the ECB-led austerity. The statement that CT change is "non-negotiable" becomes meaningless. IMO this is exactly what the Irish team has called it, the "Oliver Cromwell solution". And IMO it may not in itself be the sort of loss of sovereignty suffered by Greece but it will be the first step in an irreversible process leading to such a loss. Ireland is being offered a generation of poverty, locked into a system which will be a downward economic spiral, and loss of sovereignty as it becomes (in stages) the second EU protectorate.

2) There are whispers of whispers that the UK has actually offered Ireland an alternative. This is that it redenominates its debts in sterling (with UK guarantees) and leaves the euro. In effect this would re-establish a sterling area. In such circumstances a bailout would come from the IMF (not ECB). The IMF favours 12.5% CT, favours the lower interest rate of sterling, favours the close link in the trade cycle between the UK and Ireland. This option maintains Irish sovereignty and gives Ireland a way back to prosperity in perhaps five years and without the most draconian austerity policies demanded by the ECB. It isn't in itself a bad deal for Ireland - the problem for Ireland is that it is the UK that is offering it.

I assume Ireland will chose (1). But I think true bravery from Irish politicians would be to recognise that (2) is by far the best of two bad options.

Whatever option Ireland decides on this is a key moment in Irish history.