Tory attacks on the Euro in the wake of the Irish bail-out display a scary concoction of goldfish memory and totemic dogma.The recent bail-out for the Irish Republic, in which the EU and the IMF will lend 90bn euros (£77bn) and the UK about £7bn, has triggered a textbook case of rampant ideological poison.
Instead of focusing on the blatant Tory faux-pas of hailing last year's savage cuts in the Republic (look at this gem here, absolutely priceless), the rampant ideologues are now clinging on to a convenient red herring: the Euro -- that is to say, one of their top ideological pet hates.
Enter uber-Tories like eurosceptic fundamentalist Dan Hannan MEP, whose blog on the Telegraph website oozes more totemic certainty than a North Korean ideological textbook. Apparently, Ireland is in a rut simply because of the Euro (here) and supporters of the Euro should apologise (here).
Now, this blog here is not particularly keen on the Euro either.
But it's ridiculous, nothing less, that some people can cling on to such levels of ideological blindness without even remotely pretending to be looking at the facts.
Suddenly it's as though the crash that sent shockwaves across the planet had never started in the US (currency: the Dollar) and never required a bailout that cost well into the trillions.
It's as if the UK (currency: Pound Sterling) did not need a mammoth £850bn to hold off the most devastating domino effect in history in the wake of a fat bubble that lasted until 2008.
It's as if Dubai (currency: the UAE dirham) did not see its property bubble burst last year, and Iceland (currency: Icelandic Krona) did not experience patterns familiar to the Irish -- unprecendented expansion followed by near bankruptcy.
Robert Peston made the point on the BBC website that what happened across the Irish sea wasn't miles away from Britain's problem. Literally.
It's a fact that some of the biggest casualties of the crisis were not part of the Eurozone, while others where (Greece, Ireland). Similarly, some of the countries that best weathered the storm were in the Eurozone (look at Germany and France) and some weren't (Denmark, Sweden).
No pattern was related to either currency or scale of the economy. Like Philippe Legraine wrote in the Financial Times, the only thing all the major victims have in common is a background of predatory lending which fuelled unsustainable levels of financial and property speculation.
10 comments:
It's clear from this post that you havn't the faintest clue what you're talking about. Sorry.
The point is that Britain's and Ireland's economies are VERY similar. Both had asset bubbles caused by ultra loose money. It's just because Ireland was not in control of its currency it got Ultra, ultra loose money and a consequent Mega, mega boom. Britain merely had a mega boom.
Come the crunch, Ireland needed looser money, but couldn't have it BECAUSE GERMANY DIDN'T NEED IT. Britain could. It's currency could also fall to reflect the crunch, Ireland's couln't.
It's not that the Euro caused the crisis per se, it's a decade of wildly inappropriate monetary policy which caused Greece, Ireland and will cause Portugal and probably Spain with an outside chance of Italy and France to collapse because they couldn't dampen booms or react to busts causing huge swings in thier economies.
As for Ireland's deficit cutting. Too little, too late. Their tax revenues fell by 30%. See my blog here. The idea that they would have been OK, or less fucked if they had continued "stimulating" their economy is utterly risible, and represents nothing more than self-serving wishful thinking by punk keynsians who think "stimulus" means "a fucking huge deficit".
The Euro was a silly idea, EVERYTHING the euroskeptics said would happen to the UK if we joined has just happened to Ireland. Your post, however; It's just Yah-boo Tory bashing.
I thought you were better than that.
"It's clear from this post that you havn't the faintest clue what you're talking about. Sorry."
You can't just say you disagree, can you?
People who have different ideas from yours "dont have a clue" or are "self-serving wishful thinking by punk keynsians who think 'stimulus' means 'a fucking huge deficit'.
I'm afraid I have to quote something you wrote yourself in reply: "I thought you were better than that."
"It's not that the Euro caused the crisis per se"
Read what your mate Dan Hannan MEP wrote and see if you can put together the same sentence again.
What Chris Dillow wrote on the matter is spot-on:
"To believe that Ireland could have avoided a bubble by staying out of the euro requires one to believe that centralized policy can reliably out-perform markets and prevent bubbles. Which is an odd thing for a right-winger to believe."
Another thought. Would Ireland have a ready-made bailout from Germany and France and the rest were it not for the Euro?
I read chris dillow's post. He takes the view that, essentially it's impossible to time the market. He's right(ish) but he doesn't mention the fact that Britain's interest rates were much higher than Eurozone during the boom and lower during the crunch as you'd expect. If we'd been in the Euro, our boom would have been as big as irelands, and we'd now be knocking on the IMF's door, espcially if Idiot brown had been running his deficit. If taken next to the ECB, the BoE MPC was more right than wrong.
So Chris is right. No-one is ever going to set the right interest rate. However we did get a BETTER interest rate.
Right. Got that? The whole point of the Euro is that everyone was getting the D-Mark. Everyone would suddently become German overnight.
It was of course nonsense. THe Irish continued to buy houses, the Germans rent them, and southern europe regards tax as optional.
So everyone except Greater Germany (northern Europe) gets the wrong interest rate. Everyone except greater Germany gets fucked when the wheel stops. It's not a currency union in principle that's wrong, it's this currency union in practice.
Ireland would not be needing a bail-out because the boom, and bust were made so much worse by the Euro.
If they did need a bail-out, Britain would have stood to. Just like the Darien scheme...
Absolute crap.
By default you're playing down the fault of bankers who allowed lending to balloon to four times Irish GDP, largely on the expectation of never-ending property price increases (something that happened totally regardless of the Euro, Britain being an example).
Also, nothing to do of course with Ireland's desire to play the "big investment centre" along with Dubai and Reykjavik...and look what happened to them too as well. Floating rates did NOT save Iceland.
The Euro's main fault is that of allowing weaker countries in pretty much straightaway.
As for the Darien scheme, that's a touch too Jurassic to be used as a parallel.
Yes, yes, bankers are evil. I get it. But the REASON they were allowed (encouraged?) to overlevarage the entire economy is that it suited everyone's short-term interests. Bankers, Borrowers, home-owners, speculators, developers and above all the Government who gave the whole wheel a shove now and again.
A higher interest rate would have slowed the money carousel. And the fact you say "absolute crap" rather supports my first assertion.
It's not "weaker currencies" that were the problem. It's unaligned currencies.
Your last comment sounds more reasonable. Definitely governments allowed that to happen because it suited their short-termism (again, Britain under New Labour with those two at thehelm being an example).
"Absolute crap" was uncalled for. My wrong.
By the way, the temptation to tease you is too much you do know it's at least partly thanks to Gordon Brown standing up to Blair that Britain didn't join the Euro, don't you?
Did you read my post? It's entitled "Gordon Brown: The UK's Saviour" It was the right call, for, probably, the wrong reasons.
The right wing ideologue here forgets that his pals in the Tory party cheered on the bubble like nothing else. To them, it was the triumph of the free market before our own eyes:
George Osborne, The Times, February 2006:
"Look and learn from across the Irish Sea. The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed. In Ireland they understand this. They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn".
I suppose the Euro wasn't too much trouble at the time, was it?
Hey Jackart,
did you watch BBC Question Time on Thursday night by any chance?
This post which you dismissed as "It's clear from this post that you havn't the faintest clue what you're talking about" is saying exactly what your party colleague and former Chancellor of the Exchequer Kenneth Clarke is saying.
Will you put your hands up, admit you were talking out of the wrong orifice and scoff some Humble Pie?
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