# What if there was no Euro



## Purple (15 Nov 2010)

If there was no Euro what would the political climate within the EU be like now, i.e. what political problems would we be facing?

Would the Germans still be bailing us out?

Would the IMF already be here?


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## Towger (15 Nov 2010)

Nope.

There would have been no access to cheap money/control of interest rates, plus we could devalue if if come to it.


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## Purple (15 Nov 2010)

I thought cheap credit was a world-wide problem. Why would we not have had access to it?


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## Howitzer (15 Nov 2010)

Towger said:


> Nope.
> 
> There would have been no access to cheap money/control of interest rates, plus we could devalue if if come to it.


I'm trying to nail this truism. Cheap credit wasn't a function of being in the Eurozone - it was Govt policy.

The Central Bank may not have dictated base rates but it was completely within the gift of the Govt of the day to ensure mortgage rates and loan availability were set at a more resticted level.

There is no reason atall why they couldn't have imposed a levy on all mortgages drawn down and modified that levy as needed, so when rates were at 3% the cheapest mortgage could not have been less than 4.5%.

The EXACT OPPOSITE was what happened. Mortgage Interest Relief was increased, doubled then doubled again, to the point where the mortgage @3% only cost the borrower approxiamtely 2%.

There could have been restictions imposed on the market. No 100% loans. A maximum term of 30 years. No Interest Only loans.

This was not caused by someone else, it was home brewed.


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## Chris (16 Nov 2010)

Towger said:


> Nope.
> 
> There would have been no access to cheap money/control of interest rates, plus we could devalue if if come to it.


Of course cheap credit would have been available. Do you think that any Irish politician or central banker would have advocated anything other than increasing the money supply and reducing itnerest rates in line with the UK, US and other EU members?



Howitzer said:


> I'm trying to nail this truism. Cheap credit wasn't a function of being in the Eurozone - it was Govt policy.
> 
> The Central Bank may not have dictated base rates but it was completely within the gift of the Govt of the day to ensure mortgage rates and loan availability were set at a more resticted level.
> 
> ...



Interesting points, but I think it was the actions of commision rather than omission that were at the center of government's fault in this mess. It was all the ever increasing tax reliefs, reduced stam duties that really fueled the property market. Add to that all the extra money that flooded the market at rediculously low interest rates. As already stated, while Ireland could have increased interest rates and kept money supply level if it had not joined the euro, no such thing would have been done.


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## joe sod (24 Nov 2010)

"I'm trying to nail this truism. Cheap credit wasn't a function of being in the Eurozone - it was Govt policy."


but only made possible by euro membership. There is no way ireland would have been lent so much money if outside the euro. If you think we would have been lent the money anyway why is all the money we owe owed to european banks and pension funds and virtually none outside of this. 
Even if we had of been lent the money anyway we could have simply defaulted like iceland and had the sharp adjustment rather than the long drawn out stagnation we now have


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