Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our economy

[csirl]

Re: todays indo - Ireland should drop out of the Euro

McWilliams seems to be ignoring the benefits of stability. Financial markets hate uncertainty and instability - they price them way out of proportion to the actual risk. Having our own fluctuating currency, under the control of meddling politicians, just adds another layer of uncertainty and instability. In these unstable times, the rock that is the Euro is about the only thing that can be counted on.

Also, a comparison between Euro and non-Euro countries shows that there are greater risks with having your own currency. You can talk all the theory you like, but no Euro zone country has suffered an Iceland style catastrophy. So, what do you chose - the path that has had no dramatic crash or the path where some countries have had a dramatic crash? No brainer.

 

[Duke of Marmalade]

Re: todays indo - Ireland should drop out of the Euro

What a dreadful piece by D McW. Let us remember this and never take him seriously again. Of course we are in the wrong currency, should have stayed with sterling, but as Sunny's useful link explains there's not a damn thing we can do about it. It is simply procedurally impossible to unilaterally get out without completely destroying our whole financial system and economy.

 

[jquinn]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

Stayed with Sterling? and give up control of our economy to a body we have absolutely no control over or input to?

There would only be one benefit from dropping out of the Euro - its a way of getting a wage-cut onto civil servants - these cuts have already happened to a big section of the private sector.

So - we default on our international loans, we pay 18+% interest on our mortgages and we definitely lose any goodwill we have in Europe - so that the government doesn't have to grow a pair and actually cut wages in government jobs - including ESB and all other gov backed bodies in this - including the banks.

 

[jquinn]

Re: todays indo - Ireland should drop out of the Euro

Askar - this wasn't a problem faced by Sweden or Finland - as they were just devaluing - so all the loans, most government debt, etc were devalued too.
In our case, our mortgages, govt debt, etc would still be in Euros - so it would be a disaster.

 

[Duke of Marmalade]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

Stayed with Sterling? and give up control of our economy to a body we have absolutely no control over or input to?

jquinn, think Scotland, Wales, Luxembourg (before Euro), Kosovo (adopted the euro but not a eurozone member) etc. etc. also many US dollar reserve countries.

The fact is small countries find it hard to sustain an independent credible currency - they must use the international currency most economically and culturally aligned to their own circumstances.

The founding fathers of this State, despite their fierce hatred and rejection of everything British, knew that we had no choice but to use sterling. De Valera understood that, and he wanted Germany to win the war, but certainly wasn't going to adopt the D-mark. Cosgrove understood it and he pulled us out of the Commonwealth, but no question of out of sterling.

Why oh why did we think back in 1979 that the grand EMU project would free us from this reality? Okay, we were assured that we would never be allowed drift more than 2.5% from sterling under EMU, the Bundesbank underwrote this guarantee - the rest is history. As I have mentioned before, Luxembourg, less blinded by neighbourly xenophobia, judged more wisely. They did not enter EMU independently but stayed firmly aligned 1 for 1 with the Belgian franc. We should have done the same with sterling.

 

[Coney]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

On reflection perhaps we would be better off all around if we were still governed by Westminister.

Not saying that UK governance is perfect, but the pros would outweigh the cons by a mile.

 

[allthedoyles]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

Please someone let me know the period that sterling was the currency in the ROI.

 

[Perplexed]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

From 1928 (Irish Free State ) to 1979 when we joined the EMS ( European Monetary System ) in preparation for a single European currency ( Euro

 

[Sunny]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

Please someone let me know the period that sterling was the currency in the ROI.

The Irish Pound was tied to Sterling until 1979. Its only then when we joined the ERM that the Irish 'Punt' came into being and the exchange rate was allowed float within a band. Before 1979, even our coins were the same denomination, weight and size as the UK.

 

[Duke of Marmalade]

Re: Indo Wednesday May 06 2009 D McWilliams: Ditching the euro could boost our econom

I think doyles may have a slight technical point. The Irish Pound was "tied" to sterling but wasn't actually sterling. I would love to know the exact set up but can't find anything on Google.

I think technically there could have been a devaluation but the relationship was so firm and presumably backed by sterling reserves that, so far as I am aware, there was never any doubts about the parity being maintained, even during the dark days of the economic war with Britain in the '30s. As I said the Luxembourg Franc had a very similar relationship with the Belgian Franc. Luxembopurg chose not to enter the EMS independently of Belgium.

With hindsight we should have done the same in respect of sterling. As it happened by the time the euro came along the damge was done, we were trading at about 87p and it was hardly practical to spurn teh euru and rejoin with sterling.