Was joining the euro our fatal mistake?

Notwithstanding the failure of regulation and the blanket bank guarantee, was joining the euro our fatal mistake? Despite the fact that our two biggest trading partners were the UK and the US we surrendered our currency and control of interest rates knowing that the ECB would set monetary policy to suit Germany and France.

Surely if we had stayed out of the euro the credit boom and the housing bubble would have been smaller and even if/when FF managed to scuttle the economy the IMF, when not saddled with ECB concerns about the euro, wouldn't have forced us to socialise private bank debt nor guarantee private bond holders and wouldn't have charged us a crippling interest rate.

I know the above is simplistic but is it wrong?

The Euro, as conceived, offered a lot of advantages for Ireland.
The Euro, as it has been managed (for the benefit of France & Germany) has been, so far, a failure.

Ireland could have stayed in the Euro and avoided the credit boom through better regulation and supervision. The fact that the Government spent like Lottery winners can't be laid entirely at the feet of the Euro.

TarfHead said:

The Euro, as conceived, offered a lot of advantages for Ireland.
The Euro, as it has been managed (for the benefit of France & Germany) has been, so far, a failure.

Ireland could have stayed in the Euro and avoided the credit boom through better regulation and supervision. The fact that the Government spent like Lottery winners can't be laid entirely at the feet of the Euro.

Click to expand...

True but the human condition is to spend what you have.
Back in 2003/2004 even the ECB said that Euro area interest rates were way too low for Ireland (I thing they said 3-4%).

I was a big fan of the Euro but in hindsight it was a political project not an economic one. As both a political and economic project is was half-baked as it didn’t have any systems in place to deal with a major downturn.

michaelm said:

Notwithstanding the failure of regulation and the blanket bank guarantee, was joining the euro our fatal mistake? Despite the fact that our two biggest trading partners were the UK and the US we surrendered our currency and control of interest rates knowing that the ECB would set monetary policy to suit Germany and France.

Surely if we had stayed out of the euro the credit boom and the housing bubble would have been smaller and even if/when FF managed to scuttle the economy the IMF, when not saddled with ECB concerns about the euro, wouldn't have forced us to socialise private bank debt nor guarantee private bond holders and wouldn't have charged us a crippling interest rate.

I know the above is simplistic but is it wrong?

Click to expand...

When I was studying economics in the early 90s this was precisely the debate that was going on. No doubt the same debate was being had in the department of finance. They must have weighed up the arguments and decided that it was in Irelands interest to join. The trouble is, once that decision was made it became our responsibility to manage our economy with the new conditions in mind. We'd no longer have control over monetary policy. But our civil masters and politicians failed in this regard.

My point is, this debate was had almost twenty years ago, and a decision was made. In hindsight we may well have been better off staying out. But once the decision was made it then certain responsibilities became ours to discharge - and we made a bags of it.

Fully agree shnaek