Who will fund deficit if we leave Euro

First of all let it be repeated there is no way whatsoever of anybody leaving the euro. That is despite the fact that most people now agree it was a dreadful mistake. As the IT put it, abandoning the euro is like unscrambling an egg, not possible.

Does not stop us indulging the academic debate about the consequences of introducing Punts Nua. I'm with horusd on the theoretical implications for US MNCs. The domestic currency merely affects the value added in Ireland. This would presumably become cheaper in the short term as the Punt Nua devalued thus actually making it more advantageous for US MNCs to transfer price through Ireland.

But I am with Sunny that the consequences of leaving the euro, including capital controls and leaving the EU itself, would be so horrendous as to scare all the MNCs away.
 
So do you think the rumours that the central bank are printing Irish punts are just rumours? Or do you think they are preparing a Plan B?
 
shnaek said:
So do you think the rumours that the central bank are printing Irish punts are just rumours? Or do you think they are preparing a Plan B?
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This mightn't be too outlandish an idea after all. The existential threat to the Euro grows by the day.An ex-member of the Bank of England, (Professor ?) stated on Morning Ireland that it was heading towards 50/50 as to whether the Euro can survive. Bond rates for Italy & Spain are heading for the magic 7% which would effectively bar them from the bond market. It doesn't look like the big Pow-Wow on Thursday will come up with a plan that can draw a line under the Euroland's problems. "May you live in interesting times" says an old Chinese proverb, well, we're certainly doing that.
 
shnaek said:
So do you think the rumours that the central bank are printing Irish punts are just rumours? Or do you think they are preparing a Plan B?
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Shane Ross irresponsibly aired this rumour in the Sindo. Is this the same rumour that says the Greeks are secretly printing Drachma, the Portuguese Escudos, the Spanish Pesetas, Francs, Lire, D-marks, F-marks etc. etc.?. Do you really think this printing of legacy currencies can be kept a secret across 17 countries until Hey Presto! (maybe this Thursday) we wake up to find all our ATMs from Helsinki to Palermo, from Tralee to Bratislava will be filled with new notes. Or is this just a secret solo run by Dame Street? Get Real:mad:

The Irish Times stated it so graphically, returning to legacy currencies is like unscrambling an egg. The Brits really wet themselves at the possibility of such a meltdown and chaos in Euroland and that includes ex professors of the Bank of England, the FT, the Murdoch Press, the far right Euroskeptics, the far left Euroskeptics. And still the Euro maintains the 30% appreciation that it gained over sterling's disastrous performance in the crisis.:p
 
Duke of Marmalade said:
Do you really think this printing of legacy currencies can be kept a secret across 17 countries until Hey Presto! (maybe this Thursday) we wake up to find all our ATMs from Helsinki to Palermo, from Tralee to Bratislava will be filled with new notes.
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Did we not wake up one morning to find our ATM's filled with new notes not all that long ago? The Euro might go on, but the chances of it going on with us not in it, I believe, have moved beyond 50/50. But that is just my opinion.
 
shnaek said:
Did we not wake up one morning to find our ATM's filled with new notes not all that long ago?
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No, it took three years, it didn't happen one morning. Really, the idea that such a grand scheme could be conducted in secret by a select elite is the depths of nonsensical conspiracy theory.:mad:

You seem to subscribe to the "Dame Street Solo Run" school of this crackpot theory. So Ireland is going to secretly leave the Euro but Greece and Portugal are going to stay. If you are prepared to back that at odds on, let me advise you to give up gambling.
 
Now, what else can I say to get the third 'mad' face from Duke of Marmalade and unlock the mystic sword of AAM... :)
It would seem unlikely that our bureaucrats, talented as they are, could pull something like this off without any leaks. But I would be surprised if they haven't a plan B in mind - just in case our European partners can't get a plan together. Leaving the Euro would be traumatic for the Irish economy - there's no doubt about that. But I'd be surprised if our government aren't researching the outcome of such a move, and maybe even planning for what might happen if we do have to leave.
 
Forget about the economic implications if we leave the euro. Is it in theory possible?
Can a government say for example, on 1st Jan 2012 we will be reverting back to our old currency at the rate of 1 euro = .79 punt?
 
I'd take anything said by a lot of British newspapers/magazines on the € with a huge grain of salt. Their "john Bull" anti anything to do with Europe bias is always there in the background. It also acts as a handy smoke screen for some of their own internal UK issues.

Were we to leave the € there would be a signifcant cost to retailers and banks in terms of changing systems/tills etc. It's not something that can be done overnight and shouldn't be underestimated. As someone said in a previous post, the change to the € took 3 years.
 
Shawady said:
Forget about the economic implications if we leave the euro. Is it in theory possible?
Can a government say for example, on 1st Jan 2012 we will be reverting back to our old currency at the rate of 1 euro = .79 punt?
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There have been currency conversions flagged well in advance before. For example, the change to new francs but most graphically the change for 11 countries to euro which was given a 3 year flag. The key feature was that no one feared for the future of the new currency and therefore there was no flight of capital. Even Germans, who might probably have preferred to keep their D-marks, had no alternative, they were not going to jump into dollars/sterling.

Now if we were given 6 month advance notice of a switch back to punts, the queus to withdraw euros from the banks would stretch the length of the M50.:(
 
I know some people call for leaving the IMF/EURO deal and balance the budget on day one. Karl Whelan posted this on Irisheconomy.ie It deals with the impacts in the US if the debt ceiling isn't raised. Would be interesting to see the same document done for the Irish economy if we told our IMF/EU/ECB masters where to go.

[broken link removed]
 
Time to give that flagging rumour a bit of a boost. I heard that the theme on the notes will be the popes and that Benny himself has already posed for the 50 Punt Nua.:p
 
Mpsox said:
I'd take anything said by a lot of British newspapers/magazines on the € with a huge grain of salt. Their "john Bull" anti anything to do with Europe bias is always there in the background. It also acts as a handy smoke screen for some of their own internal UK issues.
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Thank god we stayed out of the Euro in the UK. Brown's one and only decent policy.

Control of interest rates, control of monetary policy. The UK has done much better than the euro zone as a result during the crisis.

The deflationary depression has been largely avoided, albeit at an inflationary errosion in people's living standards. The UK is now highly competitive in terms of manufacturing and service industries as a result of a weakened currency.

The PIIGS need a devalued currency fast as goods and services are way too expensive for the globalised market we live in. Yet what does the ECB do? raises interest rates. Madness.

The problem the europhiles have is that they want the Euro to succeed without putting in place the federal policies and systems to allow it to do so.

The fundamental flaw in the euro model is that you have a single currency but multiple economic policies. How can imbalance not occur under such a model?

Ireland should have had 10-15% interest rates to cool the boom in the early 2000s, yet the central control in Germany did otherwise. So the smaller economies will continually be at the mercy of the ECB that sets rates that are applicable to Germany and France. So its mega boom followed by mega bust for the smaller economies.

For the euro to work all the countries involved need to give up all monetary and economic powers to a central point. Taxes need to be equalised, regulations likewise. Budgets set and issued by the central authority. Taxes collected to a central point.

A federal system is the only system that will allow the euro to succeed. This half hearted attempt at currency union is fundamentally flawed and there is no way of getting around that fact.

Do the public of the member states want a federal state in order to keep their currency union?

It is not eurosceptic to argue that the fundamentals supporting the euro are its problem. Until these are resolved the currency simply cannot work.
 
Duke of Marmalade said:
Ireland's problems are political. The apparent economic imbalances can be solved at a stroke by cutting PS pay and Social Welfare to the levels of our nearest neighbour. Politically, we simply can't put into play these very obvious economic steps that would put us back on track.
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You mean put they would put everyone except public servants or social welfare recipients 'on track'. It is meaningless to compare public sector pay and social welfare rates against the UK without looking at the big picture. Public servants and social welfare recipients in the UK have the NHS to suppoort them, with free primary health care, free prescriptions, no need to buy private health insurance unless you want a fancy room. Public servants and social welfare recipients in the UK don't buy school books, and in some areas still have free school meals. Public servants and social welfare recipients in the UK have lower car insurance and good public transport networks available.

If you're going to do a comparison, do a proper comparison, not a selective one.
 
Complainer said:
You mean put they would put everyone except public servants or social welfare recipients 'on track'. It is meaningless to compare public sector pay and social welfare rates against the UK without looking at the big picture. Public servants and social welfare recipients in the UK have the NHS to suppoort them, with free primary health care, free prescriptions, no need to buy private health insurance unless you want a fancy room. Public servants and social welfare recipients in the UK don't buy school books, and in some areas still have free school meals. Public servants and social welfare recipients in the UK have lower car insurance and good public transport networks available.

If you're going to do a comparison, do a proper comparison, not a selective one.
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Fair points, but then again the UK is not a great benchmark, it is running its own massive deficits.:(
 
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