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Irish European stability treaty referendum vote in the balance

by Frank Schnittger Sat Apr 21st, 2012 at 06:13:31 AM EST

Undecided voters hold key to outcome of referendum

The outcome of the European stability treaty referendum on May 31st is wide open, according to the latest Irish Times/Ipsos MRBI poll which shows the result is in the hands of undecided voters.

Asked whether they were likely to vote Yes or No to the treaty, 30 per cent of voters said Yes, 23 per cent said No, 39 per cent were undecided and 8 per cent said they would not vote. When undecided voters, and those who won't vote, are excluded the Yes side is ahead by 58 per cent to 42 per cent but the outcome hinges on the attitude of the currently undecided voters.

A real worry for the Government is that at a similar stage in the first Lisbon Treaty referendum campaign in May 2008, the Yes side had a much bigger lead but the measure was rejected by the electorate in June of that year by 53 per cent to 47 per cent.

However, the Yes side can take heart from the fact that support for a No vote has halved since the last Irish Times poll in October, which asked people how they were likely to vote if EU leaders agreed on a treaty to deal with the fiscal crisis.

At that stage 28 per cent said they would vote Yes, 47 per cent No and 25 per cent were undecided.

The details of today's poll show that the Yes campaign has strong backing from middle-class voters and farmers but working-class voters are opposed to it by a large margin.

There is also a significant gender difference, with men more supportive of the treaty, while almost half of women voters have yet to make up their minds.

The Irish referendum on the European Stability Mechanism (ESM) treaty is scheduled to take place on 31st. May, and there has been some criticism that this allows inadequate time for a public information campaign and debate. The domestic political landscape has been dominated by controversial new household taxes, water charges and septic tank charges that the Government, allegedly under Troika pressure, is trying to introduce in order to broaden the tax base. The run up to the campaign has also been complicated by efforts to restructure the Anglo-Irish Bank Promissory notes which have so far been stonewalled by the ECB.

front-paged by afew


The Promissory note issue is particularly controversial in Ireland because they amount to a lot of money (€31 Billion), repayable at high interest rates, and were not part of the controversial Government Bank guarantee scheme. The bank itself is defunct, was never more than a developer/speculators investment bank, and many of its losses were incurred in respect of business deals outside of Ireland. Why should public services be cut to refund speculative private investor losses on business to which the state was not a party and from which it did not stand to benefit? The ECB has been adamant that the speculator be refunded in full even though the original investors have long since been replaced by hedge fund investors who have bought the bonds at a discount because of the risk of default.

The ECB is concerned that a failure to honour the notes will have a contagion effect on the EU banking industry generally and is in line of their policy of not allowing banks to fail no matter how irresponsibly the bank management may have behaved (in stark contrast to the US where banks are allowed to go into receivership all the time). The merits of this policy can be debated, but having already bailed out the mainstream Irish banks to the tune of c. €70 Billion under the Irish Government bank guarantee, many feel this is a problem for the ECB rather than the Irish taxpayer to address. (By way of comparison, Ireland's GDP was just €155 Billion in 2011).

However all these issues are not directly connected to the Treaty itself and some Government ministers have been at pains not to make a direct connection between the two. Steven Keen is the latest in a long line of distinguished foreign economists to have advised the Irish electorate that they are taking on an unsustainable burden of debt and that the Stability Pact (which he has dubbed a Suicide Pact) makes no economic sense whatsoever.

The main difference between this and previous referenda on EU matters is that the Irish electorate do not have a veto on this occasion: The Treaty will pass into law for a majority of EU members regardless of whether Ireland votes yes or no and there is a reluctance to move outside what is seen as the EU mainstream. It is widely accepted that the Treaty badly needs to be accompanied by counter cyclical growth promoting mechanisms to counteract its deflationary impact but little optimism that we will see any such initiative from the EU any time soon.

Perhaps the election of François Hollande as French President (and the Greek General Election) on the 6th. May will mark a change of direction in EU politics away from the increasingly devastating failure of Merkozy/ECB led austerity economics. His election would certainly help to improve the prospects of a successful referendum campaign as President Sarkozy has been widely seen as spectacularly unfriendly to Ireland in recent times. Certainly people are looking for an EU which is less ruled by the ECB and sovereign debt markets. Whether Hollande will be a significant improvement in this regard remains to be seen.

For my part, I remain undecided on how to vote. I recognise the Treaty is economic nonsense, but perhaps a political necessity given that Ireland's debt will be unsustainable without ECB/EFSF support that is unlikely to be forthcoming without a positive vote. In contrast to the Eurozone, the Irish economy is projected to grow marginally this year, but the sustainability of Ireland's debt (even without the Anglo Irish Promissory notes) remains very much in doubt. It's all very well arguing that Ireland should never have socialised the private debts of private banks in the first place, but those mistakes have been made and are probably irreversible at this stage. "We are where we are" is the most infamous cliché in Irish politics at the moment. We are expected to just suck. it. up.

I would welcome any advice on how I should vote in the comments below.

Display:
I'm not going to tell you how to vote, but when you write
I recognise the Treaty is economic nonsense, but perhaps a political necessity given that Ireland's debt will be unsustainable without ECB/EFSF support that is unlikely to be forthcoming without a positive vote.
What would be so terrible about the ECB forcing a bankruptcy? After all, the ECB's/EU's own policy guarantees the pain of insolvency without the debt reduction.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 08:39:40 AM EST
I agree with this, everyone in Ireland needs to look at what turning over fiscal policy to the ECB means - the example is there in Greece...
by Metatone (metatone [a|t] gmail (dot) com) on Thu Apr 19th, 2012 at 08:57:03 AM EST
[ Parent ]
Ireland's debt will be unsustainable without ECB/EFSF support that is unlikely to be forthcoming without a positive vote
Moreover, how can the ECB defend its political independence if Frank's quote correctly describes what would be the widespread public perception in the event of a no vote?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 09:12:59 AM EST
[ Parent ]
Someone has to be the first to defy the Troika if it is not to successively smother all of the economies in the periphery, and then on to everything west of the Rhine and south of The Alps.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 19th, 2012 at 08:01:12 PM EST
[ Parent ]
As a very open economy with a heavy dependency on foreign direct investment, the reputational damage of a bankruptcy could be considerable for Ireland, depending on how well the process is managed. My guess is that we could call the ECB's bluff on that one, as the reputational damage for the EU would be even greater. However such is the ideological entrenchment and institutional aloofness of the ECB, it is hard to predict what they would do in that instance. We have a lot more to lose than the ECB Directorate.

I presume you are not suggesting that a bankruptcy would be without painful consequences either. So how does one quantify the relative damage of taking on the full burden of debt against the costs of bankruptcy?

My personal view is that the Irish economy could recover quite quickly (debt or no debt) if there was a more growth orientated economic strategy within the EU as a whole. In that context a bankruptcy at this stage could be a grievous self inflicted wound.

The critical issue for me is whether Ireland's participation in the Stability (aka suicide) Pact will increase or reduce our ability to influence EU policy in a more progressive direction in the future.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 08:58:44 AM EST
[ Parent ]
I presume you are not suggesting that a bankruptcy would be without painful consequences either.

What I'm suggesting is that you're suffering all the pain of bankruptcy without the debt relief. You're claiming that bankruptcy would be "a grievous self-inflicted wound" above and beyond what is to be expected under the fiscal pact.

Austerity is self-defeating pain.

Ireland should have allowed its banks to go bankrupt and be taken over by their foreign creditors in 2008, but that's water under the bridge now.

But the question at hand is supposed to be about the fiscal pact, not about bankruptcy. Why is it that the two get tangled up inseparably? What justification would the ECB to crash the Irish banks or government in retaliation for the Irish public voting no on this pact which you call economic nonsense?

How can you vote for economic nonsense out of political necessity? What kind of political necessity is that, what's the benefit, if what you're doing is shooting yourself in the foot institutionally in exchange for some hope of political support from those who wrote the economic/institutional nonsense in the first place?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 09:11:12 AM EST
[ Parent ]
Migeru:
What justification would the ECB to crash the Irish banks or government in retaliation for the Irish public voting no on this pact which you call economic nonsense?

What justification have the ECB got for doing what they are doing to Greece now?

This is not a rational calculation, but a political one. The ECB are probably doing what they are doing to Ireland and Greece because they are afraid of what would happen if Italy/Spain went down the same road.

The known unknown is how would the ECB/EU react if Ireland or Greece called their bluff and actually defaulted?  We may know the answer to this in due course in any case, but I'm not sure of that now.

My guess is they would cast Greece adrift for a prolonged period of purgatory. But I don't know how they would react to Ireland - with a currently positive balance of payments - doing the same.

What needs to be understood is that the view from a small EU member is somewhat different to the view from a major member state. Ireland/Greece are dispensable in the the larger EPP view of things.

We are currently a lab rat for an ECB experiment. Do we want to be the lab rat for how the ECB/Germany will react to a defaulting member state?

Nevertheless, as you say, this vote is about the Treaty and not about bankruptcy. Considered on its merits alone, I have to vote No.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 09:26:50 AM EST
[ Parent ]
This is not a rational calculation, but a political one. The ECB are probably doing what they are doing to Ireland and Greece because they are afraid of what would happen if Italy/Spain went down the same road.

The known unknown is how would the ECB/EU react if Ireland or Greece called their bluff and actually defaulted?  We may know the answer to this in due course in any case, but I'm not sure of that now.

My guess is they would cast Greece adrift for a prolonged period of purgatory. But I don't know how they would react to Ireland - with a currently positive balance of payments - doing the same.

Of course political calculation is "rational" - in so far as it is calculation in a "political game". It may not be a "scientific" calculation but that's neither here nor there.

Anyway, regarding Italy/Spain and the ECB:

Weidmann says it's not the ECB's job to solve Spain's problems

Spain should take a rise in its bond yields as a spur to tackle the root causes of its debt woes, not look to the European Central Bank to help by buying its bonds, Jens Weidmann told Reuters. The head of the Bundesbank, who has led a push by some policymakers from core eurozone countries for the bank to begin planning an exit from its crisis mode, said no ECB policymakers favoured using the bank's bond-buying plan to target specific interest rates on sovereign bonds, and ECB board member Benoit Coeure was simply stating a fact by saying last week that the programme still existed. Weidmann also said he saw no reason to discuss a third LTRO. ,,We shouldn't always proclaim the end of the world if a country's long-term interest rates temporarily goes above 6 percent," he said referring to rates at which Spain currently has to borrow. ,,That is also a spur for policymakers in the countries concerned to do their homework and to win back (market) confidence through the pursuit of the reform path."

(Eurointelligence Dialy Briefing, 19 April 2012)

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 09:40:49 AM EST
[ Parent ]
For the ECB, being apolitical means provoking the markets with unguarded comments to ensure that "sovereign" states are forced to do their bidding. ECB Merkel comments practically forced Ireland into the arms of the Troika by ensuring sovereign debt interest rate spiked in response to their comments at particularly unhelpful times.

As far as the EFSF is concerned, my understanding is that all Member Sates would have to approve EFSF funds being used to fund the Anglo bail-out - something Germany et al are most unlikely to do except under considerable pressure.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 09:55:47 AM EST
[ Parent ]
Wait, so the ECB already forced an Irish bankruptcy once, which was only averted by the EFSF loan sharking?

What would be so terrible about the ECB forcing a bankruptcy again? That the EFSF has higher political leverage on Ireland than the original creditors did in the autumn of 2010?

And we're supposed to believe the ECB is politically independent?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:23:39 AM EST
[ Parent ]
what that's worth: vote NO. It's not only the principled stand, it's also practical.

First, waiting/hoping for possible bail-outs that will serve any purpose other than support for the biggest financial institutions is purely political marketing by their minions.

Second, Ireland can be a charter member of the rebellion that will be necessary to stop TINA.

Third, bankruptcy merely sounds horrible. It cost me about 5 years of 'treading water' financially in the early '90s; it cost Brazil a little bit over a decade. Long run, it's a footnote.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Thu Apr 19th, 2012 at 11:21:10 AM EST
[ Parent ]
The sad thing is that for Ireland, at least, bankruptcy is very avoidable if only we had a slightly more enlightened regime within the EU/ECB. People who are sick/unemployed/aged now can not afford to tread water fro ten years.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 11:27:25 AM EST
[ Parent ]
It is highly questionable whether life expectancy for the sick/unemployed/aged is higher under an IMF/ECB regime compared to a bankruptcy. Vote no and economic policy is again up to the electorate to decide, so you can then decide how to support the sick/unemployed/aged

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Apr 19th, 2012 at 11:49:55 AM EST
[ Parent ]
The ECB's new European Social Model.

  1. Don't get sick/unemployed/aged
  2. If you do, die quickly
  3. Own it


guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 11:57:25 AM EST
[ Parent ]
disposition, but some of my best friends are 2nd or 3rd generation Irish, and they are some of the most resourceful folks of my - large - acquaintance. They might have authored the aphorism, 'making lemonade from lemons'.

Ireland looks to be - from Rick Steves' travelogues in my case - a land of large resources on a per capita basis. Is there a political tendency there that might try to organize co-operatives and 'affordable housing' projects? At the risk of starting a very contentious thread, neither national socialism nor populist movements have to be the creatures of demagogues and racists.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Thu Apr 19th, 2012 at 12:10:10 PM EST
[ Parent ]
the cooperative tendency transcends party politics. There is a large cooperative Credit Union movement which is keeping many families afloat. Owner occupation in Ireland is c. 75% roughly half of whom are currently paying a mortgage (which accounts for a large proportion of the high level of private debt). In addition there is a large public housing sector and a relatively small private rental sector. House prices are 60% down from peak and falling and thus becoming more affordable as a ratio to earnings.

On the downside, part of the very large publicly owned enterprise base is being privatised (at the behest of the Troika) and may of the agricultural coops have been turned into for profit PLCs.  

We got through a similarly tough depression in the 1980's and I share your positive views on the ability of the Irish people to innovate and recover given even slightly more positive EU level policies and economic conditions.


Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 12:30:31 PM EST
[ Parent ]
What justification have the ECB got for doing what they are doing to Greece now?
You're clearly looking at things from the wrong angle. Just let Jörg Asmussen show you the way:
Let me conclude with a message of hope. Yes, the medicine is bitter, but the patient can and will recover if he follows the prescription. Looking at successful past experiences of fiscal adjustment in other European countries shows that this is not a lost battle. However, an absolute prerequisite for the adjustment to succeed is strong political ownership. The Greek people are not reforming their economy and their state to please the troika; they are not carrying out sacrifices to please country X or Y in the euro area. They are going through this adjustment process for their own good. Maximum political ownership should therefore be expected and is key.


guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 09:50:30 AM EST
[ Parent ]
I cannot fathom what exactly Ireland would gain should it assent to the ECB straightjacket. What would the ECB / EU Commission do in retaliation?

The Greek electorate is being blackmailed now by the ECB, the IMF and all their client political forces in Greece (with the backing of the local elites) to vote for the "centrist" parties, the two parties that set up the clientilist model and wallowed in corruption over the past 30 years or so. Vote for them or else... well it isn't clear exactly what the "or else" entails but it is certainly "bad"... It's going to be close but I reckon that on May 6th it just might be the case that "Center Right" and "Center Left" fail to win a majority together in the coming elections. If so there will be a reaction from the EU that might be instructive for the Irish electorate one way or another...

Ireland does not want to go the way of Greece, it is a path of social, economic and political destruction. If Ireland doesn't vote "no" it will confirm the passive acceptance of the ECB's sociopathic policies by the peoples of the EU. That would count as yet another green light for the total destruction of social Europe across the continent.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu Apr 19th, 2012 at 10:25:02 AM EST
[ Parent ]
Barroso said agree to austerity or else. Austerity was agreed and the else has materialised. So, what was the austerity for?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:32:15 AM EST
[ Parent ]
The complete phrase is "agree to austerity, or else THE ELITE GETS IT". The elite is still in control...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 11:05:22 AM EST
[ Parent ]
The elite is still in control...

But perhaps not of the referendum. And perhaps not to the same extent or for as long after a rejection of the treaty.  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 19th, 2012 at 08:16:14 PM EST
[ Parent ]
it's bought them time... to try and figure out any other way to deal with reality.

3 years of desperately trying to protect their hoarded goodies from losing value through inflation, 3 years of smuggling capital out of betrayed, dying economies, further ensuring their demise. 3 years of 'one last hit' on a public too sated with consumerism and helplessly in debt to realise their pants were being stolen right off their legs.

what they probably also realise is that the longer they continue trying to enact this farce of orwellian cruelty, the more enraged the gulled will be.

but no-one dares bite the bullet.

no-one serious will say that the banks have hijacked government and no matter how much they screw up, (and get rich doing so), their bonuses won't be touched, regulators will remain toothless, and their losses will always be backstopped by the power of the exchequer, they cannot lose, short of the whole house of cards coming down on all our heads.

but being gamblers at heart, they are willing to bet, hard and often, on exactly where that line is. on the street it's where the uniforms meet the discontented, in the boardrooms its....????

a well-kept secret, or a well, kept secret.

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Fri Apr 20th, 2012 at 12:51:02 PM EST
[ Parent ]
Thanks for reminding me that Greece is also holding an election on May 6th., and yes, the outcome may influence Irish attitudes to the Treaty.
talos:
What would the ECB / EU Commission do in retaliation?

  1. No second bailout using ESFS funds or support for using that fund to replace Anglo promissory notes
  2. Withdrawal of liquidity support to Irish banks forcing their almost immediate insolvency
  3. Withdrawal of existing Troika based funding unless much harsher public service cuts are implemented


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 10:35:24 AM EST
[ Parent ]
No second bailout using ESFS funds or support for using that fund to replace Anglo promissory notes

At the same time that economists the world over and financiers such as Soros are arguing that the EFSF/ESM should be used for EU-wide bank recapitalizations.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:37:28 AM EST
[ Parent ]
Withdrawal of liquidity support to Irish banks forcing their almost immediate insolvency

Who are the Irish banks' creditors? They can take ownership of the banks.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:38:13 AM EST
[ Parent ]
The biggest creditor is the ECB itself...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 11:06:38 AM EST
[ Parent ]
"Nice bank you have there. Be a pity if you had to take it over, eh?"
by Colman (colman at eurotrib.com) on Thu Apr 19th, 2012 at 11:41:38 AM EST
[ Parent ]
"Withdrawal of liquidity support to Irish banks forcing their almost immediate insolvency"
Do you think they could do that without creating a bank-panic across the EU periphery (and beyond)?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Apr 19th, 2012 at 11:46:11 AM EST
[ Parent ]
Of course it would create panic - but in the contet of the EU having made a conscious decision to ditch Ireland (and any other member) who dared to default - and so it would act as a salutary lesson to any other member that dared consider that option. The ECB would then ride it on a white horse to "rescue" members whose finances had been shattered by the panic it had itself, in large part, created.

What we must remember here that this is a crisis started almost entirely by bankers, for bankers, and that bankers have been the chief beneficiaries of the crisis - so much so that the ECB has now almost entirely sidelined the other institutions of the EU.

Heck, the ECB IS the EU now. The independence of the ECB now means only that it will brrok no interference from smaller Member states or other EU institutions in ITS RUNNING OF THE EU.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 05:58:50 AM EST
[ Parent ]
That considerably simplifies the analysis. The ECB is clearly and unambiguously your enemy. That means that to the extent that the ECB can be identified with the EU, the EU is your enemy.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 20th, 2012 at 06:16:18 AM EST
[ Parent ]
talos:
The Greek electorate is being blackmailed now by the ECB, the IMF and all their client political forces in Greece (with the backing of the local elites) to vote for the "centrist" parties, the two parties that set up the clientilist model and wallowed in corruption over the past 30 years or so.

ditto in italy... when monti falls, the new gang of three, ABC, alfano, bersani and casini are already waiting in the wings to take over.

same old...

what is cool here is grillo is finally seeming a real threat to these people. they have looked right through him before, now they shrill shriek that he is 'anti-politica', implying we might lose this gilded edifice we so adore and venerate.

not.

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Fri Apr 20th, 2012 at 12:37:32 PM EST
[ Parent ]
We are currently a lab rat for an ECB experiment. Do we want to be the lab rat for how the ECB/Germany will react to a defaulting member state?

Nevertheless, as you say, this vote is about the Treaty and not about bankruptcy. Considered on its merits alone, I have to vote No.

Put that way, "voting No" is an act of passive resistance. They will beat the crap out of you anyway and do what they want, but they won't have the consent of the governed.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:36:34 AM EST
[ Parent ]
Put that way, "active resistance" would involve a chap with a hollow-point umbrella taking a walk through downtown Frankfurt...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 20th, 2012 at 06:19:06 AM EST
[ Parent ]
Hey - my niece works in downtown Frankfurt - and her partner used to work for the ECB. Let's not go down the terrorism road. We've had enough of that in Ireland...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 06:26:34 AM EST
[ Parent ]
Going by recent precedent, a wet job on the ringleader of a terrorist organisation is not considered terrorism. And at this point I can think of several people in the ECB leadership who have a body count that compares unfavourably with that of Mr. bin Laden.

Anyway it's a moot point, because whatever the morality it would be counterproductive. The selective outrage in the wake of a wet job in Frankfurt would be more expensive than promoting one of the ten thousand assholes standing in line to fill their shoes.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 20th, 2012 at 07:01:05 AM EST
[ Parent ]
As a very open economy with a heavy dependency on foreign direct investment, the reputational damage of a bankruptcy could be considerable for Ireland,

In two years all would be forgotten. Remember Iceland, Russia and Argentina.

I presume you are not suggesting that a bankruptcy would be without painful consequences either. So how does one quantify the relative damage of taking on the full burden of debt against the costs of bankruptcy?

Bankruptcy gives you two years of pain. The ECB treatment has given Greece two years of worse pain so far. And they're still going to default, and get their two years of pain after they do that.

In that context a bankruptcy at this stage could be a grievous self inflicted wound.

Yeah, but that's not the context you're in. You're in the context of a ten-year depression.

The critical issue for me is whether Ireland's participation in the Stability (aka suicide) Pact will increase or reduce our ability to influence EU policy in a more progressive direction in the future.

Reduce.

The message from the powers that be has been quite unambiguous: You do not build political capital by complying with the ECBuBa's insanity, because they feel entirely entitled to your compliance. All you do is lock in an institutional lunacy.

The Spanish experience during the present crisis is quite instructive in this respect.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 20th, 2012 at 06:10:11 AM EST
[ Parent ]
You do not build political capital by complying with the ECBuBa's insanity, because they feel entirely entitled to your compliance. All you do is lock in an institutional lunacy.

This reminds me of what David Graeber says about the way feudal systems are built out of custom.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Fri Apr 20th, 2012 at 06:12:28 AM EST
[ Parent ]
As a very open economy with a heavy dependency on foreign direct investment, the reputational damage of a bankruptcy could be considerable for Ireland, depending on how well the process is managed.

Don't confuse business investment with stock trader lunacy.  That will certainly be the threat from the City, Frankfurt and Wall Street, but it worked out okay for Argentina and others.  Businesses will invest if there's a good economy to invest in, whether the government pays off the banksters or not.  They're not going to invest in an economy tanking due to austerity.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Apr 20th, 2012 at 06:43:31 AM EST
[ Parent ]
Fair point, but the main reason foreign (mainly US) companies invest in Ireland is to gain access to the Single Market. If there is any hint that Ireland might be excluded from the EU as a consequence of default that investment will dry up immediately.  Whilst there is no legal mechanism for excluding Ireland from the EU, I have no doubt there would be plenty of prominently published comments by Merkel/ECB that "countries that don't live up to their obligations shouldn't gain the benefits of EU membership"...

To an extent we are just talking about the confidence fairy here, and things could be smoothed over - hence my reference to "depending on how well the process is managed". My own view is that Ireland is in a much more powerful position than people here - or in the ECB - realise, because the damage to the EU could be enormous unless they take steps to rectify the situation, but that assumes a level of leadership and vision all round that may just not be available...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 06:52:40 AM EST
[ Parent ]
If there is any hint that Ireland might be excluded from the EU as a consequence of default that investment will dry up immediately.  Whilst there is no legal mechanism for excluding Ireland from the EU, I have no doubt there would be plenty of prominently published comments by Merkel/ECB that "countries that don't live up to their obligations shouldn't gain the benefits of EU membership"...

The ECB could stop clearing payments. Wouldn't that be fun.

What are firms going to do? Move their European HW from Ireland to Germany?

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Fri Apr 20th, 2012 at 06:55:20 AM EST
[ Parent ]
What are firms going to do? Move their European HW from Ireland to Germany?

Institutional inertia will prevent or reduce any immediate action by firms already located here, but firms currently considering their location options, and existing firms doing long term strategy will certainly consider the benefits of moving into the core as a hedge against peripheral instability.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 07:45:26 AM EST
[ Parent ]
Not irrelevant: The Irish case from an ECB perspective, speech by Jörg Asmussen, Member of the Executive Board of the ECB, at the Institute of International and European Affairs, Dublin, 12 April 2012
But let me state this right at the beginning: Ireland is not the only country that needs to reform. Fiscal consolidation and growth enhancing structural reforms are needed everywhere in Europe to remain competitive on a global marketplace. Ireland is, however, one among several countries with more severe adjustment needs.

Our view is that to set the correct course, we must be clear-headed about the reasons why we are where we are. To frame the issue somewhat bluntly, the Irish State and people woke up to a painful new reality when the Irish housing bubble burst at the onset of the international financial crisis in 2007. Extraordinarily high growth in the run up to the crisis had gone hand-in-hand with the build-up of economic and financial imbalances.

The path back to full fitness has been enormously difficult and entailed wrenching economic, financial and social change. And the path has not been smooth. Indeed, about one-and-a-half years ago the economy was close to cardiac arrest. The patient required life support - kept alive with the substantial assistance from international lenders, as well as the continued levels of extraordinary support from the Eurosystem. But progress since then has been good: the programme is on track. So far, Ireland has delivered. I am confident it can be a "success story".




guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 09:53:10 AM EST
And of course the EU/ECB had absolutely no responsibility for the inappropriately low interest rates  and lack of European wide regulation of the Single European Market for goods and (particularly) financial services which led to these imbalances in the first place...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 10:02:58 AM EST
[ Parent ]
They have no responsibility for the Maastricht Treaty, aptly described by Soros thus
The Maastricht Treaty was fundamentally flawed, demonstrating the fallibility of the authorities. Its main weakness was well known to its architects: it established a monetary union without a political union. The architects believed however, that when the need arose the political will could be generated to take the necessary steps towards a political union.

...

The Maastricht Treaty also assumed that only the public sector is capable of producing unacceptable imbalances; the market was expected to correct its own excesses. And the Maastricht Treaty was supposed to have established adequate safeguards against public sector imbalances. Consequently, when the European Central Bank started operated it treated government bonds as riskless assets that banks could hold without allocating any capital reserves against them. This encouraged commercial banks to accumulate the bonds of the weaker countries in order to earn a few extra basis points. This caused interest rates to converge which, contrary to expectations, led to divergences in economic performance. Germany, struggling with the burdens of reunification, undertook structural reforms and became more competitive. Other countries enjoyed a housing boom that made them less competitive. Yet others had to bail out their banks after the crash of 2008. This created conditions that were far removed from those prescribed by the Maastricht Treaty with totally unexpected consequences. Government bonds which had been considered riskless turned out to carry significant credit risks.

Except insofar as people like Asmussen cut their teeth writing the Maastricht Treaty and the Stability Pact under Theo Weigel...

We've been ruled by economic illiterates for 20 years who continue to amass status and political power.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:20:11 AM EST
[ Parent ]
They have obviously been playing the political game rationally...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 19th, 2012 at 10:25:24 AM EST
[ Parent ]
Merkel has.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Thu Apr 19th, 2012 at 10:33:17 AM EST
[ Parent ]
Voters' satisfaction with Government down sharply
The Government's satisfaction rating has declined sharply, according to the latest Irish Times/Ipsos MRBI poll, which also shows a drop in support for both Coalition parties.

The Labour Party has been particularly hard hit, while Sinn Féin has risen to 21 per cent, its highest rating ever in an Irish Times poll.

Support for Independents and smaller parties has also increased.

Satisfaction with the Government has dropped 14 points to 23 per cent since the last poll in October, while Taoiseach Enda Kenny and Tánaiste Eamon Gilmore are also down significantly.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 06:34:18 AM EST
ECB Rule?

As a cursory glance at my Blog will confirm, I have written many articles in support of every EU referendum in recent times, and have voted accordingly since Ireland's entry into the EU in 1973.

For the first time in my life I am going to vote and advocate against Ireland passing an EU referendum - in this case the so called the Stability Pact referendum.

Firstly, because it is no such thing: Far from guaranteeing stability, it will guarantee recurring economic crises within the EU as it strips "sovereign" EU Member states of all powers to engage in counter-cyclical corrective action during recessions almost guaranteeing that minor recessions will turn into major depressions.

The current situation reflects that position perfectly: At a time when governments need to act boldly to stimulate growth and create jobs, austerity policies rule and governments are powerless to prevent what should be a cyclical downturn from turning into a major catastrophe.

Secondly, the "Stability" Pact - rightly dubbed the suicide pact by prominent Australian economist and global authority Steven Keen -  enshrines in our constitution the total dominance of the ECB in the governance of Ireland.

The ECB has successfully sidelined the European Parliament, Council and Commission in the governance of the EU. Every month now we have ECB Board members - acting independently or as part of the Troika - telling us how to manage or fiscal affairs despite the fact that the ECB has absolutely no mandate to advise Sovereign Governments on fiscal matters.  

Countries which fail to comply are subjected to well timed and leaked whispering campaigns which spook the markets and cause spikes in sovereign interest rates to unsustainable levels giving countries like Ireland only two choices: comply or default.

And if we default we will be threatened with the destruction of our economy and banking system throughy the withdrawal of all credit facilities for Irish banks and the state.

It is time we returned to a more positive and democratic vision for the EU: Say NO to the in-Stability Pact and say no to rule by bankers!

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 07:39:18 AM EST
Excellent, but I'd be wary of using 'counter-cyclical'.

I suspect most readers (and probably most editors and journos) don't know what it means.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Apr 20th, 2012 at 08:10:23 AM EST
[ Parent ]
I'd be amazed if that was the case. The term is in constant use in current affairs programmes and economics/business articles here.  I think it is also important to stress that was is being proposed IS counter-cyclical unlikely to pro-cyclical spending engaged in by the Fianna Fail led Governments in the latter stages of the Celtic Tiger which generated huge asset inflation and faux "growth".

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 08:19:27 AM EST
[ Parent ]
Hmm. Depends on your intended audience.

I still think it's specialised and jargon-y, so business/economy people may get it, but general readers may not.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Apr 20th, 2012 at 08:24:10 AM EST
[ Parent ]
in this case the so called the Stability Pact referendum

Better to say "the referendum on the so-called Stability Pact"?

telling us how to manage our fiscal affairs

destruction of our economy and banking system throughy the withdrawal

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

by Migeru (migeru at eurotrib dot com) on Fri Apr 20th, 2012 at 08:52:04 AM EST
[ Parent ]
Any substantive criticisms?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 20th, 2012 at 09:04:42 AM EST
[ Parent ]
Echoing TBG, strips "sovereign" EU Member states of all powers to engage in counter-cyclical corrective fiscal action

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Fri Apr 20th, 2012 at 09:16:15 AM EST
[ Parent ]
Or just restate Keynes' argument regarding the cost in production lost forever and of diminished productive capacity resulting from NOT employing those willing and able to work, buttressed by Richard Koo's analysis of Japan's experience of its balance sheet recession which showed it was MORE expensive NOT to provide government stimulus than to provide it.


As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Apr 20th, 2012 at 02:00:15 PM EST
[ Parent ]
Why should public services be cut to refund speculative private investor losses on business to which the state was not a party and from which it did not stand to benefit? The ECB has been adamant that the speculator be refunded in full ...

Such blatant fraud. Bite the bullet, go bankrupt, and get on with your lives before you're all enslaved.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.

by THE Twank (yatta blah blah @ blah.com) on Sat Apr 21st, 2012 at 06:55:58 AM EST
Schaeuble arrives in (Athens/Rome/Dublin .. )

Immigration: Name?
Schaeuble: Schaeuble
Immigration: Occupation?
Schaeuble: No, just visiting for a few days.

by rootless2 on Sat Apr 21st, 2012 at 04:03:55 PM EST
I read today that a poll gives 47% to yes, 35% to no and the rest undecided. And adds that "yes" went down 2% since the previous poll.

Please tell me it's all wrong and they inverted yes and no!


Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Apr 30th, 2012 at 11:31:51 AM EST
I'm afraid you got it right and most polls have shown a c 60:40 Yes/no majority with the undecided vote slowly declining. All political parties bar Sinn Fein are in favour although some unions have come out against. The SERIOUS PEOPLE are in favour...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Apr 30th, 2012 at 03:23:06 PM EST
[ Parent ]


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