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Ireland is obviously a case study in this regard, having foolishly taken on net liabilities of c. €60 Billion on foot of the bank guarantee (c. 30% of GDP) the Commission and ECB prevented the government from burning bank bond holders - even junior unsecured bondholders - putting ordinary taxpayers on the hook instead: taxpayers who had, almost universally, never even heard of the investment banking entities who required much of the bail-out. Apparently this was for reasons of moral hazard, if you don't regulate your banks sufficiently, you pay...

Hopefully lessons have been learned - by all sides from that debacle - the ECB has since moved to make junior bond holders the first line of liability. That debt is still on the Irish government books despite a massive turnaround in economic fortunes since. But much of that economic turnaround was also enabled by ECB policies in the meantime, with QE providing v. low cost finance for the national debt to the point that the interest burden now is less than it was after the economic crisis of the 1980's - before the advent of the Euro.

It is perhaps this history, and this experience which makes me and c. 90% Irish people such pro-EU advocates. Most would trust the ECB/Commission before we would trust our own financial watchdogs. The peculiar perspective from a very small state with a very open economy makes us appreciative of whatever small mercies the Draghi ECB visited upon us.

We are still close to being captured by global corporates, and particularly by US ICT corporates like Google, Microsoft, Facebook, Apple. Our government could/would never have contemplated what the Commission has done in seeking to rein in their most egregious tax and regulatory excesses. We need the EU to do what our government simply hasn't got the bargaining power to do. Perhaps this is a particular "small country" perspective, but let us not forget the the bulk of the remaining 27 EU members are economically small countries. The view from France/Germany may be somewhat different.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Nov 19th, 2018 at 02:53:13 PM EST
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