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by Colman Thu Nov 14th, 2013 at 07:08:35 AM EST
In wonderful news for our austerian overlords, their great success story, Ireland, is to leave bailout mode on December 15th without a precautionary line of credit.
Whoo-hooo. Use this thread to list your favourite statistics showing what a successful economy Ireland is now.
(Colman very busy today. Colman talk small words.)
The political problem is that credit lines from ESM require the approval of all euro area member states and this was not going to be possible now. Germany still does not have a government as Angela Merkel's CDU continue negotiations with the SPD to form a coalition. During these negotiations, the SPD has regularly insisted that they would not support an ESM credit line for Ireland unless the country followed a series of highly specific policy recommendations. SPD requirements for approval of a credit line included raising the corporate tax rate and introducing a financial transaction tax. The SPD also ruled out any deal that involved used funds from the credit line to recapitalize banks. This kind of micro-managing of other people's economies was not what most people had expected ESM conditionality to look like. Given the existing raft of EU monitoring programs that exist (the six pack, the two pack, the macroeconomic imbalances) a sensible approach would be to require that a country seeking a credit line from ESM commit itself to meeting the recommendations on macroeconomic policy of the European Commission. (...) Missed in yesterday's discussion is that these developments have implications for the ECB's Outright Monetary Transactions (OMT) program. This is the program announced by Mario Draghi after his "whatever it takes" speech last year. Under this program, the ECB can purchase unlimited quantities of a country's government bonds. However, the ECB decided that countries could only avail of OMT if they had an agreement with ESM for a bailout program or precautionary credit line. Ask yourself this: If star pupil Ireland couldn't negotiate a precautionary credit line based on reasonable conditionality, what chance is there that a credit line of this sort for Italy will be approved by all countries in the euro area? OMT may have been cast as the plan to save the euro but getting it up and running may not be so easy.
The political problem is that credit lines from ESM require the approval of all euro area member states and this was not going to be possible now. Germany still does not have a government as Angela Merkel's CDU continue negotiations with the SPD to form a coalition. During these negotiations, the SPD has regularly insisted that they would not support an ESM credit line for Ireland unless the country followed a series of highly specific policy recommendations.
SPD requirements for approval of a credit line included raising the corporate tax rate and introducing a financial transaction tax. The SPD also ruled out any deal that involved used funds from the credit line to recapitalize banks.
This kind of micro-managing of other people's economies was not what most people had expected ESM conditionality to look like. Given the existing raft of EU monitoring programs that exist (the six pack, the two pack, the macroeconomic imbalances) a sensible approach would be to require that a country seeking a credit line from ESM commit itself to meeting the recommendations on macroeconomic policy of the European Commission.
(...) Missed in yesterday's discussion is that these developments have implications for the ECB's Outright Monetary Transactions (OMT) program. This is the program announced by Mario Draghi after his "whatever it takes" speech last year. Under this program, the ECB can purchase unlimited quantities of a country's government bonds. However, the ECB decided that countries could only avail of OMT if they had an agreement with ESM for a bailout program or precautionary credit line.
Ask yourself this: If star pupil Ireland couldn't negotiate a precautionary credit line based on reasonable conditionality, what chance is there that a credit line of this sort for Italy will be approved by all countries in the euro area? OMT may have been cast as the plan to save the euro but getting it up and running may not be so easy.
You can see the bank bailout in 2010. A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
Wave of Irish trying their luck Down Under ...When the global financial crisis hit Europe in 2008, one of the first countries to fall into recession was Ireland. Two years later in 2010, Ireland accepted a financial bailout from the European Union and International Monetary Fund, as its once famous "Celtic Tiger" economy crashed. (Transcript from World News Australia Radio) Thousands of jobs were lost and the domestic property market collapsed. Today, unemployment remains high at nearly 15 per cent. The high rates of joblessness saw more than 87,000 people emigrate from Ireland last year. Australia is becoming the new home for thousands of Irish each year.
Two years later in 2010, Ireland accepted a financial bailout from the European Union and International Monetary Fund, as its once famous "Celtic Tiger" economy crashed.
(Transcript from World News Australia Radio)
Thousands of jobs were lost and the domestic property market collapsed.
Today, unemployment remains high at nearly 15 per cent.
The high rates of joblessness saw more than 87,000 people emigrate from Ireland last year.
Australia is becoming the new home for thousands of Irish each year.
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