The euro is ten years old in the republic on January 1st 2009.

Happy birthday to the euro in the republic, here RTE examines how the economy has fared with the euro compared to the old punt and perhaps presents a case for others to join? Britain maybe?

  • Greenflag

    With the Czechs now in the Euro zone and the Hungarians , Poles and Slovenians close to membership we can look forward to another steady ten years of monetary stability . The sooner Britain joins the Euro the better for the British people . Their currency has gone down by almost a third in value over the past year . Contrary to the nonsensical outpourings of some of the right wing media a ‘devaluing ‘ currency is not a harbinger of future economic prosperity .

    ask any Zimbabwean or any German who knows the financial history of the Weimar Republic . Good report by Lee . Had we still been linked with Sterling the present ‘crisis ‘ would have been a good deal worse 🙁

    As for those hoping for a better economic new year I refer you to Maurice Hayes excellent article in one of today’s papers -I’ll post some quotes later next year 😉

  • Greenflag,

    Yes, Irish retailers must be delighted at the success of the Euro as the “unpatriotic” hordes come North for a slice of Sterling value. With up to 25% of those in border counties now shopping in the Sterling zone once a month, border county stores must dance a jig for joy at the Euro.

    Here’s a little economic reality check. A NATION must have the right to alter its currency from time to time. There are those in the Republic that realise that a strong Euro has a disastrous impact on the Irish economy as we enter 2009, and would prefer a weaker currency. See how tourists into ROI love the Euro.

    Of course the UK is cursed with an economic imbecile in the form of Mr Broon and I suspect the decline of the British Pound fills his heart with joy. One more triumph for a politician who makes Biffo seem a sophisticate.

    The way I see it, the UK AND the Republic face serious economic challenges, surging unemployment, retail wipe out. I believe the UK has better options in what it could do to deal with the situation ( but won’t under Zanulabour) but I also believe that the Republic better understands the value of low tax. So, in summary, I wish both countries well in 2009 and hope all of us can prosper in tougher times.

  • USA

    In the macro economic picture I have held the opinion for some years that Britain would be better off adopting the Euro. Business people dislike uncertainty and the Euro offers stability, especially when agreeing large sum contracts across international borders, not to mention the stability it provided in the current financial climate.
    The British pound fluctuates and therefore introduces economic uncertainty. But when using the Euro a Frenchman can make a deal with an Italian, a German with an Irish woman and they all know the future value of the deal. The same holds true in the US with guys making deals from California to NYC (across three time zones), this facilitates and encourages business. Heck it was another big selling point for the US companies that set up in Ireland during the 1990’s. None of this holds true with Sterling.
    As for David Vance’s little venture into finance with his southern shoppers observation, its so provincial it barely warrents a response. Suffice to say that if you travel to Newry you will find that they practically entered the Eurozone along with the Republic. All the foreign jobs in Dundalk and the surrounding areas were attracted through additional FDI techniques such as a 10% corporation tax. The young graduates from Newry took up many new positions in Louth and this brings economic prosperity. I would also suspect (as in many other similar situations around the world) that if you go into Newry to shop the Euro is widely accepted as a means of payment. Heck, with modern consumers paying with credit cards i’m sure the tills in Newry don’t care if the Visa or Mastercard was issued in Dublin or Dubai. I am sure this pattern is repeated all along through Fermanagh, West Tyrone, Derry etc.
    It really is economics 101. I think Brown knows Britain should switch but cannot move as the Tories would wrap themselves in patriotic anti-European flag waving bullshit and kill Brown off with this issue.
    The Tories are doing themselves and the future economic growth of Britain a great disservice.
    Happy New Year.

  • Plastic Paddy

    . . . and by “Britain”, Kathleen, I presume that you mean the United Kingdom? (wink)

  • USA,

    I bow to your gargantuan insights into macro-economic theory, and clearly those retailers in the Republic eurozone now going out of business as their customers travel to the black North will be relieved to know that they are blessed to have the Euro and the fixed monetary policy it brings.

    As for the unmitigated joy the Euro brings elsewhere, perhaps you need to have a word with the Germans and the Italians who seem to yearn for the return of the economic freedom a national currency brings?

    As Irish unemployment rises, as US business moves elsewhere, and as the Celtic tiger is buried, I am sure there will be mass celebration (no pun intended) in the Republic for the gift of the Euro.

    Meanwhile we British keep our distance, and once we have ditched Prudence Brown, we can restore our fortunes without running begging to Brussels.

  • Dr. Kildare

    David,
    How long do you think this price differential with the South is going to last? I was up in the North (Newry, Banbridge and Belfast) on Tuesday to have a look see and splash a few Euros. Almost all of the items we purchased were not manufactured in the UK but imported from outside the sterling area! Imported inflation is going to be a real problem for the UK in the months ahead. Retailers in the South (especially UK based ones like B&Q;, Debenhams, Tesco) are now coming under sustained pressure to reduce prices. The boom years provided very fat margins here and I think you’ll see these margins squeezed tightly in the months ahead. The consumer is in the driving seat here in the South now.
    The ECB are briefing about further rate cuts in January. This will take some of the heat out of the exchange rate differential. Personally I think it was one of the best decisions every taken by an Irish Government to join the Euro. Also I see no substantial evidence of Italy, Germany or any other countries in the Eurozone wanting to ditch the Euro, in fact because of the recent volatility countries are queuing up to join rather than leave!

    Finally anybody from the South travelling up North don’t pay in cash, you’ll get fleeced on the exchange rate. Pay by card and you’ll get the rate for day.

  • Greenflag

    David Vance,

    ‘Here’s a little economic reality check. A NATION must have the right to alter its currency from time to time.’

    Well here’s some more ‘economic ‘ reality;) minus the histrionics of ‘currency ‘ provincialism ..That ‘NATION MUST’ line seemed to be the case in the the middle of the 20th century until the advent of the US Dollar as the world’s major reserve currency – the rise of the Yen and the coming of the Euro .The pound sterling continued to decline against the German Mark in the 70’s and 80’s and most of us will remember Mr Major’s determination not to devalue the pound until he was told to -by George Soros- having ‘burnt ‘ a billion pounds in a vain attempt to stave off the inevitable . Now in 2009 it’s deja vu time again for the pound sterling . How low can it go ?

    With globalisation and the mass use of credit cards for cross border and international purchases it hardly matters as USA sets out above . Mr Brown is virtually ‘powerless’ to do anything much more than moderate the worst effects of this recession – Mr Cameron likewise and for Messrs Cowan and Robinson it’s the same .

    The world awaits President Obama’s inauguration in the hope that he has put together an economic strategem which will unlock the ‘gates ‘ of this economic recession . It may be a forlorn hope although President Obama will no doubt as Mr Brown will try to moderate the worst impact on the ‘losers’ during this economic cycle .

    Maurice Hayes as I said above wrote a ‘persuasive’ article in yesterdays Belfast Telegraph which to me states the overall economic and political situation with impressive clarity – I quote

    ‘Despite Gordon Brown’s professed intention to spend his way out of trouble, it is doubtful whether the rate of public expenditure, on which the North is inordinately dependent, can be maintained for long.
    And with it goes the Executive’s ambitious plans for infrastructural and other schemes which might have been started (and in many cases completed) had they been able to agree to work together at any time in the 10 years since the Good Friday Agreement.
    Northern Ireland has weathered recession in the past. The area has seen business rise and fall in successive economic cycles. The difficulty is that most people, used in recent years to a level of prosperity, have forgotten how to cope. In the Thirties, it was the linen mills that went, then, post-war, the shipyards and most of manufacturing industry.
    Most people forget that in the Sixties, Northern Ireland had the highest concentration of man-made fibre plants in Europe — until the oil crisis in the early Seventies.
    What this cycle is likely to see is the loss of financial services and back-office facilities built up over the past 20 years.
    In the post-industrial society people stopped making things in the belief that they were making money instead, until that bubble also burst.
    Now the region is, as ever, dependent on the enterprise and intelligence of its people and a sound education system in the search for a new basis for economic activity. It may be in all of this that the gleaming financial services centres become the modern counterparts of last century’s dilapidated and deserted mill villages.’

    Maurice Hayes ‘words’ quoted above particularly the last paragraph could be applied to most of the developed ‘world ‘ and not just NI.

    We are as I said pre the USA Presidential election facing into a new paradigm . Economic forecasters worldwide are ‘hoping’ that the new American administration will spend it’s way out of this mess given renewed ‘confidence’ following the exit of the previous ‘spendthrift’ Republicans .

    However it may well be that for the major Western countries the benefits of the globalisation of their economies may be at an end . As manufacturing and now financial services have been outsourced to lower labour cost countries the impact on Western ‘middle classes’ has finally hit home and I don’t just mean ‘equity ‘ values .

    to be continued

  • Greenflag

    David Vance ,

    ‘Meanwhile we British keep our distance, and once we have ditched Prudence Brown, we can restore our fortunes without running begging to Brussels.’

    As the sound of international capital sucking out of sterling into the Yen and Euro reaches a crescendo Mr Cameron will not run begging to Brussels – he will instead be on his hands and knees pleading with the International Monetary Fund to bail out the UK 🙁

    There is no ‘magic’ attached to any ‘national ‘ currency in this new era .

  • Greenflag

    USA ,

    ‘I think Brown knows Britain should switch but cannot move as the Tories would wrap themselves in patriotic anti-European flag waving bullshit and kill Brown off with this issue. The Tories are doing themselves and the future economic growth of Britain a great disservice.’

    Aptly put . Could’nt have said it better myself 😉

  • PaddyReilly

    I think David Vance’s ideas suffer from the practice of seeing the part as the whole.

    Some Italians and Germans may yearn for an independent currency (I can’t say I encountered any). Someone is doing well out of the exchange rate (Newry Traders). It’s an ill-will that blows nobody good. But as with any market of fluctuating rates, if you are doing well, someone else is doing badly.

    Anyone who has actually decided to buy from the Eurozone is going to be stuffed. So the profits go to Newry Traders, and the losses are born by anyone who is buying computer bits etc:- i.e. David Vance and the rest of us. Anyone who has calculated on buying stuff from the Eurozone will, unless they can put their prices up quick, go bust.

    I wonder if Gordon will lose the courage of his convictions when we reach parity and ditch the pound.

    We do however have a means of controlling our own economy other than allowing deflation. That is to loosen/tighten planning laws to allow houses to be built, causing their price to fall, and thus everything else to become cheaper. The Eurozone is not responsible for huge house prices: in Germany they are very reasonable. It’s the brown envelope brigade in Dublin that have achieved that.

    Equally, In NI, British planning laws were introduced later than in the rest of the UK, and had a noticeable effect, destroying rural communities and the second home industry. If you need to deflate, then you can do so by reforming this.

  • Mack

    Sterling’s collapse is not a good thing.

    There. I’ve said it. It wouldn’t be a sensible policy for the British to pursue (and I don’t think they are actively pursuing it). It also causes problems for Irish exporters selling into Britain (which I presume is a very low priority for Broon). But let’s be releastic, the Euro / Dollar exchange rate is much more important than the Sterling / Euro exchange rise (due to the FDI component of the Irish economy).

    The problems it causes Irish retailers will probably be temporary as import prices will rise in the UK (by way of example DID and Power City electrical goods chains have consistently been substantially cheaper than UK equivalents – two of the few Irish shops that were – over the past number of years. They are now more expensive, but as electrical goods stores sell Japanese, European (not British or Irish), and Chinese goods prices will rise eventually (and margins fall soon) in the UK when Curry’s and the like next buy in new stock with weakened Sterling.

    The problems it causes British retailers may well be substantially longer lasting (higher prices, lower sales).

  • Mack

    Another concrete example of the problems brewing for UK retailers. I write this on a brand Dnew Dell laptop, manufactured in Limerick. My last Dell laptop I purchased in Euro, in the south. This one I bought via Dell UK – the recent fall in Sterling rendering it cheaper there. Once the exchange rate stabilises the price differential will probably narrow, or reverse (with Dell pulling out of Limerick it may never be cheaper to purchase Dells in Ireland again – who knows). Regardless, it was purely the recent collapse in Sterling that enabled me to purchase this laptop at a substantial discount.

  • Greenflag

    paddyreilly ,

    ‘I think David Vance’s ideas suffer from the practice of seeing the part as the whole.’

    You are too kind;) I’d have said he can’t see past his hole because his line of vision is blocked due to the awkward place he has stuffed his head;)

    As I said in my reply to Vance above this is a new situation . Many of what were previously seen to be horses of a different colour are now merging to deliver a major ‘realignment ‘ in the world economic order . Capitalism is not finished but it’s in for some serious overhaul if it cannot find a way through the present mess . This is not just the cyclical recession which many predicted but which Greenspan and the Republican administration staved off since 2001 through spending and borrowing their way to perdition 🙁

    What we have now is as a consequence of economic policies pursued by most of the Anglosphere since 1980 approx .

    The ‘brown paper envelope ‘ brigade in Dublin were only a tiny part of this debacle . The ‘brown’ disguised as white paper merchants of Wall St , the City and the entire Financial /Insurance / Hedge Fund / Derivative merchants indulged in a mass rape of American retirement and house equity values simply because they could and it worked -for a while . Now they have turned on each other to feed off any remaining ‘fat’ has been scraped off the bones of the American middle classes.

    BTW House prices in Germany are not ‘reasonable ‘ otherwise 75% of Germans would own their home instead of the 40% who do . Rental and social housing legislation is very strictly enforced in Germany thus public and private rental apartments are well maintained .

    Gordon Brown’s remaining reserves (not currency0 can be expected to be devoted to winning another term at Number 10 . Won’t be easy but not impossible either .

  • USA

    David Vance,
    Did you graduate from the same Business school as Gerry Adams?

  • South Armaghlite

    Lol, I’m suprised Vance is even involved in this discussion atm. I thought he’d be too busy on his own site and several others celebrating each Palestinian death atm…..

  • PaddyReilly

    otherwise 75% of Germans would own their home instead of the 40% who do

    This does not follow, Green flag. (By the way, are you related to Green Span?) They are actually cheap to buy but difficult to sell, which is why Germans do not acquire one until they’re certain they’re not going to move any more. The whole idea that it’s good to own your home (made up by Mrs Thatcher and her ilk) is rubbish: free movement of labour is the fastest road to prosperity, and free movement of labour does not happen if shackled by the need to buy and sell houses in the process.

  • USA,

    Yes, I am an economics graduate unlike Mr Adams, hero of so many here, who is a terrorist graduate. I presume you can work out the difference?

    SouthArmaghverylite,

    Always happy when terrorists die. I believe the IDF got a major Hamas leader today – result! What a good start to the New Year, but sadly, many more Islamic killers need to meet Allah. Oh, and yes, have been busy on ATW and B-BBC!

  • Greenflag

    ‘Yes, I am an economics graduate’

    Thus about as accurate a predictor of the future economy as gypsy fortune tellers 🙁

    ‘I believe the IDF got a major Hamas leader today’

    And another four were born plus hundreds of others who will seek to avenge his killing no doubt .

    ‘What a good start to the New Year’

    Nothing like peace and joy eh to all men eh ? sorry that should read ‘war and blood ‘ 🙁 You sound like one sicko mate 🙁

  • Greenflag,

    I note you are mute as well as dumb on the topic of Mr Adam’s pedigree.

    As for the death of a major Hamas terrorist, I can imagine how broken-hearted you are. Isn’t it just awful when terrorists get killed before they can kill more innocents?

    Of course you suggest that Gaza breeds terrorists so on the force of your own logic, it is vital Israel keeps up the attacks.

    One of the rare delights of this site is observing the number of morally bankrupt Hamas apologists that infest it. The land of the blind, truly. Bye.

  • Greenflag

    paddy reilly ,

    ‘are you related to Green Span’

    At this time of year I often wish I was of the faith of the circumcised ones but alas us atheists have to put up with the cursed spending of money on Chinese made stuff just like those who worship the one who lies in the manger or the one who provides the light of Hanukah etc 🙁

    Greenspan’s magic voodoo act has run it’s course and to be fair to the man he did an excellent job of keeping the economy away from recession by his oracle like enunciations re movements in interest rates and such . A class act with the emphasis on ‘act’ _Alas the real economy as opposed to the ‘paper economy’ intervened and now Mr Bernanke is left to carry the can of worms forward into largely unknown territory . How unknown we should find out by mid summer 2009 .
    Hints at an Obama move towards ‘protectionism ‘ may be heard if the ‘new ‘ economic stimulus being planned fails to impact . Given worldwide economic interdependence ‘protectionist’ policies initiated by any of the major economic powers now would be answered with more of the same by competing economies . Obama will need to be a magician to work his way around this conundrum .

    Re your points on Germany -perhaps things have changed since last I lived there but iirc Germans were required to put down at least a 25% deposit if they wished to purchase a house. Selling is of course bound to be more difficult in such a market .

    ‘The whole idea that it’s good to own your home (made up by Mrs Thatcher and her ilk) is rubbish’

    Perhaps in some societies depending on their histories -record of social housing provision etc etc but for most Irish people and indeed throughout the Anglosphere the ‘drive ‘ to own one’s own home is seen as almost innate . For Ireland particularly given the local history of evictions , famine etc . Those who had to flee to America and elsewhere were mostly those who did not have a place to call their own i.e they were tenants .

    ‘ free movement of labour is the fastest road to prosperity’

    It’s one of the roads but of itself is neither a primary or sufficient cause for prosperity . More important are location , resources , education , and market proximity . The ‘free movement ‘ of labour around the world and particularly in the USA has as is being seen now acted as a brake to real rises in income in that country and others which has in turn impacted on the present crisis and made more difficult recovery from same . As I said in earlier posts this present ‘crisis ‘ has been building for 20 plus years and when the commentators get past the ‘immediate ‘ causes some may dig a little deeper .As of now nobody but nobody wants to look any further into the ‘black hole ‘

  • Comrade Stalin

    David’s an apologist for the Irgun and zionist terrorism, and won’t condemn their terrorist actions, such as murdering British civil servants during the Palestinial mandate. So we can treat his pontificating with the contempt it deserves.

  • Greenflag

    Vance ‘

    ‘I note you are mute as well as dumb on the topic of Mr Adam’s pedigree.’

    Mr Adams is now a constitutional politician and has promised to pursue his legitimate political objectives by peaceful means . I’m not yet convinced that the DUP are as committed to a peaceful power sharing temporary solution in NI as SF are. Not being an SF supporter I have little interest in Mr Adam’s pedigree. In his defence however I’ve never heard him publicly gloat over the deaths of innocent civilians which is something you apparently have no difficulty with .

    ‘As for the death of a major Hamas terrorist, I can imagine how broken-hearted you are.’

    Your imagination is as dimly lit as the rest of your mental faculties . About as reflective of light as the far side of the moon:(

    ‘Isn’t it just awful when terrorists get killed before they can kill more innocents?’

    Not at all . What’s awful is that you seem to think that the murder of hundreds of innocent civilians is justified if one ‘terrorist’ can be hit in the crossfire 🙁

    Get some common sense man and grow up !

  • Valenciano

    “With the Czechs now in the Euro zone and the Hungarians , Poles and Slovenians close to membership we can look forward to another steady ten years of monetary stability .”

    The Czechs aren’t in (though the Slovaks have just joined.) Slovenia has had Euros for 2 years.

    I’d expect sterling to recover a little in 2009 maybe to 0.85-0.90 per Euro. The Eurozone economy has some rocky times ahead particularly in Eastern Europe. In the Baltics in particular the currency pegs are looking increasingly at risk.

  • There are no real links between the Euro and our recession. In fact, being outside the euro means higher inflation for the UK and Iceland, as the Icelandic krona has fallen 30% in December alone and Sterling slides, making imports more expensive. On the other hand, I accept that for 10 years, the ECB was following a monetary policy that was out of sync with the needs of the Irish economy which at the time needed higher interest rates to cool down the housing-market. But you can’t definitely state whether the inflationary-impact of the low interest-rates was counterbalanced by the counter-inflationary impact of the elimination of currency exchange-rates between Eurozone countries. In any case, the strength of the Euro at 95p Sterling (compared to 71p when we joined) and $1.39 (compared to $1.17 in 1999) will make repaying the national-debt a less honorous proposition than would otherwise be the case. The underlying point in relation to EMU is that it reduces longterm import-inflation, and that the size of the UK economy would give the UK disproportionate influence over ECB policy in the event of EMU membership. In terms of cross-border implications, the Euro would help eliminate the pattern whereby the North/South lose shoppers to the other side because of currency fluctuations, and that is arguably a good thing from an employment point of view. Anyway hurry-up will you it’s been 10 years…. 😉

  • USA

    David Vance has been just been schooled. So much so that he is reduced to ranting about “dead terrorists” on a thread about Eurozone financial policy.
    He knows as much about macro-economics as Winnie the Pooh.
    He is arrogant and rude, is David Vance really Peter Baker in disguise?

  • Wilde Rover

    Comrade Stalin,

    “David’s an apologist for the Irgun and zionist terrorism, and won’t condemn their terrorist actions, such as murdering British civil servants during the Palestinial mandate. So we can treat his pontificating with the contempt it deserves.”

    Indeed.

    He seems to spend his time either condemning some people or praising other people for doing exactly the same thing.

    Just the thought of trying to juggle the contradictions makes my head hurt.

  • Henry94

    The celtic tiger was a result of the break with sterling as much as anything else. It helped make Ireland a low-cost and competitive economy.

    Joining the euro undid all that but we didn’t notice because low-interest rates gave us a delusional and destructive property boom.

    It now gives us a relatively strong currency when we don’t need one. That will only last as long as interest rates are higher in the eurozone. Under the circumstances they are insanely high having been raised in a panic over the oil price bubble.

    So far so lousy in terms of economic management from the ECB.

    Ireland’s interests would best be served by the collapse of the euro project. As long as it exists we are unlikely to leave and Sterling is unlikely to join.

    Our other option for regaining competitiveness is to drive down taxes, wages and government spending. The consequent social unrest will be the price of membership of the eurozone.

    We have little flexibility and not many policy options. But we can at least vote against the Lisbon treaty again. Meanwhile good luck to the retailers lucky enough to be living under John Bull’s tyranny rather than Jean-Claude Trichet’s stupidity.

  • Greenflag

    henry 94,

    ‘We have little flexibility and not many policy options.’

    So not different from the UK , the USA etc etc except in the matter of degree .

    ‘But we can at least vote against the Lisbon treaty again’

    Having pulled the trigger 5 times in the terminal inducing game of Russian roulette one can always pull the trigger for the sixth time .

    ‘It now gives us a relatively strong currency when we don’t need one.’

    Neither does Zimbabwe eh ?

    The world currency market is not a supermarket shelf where small and large countries get to choose which monetary system they will join next year as opposed to this year nor is it a fashion show . People and countries want currency stability in order to make economic policy and financial investment decisions with some prospect of getting a ‘real’ return .

    Ireland has little choice except to remain part of the Euro zone . The rush of new member States into the euro zone will put even more pressure on those outside the zone in terms of higher interest rates and greater import inflation and of course the ‘eternal ‘ 6 % currency exchange costs .

  • smcgiff

    ‘I write this on a brand Dnew Dell laptop, manufactured in Limerick.’

    Afraid not. Dell in Limerick hasn’t shipped a lap top in yonks. Your Lap top most likely came from Poland.

  • Mack

    smcgiff – Ah well. Whatever they were doing there, it was cheaper to buy laptops from Dell Ireland 2-3 years ago than Dell UK (I had assumed this was because they were coming from Limerick).
    But either Dell Ireland will lower their prices (decent sale offers on now) or Dell UK will raise them (or lower them less), or some combination of both. The large pre-Christmas differential is artificial, an artefact of the immediacy of the currency fall.

  • USA,

    Wondered if,as part of the macro-economic debate, you could explain why unemploymentis at a twelve year high in the Republic given the Euro success you claim? http://www.investmentmarkets.co.uk/20081205-2807.html.

    But do not despair, NI is going to help save the crippled Irish economy! Just read what Jim O’Leary,Senior Fellow of the Department of Economics, Finance and Accounting at NUI-Maynooth has to say.

    The central economic point, of which you remain uniquely -if heroically – ignorant, is that IF Northern Ireland was in the Eurozone, Jim’s excellent points would be redundant.

    I am afraid that if I need “schooling” then the Slugger kindergarten would not be my place of choice.

  • Mack

    David Vance –
    But do not despair, NI is going to help save the crippled Irish economy! Just read what Jim O’Leary,Senior Fellow of the Department of Economics, Finance and Accounting at NUI-Maynooth has to say.

    Missing a link? Is this the article you refer to –
    http://www.irishtimes.com/newspaper/finance/2008/1212/1228864709873.html

  • kensei

    David

    If it was not for the Euro tere is every possibility that trhe Republic could be facing a currency crisis in addition to all its other problems. I fail to see how this would be beneficial to the Republics economy, even over the short term. I can definitely not see how it would help attract FDI over the long term.

    Second, monetary policy in the UK seems to be heading the same way as the US ie towards the zero lower bound and effectivekly useless. Even at this point it appears to be pushing on a string.

    Third, if you are going to cite someone, it is polite to provide the link to whatt he hell you are talking about

  • Cheers Mack – it was indeed!

    Kensai – ever make a superficial error? Read the link and address the substance? I repeat; what if NI had followed the Republic into one size fits all macro-economic policy-land? We’re saving the Republic’s bacon.

    I await the macro-economic perspicuity of the well-schooled USA.

  • PaddyReilly

    But do not despair, NI is going to help save the crippled Irish economy!

    Part for the whole again. The Irish economy is not crippled, it is suffering from the Credit Crunch, as is the British economy, American economy etc.

    That part of NI (mostly Newry) which is closest to the border aids good republic folk to save money. The US may save money by buying bananas from Haiti instead of Florida, but it is hardly the case that Haiti is thereby saving the US from ruin.

  • Good news folks!

    “Most Britons still oppose the Euro”

    http://news.bbc.co.uk/1/hi/uk/7806936.stm

    It’s on the BBC so it must be true.

    And then there is this.

    Has the death knell sounded for the Euro?

    http://www.spectator.co.uk/coffeehouse/3201021/has-the-death-knell-sounded-for-the-euro.thtml

    Now then – 10 more years of the Euro everybody – which may also be the time it takes US to “school” us with his macro-economic perpicuity.

  • Ed Krakka

    The euro is primarily a political enterprise not an economic one. Therefore, it shouldn’t be a surprise when people still urge UK euro membership despite the harsh economic truths.

  • ZoonPol

    A currency can still fail be it adopted by one or many and another may still profit from its profit or loss. Each is a risk but if the EU fails as a project then what of these risks?

  • Mack

    Chances are every fiat currency will collapse eventually, and there is nothing to say people will want gold in 100 years or 1000 (inductive reasoning would suggest they would, but inductive reasoning is deeply flawed).

    For now I’d rather have a currency that does what money is supposed to do – store value. The Euro is doing a decent job so far.

    Links on fiat currency flaws..

    http://www.ronpaul.com/2008-12-02/playing-god-with-the-economy/

    http://www.myprops.org/content/Wall-Street-Unspun-with-Peter-Schiff-internet-radio-show-April-16-2008-recording/

    http://www.dailyreckoning.com/rpt/fiathistoryWP.html

  • Greagoir O Frainclin

    Looks like the UK will eventually join the euro if the pound continues to drop in value. I remember the day when the British government lauded the strength and value of the British pound. Now they are championing its growing weakness in the guise of the value of cheap UK exports. Seems like things in the UK are alot worse then what the government is prepared to admit. Ironically, wealthy ROI shoppers with all their money made in the Celtic Tiger years and who know a good bargain may keep NI retailers afloat.

    RTE’s economic expert (and bearer of bad news) George Lee has lauded the strength of the Euro for protecting the small Irish economy which would have collapsed like Iceland’s with the present credit crunch situation!

  • Greagoir O Frainclin

    “But do not despair, NI is going to help save the crippled Irish economy!”

    Ha Ha…Do I detect a little bit of mixed feelings of disgruntlement from David Vance as he sees all the papist fenians heading north, crossing the ‘border’ to do their shopping in ‘Britain’.
    There was a time when most people from the ‘south’ were unfamilar with NI, associationg it with just trouble and strife. It’s all changed now! To put it bluntly, it’s seen for what it really is, as just another part of Ireland where one can just hop in the car and drive to for a great bargain!

    The Pound = Euro now!

  • Dr Kildare

    Hmmmm…
    “The pound = Euro Now!”
    From a Southern perspective non wasting (fixed) assets are becoming very cheap up North now. I’d say this thought has crossed more than one Southern’s mind in recent days!

  • kensei

    David

    Kensai – ever make a superficial error? Read the link and address the substance? I repeat; what if NI had followed the Republic into one size fits all macro-economic policy-land? We’re saving the Republic’s bacon.

    Ever answer the question? I read the article, and it does not say what you are saying. What it says is that shopping in the North may hasten the process whereby shops in the South are forced to cut prices. But in a recession that process would happen anyway.

    I also disagree with his thesis that the Republic must “increase competitiveness” by dropping wages or if they had the power, devaluing the currency. Let’s get competitive by dropping the living standard and wealth of the nation. Great. Is our ambition to be Italy? The Republic should focus on upping productivity. Aside from that there are a couple of things you could do — try to invest in the next big thing, or become highly specialised in what you are good at, like say Switzerland.

    As for your question, there are two possible scenarios the way you have phrased it

    1. The North was politically joined with the South and joined the Euro. In which case Belfast would have been an attractive place for a proportion of all that FDI the Republic got, we’d have had enjoyed lower tax rates and higher growth, and current border counties might not be making short term gains from currency differentials, but they might still be materially better off and trading more with each other without a giant trade barrier. The recession would force down prices because that is what recessions tend to do,

    Oh, and we wouldn’t be basically a Soviet Satellite, either.

    2. NI is part of the UK and the UK joins the Euro — well the transactions costs of trading with the UK would have dropped due to sharing a currency, so there may have been more trade between the Republic and the UK than there actually was across the boom time, ever so slightly increasing prosperity in both nations. There would still be trade barriers North-South due to differing regulation and differing price code, so probably still a price differential and the process would have occurred, except slower than now but faster than just a pure recession.

    And I would have been able to afford to visit Dublin over Christmas, because I wouldn’t have to worry about the pound being ridiculously weak against the Euro.

    What we are discussing is currency fluctuations and arbitrage gains. You can’t build an economy on it in the long run.

    You are really an economics grad?

  • If you think now’s the time to snap up cheap property in the North, Dr. Kildare, I’d warn that property in the North is still valued over its long term trend by a greater ratio than seen in recorded history, even after recent falls.

    Come up here and get your fingers burnt all you want, but don’t say you weren’t warned. Northern Ireland still suffers from too many new houses, too often of types that people don’t want to live in, usually badly constructed, often in the wrong places, too many lying empty, and with a complete dearth of first time buyers.

    In other words, it’s just like the South. But not as bad.

  • Greenflag

    greagoir o frainclin ,

    ‘Now they (British Government spokespersons ) are championing its (Sterlings) growing weakness in the guise of the value of cheap UK exports.’

    They used the same argument back in the 1970’s , and 80’s and 90’s and no pun intended but that argument has even less currency now than it had then . The UK needs to row in with the rest of Europe and help enhance world wide currency stability in the face of a probable decline in the US Dollars ‘shaky ‘ role as the world’s reserve currency of last resort.

  • Greenflag

    Dr Kildare ,

    ‘From a Southern perspective non wasting (fixed) assets are becoming very cheap up North now. I’d say this thought has crossed more than one Southern’s mind in recent days! ‘

    Indeed it has but only fleetingly . Apart from anything else there are better bargains to be had in Spain and Florida . I know one near neighbour who bought two condos in Florida for 150,000 dollars (for the two ) -basically bought one and got the other ‘free’. Also the weather is better -the natives less truculent than the nordies, who always seem to be chewing on a wasp . Climate does things to people.

    Sammy Morse is right -NI has not reached the bottom yet 😉 Not to worry it will . There’s nowhere else to go for that market at least for another decade or so .

  • Greagoir O Frainclin,

    “…all the papist fenians heading north..” Please do not seek to transfer your pathetic and sectarian prejudices upon me.

    Kensei,

    So, to summarise, an Irish economy which has led the EU zone into recession; which has unemployment levels almost double those in the UK; which has a crashing property market and a punctured retail market leading to desperate politicians in Dublin urging “patriots” to stay south of the border; and which has no ability to alter interest rates to deal with its urgent issues ..is an economic model that we should seek to emulate? Have you ever read an economics textbook?

    The Celtic tiger has been spit-roasted and the state of the Irish financial institutions exposed for all to see. Northern Ireland’s economic well being is best served by its continued centrality within the UK power-house which, despite the efforts of Zanulabour, is still a major global player.

  • Lindsay Roy

    NI well being is best served by sponging off GB.

  • PaddyReilly

    Most Britons still oppose the Euro

    Indeed, most Britons are innocent of economic sense and most opinion polls are commissioned by people who wish to load the question so it gives the result they desire.

    The attraction to the £ is an emotional one, not an economic one. If you were to rephrase the question “Would you object to the £ being pegged to the € to stop it falling any further” most of them would reply no.

    As long as it looks like British money they wouldn’t object. The fact that the £ would thus have become a notational varient of the € wouldn’t occur to them.

    So that’s the way to do it. As Mr Punch says.

  • Mack

    David Vance
    The Celtic tiger has been spit-roasted and the state of the Irish financial institutions exposed for all to see. Northern Ireland’s economic well being is best served by its continued centrality within the UK power-house which, despite the efforts of Zanulabour, is still a major global player.

    David NI is a peripheral, not central, part of the UK economy. It is entirely dependent on fiscal transfers from the productive part of the union.

    The IMF project Irish GDP per capita to be more than 30% higher than the UK’s in 2009. Both economies are entering severe recession. There is no evidence however that the UK is set to overtake Ireland.

  • Greenflag

    paddy reilly ,

    ‘As long as it looks like British money they wouldn’t object.’

    Great idea Paddy 🙂 Stick a picture of Queenie on the front and a picture of her corgis , a plate of fish and chips and Postman Pat on the back call it ‘money’ and bob’s your uncle . Some imperial mind sets die off slower than others 🙁

    Now that the former european colonial powers have been evicted from Asia ( apart from the Americans in Iraq /Afghanistan and the Israelis in Palestine how much longer will it take for the West to accept that Asia will take on board what benefits it’s societies from the west but will leave the rest thank you very much . As Chou En Lie once said it’s still to early to say what the effect of the French Revolution will be but we can see what’s happening to the pound and going down is always painful particularly if you haven’t been pleasant to the folks on the way up 😉

  • Greenflag

    Vance ,

    ‘Northern Ireland’s economic well being is best served by its continued centrality within the UK power-house’

    And he’s an ‘economics ‘ graduate ? Either standards have slipped dramatically or he meant ‘home’ economics . Somebody needs to educate this Vance ‘eejit’ that NI is about as central to the UK economy as Outer Mongolia is to the Chinese economy .

  • Dave

    The Treaty of Rome imposes a binding obligation on the governments of member states of the EU to seek “ever-closer union” (the outworking being unity) between them. For the Europhiles who promote integration, the arguments about whether or not aspects of integration such as the Eurozone promote the national interests of member states are wholly irrelevant because they do not accept that those member states are entitled to a national interest that is separate from the EU.

    Daniel Hannan summed up this ‘all roads lead to the EU’ agenda quite nicely:

    “I’d take them more seriously, these euro-merchants, if they hadn’t been arguing for membership a couple of years ago on grounds that the euro would boost exports and lower interest rates. Odd, isn’t it, how, as far as they’re concerned, all scenarios point the same way. Pound too strong? Join the euro! Pound too weak? Join the euro! Pound just right? That just shows that we’re stable enough to join the euro!”

    Ireland’s exports stagnated after it joined the eurozone in 1999, after quadrupling in the decade before membership (the actual Celtic tiger). For a country that is critically dependent on exports, this stagnation shows that Ireland has now locked itself into a mean average of EU mediocrity and has no economic future other than as an EU-region.

    Year Exports
    2000 83,889
    2001 92,690
    2002 93,675
    2003 82,076
    2004 84,409
    2005 86,732
    2006 86,772
    2007 88,852

    In 1998, for example, GDP growth was 8.7% and inflation was 2.2% with interest rates set by the Irish Central Bank at a sensible level of 6.2% that was in full accordance with the needs of the Irish economy. After transferring sovereignty over Irish monetary policy to the European Central Bank, interest rates were set by the ECB under their one-size-fits-all policy at levels that were inappropriate for the underlying indicators of the Irish economy. The result was that house prices and sales of consumer goods, car sales, etc, soared as the Irish binged on this supply of cheap credit that was proffered by the ECB, amassing a mountain of debt. It is a circular argument to point to the Eurozone as a saving grace for Ireland because if we did not join the Eurozone we would not be in need of saving graces. Had Ireland retained control over its monetary policy, interests rates would have remained at a level that was appropriate for the needs of the Irish economy rather than being set by Frankfurt at a level that was appropriate for the needs of the German economy..

  • PaddyReilly

    Joining the Eurozone does take away the Republic’s room to manoeuvre with regard to currency rates, but that is only one such mechanism.

    As Greenflag points out, restricting mortgages to 75% of the total price cuts down the number of buyers and borrowers in Germany. Building more houses than there are buyers for deflates housing prices, you only need to free up more land for this purpose.

    And keeping some control of immigration is the best way to cut down on unemployment. You just seek out the last in and the most alien and tell them to hop it.

    The idea that states need to be able to control their currency is a bad one, and comparatively recent. When gold and silver ruled governments had no such freedom. Where they obtained the freedom to create value using paper, as with the Louisiana Bubble in France under M. Law, they generally abused it.

  • Dave

    It takes away a lot more than that. As John Maynard Keynes said, “Whoever controls the currency controls the economy.” Monetary policy is a critical tool for controlling the economy. When you surrender control of it to third parties, you surrender control of your economy along with it. That is why Central Banks are nominally independent from government but still obliged to follow the economic policy of the government. You cannot have a situation where the agency that controls the monetary policy is using it to influence the economy in one direction and the government is trying to influence the economy in the opposition direction. That is the dismal situation that exists within the Eurozone. In other to avoid the conflict, the government has no option other than implement its economic policy so that it follows the monetary policy of the ECB. If the ECB is using that monetary policy to stimulate spending by proffering cheap credit, then the government simply has to go with the flow. Do you know what interest rates sustain GDP growth of 8.7%? Well, look at what interest rates were in Ireland when it had GDP growth of 8.7%. They were set by the Irish Central Bank at a sensible level of 6.2%. This ensured that money was only borrowed for sensible reinvestment purposes. Lending money at ridiculously cheap rates ensured the opposite result.

  • Dave

    And, by the way, the law of supply and demand didn’t regulate house prices in Ireland. That is why the supply exceeded the demand by 340,000 units (the number of vacant houses). What ‘regulated’ that practice was the ECB setting interest rates so low that it didn’t matter if a tenant existed for the property or not. A buyer could simply borrow the money, leave the house idle for a year or two, and then sell it for a profit. The downside to this is that the mortgages will now have to be repaid on all of those properties, and no tenant exists to repay it. Instead of investing their disposable income in the economy, those buyers are going to spend the next 20 years repaying loans on properties that produce no income. Give it another 5 years, and you’ll see the full scale of the damage that the ECB has done to the Irish economy… and you’ll see it first in all of the businesses who thrived on the cheap credit that was proffered by the ECB.

  • PaddyReilly

    A buyer could simply borrow the money, leave the house idle for a year or two, and then sell it for a profit.

    If this was the case, then I would beg to suggest that there was in fact some interruption to the proper law of supply and demand. You can’t perform the same trick with cars, for example. Nor can you do this with houses in many countries- Cyprus, for example. A house is at its highest value when new, and declines in value ever after, just as a car does.

    This is nothing to do with the ECB and everything to do with the false market in housing which exists in Britain and Ireland.

    The problem is that no house-owner wants this bubble pricked, and so it is allowed to continue.

  • Mack

    Dave, Paddy Reilly

    And, by the way, the law of supply and demand didn’t regulate house prices in Ireland

    Spot on Dave. George Soros describes this reflexivity, most of the rest of us would call it a feed back loop. Assets are different from goods, human psychology being what it is when apples go up we buy less and switch to pears. When house prices or shares go up – we buy more, not less – pushing prices up further! This feedback loop infected every aspect of the Irish economy (increasing tax revenues, wages etc) – it was in place prior to joining the Euro too by the way. The authorities actually believed their own guff rather than fixing the problem (the mal-investment boom being the problem, not the bust per se).

  • PaddyReilly

    the mal-investment boom being the problem

    Yes, and we have to bear in mind that in the German economy there is an element of rent control. Consequently the idea of buying to rent, and borrowing to buy to rent, and expecting to make a packet isn’t there so much.

    If you’re going to rent property you probably need to own whole blocks or streets in order to introduce economies of scale, and you certainly can’t do it on borrowed money. This is the way it was in Ireland and Britain a hundred years ago. It is this madness which is infecting the Irish economy, not the fixed currency, which was universal in the days of gold.

  • Mack,

    Any thoughts on why the Republic is not a member of the G7?

  • Mack

    David,

    It’s a puzzle. Ireland, Luxembourg, Switzerland, Isreal and Norway are really struggling because of their pig-headedness, what are they thinking?

  • kensei

    David

    So, to summarise, an Irish economy which has led the EU zone into recession;

    I am unsure what you mean by “led” here; the Irish economy does not have the power to lead anyone else anywhere. If you mean “preceded”, I’m not sure that is true — the Republic’s economy was in difficulties but it was assumed it would still grow until the tsumai hit. This is similar to other economies, particularly within the Anglosphere.

    which has unemployment levels almost double those in the UK; which has a crashing property market and a punctured retail market leading to desperate politicians in Dublin urging “patriots” to stay south of the border; and which has no ability to alter interest rates to deal with its urgent issues ..is an economic model that we should seek to emulate? Have you ever read an economics textbook?

    This is frankly ridiculous. You are taking a snapshot of the economy at the low point of the economic cycle. It is no more effective than asking the converse questions during the high point of the boom. What matters is who does better over an extended period. On that basis, we would have done very well to emulate the Republic over the last 15 to 20 years. Whether that stays true remains to be seen; I’m not sure the policies the Republic will pursue for a start.

    Some other points: NI has no influence over its currency. It has hitched itself to a bigger currency – in this there is really no difference between it in the Republic except which currency it is hitched to. Second I’m not sure reading an economic textbook would help; none of the things you mention are actually decisions effecting macroeconomic policy, they are outcomes of a recession. Third, many of those problems are equally shared by the UK, and a few of their own. The budget problems are going to be interesting.

    The Celtic tiger has been spit-roasted and the state of the Irish financial institutions exposed for all to see.

    The Celtic Tiger could not last forever. Consider what would happen if the Republic sustained 5+% growth rates indefinitely. It would outperform the rest of the world by so much that there would a huge differential in per capita GDP. No, things had to fall to more normal levels. The question is whether it would happen gracefully or badly. We have are answer, but it doesn’t really tell us anything about what you are asking.

    Northern Ireland’s economic well being is best served by its continued centrality within the UK power-house which, despite the efforts of Zanulabour, is still a major global player.

    An easy case to make in the middle of a recession when you have a huge subsidy from England. What matters is who does better over the long term. It possibly, probably likely that the South will come out of this recession maintaining high GDP per capita and lower debt than NI, and certainly a lower percentage of GDP in the public sector. The best interests of the six counties in the long run can not be ascertained form a snapshot in a recession, and part of it is likely a value judgement. It may be that the UK offers better stability but lower growth than the Republic. Which would be prefered is not entirely clear and easily argued.

    Again: are you really an economics graduate?

  • Mack

    David Vance, Kensei
    which has unemployment levels almost double those in the UK

    Just noticed this. This is incorrect. Unemployment in Ireland was 7.4% compared with 6.0% in the UK in October. The British are slightly slower at generating stats it was 7.8% in Ireland in November. Higher but certainly not double.

    http://www.statistics.gov.uk/cci/nugget.asp?ID=12

    http://www.cso.ie/statistics/sasunemprates.htm

  • Kensei,

    Let me simplify for your benefit;

    The Republic of Ireland was the FIRST Eurozone country to technically go into recession.
    The Central Statistics Office (CSO) said gross domestic product (GDP) had contracted by 0.5% in the three months to the end of June. The economy had shrunk by 0.3% in the first quarter of the year. Technically, a recession is defined as two or more successive quarters of negative growth.

    So, let us be clear that the Irish economy was the worst performing in the Eurozone in 2008.

    Check out the BBC, they always tell the truth.
    http://news.bbc.co.uk/1/hi/business/7635426.stm

    Right – so now we have established that the Republic’s economy has been at the cutting edge of economic meltdown (Hurray for the Euro)let us move on and clarify a few of your other points.

    You seek to distract my point regarding unemployment by seeking to reference economic performance over the last 15-20 years. But during the 80’s and early 90’so, Ireland had unemployment as high as 15%. That was the second highest in Europe. http://www.tcd.ie/Economics/SER/archive/1996/ODONNELL.HTM. So what is your point, exactly? Irish economic performance was abysmal in the 70’s/80’s/and early 90’s. That’s just the reality and I suspect without the €10 Billion of Euro-monies poured in via net EU contributors such as the UK, the growth of the Celtic tiger would have been stunted during the boom years from 95-07.

    You claim Northern Ireland has no influence of it’s currency. Northern Ireland, by virtue of being British, enjoys the benefits of our ancient Sterling currency. That is just one part of our rich economic heritage. I have never claimed that the people of NI set out our currency requirements but I do know this; unlike the ludicrous Eurozone’s “one size fits all” approach, the UK can, and does, adjust monetary policy to suit our specific BRITISH economic requirements. The poor old Celtic tiger got spit roasted because Ahern could no more influence the rates set by the ECB than he could account for his own personal financial dealings. Ireland would have benefited from higher interest rates to reduce the overheating in the property market. It didn’t get them and now — well, remind me how many workers in this sector are losing their jobs and then, when you are at it, reflect on the fact that in 2007, over 13% of Irish workers were in construction. Ireland has run the risk of an overly exposed construction sector, built on leprechaunic logic, and it is now paying the (ever falling) price.

    You say that the Celtic tiger could not last forever. Correct. It’s dead and buried.

    As for the UK’s future, I do feel we could learn lessons from the South. I applaud the low tax approach that the Irish government adopted in the 90’s. My hope is that we purge ourselves of the neo-Keynesian trash in Labour and elect a Conservative government which will cut taxes, reduce the bloated public sector, and encourage SME’s.

    I ALSO hope that the Republic does emerge from the deep recession that it is moving into since it is our neighbour and I would not want to see it suffer. I fear that Biffo and the gang are as useless as Brown and Darling, but time will tell this year. It is not good for either North or South to do badly and so as we start to travel through 2009, I will be wishing the Republic well.

  • PaddyReilly

    Well I for one think that it is a very useful development that so many of the Republic’s workforce, perhaps 200,000, are unemployed. Every cloud has a silver lining.

    What proportion of these are Northerners, or the children of Northerners? Does it not make good economic sense to offer them the chance to participate in job creation schemes in their native province, where their inflated 26 County benefits would be directly comparible with a badly paid Northern job?

    Who knows, if there were enough of them, they might have a positive effect on the political atmosphere of the area, bringing about a new era of peace and reconciliation.

  • kensei

    David

    The Republic of Ireland was the FIRST Eurozone country to technically go into recession.

    Sweet. Isn’t life so much simpler when you produce data?

    Irish economic performance was abysmal in the 70’s/80’s/and early 90’s.

    You could go back further, but it doesn’t really make sense. There is an absolutely clear demarcation of the Irish Government pursuing radically different policies than those that went before. It would be like adding in economic data from the 70s when discussing the Tory reforms in Great Britain during the 80s and early 90s. It is meaningless in context.

    I suspect without the €10 Billion of Euro-monies poured in via net EU contributors

    That one. Wikipedia gives the yearly subvention from the UK to the North as 5 billion pounds a year, and that isn’t counting the money from Europe that has been thrown at us. The Republic took the money and used it to help build a real economy. 10 billion Euro sounds a lot of money, but it does not generate the 10% growth rates seen in the last 90s on its own.

    You claim Northern Ireland has no influence of it’s currency.

    It has minimal influence just as it does with everything else. That is a simple statement of fact.

    Northern Ireland, by virtue of being British, enjoys the benefits of our ancient Sterling currency.

    Appeal to tradition, meaningless, logical fallacy. Next.

    the UK can, and does, adjust monetary policy to suit our specific BRITISH economic requirements.

    Given that the economy of the South East of England is almost entirely divorced from the state driven economy of Northern Ireland (or large swathes of Northern England), you have precisely the same problem – a single rate for often disparate areas. Moreover, you are ignoring the point about the current crisis — monetary policy has become essentially useless.

    Even then, it is not as clear cut. Yes, the Republic gave up control over interest rates and that is a notable surrender of sovereignty. But in return it lowered transactions costs with its main trading partners and got the value of a strong currency in a way the punt could never be. ANy argument for or against would have to take into account that trade off. You might eb right. But your argument is simplistic and just a touch jingoistic.

    The poor old Celtic tiger got spit roasted because Ahern could no more influence the rates set by the ECB than he could account for his own personal financial dealings.

    And the Bank of England inflated an asset bubble just as large, if not larger in the UK in an attempt to stave off the last recession. Great success, bud.

    Ireland has run the risk of an overly exposed construction sector, built on leprechaunic logic, and it is now paying the (ever falling) price.

    Construction is a problem but one hard to avoid. A lot of infrastructure needed built, both public and private, because Ireland had a lot of catching up to do in the area. You were going to have this problem to an extent regardless of the interest rates. Perhaps not as large, but it is an imbalance.

    The UK’s economy is incredibly reliant on a Financial Services sector which has just taken a pounding from which it is unlikely to recover anytime soon. The lost revenue is scary. So the UK has imbalances of its own.

    In a sense, we’re bald dudes arguing over a comb. Both the UK and Irish economies are going rapidly down the pan. Each has its own strengths an weaknesses, and it is not at all clear which will come out better over the long run. Hell, I’ll not every deny that having a giant subsidy over the next few years will help ease the economic pain. But that does not answer the larger question.

    My issue is that you are simplistically shoe horning this into “look how great the Union is” without really much thought or decent argument. Picking apart short term failures is essentially meaningless. What matters is the medium to long term, the relative performance and the comparable volatility of the economies. There is a worthwhile debate to be had there, but all you are doing is “L00k the Celtic Tiger is dead L0l”. Well, of course it is. The real Tiger has been dead for years and could never be sustained forever. The Republic started from a lowish base and could only suatin huge growth rates for a short catch up period. But it has had a fairly solid run of economic performance, and outperformed the UK over the period. NI would probably have been better off as part of the Republic during that period. It wasn’t true for the period before. It may not be true for the period in the future. But as of right now, we have being running a natural economic experiment for the past 80 years, and the current result is the Republic is well ahead in living standards. That is a fact. But it hasn’t been there for most of the 80 years. Possibly that is a blip. But if the Republic maintains an edge in the future, economic argument will tilt toward it. Else it won’t.

  • Greenflag

    david vance ,

    ‘My hope is that we purge ourselves of the neo-Keynesian trash in Labour and elect a Conservative government which will cut taxes, reduce the bloated public sector, and encourage SME’s.;

    Not content with Dubya’s neo con destruction of the USA economy you wish to a repeat of same on the British economy ? Unionism and some unionists have long been recognised as having an overdose of the self destruct ‘gene ‘ but wishing the same for their ‘subvention ‘ donor across the water takes ‘biting the hand that feeds you to a whole new level 🙁

    Have you joined SF recently or do you just dislike the Brits that much ?

  • Dave

    David Vance (bar the leprechaun trolling) is correct with most of his points. Over 90% of all EU funds that Ireland received went to the farmers, offering no benefit to society (bar the banks with whom said farmers deposited said money for – literally – nothing). The effect of those funds was to create a culture of dependency in the farming industry that keeps it in the dark ages and keeps food prices at artificially high levels in the EU, since it is taxpayers within the EU who fund the CAP. On the other hand, the benefit of modest EU funds that never accounted for more than a fraction of GDP were always offset by the cost of implementing EU, and the burden of billions that it imposes on Irish industry – not to mention that the value of unprocessed fishing stock in the EU is worth £13.9 billion sterling annually, and that 40% of it is extracted from the Irish box. In processed form, the value is double that. Contrary to the propaganda by Irish Europhiles, Ireland has been a net contributor to the EU from day one.

  • Dave

    “…offset by the cost of implementing EU [b]regulations[/b]…”

  • Greenflag

    kensei ,

    ‘In a sense, we’re bald dudes arguing over a comb.’

    Indeed but an excellent post bte covering all the major points such as they now seem to be . Both Vance and David are so hung up on ‘ideology’ of the simplistic right wing ‘nutter’ brand that not only can they not see the wood for the trees but they forget that the ‘forest’ contains over 6 billion people . We’ve heard the ideologues long enough to know that be they of the extreme left or right they have nothing to offer as to the present economic mess except the same old rubbish.

    Having ‘exported ‘ most of the western manufacturing base to Asia and elsewhere over the past 20 years the stage is now set to export most ‘financial’ services and any remaining industries . In the coming ‘recession ‘ Europeans have a ‘social safety net ‘ and a known history of what can happen when millions of people are forced to reduce living standards and /or face a hopeless future . Americans have little or no safety net for it’s millions of now emisserated middle class . They have of course access to millions of firearms which at the end of the day may be used to supply Americans with their ‘needs ‘ if the ‘economy ‘ fails to deliver .

    What we call economic progress and it’s accompanying prospect of ever increasing prosperity and living standards for the majority of the people may have been just a blip brought about by the false optimism generated by the fall of ‘communism ‘.

  • Greenflag

    david ,

    ‘The effect of those funds was to create a culture of dependency in the farming industry that keeps it in the dark ages’

    Would this be the same culture of dependency that has giant American corporations such as GM , Chrysler and the Insurance Companies and the Banks feeding at the trough of the American taxpayer ? Northern Rock ? Royal Bank of Scotland etc etc etc . What you call the culture of ‘dependency ‘ has indeed reached it’s political zenith in Vances ‘Norn Iron ‘ with a massive 6 billion a year for the past decade or more for 1.6 million people ?

    Vance is not 90% right . He’s a narrow minded right wing ideologue – extrapolating simplistic Sun/Daily Mail solutions onto a situation which defies the traditional economic ‘remedies ‘ be they of the extreme right or left .

  • Mack

    David Vance
    “Irish economic performance was abysmal in the 70’s/80’s/and early 90’s.”

    The Irish economy out performed the Nothern Irish economy most years during that period (and the Scottish economy too).
    Britain was bankrupt by the mid 70’s and had to be bailed out by the IMF. By the earlier 80’s their get out of jail free card – North Sea Oil – was flowing.
    The 80’s were tough – there was some growth but not enough to create enough jobs for the large numbers of potential new workers thanks to sky high birth rates. The earlier 90’s would have been regarded as a boom in recession hit Britain.
    It takes time to move from being a poor country to becoming a rich one. Certainly the seeds were sown in the 1980’s Ray MacSharry’s spending cuts, start of the tax cuts, IFSC created etc.

    Irish economic growth 1990-2006

    http://www.esri.ie/_internal/cimg!0/34a3knz06rl2v

  • Mack

    The link in my last comment breaks Slugger’s redirector – try cutting and pasting it

    http://www.esri.ie/_internal/cimg!0/34a3knz06rl2v

    Irish growth

    The redirector removes the ! just before the 0 cimg!0

  • Greagoir O Frainclin

    Reading David Vance’s opinions it seems that he is dearly hoping (whilst wringing his hands) that there will be a catastrophic demise of the Irish economy, (unlike the economic bouyant NI and UK of course).
    But sadly for David the days of poverty, popery and spudz are well behind us down south. Anyways, sure folk can flock north to sell ye their BMW’s and Mercedes as well as their holiday homes abroad if times get that hard again.

    Must check out the balance of my SSIA account, (just one of many), I’m sure all that champagne, beluga caviar and oysters at Xmas on the beach in St Lucia made a bit of a dent.

    LOL!