Ireland and the ECB: “We have political power and we should use it”

Brian Lucey in the Irish Times:

I RECENTLY had coffee with a former colleague who is now working in the financial services industry in Germany. He was at pains to stress that the general tenor of the German press, even among the tabloids, was that although Ireland had been stupid, feckless, and perhaps somewhat arrogant, it was in general a well-run European country that was at least trying, painfully, to get out of the hole it had in part dug for itself. He felt there was a degree of sympathy for the Irish, and the German taxpayer would understand if the Irish, having made a genuine effort, required the European partners to take some of the burden.

The truth is there is no agreed mechanism for any country to go bankrupt in the way individuals can. That’s a big gap in the international financial system and makes re-entry into the club of nations arduous and problematic. Still less is there one for a member of the Eurozone.

Lucey suggests this could be the ECB’s weakness and Ireland’s opportunity (to re-coin an old phrase):

We have political power and we should use it. Even if the Government is forced to consider a unilateral decision; and I would favour that if we begin movement towards that using the powers of the Minister for Finance, the ECB will not cut off emergency liquidity. To do so would expose it as a neocolonial power.

I do not believe that it is such. Irish banks borrowed foolishly from European institutions. European institutions lent bullishly to Irish banks. The solution to date has been for the Irish taxpayer take on all of the adjustment. Time to call a halt.

There is a clear difference in German sentiment towards Ireland and Greece. But it will be getting Europe to recognise the unrealistic size of the burden that’s the key to unlocking this increasingly drastic situation.

It’s an open questions as to whether it is possible to arrive at a credible solution which works for Ireland and does not spark further instability around the peripheral countries.

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  • joeCanuck

    There is a clear difference in German sentiment towards Ireland and Greece.

    Do you think that the relative size of the economies has an influence? Apart from the fact that Ireland has been an attractive holiday destination for germans (Greece too of course).

  • john

    ”There is a clear difference in German sentiment towards Ireland and Greece”

    No matter how poor the government is in Ireland Greece is ten times worse and the Government PASOK with American George at the helm are a massive joke makes FF look good! By the way these losers virtually make themselves untouchable so they can do whatever ever corrupt dealings they want so fair play to the UK for jailing the expenses chancers if that happened in Greece the whole lot of them would be in prison

  • Mack

    David McWilliams now calling for a referendum on the banking debt. Could certainly give any new government leverage, if they were ‘reluctantly’ forced to accept the need for one. The EU wouldn’t want to be seen as undemocratic, would they?

  • CW

    As usual this is off-topic again, but can we have a blog on the Cavan-born actor TP McKenna, who passed away recently? Many will no doubt say “who?”, but McKenna was considered was of the finest Irish character actors of his generation.

    You may not have been familiar with the name, but the chances are that you will have seen him in one of the many guest appearances he made on some of the most popular TV shows, including The Sweeney, Dr Who, Lovejoy and Fair City. One of his most notable big screen roles was in a 1960s adaptation of Ulysses.