New York Times columnist Paul Krugman has slammed Ireland’s decision to back the EU Fiscal Treaty – and predicted the death of the Euro within two years.
Liberal economist Krugman has rubbished the Fiscal Compact in an interview with Irish state broadcaster RTE.
He has described the Fiscal Treaty – designed to keep EU government spending in check – as a ‘bad idea’ and said he cannot understand why the Irish electorate endorsed it in the referendum.
Krugman told RTÉ Radio 1′s ‘The Business’: “Irish voters should have voted only to support what is right, rather than trying to appease the Bundesbank.”
He also predicted: “There is a fifty-fifty chance of the single currency disappearing within two years anyway, given the pressures arising in Greece.
“If the outgoing coalition of New Democracy and PASOK lose power after the second Greek general election, it is likely that Greece will reject its bailout conditions and then end up leaving the currency union almost immediately.
“Even if they manage to stay in it will only take about a year of falling economic growth to put the country at risk of leaving it anyway.
“That’s a move I do not believed the currency will survive.”
Krugman was also critical of the EU leadership and its handling of the Eurozone crisis.
He said: “If the ECB does not rise to the occasion, with very very large lending, the whole Eurozone breaks up in a matter of months.
“There are two inconceivable but equally likely, possibilities - that the ECB’s mandate will be expanded, in order to allow inflation to rise through a process of open-ended lending, or that
Germany will veto expanding the mandate and allowing the union to break up and fail.
“One of those two inconceivable things will have to happen.”
The celebrated economist also suggested the Fiscal Compact is not the solution to Europe’s current problems.
“It deals only with imaginary problems, not the real ones,” he said.
“Ireland had a budget surplus and a low debt. Spain had a budget surplus and a low debt. Both countries are struggling economically as a result of privatising their banking debts rather than through incurring too much sovereign debt.
“The Fiscal Compact would instead force countries to pursue austerity policies which Ireland had already shown to be ineffective.
“Two things were supposed to happen - Ireland was supposed to have an economic expansion, because austerity was supposed to create confidence and lead to economic recovery, and Ireland was supposed to raise confidence in the bond markets.
“Neither of those things have happened at all. The two occasions on which Ireland appeared to be on the cusp of growth, in early 2010 and late 2011, had turned out to be false dawns.
“This is a particularly good example of why austerity didn’t work. Ireland had been a good soldier in undertaking all the reforms asked of it, but still had not yet been able to engineer a lasting recovery.”
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Switch to the desktop site to post a comment.Bythebay | Jun 16, 2012, 06:03 PM EDT
Ireland approved the European Stability Mechanism by a majority. The people have spoken with a majority. It's unlike the US which is totally ignoring its imminent default on July 1 and its Congress and President's inability to agree a solution. They're incompetent. Europe has moved to a solution.
GeorgeDillon | Jun 07, 2012, 11:17 AM EDT
"Too many dark-skinned people living in Ireland". No, hassny, too many pieces of racist vermin living in Ireland, starting with you, you stupid racist bigot...
Bythebay | Jun 06, 2012, 01:02 PM EDT
The US can't even address its impending fiscal default on July 1 and is asking for a meeting with EU countries for help.
Bythebay | Jun 06, 2012, 12:57 PM EDT
BrianO, then you are ignorant of both Ireland and the European Union and haven't been following anything in Ireland for at least the Twenty First Century.
BrianO | Jun 06, 2012, 09:54 AM EDT
@btb, The point of the question was to those that have lived the inclusion into the EU, from an Irish perspective, is Ireland a state of Europe or An independent nation. And yes that same question could be raised to other nations but this is supposedly an Irish discussion board. By your response I infer you are European union of Irish descent.
haasny007 | Jun 05, 2012, 10:23 PM EDT
GeorgeDillon, you are on record in this forum as a narrow-minded, racist, ignorant, ugly Irish-American. Too many dark-skinned people living in Ireland, eh? KKK and Aryan Nation are glad to have you as a member.
Bythebay | Jun 05, 2012, 04:00 PM EDT
BrianO, do you think the same question should be asked of Italy, Germany, Spain, Greece, France, Austria, Portugal, and the other countries? What's the point of your question?
Bythebay | Jun 05, 2012, 03:55 PM EDT
Krugman needs to focus on the $15 trillion US debt which will cause the US to default unless it's addressed by July 1. That is of more immediate concern to the US and Mr. Krugman.
Bythebay | Jun 05, 2012, 03:53 PM EDT
The Economic Stability Mechanism is just that, a standard of economic stability that needs to be followed by all members of the Eurozone. It protects all the countries from catatrophic economic failures in one country.
GeorgeDillon | Jun 05, 2012, 03:44 PM EDT
Ciaradexy: Far from not knowing anything of Ireland or Europe, I even know the ancient language of the Gael, a language you can't scratch two words together in, despite a dozen years "studying" it in school. I speak Irish, though I had none of your access to the language. I guess you were mostly in the dunces' corner. You bigoted fool.
GeorgeDillon | Jun 05, 2012, 03:41 PM EDT
BrianO: There has of course been a loss of sovereignty, more accurately a relinquishing of sovereignty, since the Irish themselves have ceded control of their own economy. As regards loss of identity, this has coincided with the introduction of the euro, but has primarily been caused by the importation of vast throngs of foreign migrants into Ireland. Haven't you been in Dublin recently? If not, you ought to take a trip and go and stroll down O'Connell Street some day. You'll see that foreigners outnumber Irish by maybe five to one. It's more like Kinshasha or Karachi than an Irish city. Rural villages and towns are no different. The forecast was that the Irish will be an ethnic minority in their own ancient homeland by the middle of this century, but recent revisions are putting that Doomsday date as near as 2030.
ciaradexy | Jun 05, 2012, 12:21 PM EDT
Haasny, great to meet you and its brilliant that yet another poster sees GD for what he really is-a poisonous little dwarf who knows nothing about Ireland or Europe. Hes a tool and a troll!
ciaradexy | Jun 05, 2012, 12:20 PM EDT
I hope the Euro collapses. I want my punt back.
BrianO | Jun 05, 2012, 10:27 AM EDT
A question I cannot answer because I am not Irish, Has Ireland since entering the euro zone lost any of It's national identity or sovereignty?
IrelandNorth | Jun 05, 2012, 08:34 AM EDT
Representative democracy is a game career politicians play. As Ken Livingstone once said: "If democracy worked - they'd ban it!" A very Irish coup took place in 1973, when an extremely naive Irish electorate were sold the pig-in-a-poke of the Common Market (CM)/European Economic Community (EEC)/European Union (EU). And given a designer propagandistic press/media beholden to the political establishment, they were/are able to prevail on an impressionable majority of the electorate to vote for this new Act of Union. The electorate were stampeded into voting this way by Government source rumours about [nationalised] bank teller machines not dispensing money if the treaty were voted down. Same old carrot and stick approach to every European treaty. Seems economics trumps democracy every time. The Europhilic political establishment in Ireland (FG/Lab/FF) do not represent Ireland in Europe. They represent Europe in Ireland, whilst being paid hamsomely by an overburdened Irish taxpayer for the dubious honour. But observe how the majority/minority margins are narrowing as an indicator of rising political consciousness.
haasny007 | Jun 04, 2012, 09:14 PM EDT
@GeorgeDillon: Georgie Boy everyone in this forum knows that you are an ignorant fool, but what I did not know until now is that you are absolutely clueless about the difference between left and right.
jackohdream | Jun 04, 2012, 06:51 PM EDT
Living in the U.S. I predicted in 2006 that financial trouble was coming. Too much credit-card spending. Too much house buying with no-money-down and goods made-in-china were everywhere. Today's solution for U.S. AND Europe.[we are China's market] SO a massive cut back on imports from China. Make the goods ourselves and the U.S. and Europe trade more with each other and put it's citizens back in work. In the last ten years many manufacturers from Europe and the U.S closed their factories and moved to China. Western governments need to stand-up and protect it's citizens.Go to your local government politician and demand action. Go to their house, no more excuses.
FastEddy | Jun 04, 2012, 12:01 PM EDT
Being right for all of the wrong reasons, Krugman is a fraud and admits it.
casualMBA | Jun 04, 2012, 11:45 AM EDT
Seagreen, by the end of the business cycle, the Chinese investment in Athlone, will be followed by the Japanese, Europeans, and Americans, will they not? Krugman's announced demise of Europe keeps an American election close, and its aftermath irrelevant - not to mention irreverent.
seagreen | Jun 04, 2012, 09:17 AM EDT
Just returned from Japan, Am not qualified in international economics in any way, so no opinion. A Japanese engineer commented to me (without malice) that The US and Europe are trying to maintain a standard of living as ever , while not practicing national capitalism, but while doing so on an international level. A relative few using the system to draw money and resources from countries that will allow them to do so ! This has allowed huge sums to be financially relocated with impunity Yes China at some point will make a move eastward, physically also. Taiwan is history.. The US military rape of the twelve year old girl in Okinawa two years ago, has done more dammage than any battle, and eventually will result in all Americans out of Okinawa (5000 have just been transferred to Guam) China has our money, they have Europe's money, they will do with it what is good for China! When the dust settles, we may actually have to live a lifestyle that we can actually afford to pay for.
PhlutiePhan | Jun 03, 2012, 08:43 PM EDT
Krugenholstein is a liberal economist who works for a liberal rag. However, in this case, he appears to make a point. If the Euro fails, what will replace it? It sure won't be the dollar. The Chinese are jockeying to take over the world economy just like the Roman Empire. They are putting workers in projects all over the world. Ireland will get 20K. Detroit has a proposal for another 20K. You put that many young men in one place who march to work every morning in formation and what do you have? It is called in the words of Julius Caesar, an invading army, with the nerve center in Shanghai. They are just doing economically what Adolph Hitler tried to do militarily in creating a world economic system. America is deteriorating just like Europe and that is the agenda of the Chinese.
aloistmartin | Jun 03, 2012, 08:14 PM EDT
The only thing keeping the Euro alive is NATO and Cheap Immigrant Filiality !
aloistmartin | Jun 03, 2012, 04:29 PM EDT
nobody cares what this loonie thinks.
GeorgeDillon | Jun 03, 2012, 04:13 PM EDT
"A note to the ignorant right-wing posters". You're the only right-winger I see here, hassny. And you're pretty ignorant too!
haasny007 | Jun 03, 2012, 03:23 PM EDT
Krugman is right most of the time on the US economy, but he is mostly wrong on the euro. While the PIGS may well crash out of the euro, the common currency will survive among the core euro-countries because it makes economic sense. A note to the ignorant right-wing posters in this forum: the euro has nothing to do with left or right politics, economic or otherwise.
BrianO | Jun 03, 2012, 03:10 PM EDT
Irish central's favorite economist, no surprise.
jamthecat | Jun 03, 2012, 03:09 PM EDT
Let's see, Orcas...Paul Krugman has a Nobel in economics, you don't. He said there was a housing bubbles and was right. He said the stimulus in the US was not enough to restart the economy, and was right. He called the actions of the EU damaging and showed they would lead only to more debt and chaos, and so far that's been the case. What's your argument in response? SOCIALIST! Yeah, we really ought to pay attention to you and your ilk and not to the man who has, so far, been correct. Idiot.
Celtlaw | Jun 03, 2012, 03:06 PM EDT
Krugman is a zealous leftist with a closed mind. I watch him regularly on Sunday morning round-tables. He is smugly dismissive of any opinion that does not is lock-step with his own. Once he's made up his biased mind, he can't be bothered with the facts.
bunkerisland | Jun 03, 2012, 02:20 PM EDT
Ireland, like Spain allowed banks and developers to construct excessive amounts of residential and commercial developments at outrageous prices all over the country. Traveling in Ireland in the mid 90's one could see the expansion of highways, the creation of rather gated communities and a building boom that could not be sustained. The assumption was that the properties would be sold to other Europeans, Canadians and those from the States. It was an absurd assumption allowing thousands of immigrants in to help build these sterile communities. Now they stand half built, half empty and boom has gone bust. The lack of government regulations and control allowed this madness, everyone looking for a fatter pocket book. Now many of the properties are on the auction block but many of us are with limited funds attempting to hang on to what we have and not thinking of purchasing properties which are often half their original selling price. Unemployment, and absurd austerity program and new taxes will do little to enhance or stimulate the economy. We'll return to the Punt in a year or two and through off the yolk of the EU.
orcas06 | Jun 03, 2012, 02:12 PM EDT
How strange! Krugman doesn't like anything that doesn't go along with the socialist agenda. I don't understand why he hasn't realized yet that socialism only works as long as there is other people's money to spend.
Pittsburghkid | Jun 03, 2012, 02:09 PM EDT
The Ireland has never been very smart as a country. An Irish King invited Henry II, into Ireland. After 800 years they evicted the English only to invite the EU as rulers. I thank God that I am an American.
Bythebay | Jun 03, 2012, 01:56 PM EDT
Krugman's Jewish immigrant ancestry might be coloring his opinion of Germany and the European economic situation. He's also a member of the London School of Economics whose graduates have not successfully implemented sound economic policies.
LoyalCitizen | Jun 03, 2012, 10:49 AM EDT
I wonder what made him think the Irish people choose anything..........Ireland is totally corrupt, especially secret voting systems, opinions in law and a police force that does not know what crimes is...........Its unlikely that Ireland has ever had a democracy.
Patrick Devaney | Jun 03, 2012, 08:05 AM EDT
“There is a fifty-fifty chance of the single currency disappearing within two years anyway, given the pressures arising in Greece.'' Lazy journalism with the headline there. He didn't predict the collapse the failure of the euro, he just said it could go either way.