\"Ireland

Why Ireland should join dollar or sterling currency now

\"Ireland

“On Thursday 18th  November 2010 The IMF arrived in the Emerald Isle. What a sad sad day that was  for the proud people of Ireland. Following 300 years of armed struggle the then resident Fianna Fail government replaced English masters with the Continental variety. However the method of usurpation this time was not guns and bullets and starvation but economic and financial prowess. To the victor will go the spoils.”

The above was written at the end of 2010. It is now nearly five months on and the crisis which brought the IMF to Ireland shows no signs of abating. As we speak the full extent of the problem has not been fully comprehended.

As mentioned previously there are now in effect seven levels to Ireland’s financial fiasco: insolvent property development lending; unsustainable annual government deficits; sovereign debt credit rating collapse; insolvent consumer debt lending; insolvent mortgage debt lending; “off balance sheet: mark to market” derivative debt; 140 billion short-term ECB/ Irish Central Bank lending facility to national banks which cannot be secured long term.

All the above “problems” need a solution but instead of a comprehensive resolution being implemented each element is being “handled” in a shoddy, short-term manner.

Accordingly, not surprisingly, the Euro continues to lurch towards implosion and we are still only half way through recognising the totality of the crisis, never mind solving it.

As more and more countries become affected the options open to the mandarins at the ECB/IMF are fewer and fewer. Eventually it must be recognised that the only way to resolutely end the banking crisis is for each country to find a way to restore growth.

When the implications of the austerity cul-de-sac is fully understood it will finally be accepted that the only real option left will be currency devaluation. This measure would save the tourist industries in Spain, Greece and Portugal and return competitiveness to Irish manufacturing, tourism and agriculture.

Thus Ireland needs to take action similar to that taken by Argentina in 2002. In that year the former South America tiger faithfully managed to “humble” American banks and dollar bondholders.

She de-coupled her currency from a disastrous one-to-one parity with the Dollar and so saved her economy and the social contract with her citizens.

In addition she forced American mortgage holders to accept “pari-pasu” payment in the new devalued currency rather than in old dollars. Thus Argentinean homeowners did not suffer the fate currently being experienced by Latvians and Lithuanians where hard Euro mortgages must be repaid in sinking national currencies.

Ireland needs to get support from her Euro zone partners which will enable her to significantly cut her debt exposure to private bank bondholders. If this action is not allowed Ireland should let it be known that she will consider joining the Sterling Area or possibly merging with the dollar.

This course of action may seem extreme but the simple fact is that the economic picture is so grave that it is only through such decisive and courageous measures that the disintegrating Irish financial structure can be salvaged.

(It should be remembered that when Eamon de Valera, the former Irish Prime Minister, was consolidating the finances of the fledgling Irish nation one of the options explored by the think tank he set up was for Ireland to use the American Dollar rather than the British Pound).

The Irish have nothing left to lose.  Ireland will not be able to negotiate with strength if she does not have options on the table. Threatening to leave the Euro, or even the Euro zone completely, is a very strong bargaining chip.

But the threat will have to be credible to be of benefit. If it is not backed up with planning, organisation, critical review and cost-benefit analysis it will have no leveraging value. In other words the Irish government will have to mean it.

Thus forthwith the new coalition executive, under Prime Minister Enda Kenny, should set up a task force to explore all aspects of the respective Sterling and Dollar strategies. Ireland is in a difficult place and it is time for creative thinking. The European association has all but destroyed Ireland.

The Irish nation must realise that we now owe Brussels nothing for it failed to regulate the availability of European Central Bank credit as was mandated under the Maastricht treaty. The ECB and the European Commission has thus proved itself to be strategically, administratively and politically incompetent.

Why is it important that Ireland explore these devaluation options? Well the main reason is that through simple devaluation we can restore competitiveness to our economy without applying crippling ECB/IMF deflationary “austerity measures.”

Of course to prevent inflation and its concomitant problems undermining future growth of the nation, real enterprise with real wealth benefits must be promoted. The civil service mentality of pay without production must be finally put to rest. Economic survival demands it. The joust with European socialism must cease forthwith as it has brought us to the brink of national collapse.

COMMENTS

Log in with your social accounts:

Or, log in with your IrishCentral account:

Forgot your password ?

Don't have an account yet? Register now !

Join IrishCentral with your social accounts:


Already have an account ?

Or, sign up for an IrishCentral account below:

By clicking above you are indicating that you have read & agree to our Terms and Privacy Policy.


Make sure we gathered the correct information from you

By clicking above you are indicating that you have read & agree to our Terms and Privacy Policy.


You already have an account on IrishCentral! Please confirm you're the owner.


Our new policy requires our users to save a first and last name. Please update your account: