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Periscope by Niall O'Dowd

Ireland’s “Yes” vote on Europe means Germany must act

Posted on Saturday, June 02, 2012 at 08:14 AM

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"Yes" vote on Fiscal Treaty keeps Ireland in the game

A “Yes” vote on the European treaty has kept Ireland in the game a senior Irish government official told me yesterday.

“This is as much about psychology as any reality about the treaty” he said, pointing out that a “No” vote would have slammed the door in several European capitals on Irish efforts to have the Anglo Irish bank debt renegotiated.

It is easy to see that reality. With Germany, in particular, assailed on all sides these days, a “No” vote in Ireland would have been a very unwelcome development in a very bad week for the Euro project.

Now Ireland can at least point to its success in passing a pro-European referendum despite a massive anti Europe mood across the country and indeed the continent.

It allows the Germans in particular more breathing space while they consider the overwhelming question that needs to be addressed.

Is the EU about full federal monetary union where like in the US the federal government bails out individual states if that is called for, or is it just a loose and increasingly unworkable arrangement between states with vastly different economic profiles?

It needs to be the former for the Euro to have any chance to survive, but whether Frau Merkel sees it that way remains the one overwhelming question.

Yesterday’s win in the Irish referendum shows that the Irish for one, continue to believe in the European project but the future still lies with the big boys of Europe, especially the Germans, who are failing to act decisively as Europe teeters on the brink.

The bad news on the American economy yesterday merely highlights the need for quick and decisive action in Europe. The last time Europe dithered like this the Second World War ensued as Hitler swept to power. We could be looking at an economic equivalent if the Germans do not act soon.

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casualMBA | Jun 06, 2012, 06:53 PM EDT

While on bank exposures and German actions, could we fast forward to Spain a moment and its (via the Irish Independent)270 BILLION euros worth of NON-Performing ASSETS??? Try weaving that number into a facile ESM rescue for Ireland.

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sirpeter | Jun 05, 2012, 10:10 AM EDT

haasny007.Private foreign and domestic gambling losses turned into Public debt by the Irish government.Isn't that the whole problem as you and Georgie says?.Where exactly is the Irish public morally responsible for private gambling losses?Besides the fact that the Irish public are guilty of believing the lies of our incompetent politicians.Why are the German private gamblers let off the hook? Whats behind it? I don't get exactly where you are coming from.

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haasny007 | Jun 04, 2012, 09:05 PM EDT

Hey dudes, not sure what you people are smoking. The Irish government is guaranteeing the obligations of Irish banks vis-a-vis their creditors, i.e. bondholders, depositors, CDS & FX counterparties, etc, foreign and domestic. The Irish taxpayer is, of courese, NOT on the hook for defaulted mortgages ("loan exposure") in Ireland held by foreign banks.

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sirpeter | Jun 04, 2012, 04:29 PM EDT

Bythebay.It's not saying much for you when even Georgie Boy is getting the better of ya.In September 2010 government support for the six guaranteed banks had risen markedly to 32% of GDP.Where did these banks get the money in the first place?Where is part of the bailout money going?.So whose banks are we bailing out? Did you get it yet??Baaaank Guaraaaantee ooof fooooreign baaaanks' expoooosure.

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Bythebay | Jun 04, 2012, 11:23 AM EDT

GeorgeDillon, more confused every day. The bank bailout in Ireland was of Irish banks, not foreign banks.

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haasny007 | Jun 03, 2012, 03:49 PM EDT

GeorgeDillon, your job at the US Postal Service is obviously overstraining you. FYI: Visiting your relatives in Ireland every other year does not make you the expert on Ireland or Europe that you claim to be. Neither do you have any clue about the type of obligations the Irish government guarantees nor do you have the faintest idea how EFSF or ESM work. I agree with Krugman on the US economy, but he is mostly wrong on the euro. The euro will survive and thrive but only among the core-euro countries. The economically weak euro-countries, including Ireland, will eventually be forced to leave. Oh well, Georgie boy, the New York Post is only of limited use to get you educated. BTW, what makes you assume that I live in Ireland?

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GeorgeDillon | Jun 03, 2012, 03:04 PM EDT

Hassny: I'm not paid to teach you Economics 101. Go read the Nobel Economics Prioze winner Paul Krugman on this site. Just one hint. You say "Irish government does not guarantee foreign banks' exposure". You've obviously never heard of the Bank Guarantee, you must be the only person in Ireland who never did. You're a chump, I'm not going to waste my time with you.

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Bythebay | Jun 03, 2012, 02:28 PM EDT

The collapse of the US economy caused world economic instability. The US needs to face its $15 trillion deficit and correct it immediately. If there was a massive anti-European mood in Ireland those massively against it would have voted no and the Economic Stability Mechanism wouldn't have passed. It passed. Obviously there was no massive anti-European mood in Ireland. Obviously those in New York couldn't see that.

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haasny007 | Jun 03, 2012, 12:23 AM EDT

Not you again, clueless GeorgeDillon! It was mostly Irish banks who fueled the real estate bubble in Ireland. Irish taxpayers are on the hook for Irish banks' obligations, i.e. bonds issued by them and bought by domestic and foreign investors. Thank the Irish government for it. The Icelandic government did not make the same mistake. The Irish government does not guarantee foreign banks' exposure to defaulted individual real estate loans. It was a lack of financial regulation in Eire and the stupidity of its banks, investors and individuals who believed that real estate prices could only go up. Thanks to low euro-interest rates, consumers were taking on debt and spending as if there was no tomorrow - weekend shopping sprees to New York, second and third apartments in Dublin, living way above their means. Same story in Spain, and to a lesser degree in Portugal and Greece. No, it is not the German, Dutch, or French banks' fault that the PIGS economies are on the brink of collapse now. There was no bubble in the core euro-countries, their governments behaved responsibly and they have sound economies which are built on solid industrial, fiscal, monetary and regulatory policies. For the most part of it their banks can handle the blow of the euro crisis. It was a big mistake to allow the PIGS into the euro, their economies were - and still are - not mature enough for a strong currency. GeorgeDillon you are an incorrigible ignoramus, why don't you do yourself a huge favor and just shut up.

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GeorgeDillon | Jun 02, 2012, 05:11 PM EDT

hasny07: "did not have a real estate bubble". You know nothing about this. The German banks DID participate in a real estate bubble, by dumping money into real estate loans in countries such as Ireland and Spain. When normal people take a punte and back some project, they stand to lose if it flops. But not the German banks. Because of your stupid Irish government, the German banks were guaranteed a return on their speculative investments, with the unfortunate Irish tax-payer paying back debts s/he never incurred. You just don't have a clue, do you HassNy?

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aloistmartin | Jun 02, 2012, 04:48 PM EDT

Silling@ One more Outburst like that, an you`ll be needin a Poliitcal Spokesman as well !

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aloistmartin | Jun 02, 2012, 04:43 PM EDT

As Ireland since Good Friday, becomes more amd more, like Germany since WWII

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haasny007 | Jun 02, 2012, 04:15 PM EDT

OMG, Niall, the WWII analogy may make a good headline but it is total nonsense. Why can't the professional whiners in PIIGS, including Ireland, for once stop blaming Germany and all the other euro countries who did not have a real estate bubble or engage in out-control private and government spending due to low euro interest rates, for the mess they are in now. The euro crisis was self-inflicted by the PIIGS, and, of course, it was also caused by the global financial meltdown under Bush.

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Silling | Jun 02, 2012, 02:52 PM EDT

Ireland needs a military coup led by the IRA. My father always said that they were operating the wrong side of the border. Sinn Fein is the only hope for the country. Other than that, sell Roscommon to New Zealand.

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sirpeter | Jun 02, 2012, 01:26 PM EDT

My God Georgie Boy!! You actually made a very good point for once.I always thought that was a bit unfair too.

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