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Old 11-12-2010, 05:25 PM   #1
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Time is running out for our liberal democracies

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When politics and economics collide, it is often said, the economics always ends up winning. The curiosity of the euro is that it has managed to defy this otherwise universally applicable rule; the politics somehow continues to triumph over the single currency’s self-evidently flawed economics.

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Markets have reacted accordingly, by driving up rates to a level where the costs of refinancing and servicing Ireland’s national debt would make default virtually inevitable. If Ireland wasn’t bust before, it is now. Other peripheral eurozone economies could follow.

The Irish people have been betrayed by their European “friends” as surely as was Britain during the fiasco of the ERM in the early 1990s. Unfortunately for Ireland, there is no similarly obvious escape route. It cannot devalue its way back to growth. It is as permanently imprisoned in its eurozone sarcophagus as an Egyptian mummy in the Valley of the Kings.

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But we are still light years away from the full-frontal federalism of the United States, for which there appears to be little appetite anywhere in Europe. The reason the resolution mechanism is being reformed is to address the fury of German taxpayers at being asked to bail out the profligate fringe. No European nation is ever going to subjugate its tax-raising powers to the interests of the whole, least of all the Germans.
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The tragedy is that with both Europe and the US in a state of economic and political paralysis, the door is left wide open to the onward and upward march of China’s deeply sinister form of centrally controlled, authoritarian capitalism.

Time is running out for our liberal democracies. If they cannot come up with solutions soon, crueller alternatives may eventually prevail.

Ireland has been betrayed by its EU 'friends’ - Telegraph
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Old 11-12-2010, 06:04 PM   #2
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it reads like it was written by someone with lots of opinions but little knowledge of economics

the China bit is intriguing me though
China seems to be playing a grim game
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Old 11-12-2010, 06:11 PM   #3
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it reads like it was written by someone with lots of opinions but little knowledge of economics.
Anything in the way of counterarguments?
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Old 11-12-2010, 06:25 PM   #4
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to counter what?
it tries to make macro economics sound like a bad episode of the x files

there's not much inherently wrong with the concept of the euro
at least not a lot more than with the dollar or any other currency

the betrayal of ireland makes no real sense
Ireland did well focussing their economy on the finance industry
so they got hit extra hard by the economic crisis
i don't see what the euro or eu or anything has to do with that

and to make out German taxpayers decide every EU decisions is closer to being ridiculous than being guilty of over-simplifying
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Old 11-12-2010, 06:55 PM   #5
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to counter what?
it tries to make macro economics sound like a bad episode of the x files

there's not much inherently wrong with the concept of the euro
at least not a lot more than with the dollar or any other currency.
I'm afraid that I profoundly disagree with this. The dollar is the currency of a country with a unified political system, unified langange and culture and no borders. This is precisely the point made by the writer in his first few paragraphs. The euro is an attempt to make the politics trump the economics.

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the betrayal of ireland makes no real sense
Ireland did well focussing their economy on the finance industry
so they got hit extra hard by the economic crisis
i don't see what the euro or eu or anything has to do with that
There's a heck of a lot more to it than that. We were subject to excessively low interest rates, particularly post 911, which was a key factor in the bubble. The price of credit was far too cheap for the booming Irish economy but at that time suited the more slow-growing economies such as Germany just fine.

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and to make out German taxpayers decide every EU decisions is closer to being ridiculous than being guilty of over-simplifying
Merkel has an election coming up. Do you seriously think her recent comments are not influenced by her calculus as to what is or is not appealing to the German taxpayer?

Edit: can I request that the moderators do not merge this thread with the existing thread on the Irish crisis? There are important points in the article that have a broader resonance than the current travails of Ireland.
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Old 11-13-2010, 05:49 AM   #6
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the system underlying the euro can and should be discussed, but "the politics somehow continues to triumph over the single currency’s self-evidently flawed economics. " does nothing for any discussion
it is written for the sake of writing something, not to discuss economics

I understand there's more going on in Ireland then what I wrote before
still, I already get closer to the real problem in 1 sentence than the article does IMO
which says something about the quality of it

re. Merkel's Germany I maintain it's beyond oversimplifying
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