Why is my rent so high? Mon Oct 31, 2016 18:51 | Gavin Mendel-Gleason
Review of Capitalism: Competition, Conflict, Crises by Anwar Shaikh Sun Oct 30, 2016 16:21 | Gavin Mendel-Gleason
Electoralism vs Abstentionism (Or: Why You Should Run For Office) Fri Aug 26, 2016 17:07 | Slyvia Smith
Centrism extremism: how horseshoe-politics silences brutality Sat Jul 02, 2016 18:25 | yeksmesh
Of Tankies, Trots and Social Democrats Thu May 12, 2016 23:41 | Gavin Mendel-Gleason
Spirit of Contradiction >>
Interested in maladministration. Estd. 2005
RTEs Mary Wilson: A woman with some brain…
Irish journalism: Suffering from a serious malaise Anthony
Brian Cowen: A political idiot Anthony
Hell at the Gates: A propaganda exercise Anthony
Breaking: New minister for investigative judges to be appointed Anthony
Public Inquiry >>
A bird's eye view of the vineyard
His own man ? or someone?s puppet? Wed Dec 07, 2016 18:05 | mod editor
This comment was chosen by Mod KL from the post “Is Donald Trump really only a showman who will prepare the USA for war?”. The moderator feels this comment is
The World SITREP December 7th, 2015 by Baaz Wed Dec 07, 2016 17:47 | Scott
The Middle East The Yemeni army and popular forces continued their advances in Southern Saudi Arabia, inflicting losses on the military hardware of the kingdom’s government troops. “On Monday, the
Syrian War Report ? December 7, 2016: Washington Attempts To Save Militants From Total Collapse Wed Dec 07, 2016 16:48 | The Saker
Russia SITREP December 06, 2016 by Scott Wed Dec 07, 2016 03:19 | Scott
Russian President Vladimir Putin approved the new Doctrine of Information Security of Russia, according to a decree published on the legal information portal Tuesday. the Information Security of Russia (in
Wesley Clark Jr apologizes to the Lakota nation (UPDATED 2x) Wed Dec 07, 2016 00:02 | The Saker
An incredible moment of healing at Standing Rock: Hundreds of veterans ask Native elders for forgiveness. “We fought you. We took your land. We signed treaties that we broke. We
The Saker >>
Notes on Judge Harding-Clark?s Report on the Symphysiotomy Payment Scheme. Thu Nov 24, 2016 17:50 | Máiréad Enright
The Practical Implications of Miller v SSEEU for Brexit: Nine Reflections Thu Nov 03, 2016 16:30 | Fiona de Londras
Having Our Voices Heard ? the Official Languages Act foreshadowing the Recognition of Irish Sign Lan... Wed Nov 02, 2016 09:35 | admin
Benefit Sanctions and Coercion Within the Irish Welfare System Thu Sep 22, 2016 13:38 | Cliodhna Murphy
The rights of the unborn: a troubling decision from the High Court? Wed Aug 10, 2016 12:42 | Máiréad Enright
Human Rights in Ireland >>
The Recession, Bank Bailout or our Deficit?
Tuesday May 01, 2012 09:27 by Sonya Oldham - The People's Association Watchdog irelandpaw at gmail dot com
Does the Fiscal Compact Treaty Deal with the Cause of the Crisis?
Does the Fiscal Compact Treaty Deal with the Cause of the Crisis?
What Caused the Crisis? The collapse of the Irish banking system was principally caused by a failure of regulation and the reckless lending practices of the Irish and European banking system.
According to the Banking Enquiry: Financial integration in the euro area allowed banks in Ireland unprecedented access to cross-border funding. As in many smaller EU economies the entry of foreign banks intensified competition in lending. The banks’ ability to borrow cheaply in international wholesale markets created a ‘capital flow bonanza’ which has been observed to markedly increase the likelihood of a banking crisis within the receiving country. This clearly happened in Ireland.
According to the Assistant Director General, Financial Institutions Supervision, Central Bank of Ireland:
In the 2000s, it is clear that the low ECB policy rate facilitated the growth of property prices in Ireland.
There was also no direct regulation of credit limits, for example through restrictions on LTV ratios. This meant that Irish households were able to accumulate liabilities more easily than consumers in countries where there was stricter regulation. A contributing cause of the crisis was that bank governance and risk management were weak – in some cases disastrously so.
It appears that internal procedures were overridden, sometimes systematically. There is a need to probe more widely the scope of governance failings in banks and whether auditors were sufficiently vigilant in some episodes.
According to the Banking Enquiry: These supervisory problems must be seen in conjunction with the absence of forceful warnings from the central bank. However, the IMF’s major Financial System Stability Assessment of 2006 also did not sound the alarm.
According to the Assistant Director General, Financial Institutions Supervision, Central Bank of Ireland: A striking lesson of the global banking crisis is the danger of allowing banks to operate to free market principles within free market economies.
Did Ireland overspend?
According to Paul Murphy MEP: This is simply not the case. In 2007, Ireland’s debt to GDP ratio was 24.8% (Eurostat) - far less than the 60% dictated in the Fiscal Treaty; our general budget was in surplus of 0.1% compared to a target of a deficit of 3%; and our structural balance was estimated by the EU Commission in spring 2008 to be in surplus of 0.2% compared to a target of a maximum deficit of 0.5%. Later on, the structural balance was revised downwards, with the Commission in 2011 saying that Ireland had a structural deficit of 1.4%. So having the strictures of the Fiscal Treaty in place would not have meant we avoided the economic crisis. In fact, the government would have been congratulated on having met the targets so effectively and with such high growth rates! The same is largely the case for Spain and Portugal, which had relatively low levels of public debt in advance of the economic crisis.
How Much is the Bailout Costing?
Bond payments September 2008 to April 2012 were €103.7bn
Bond payments from April 2012 onwards: €40.6bn
TOTAL BOND PAYMENTS (according to Michael Noonan): €144.3bn
THE COST: So far, according to Mr Noonan, the bank recapitalisation is €62.8bn (Anglo/INBS €34.7bn; AIB/EBS €20.7bn; BoI €4.7bn; IL&P €2.7bn). Given that according to Mr Noonan these banks still have over €40bn to pay, there is a good possibility we may have to recapitalise again. Also, this figure does NOT include interest lost on the money taken from the National Pension Reserve Fund, nor the interest we’ll have to pay on the borrowings needed to fund all that recapitalisation.
So we can see it was the bank and bondholder payouts that caused our deficit to take a downward spiral so will the Fiscal Compact Treaty be effective?
How can it when it does not deal with the cause of the collapse. The fiscal treaty, if it had been in place, would have been ineffective in preventing this recession as our country was within limits. This is not a crisis caused by government overspending, this is a crisis caused by the lack of financial regulation within Ireland and the EU. Todate we are still living with the moral hazard of the fiscal sector.
According to many leading economists this treaty will in fact make matters worse:
Roubini Global Economics: “In our view, the terms of the fiscal compact require a fiscal adjustment by most Eurozone countries that will significantly undermine their short-term growth prospects. If the treaty is not enforced, it will be positive for Eurozone growth prospects and therefore for fiscal sustainability.”
Vote No to the Fiscal Compact and Demand real solutions to this crisis!
The People's Association Watchdog; www.paw.ie; email@example.com