Joined up thinking for the Irish Left
New Books Worth Reading Mon Sep 19, 2016 23:25 | Seán Sheehan
13 Billion ? Lucky for some? Mon Sep 05, 2016 13:04 | Tony Phillips
Rebuilding Ireland: Long on Promise, Short on Detail Mon Aug 29, 2016 22:20 | Eoin O'Mahony
Brexit and Other Issues: Comments on the Current Situation Mon Aug 29, 2016 21:52 | Brendan Young
Bin Charges: From Private Circus to Public Service Tue Jun 21, 2016 12:38 | Michael Taft
Irish Left Review >>
What is Dogmatism and Why Does It Matter? Wed Mar 21, 2018 08:10 | Sylvia Smith
The Case of Comrade Dallas Mon Mar 19, 2018 19:44 | Sylvia Smith
Review: Do Religions Evolve? Mon Aug 14, 2017 19:54 | Dara McHugh
Fake News: The Epistemology of Media Wed Jun 07, 2017 11:52 | Gavin Mendel-Gleason
Officials and Provisionals Sat Apr 01, 2017 22:54 | James O'Brien
Spirit of Contradiction >>
Interested in maladministration. Estd. 2005
Orwell’s 1984 arrives in 2018 Ireland
Elaine Byrne: Not speaking full truth to power Anthony
Israel/Ireland: Corruption comparison Anthony
Irish cowboy town and fake regulatory agencies Anthony
Elaine Byrne: Failing to join up the dots on state corruption Anthony
Public Inquiry >>
A bird's eye view of the vineyard
Neocon buffoonery reaches a new level Thu May 24, 2018 17:57 | The Saker
Step one: the DPRK destroys its nuclear testing facility Step two: Trumps cancels his meeting with Kim Jong-un Step three, just read this masterpiece: Amazing, no? The fact that the
May 23, 2018 Biggest ISIS Attack Near Palmyra In Past Few Months Wed May 23, 2018 21:03 | Scott
https://southfront.org/syrian-war-rep... On May 22, ISIS attacked positions of the Syrian Arab Army (SAA) near the T3 pumping station, near the city of Palmyra, in the province of Homs. The attack
Will the Russian-Iranian-Syrian alliance hold as the Syrian war draws close to an end? Wed May 23, 2018 10:00 | The Saker
By Aram Mirzaei for The Saker Blog These past weeks have witnessed a lot of tensions running high, with Israel and Iran reportedly facing off near the Golan Heights. Israel
May 22, 2018 Damascus Is Secured, Daraa Is Next Tue May 22, 2018 22:02 | Scott
https://southfront.org/syrian-war-rep... Late on May 21, Russian air defense systems, allegedly a Pantsir-S short to medium range system, launched at least four missiles at ?unidentified? targets over the Khmeimim air base
One Year On ? The Truth About The Manchester Bombing Scorpion Tue May 22, 2018 19:43 | The Saker
by Nick for The Saker Blog ?Terrorism is like a scorpion; it can unexpectedly sting you at any time?. Among the Western nations to discover the bitter truth of Bashar
The Saker >>
People's News: Another housing bubble building!
Monday February 27, 2017 22:18 by 1 of Indyy
News Digest of the People’s Movement - No. 162 15 February 2017
The latest issue of People's News -for 15th Feb carries a lead article on the current housing bubble.
The free movement of capital has become one of the maxims of global capitalism. Along with the free movement of people, goods and services it is also one of the “four freedoms” of the EU’s single market.
But the removal of the policy instrument of capital controls has probably contributed to a succession of financial crises. Three decades ago, many people in the EU invested their hopes in a combination of free trade, free mobility of capital, a fixed exchange rate, and an independent monetary policy — dubbed an “inconsistent quartet.”
The combination is logically impossible. If Ireland, say, fixed its exchange rate to the German mark — which in effect it has done by adopting the euro — and if capital and goods move freely across borders, the Central Bank would have to follow the policies of the German central bank, the Bundesbank — or, in effect, the EU Central Bank in Frankfurt.
So we sacrificed monetary independence when we adopted the common currency. What has changed since then is the increasing importance of cross-border finance. Many emerging markets do not have a sufficiently strong financial infrastructure of their own. Companies and individuals therefore take out loans from foreign institutions denominated in euros; and that’s what the Irish banks were doing a decade ago.
Theoretically, it is the job of the Central Bank to bring the ensuing havoc to an end, which standard economic theory suggests it should be able to do so long as it follows a domestic inflation target. But if large parts of the economy are funded by foreign money, its room for manoeuvre is limited.
In the good times, credit flows into peripheral markets, fuelled by the massive German surplus, where it fuels local asset price bubbles, as we have experienced to our detriment. When, years later, liquidity dries up and the hot money returns to safe havens in Europe, the country is left in a mess.
Unless you accept financial instability as inevitable — and it increasingly seems an intrinsic part of the system as the time between crises grows shorter — you may soon be thinking about imposing capital controls that involve telling foreign investors that you don’t want their cash. The point is to prevent hot money flowing in during the good times and to stop it from draining out in the bad times.
This is not yet a subject of polite conversation among policy-makers. Central bankers have instead been peddling a concept known as macro-prudential regulation, a version of capital controls. The idea is to tweak incentives: when a housing bubble seems to be building up, the Central Bank imposes some ceiling on lending, for example by capping loan- to-value ratios. It might also ask its government to raise stamp duties or other transaction taxes.
Spain tried such measures during the precrisis years, and Ireland is trying it now. But it did not stop the buildup of one of the biggest housing bubbles in history.
More drastic action, such as leaving the euro or imposing controls on capital, might prevent the next calamity as rents and house prices soar. Spain did neither, but before long someone will — and it looks increasingly like it should be Ireland. Free movement of capital cannot be sustained as a point of principle when the economic costs are so devastating.
Some of the other articles in this issue are:
Two-speed EU back on the agenda!
Is there a trade war on the way?
Could the EU provide a solution to Ireland’s housing crisis?
EU banks have more than €1,000 billion in bad debt!
More euros to lend at low interest rates ?
The security industry is shaping EU legislation: lobbyists in action!
More austerity for the Greeks
What to do in Europe? Proposals from the left