Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Ireland Should Consider Joining the Sterling Area or the Dollar

Interest-Rates / Euro-Zone Apr 15, 2011 - 07:46 AM GMT

By: Christopher_Quigley

Interest-Rates

“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 5 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 7 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.

Without strong renegotiation of our way of doing business with the Europeans Ireland will be left saddled with a debt burden that is utterly unsustainable. Without meaningful national initiative the country will be left by the European elite to slowly but surely rot in economic and social stagnation, living on hopes and prayers and dreams and sound-bites emanating from a media structure bought and sold for by bond technocrats in Paris, Frankfurt and Strasbourg.

By Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin and holds a Batchelor Degree in Accounting and Management from Trinity College/College of Commerce, Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the Stock Market in 1989. in Belmont, California where he lived for 6 years. He developed the Wealthbuilder investment and trading course over the last decade as a result of research, study, experience and successful application. This course marries Fundamental Analysis with Technical Analysis and focuses on 3 specific approaches. Namely: Momentum, Value and Pension Strategies.

Mr. Quigley is now based in Dublin, Ireland and Tampa Bay, Florida.

© 2011 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in