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Ireland Still Refuses To Contemplate Leaving the “Imperial” Euro and Joining a “Mediterranean” Euro Zone

Politics / Euro-Zone Nov 23, 2010 - 06:48 AM GMT

By: Christopher_Quigley

Politics

Best Financial Markets Analysis ArticleOn Thursday 18th 2010 The IMF arrived in the Emerald Isle. What a sad sad day for the proud people of Ireland. Following 300 years of armed struggle the resident government have 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 goes the spoils.  Professor Honohan Governor of the “Irish” central bank and his associate Mark Elderfield, the resident bailiffs of the Continental finance houses, already have a list of the target assets compiled courtesy of  “An Bord Snip” ( A committee set up to identify where Ireland’s creditors can get funds quickly in the event of default). On this schedule of valuations are such national jewels as: An Bord Gais, C.I.E., Coillte,  The Dublin Airport Authority, The Dublin Port, R.T.E., The National Transport Network, The ESB power grid, The National Lottery etc. etc. You get the picture. These assets belong to the Irish nation. Some will soon belong to foreign bondholders.

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. There are in effect 6 levels to the “credit” fiasco in the Euro zone:

1.        Insolvent Property Development Lending
2.        Unsustainable Annual Government Deficits
3.        Sovereign Debt Credit Rating Collapse
4.        Insolvent Consumer Debt Lending
5.        Insolvent Mortgage Debt Lending
6.        “Off Balance Sheet: Mark To Market” Asset Value Collapse

All the above “problems” need a solution. The Euro is on the verge of collapse and we are still only half way through recognising the crisis, never mind solving it. As more and more countries become affected (as we move down the food chain of the “crisis” schedule above) the options open to the mandarins at the ECB/IMF will be fewer and fewer. Eventually it must be recognised that the only way to solve the banking crisis in each country is to find a way to restore growth. When the deflationary cul-de-sac of austerity is comprehended it will finally be accepted that the only real option left will be national currency devaluation. This measure would save the tourist industries in Spain, Greece and Portugal and return competitiveness to Italian and Irish manufacturing.

The hapless Prime Minister of Ireland Brian Cowen, like a rabbit in the headlights, refuses to face the inevitable fact that he has led his country to ruin through utter incompetence. One of the saving graces of ignorance is that your stupidity does not possess the intelligence to understand that it is stupid. It’s what psychologists call:  “a closed  self-deception psyche.” The vernacular manner of formulating this psychic state is; “ignorance is bliss.” Or as our great Lord expressed it so passionately in prayer on the mound at Golgotha; “father forgive them for they know not what they do.”

Mark my words Ireland will leave the Imperial Euro (IE). That is my prediction. If not now then in five or ten years time. It is inevitable. Economic law will demand it. Divorce is in the offing.  If we had true leadership in Ireland they would bite the bullet and file the papers now. A new “Mediterranean Euro Zone” (ME) should be conceived involving Ireland, Spain, Italy and Portugal and Greece. This “ME” is needed to pool resources to ensure that the countries leaving the “Imperial Euro” (IE) can get out of its hard currency loans without bankrupting French and German banks. Not to do so would be disaster. Argentina saw this problem and faithfully managed to “humble” American dollar bondholders and so saved their economy and their nation. Hungary failed to identify this issue and is now repaying hard Swiss and “Imperial” Euro loans in a significantly devalued national currency. As a result its economy is a structural basket case.

Why is it important that Ireland leave the “Imperial” Euro? Well the main reason is that, as mentioned, through simple devaluation we can restore competitiveness to our economy without applying crippling 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.

If Ireland chooses to stay in the “Imperial” Euro and tries to continue to belong to a club it cannot afford Brussels’ price will be economic suicide for the proud Irish nation. IMF austerity cuts over the next five years are going to crush Irish GDP through budget & expenditure cuts and tax hikes. In addition none of its banks will remain native owned. It is also axiomatic that many of its prized semi-state assets will be sold off to foreign operators at bargain basement prices.

When Ireland Inc. finally leaves the IMF/ECB bankruptcy process it will be a shadow of its former self. If Ireland as a Nation complies with this liquidation without a strategy for future growth it will become a Nation in name only within a decade. The day a leader emerges in Ireland who formulates a credible “Mediterranean” Euro strategy with associated close tactical links to the Sterling area is the day a new dawn will have arrived. The past is indeed dead but we await a visionary who will provide a workable concept of the future. The longer the Irish psyche remains bound to the current mis-formulated Euro model the deeper the hole will become for Ireland. It is time to stop burying ourselves. It is a time for ladders not shovels.

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.

© 2010 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.

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