Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Gold & Silver Corrective Rally is Almost Over - 20th Nov 18
Stock Market Going Sideways - Which Direction is Next? - 20th Nov 18
Technical Analysis Points to DOW 30k Next Target - 19th Nov 18
Stock Market Consolidating in a Downtrend  - 19th Nov 18
Next Tory Leader, Prime Minister Forecast and Betting Market Odds - 18th Nov 18
The Fed's Misleading Money Supply Measures - 17th Nov 18
Stock Market Outlook: Why the Economy is Bullish for Stocks Going into 2019 - 17th Nov 18
NO DEAL HARD BrExit Tory Chaos, Theresa May Leadership Challenge - 17th Nov 18
Gold vs Several Key Investments - 17th Nov 18
GDX Gold Mining Stocks Q3 18 Fundamentals - 17th Nov 18
Is Gold Under or Overpriced? - 17th Nov 18
Active Managers are Bearish on Stocks. A Bullish Contrarian Sign - 16th Nov 18
Will The Fed Sacrifice Retirement Portfolio Values For The "Common Good"? - 16th Nov 18
BrExit War - Tory Party About to Replace Theresa May for NO DEAL BrExit - 16th Nov 18
Aspire Global Makes Significant Financial Strides - 16th Nov 18
Gold Oil and Commodities …Back to the Future ? - 16th Nov 18
Will Oil Price Crash Lead to “Contagion” for the U.S. Stock Market? - 15th Nov 18
How NOT to Be Among the MANY Stock Investors Fooled by This Market Myth - 15th Nov 18
Tory BrExit Chaos Cripples UK Economy, Wrecks Housing Market Confidence - 15th Nov 18
Stocks Could End 2018 With A Dramatic Rally - 15th Nov 18
What Could Be the Last Nail in This Stock Bull Markets Coffin - 15th Nov 18
Defensive Stock Sectors Outperforming, Just Like During the Dot-com Bubble - 15th Nov 18
Buying Your First Home? Here’s How to Save Money - 15th Nov 18
US Economy Ten Points or Ten Miles to ‘Bridge Out’? - 14th Nov 18
US Stocks: Whither from Here? - 14th Nov 18
Know exactly when to Enter&Exit trades using this... - 14th Nov 18
Understanding the Benefits of Keeping a Trading Journal - 14th Nov 18
S&P 500 Below 2,800 Again, New Downtrend or Just Correction? - 13th Nov 18
Warning: Precious Metals’ Gold and Silver Prices are about to Collapse! - 13th Nov 18
Why the End of the Longest Crude Oil Bull Market Since 2008? - 13th Nov 18
Stock Market Counter-trend Rally Reaches .618 Retracement - 13th Nov 18
How to Create the Best Website Content and Generate Organic Traffic - 13th Nov 18
Why the Stock Market Will Pullback, Rally, and Roll Into a Bear Market - 13th Nov 18
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18

Market Oracle FREE Newsletter

Free Online Trading Session

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

© 2005-2018 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

6 Critical Money Making Rules