I am starting to understand how the economics of this referendum are quite different to the politics of it.
I agree that our state should be keeping its debt to GDP ratio as low as possible, I'm bemused that we need to change our constitution to do it and enter into an agreement to be fined by the European Court of Justice should we fail to do it. Can't we manage our own home?
My reservations about a Yes vote, which I think will be the result, are compounded by what I have been reading and listening to, including the following:
Only 4 countries have so far ratified the treaty. I'm led to believe that there is a meeting of EU ministers in June, at which, changes may be made to the compact as it currently stands. We will have already ratified it.
Signing up to the Fiscal Pact does not guarantee bailout funds. Any other signatory to it can block an attempt to borrow from it.
We are still paying bondholders who invested in banks, lost in their gamble but get paid back anyway. On Monday 28th May, AIB paid out 2.25 Billion. In my opinion, it's not their cash to splash, we own them and shouldn't be rewarding bad gambles. As long as we are willing to pay back the failed investors, we will always need bailouts. I'm told not paying them will mean they won't invest in Ireland again. I say that unless we allow investors to fail they will continue to make bad investments and corrupt capitalism, as Freedman intends it.
This international agreement is here to stay, should we decided in the future that it's not in our interest to be in it, we can't get out of it.
We are being asked to do something (reduce debt to gdp @ maximum of 0.5% ) which is something we havent been able to do in the past. Since 1980 its averaged at 4%. So when the NO side says it is leading to more austerity, I can see why.
Yes, the question still remains, what's the alternative? We vote yes, we will need a bailout. We vote NO we will need a bailout. Maybe we should learn Chinese?
