The EU fiscal compact treaty

Right, so what is this latest memo from Brussels all about then? Well its full name is “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.” It’s not only for Eurozone countries; other EU states who use a different currency can also sign up to it, but its primary purpose is to stabilise the Euro.

Econocat has read the treaty. You can too, it’s not very long, in fact I’m sure the regulations on the proper curvature of bananas are a lot longer. And I just heard on the news this morning that junior finance minister Brian Hayes is going to send a copy to each household over the next few weeks, before they ask you whether they can make abiding by its terms constitutional or not. Because that’s what the referendum is about – Enda Kenny has already signed the agreement, committing Ireland to its terms and conditions. Europe would prefer that all parties make it constitutional, although it’s not a requirement, and our AG decided that we do need to do so, hence the question being put to you, the unwashed masses. I’m not sure if, like before, they’ll ask you to vote again if you give them the answer they don’t like (as comedian Des Bishop puts it – “we’ll do this again and again until you get it right!”).

For a brief summary of the treaty, and if you care what Econocat thinks about it, see below the fold.

The terms of the treaty are fairly simple, and is standard neoliberal fare: Balance your budget and reduce your public debt, or else. I’m not going into specifics in this, my very first post; I’ll be discussing this whole issue in much more detail over the next two months. Reject it and we lose access to bailout funds from the European Stability Mechanism as of March 2013, although we are assured that current bailout arrangements will not be affected. Accept the terms and we have to commit to a certain maximum ratio of public debt to GDP, and likewise for any budget deficit.

Econocat’s opinion? Well, for the big economies like Germany and, um….., for Germany it makes perfect sense. Now that the potential scenarios that had us all scratching or heads right at the start of this Euro thing – like how was a single currency ever going to work with different political ideologies – now that the proverbial has hit the fan it makes all the sense in the world for Germany to try to reign in the naughty kids on the fringes. If you want to use our currency, behave yourselves and stop mucking it up. If I were German, I’d be voting yes on this one.

For Ireland, if we’re going to stay in the Eurozone, then we have to support this, unpalatable as it may be. I don’t blame the government for signing it already, because it simply confirms a position that Ireland has fairly consistently taken all along (with one or two hiccups along the way).

But, because Econocat is a contrarian and thoroughly subversive, I’m going to say vote No. Because it gives us a chance to break free of this bizarre Euro game. It gives us a chance to control our own economic destiny. It gives us a chance to boost our exports. It gives us a chance to become even more attractive to foreign investors (Hey Intel, open another plant – you can pay for a highly skilled workforce at a devalued rate, and still sell your chips in Euros or dollars or whatever you’re having yourself. And why should you be worried about some bondholders who gambled and lost during the boom).

But much more on this later.

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