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  • irishtimes.com - Posted: November 30, 2011 @ 6:58 pm

    Currency Woes and the Dance of the Seven Veils

    Deaglán de Bréadún

    There is a very strange atmosphere in political circles arising from the uncertainty about the future of the Euro. There has never been anything quite like it in recent decades.

    People are openly wondering what happens to their savings if the Euro goes bye-bye and we see a return of the Punt.

    What happens to the value of your wages/salaries and the value of your house or apartment? Will there be a substantial discount if one currency is replaced by another?

    There is always a tendency in political and media circles for emotion to get a little out of hand. Steady nerves and a stiff upper lip are needed, some would say.

    But that isn’t really enough on this occasion. The problems of the currency need to be sorted out.

    Personally speaking, I have long been an advocate of a hard currency. On assignment in Moscow for this newspaper in 1994, I saw the effect of a major currency devaluation on people’s pensions and their standard of  living.

    To this day, I remain haunted by the sight of mothers and elderly folk selling their household goods on the street, outside the underground railway station, the famous Moscow Metro.

    Other side-effects ensued: there was a massive increase in prostitution when even middle-class women were forced into it as a means of ensuring there would be food on the table.

    Ironically, what emerged in the aftermath of the Soviet Union’s collapse proved to be a very good illustration of Marx’s comments about the cash-nexus as the basis of human relationships in a capitalist society.

    Meanwhile, our own budgetary process proceeds apace, with next Monday and  Tuesday set for the last part in the Dance of the Seven Veils.

    It can now be said that, in the process of establishing the common European currency, our EU leaders forgot the old dictum that “The devil is in the detail”.

    Lax standards and regulation have led to the present mess. It is very hard to enforce proper standards when you haven’t got a unitary state.

    The Germans have a point when they say we all need to clean up our act – but is it too difficult in a sprawling community of many nations and is it too late in any case? Fingers crossed!

    • RPE McCarthy says:

      the gerries are right but reform and a lender of last resort need to happen in parallel.

    • Desmond FitzGerald says:

      Deaglán, No one will lose their savings, as they are guaranteed and anyone stupid enough to have all their savings in one account or two accounts with the same bank group needs their head tested.

      Hopefully scenes of stupid people Q-ing to take their money out of Northern Rock in the UK and making the situation even worse won’t happen in Ireland.

      No one in Iceland lost their pension or their savings.

      There will be no return to the punt because the solution to this mess is actually pretty easy and the problem is not financial, it’s political.

      The ECB could print €3 trillion or twice that or any amount needed to pay off the debts and deficits of every Euro zone member state if it was allowed to and it would have the combined economy clout to make such a commitment plausible.

      But due to the stupidity of the political class in power when the Euro was divided and the so called ‘best of the best’ employed in EU and national officialdom, no one had the guts to put in place the political rules to make the system work.

      The political cost now is the political class admitting it got it so wrong. But when have we ever heard a politician admit they were wrong. When was the last time an official was held to account.

      Because denial is the strongest of all human emotions we will all be pushed to the brink of the abyss and will probably feel we are losing our balance and there will be some arm-flapping to maintain balance but at the last second sanity will prevail and the right thing will be done.

      The cost will probably be to destroy any remaining credibility of the current generation of the political class and their officials – they are quite possibly the worst generation since the one before that spawned Clinton, Blair, Ahern, Bruton etc who were themselves perhaps the worst class since those of the late 1930s who allowed a world war to start on their watch and were asleep on the job as it crept up. The best generation were probably that of Attlee, Schumann, Adenauer or the Dutch Beel.

      The damage done by the Ahern’s and Blair’s and Clinton’s and those who came after have affected and stunted the lives of millions, the families broken up by emigration, the people who will never work again, the people who will miss out on college and the millions whose incomes haven’t risen in real value since the 1970s while the gap between the salary of those ‘on the floor’ and those in management has ballooned.

      Yet, not one single official or politician who caused this mess has lost a thing – it seems Iceland will be the only country to hold anyone to account.

      So the solution is the ECB doing what a central bank is supposed to do and the member states getting a good hard dose of reality and accepting they can’t have any more say on the issues that are relevant to a Central Bank. Do the Greeks and Italians want to pay their debt back or do they want to allow the honest efficient Germans sort the mess out. I know I’d feel far safer with a group of Germans running the Department of Finance than I ever would with Irish officials being left in charge.

    • Desmond: Right or wrong, you are reflecting the serious undermining of people’s confidence in our political and administrative class which is one of the outcomes of the current crisis.

    • Ms Straus's daughter says:

      Thank God I kept a jar full of Irl decimal 50 pence pieces………..that should keep one going for a few years..!

      (Btw..anyone know where you can change foreign coins to Euro……..I’ve got buckets of UK and USA coins and others from various foreign countries..?)

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