Originally Posted by
wiggin
Did you even read what I've written? I specifically offered two viable options - either breaking up the euro or centralizing economic policy as well as monetary policy. I'm not taken in by some systematic english language bias here, I'm just illustrating a difficulty with the current management of the EMU, not the concept of the EMU itself. I couldn't care less what you guys do on that front.
Here's my problem with this reasoning - did Ireland have a choice, really, about bailing out their banks? And was the EMU completely blameless in the size of bailout needed?
Now we're getting somewhere. So the real issue isn't whether euro monetary policy was involved in the huge bubble in Ireland (it was), but whether Ireland should have bailed out their banks. I personally think the answer is clear - saving the financial system of a country from wholesale collapse is inevitably cheaper than the alternatives. Furthermore, it's often possible to recoup most of the bailout costs through later provisions (e.g. TARP hasn't been too pricey).
The bottom line is that Ireland is too small to fix the financial sector in its country. IMO this isn't something wrong with Ireland - many countries weight industries one way or another. Furthermore, they're particularly susceptible to bond market vigilantes because their bond market is tiny in comparison to much of the world. Lastly, guaranteeing Irish access to credit costs peanuts to 'core' countries in the EMU and generally saves the entire region from serious knock-on effects - hell, the euro and European markets have been seriously battered by uncertainty over Ireland (just as with Greece months ago) - said uncertainty mostly due to foot-dragging by a few key countries (ahem, Germany).