20 november 2010, bad policy and catastrophic politics

The financial times has surely called it right that the eu using the irish crisis as an opportunity to rid themselves of the running sore of ireland's 12.5% corporate tax rate would "politically, be the most monumental own goal europe could score. The irish were converted to the lisbon treaty by guarantees on tax sovereignty. Reneging on them would cause cracks in europe's political edifice that no words could paper over." Much as many do not agree with this rock of irish fiscals, and much as the quid pro quo for a community bail out must be rigour and reality in national affairs, that policy has proved as successful as any, and is their democratic right to pursue. This is not greece, where root & branch reform of the fiscal administration is necessary; the irish have been bold and competent in this department. The tragically lax and wayward was bank lending, which surely means a focus on regulation and balance sheets, the ultimate journey being wind down and removal of irish lending capacity, which should not be irreplaceable given open access to other euro lending. Isn't that part of what a sustainable single currency needs to be ? The press in the uk meanwhile is full of tosh about how it's all ireland's fault for joining the euro in the first place, though of course having their own currency would not have stopped irish banks irresponsibly lending the ludicrous amounts of money that are the source of the problem. It would though have robbed them of 15 years of roaring tiger growth that economically transformed this once-obscure part of europe, and nor would there be weeks of negotiation with a friendly eu white knight, but rather it would be the immovable imf against an ireland with its hand undermined by a currency crash.