Sean Barrett (Independent) | Oireachtas source

The Minister is welcome as always to the House. Having read through the documentation on the matter one of the thoughts I had - I am not being too mischievous - was what did Latvia do to deserve to be included in the euro. The more serious theme is Alan Ahearne's comment in a section of the Brian Lenihan book to the effect that an additional dimension to Ireland's crisis was the country's membership of a poorly-constructed and at times dysfunctional currency union. It was extremely badly designed. The wisdom of the United Kingdom, Sweden and Denmark in not joining has been justified by events. People like the Minister are doing their best, I imagine, to establish whether we can get back any retrospection following what happened and having taken the hit for the dysfunctionality of the eurozone. If I was a Latvian I would be voting against this Bill, but we will leave that aside.
One of the problems is that we get interest rates inappropriate to a country's stage of development. We lose the exchange rate as an instrument of economic policy. We get the tsunamis as well. One of the banks that was advising the Minister on how to run the mortgage market in the Sunday Independenthad 275% wholesale funding but hardly any deposits at all. That is a recipe for instability. There was no bank regulation and we took the hit for it.

There was inadequate fiscal federalism for the system it was supposed to serve and there was no exit mechanism. I fear that this system will guarantee mass unemployment forever in places such as Spain, Greece, Italy, Belgium and Portugal. Ireland has struggled manfully with the system. This was designed to be a hard currency zone but, as far as I can see, only two eurozone countries, Germany and Austria, actually qualify. The other countries in the hard currency zone are Sweden, Norway, Denmark and Switzerland.

The fact that Ireland did not have mechanisms to deal with huge movements of capital into the banking system created the property bubble. Such movements were treated as manna from heaven. The Minister has worked against this, with our support, in the years since his appointment and he said in the Dáil that he keeps open the prospect of retrospective action, but this would require the unanimous agreement of the 17 other eurozone countries. Such agreement seems unlikely but, as the Minister said, it keeps open the possibility of applying the European Stability Mechanism, ESM, for retrospective direct recapitalisation. The single supervisory mechanism comes into operation in November and it is a step towards this, but it is a long road.

I asked fellow economists about the €60 billion in the fund and they said that around €2 trillion would be required to rescue all the dud zombie banks in Europe - €60 billion is only a drop in the ocean. Perhaps the Members of this House and others should read the small print more closely when documents from Europe come before us, as this matter has been a disaster for people throughout the continent. I do not believe some countries will reach a resolution for a very long time. The matter was badly thought out and has done huge damage to many people in our constituencies and in countries throughout Europe.

I wish the Minister well as he must grapple with the problem. The last time I met the Minister he was being condemned by people in the tourist industry for a measure that in fact promoted that industry. Similarly, a measure that promoted the newspaper industry was condemned in a newspaper editorial. Two banks, one rescued by the British Government and the other rescued by the Irish Government, give the Minister advice on how to run the mortgage market. Many tax lawyers and accountants who designed the "double Irish" arrangement now try to advise the Minister on how to replace base erosion and profit shifting, BEPS. This illustrates the problems faced by the Minister for Finance, but he copes with them remarkably well and I commend him on this. I wish the Minister well, because much of the success we seek depends on his success in his onerous post. He has our support.