We had a debate in the Seanad this evening on the crisis in Greece and the challenges facing EMU. This was some merriment about this on the Order of Business but I’m very glad that it happened today. The whole situation is incredibly grave and needs some form of debate in the Oireachtas.
The main points that I made were:
Firstly, we have a monetary union without a political union. Why is this relevant? We share a common currency and interest rate. However the actions of one Government can cause huge difficulties for another. Greece doesn’t tidy up it’s shop but we do. Do we have the right level of political integration to deal with this? Why should we pay for their difficulties?
Secondly, (and answering the above question) we have to help because of the concept of solidarity. We saw this to Ireland’s benefit during the Lisbon referenda.
Thirdly, what are the limits to this solidarity? Well, I hope we don’t get to answering that question but we are dealing with a hugely serious issue and these limits could get tested.
Finally, would support for Greece aid or reduce long term macro economic stability? The issue of moral hazard applies to Governments as well as banks.
Big questions. I don’t have the answers to them. However a few small answers are apparent now. We must ensure our plans on our deficit are credible and perceived as such. Additionally we must ask that any European market that is capable of increasing consumer demand do so. Germany appears to be an excellent example of this.