Via The Nation: from “Billy Blog” by Bill Mitchell, Research Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW Australia – The Sick Celtic Tiger Getting Sicker:
The problem is that the Irish government has no real options while they remain constrained by the Maastricht Treaty and their lack of sovereignty. As noted above, while the Prime Minister might define economic sovereignty as the avoidance of default in a fixed exchange rate world this is far removed from what true currency sovereignty constitutes.
Boone and Johnson understand that too. They say:
… the Irish need to consider seriously whether being in the euro zone is worth the cost. The adjustment to this awful situation would be far easier outside the euro zone – even though leaving the zone might have adverse repercussions for other nations.
This is one of my regular themes when discussing the Euro problems. The design of the monetary system is incapable of delivering sustained prosperity and is crisis-prone when there is a major asymmetric aggregate demand shock experienced across the member nations. All the bailout packages and other add-ons will not change that.
Either they have to enter a fiscal union to support the monetary union or the nations should exit the system. Please see the blogs – Exiting the Euro? – Doomed from the start – Europe – bailout or exit? – for further discussion…
The only reason there is a sovereign debt crisis is because the nations within the EMU gave up their currency sovereignty.