12th May 2006
The 
Confirmed bachelors can always explain why it is never the right time
to get married.
Speculators in property and share trading can explain convincingly why it is never the right time to sell. When the prices are going down they prefer to wait until better sale prices could be achieved. When prices are going up they prefer to hold on to their assets while they are growing in value.
Following Labour’s defeat in the 2003 general elections, it was the natural time to project the unavoidable shift in party policies through new party leadership. This has not happened much to the amazement of the general public and at the expense to Labour’s credibility as it promotes new products in old wrappers.
For insiders, it was not the right time to press for change of leadership, when the incumbent leader decided to re-contest in spite of earlier pronouncements to the contrary, as the party was in trauma after the election defeat. Now it is not the right time, although an independent report had recommended that the matter should be re-visited within two years, as the next elections are too near.
The “Not the right time” argument is again being used by Labour regarding the government’s plan to join the euro in 2008. This is a complicated issue as there is a long lag between the timing of the decision and its implementation. During such time lag various economic variables are in play. The government decided to join the ERM II mechanism in May 2005, leaving a period of more than two-and-a-half years until actual monetary union, if it really happens in January 2008.
During this waiting time, we have to bring ourselves in line with the official criteria for joining the euro, about which the EU seems to be adopting a rigid attitude.Lithuania
And to complicate matters forLithuania Sweden Sweden Denmark UK
Labour is suggesting inclusion of a further criteria for the timing of our euro entry, that of having real economic growth of four per cent per annum. Once at it, why not include as well other tests like having a surplus in the balance of payments current account or having unemployment rate less than the EU average? Individually, all these tests make sense but collectively they would complicate the process so much that ultimately it will never be possible to join the euro.
One has to make a distinction between the ideal scenario, that hardly ever materialises, and the practical scenario that makes it possible to proceed with one’s plans and then continue aiming for perfection or idealism along the way.
For me, the issue of joining the euro was decided when we took on that obligation upon accession to membership. A small country like ours, exposed to international trade, has immense benefits in having a stable rate of exchange policy that is perceived credibly by trading partners and foreign investors. Nothing can achieve this better than a monetary union with our major trading block partners.
The timing should be the shortest possible one to come in line with the conditions of monetary union without sacrificing economic growth or causing undue disruption to the country’s social cohesion.
The big decision for the euro project was at what rate of exchange level should we make the docking into the monetary union. In the past, I expressed myself liberally that we ought to have chosen a lower rate than the one we did. At the same time, I was against gradual adjustments that can only give rise to instability, capital leakages and consequent erosion of foreign reserves.
Once the decision to join at the rate chosen was taken this time last year, I laid down my arguments as energies had to be devoted to other economic variables which have to be adjusted to preserve and promote competitiveness both in the run-up to and after the monetary union.
To a large extent, we are already in a monetary union. The fixed parity chosen means that our interest rate decisions have to shadow those of the ECB even in the preparation stage. So why wait beyond 2008 (unless one wants to re-open the level of exchange rate docking into the euro) denying the economy the benefits of monetary union while carrying all its obligations?
As to the dual pricing argument, I feel that a long period of dual pricing is necessary to avoid abuses of price rises on the changeover date. But it is illogical to conduct such dual pricing exercise unless the banks participate by offering a fixed central parity exchange facilities during the dual pricing period.
The relatively small amount of profits from exchange that banks will forfeit is a small price to pay for smoothening our entry into the euro and would be a gesture against those who keep arguing for the imposition of windfall taxes on the banking sector.
Speculators in property and share trading can explain convincingly why it is never the right time to sell. When the prices are going down they prefer to wait until better sale prices could be achieved. When prices are going up they prefer to hold on to their assets while they are growing in value.
Following Labour’s defeat in the 2003 general elections, it was the natural time to project the unavoidable shift in party policies through new party leadership. This has not happened much to the amazement of the general public and at the expense to Labour’s credibility as it promotes new products in old wrappers.
For insiders, it was not the right time to press for change of leadership, when the incumbent leader decided to re-contest in spite of earlier pronouncements to the contrary, as the party was in trauma after the election defeat. Now it is not the right time, although an independent report had recommended that the matter should be re-visited within two years, as the next elections are too near.
The “Not the right time” argument is again being used by Labour regarding the government’s plan to join the euro in 2008. This is a complicated issue as there is a long lag between the timing of the decision and its implementation. During such time lag various economic variables are in play. The government decided to join the ERM II mechanism in May 2005, leaving a period of more than two-and-a-half years until actual monetary union, if it really happens in January 2008.
During this waiting time, we have to bring ourselves in line with the official criteria for joining the euro, about which the EU seems to be adopting a rigid attitude.
And to complicate matters for
Labour is suggesting inclusion of a further criteria for the timing of our euro entry, that of having real economic growth of four per cent per annum. Once at it, why not include as well other tests like having a surplus in the balance of payments current account or having unemployment rate less than the EU average? Individually, all these tests make sense but collectively they would complicate the process so much that ultimately it will never be possible to join the euro.
One has to make a distinction between the ideal scenario, that hardly ever materialises, and the practical scenario that makes it possible to proceed with one’s plans and then continue aiming for perfection or idealism along the way.
For me, the issue of joining the euro was decided when we took on that obligation upon accession to membership. A small country like ours, exposed to international trade, has immense benefits in having a stable rate of exchange policy that is perceived credibly by trading partners and foreign investors. Nothing can achieve this better than a monetary union with our major trading block partners.
The timing should be the shortest possible one to come in line with the conditions of monetary union without sacrificing economic growth or causing undue disruption to the country’s social cohesion.
The big decision for the euro project was at what rate of exchange level should we make the docking into the monetary union. In the past, I expressed myself liberally that we ought to have chosen a lower rate than the one we did. At the same time, I was against gradual adjustments that can only give rise to instability, capital leakages and consequent erosion of foreign reserves.
Once the decision to join at the rate chosen was taken this time last year, I laid down my arguments as energies had to be devoted to other economic variables which have to be adjusted to preserve and promote competitiveness both in the run-up to and after the monetary union.
To a large extent, we are already in a monetary union. The fixed parity chosen means that our interest rate decisions have to shadow those of the ECB even in the preparation stage. So why wait beyond 2008 (unless one wants to re-open the level of exchange rate docking into the euro) denying the economy the benefits of monetary union while carrying all its obligations?
As to the dual pricing argument, I feel that a long period of dual pricing is necessary to avoid abuses of price rises on the changeover date. But it is illogical to conduct such dual pricing exercise unless the banks participate by offering a fixed central parity exchange facilities during the dual pricing period.
The relatively small amount of profits from exchange that banks will forfeit is a small price to pay for smoothening our entry into the euro and would be a gesture against those who keep arguing for the imposition of windfall taxes on the banking sector.
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