Edgar Morgenroth assesses the role of public investment during a recession in this paper.
Month: May 2009
Full text of NTMA chief Michael Somers’s appearance at the Public Accounts Committee is now available here.
Last night on The Week in Politics, Fine Gael’s Leo Varadkar criticised proposals for nationalisation of the banks on a couple of grounds, one of which was that it “wipes out 300,000 small shareholders.” Later, in describing FG’s plan he said that the new banks created as part of this plan “would buy the good loans off the banks, take the good loans off the banks and set up a clean bank and, by doing that, you then create capital for the old banks and give them some chance of survival.”
Those watching would probably interpret these comments to imply that Fine Gael’s plan does not involve nationalisation and that it would be better for bank shareholders than what has been proposed under nationalisation. In my opinion, neither of these positions are correct.
The IFS have recently published a report on inequality in the UK (http://www.ifs.org.uk/publications/4524). They show inequality at its highest level since a consistent time-series began in 1961. Unfortunately the data has not picked up all of the recent declines in income but they speculate that incomes at the top (more heavily dependent upon interest and dividends and with a higher proportion of earners in the financial sector) may have experienced a greater fall. It is interesting to carry out similar speculation for Ireland. Certainly the same forces are at work at the top of the income distribution but we have also experienced a greater rise in unemployment. However the recent ESRI analysis by Tim Callan and his colleagues has shown that the lowest quintile has done relatively well in recent budgets, particularly last year. On balance this suggests a fall in inequality. The relative position of pensioners is of particular interest, with their reliance on interest and dividends (which have fallen) and on the old-age pension, which has risen in real terms in recent years. No doubt Brian Nolan’s paper at Wednesday’s Conference in TCD will throw further light upon this.
Ronan Lyons updates his ongoing discussion of this issue on the following link
As Ronan states himself, these are round numbers being constructed from extrapolations from the Census and various property data sites. Ronan is moving toward estimates of the number of people who are both unemployed and in negative equity. I will make his life more difficult by noting that while this would be a really interesting statistic (particular its regional distribution), it does not take into account people who have retained some form of employment but whose income has fallen substantially.