Here‘s a paper on “Containing Systemic Risk” which I submitted to the European Parliament’s Monetary and Economic Affairs Committee in relation to its Monetary Dialogue with ECB President Trichet.
I’m one of a panel of “experts” that briefs the committee. Here‘s a link to the page that contains all the expert papers for this year. Click on 7.12.09 and you’ll see papers by other economists on the topic of systemic risk as well as some interesting papers on the Monetary Exit Strategies.
Writing in today’s Irish Times about the upcoming budget, Pat McArdle states
the first thing to do is to try to disentangle the two crises that confront us, namely, the bailout of the banking system and the budget. The two are inextricably but incorrectly linked in the public mind.
He is highly critical of people who suggest there is any such link and the piece includes the now-standard McArdle swipe at academics who “should know better.”
McArdle’s principle objection is to those who see any link between the €4 billion injected into Anglo Irish Bank this year (and perhaps a similar amount next year) and the €4 billion in tax and spending adjustments scheduled for the upcoming budget.
We heard on RTE radio yesterday that the shopping centre in Bandon which is now under flood was build in an area known to locals as “the swamp”. Other councils and planners were also known to have allowed buildings to be erected in the flood plains of rivers over the boom period. How can they be held to account?
Consultants also face inefficient incentive structures. Will PWC lose any future contracts for failing to highlight the importance, in their report to the Minister for Finance, of the €7 billion deposit that ILAP had placed in Anglo-Irish Bank? This was damaging to the credibility of the Minister for Finance and his department when it emerged into the public domain several months later (Irish Times, February 12, 2009).
A correspondent recently drew my attention to a statement from the same Minister on November 28, 2008. Referring to a report he had received on the Bank Guarantee Scheme, the Minister noted that:
“The report confirmed that the capital position of each of the institutions reviewed is in excess of regulatory requirements as at 30 September 2008. The report also concludes that even in certain stress scenarios the capital levels in the financial institutions will remain within regulatory requirements in the period to 2011.”
Since the report remains confidential, the extent to which the Minister’s interpretation and explication may have been politically motivated remains unclear; i.e. how broad a range of the stress scenarios does his statement refer to? If the report’s authors got it completely wrong, then surely they should have consequences to face?
The powers and remit of the Comptroller and Auditor General need to be extended to cover such matters.