Patrick Honohan has written an article for the FT: you can read it here.
This is hardly the most important issue right now with so much going on but it’s a two cents I’d like to toss out there all the same.
Last year, I regularly heard the following argument on this blog, in the media and in private. “Overpaying for assets via NAMA is actually the best way to recapitalise the banks. This is because we can purchase the property assets with “NAMA bonds” that we can just print off. They’re not real money, just IOUs. But if we paid a low price and had to recapitalise nationalised banks, we couldn’t do this. We’d have to borrow the money expensively on sovereign debt markets and then hand over real money to the banks.”
It is useful to place the current Irish crisis into a comparative context. In “Risk Management and the Costs of the Banking Crisis” [IIIS Discussion Paper No. 262 (published in National Institute Economic Review)], Patrick Honohan estimated that the mean fiscal cost of systemic banking crises to be 17.1% of GDP [narrow sample of 45 countries] or 19.1% of GDP [broader sample of 78 countries]. The respective median values are 13.2% and 15.5% and the upper quartile values are 16.7% and 27.7%.
It is notoriously difficult to calculate the total fiscal cost of a banking crisis – as Reinhart and Rogoff have emphasised, there are substantial indirect costs since a banking crisis typically also amplifies recessionary forces, leading to a generalised decline in tax revenues.
In addition, the final fiscal cost may differ from the upfront fiscal cost, to the extent that there is ultimately a positive investment return on the fiscal injections.
The current projection is that the State injection into the banking system will soon stand at €33 billion or so. This is made up of €3.5bn preference shares in BOI (some of which will probably be converted into ordinary equity); €3.5bn preference shares in AIB (some or all of which will probably be converted into ordinary equity); €22bn in Anglo (€4 already put in + €8.3bn + an expected further €10bn); €2.7bn into INBS; and about €1bn into EBS.
€33 billion is about 22 percent of GDP (26 percent approx of GNP). The injections into AIB and Bank of Ireland could ultimately deliver some level of payoff to the taxpayer, such that final cost could approach the mean value for a systemic banking crisis. In the other direction, additional fiscal injections in the future would raise the total bailout cost.
I note also that the gross fiscal cost is not all paid out up front, in view of the strategy of using promissory notes.
[Clearly, it matters for this ratio whether it is measured vis-a-vis pre-crisis GDP or current GDP.]
Finally, the fiscal cost of the banking crisis is a narrow measure – many households and firms will also suffer private losses of various types.
The standardised unemployment rate for March was 13.4 percent (release here) having been revised up in previous month’s due to last week’s QNHS release. The Live Register based unemployment rate was flat over the first quarter but there are questions now about whether this reflects tightening of benefit coverage rather than underlying labour market conditions.
Ok folks, let’s have a competition. According to page 3 of this document, we’re paying €8.5 billion for the first tranche of loans, which are backed by property with a calculated long-term economic value of €10.5 billion. First person to provide full details of how exactly this works gets a copy of the old NAMA protest article signed by all 46 guys. Should be worth a fortune in years to come. Zhou is doing trojan work on this right now and has been installed as odds on favourite by Paddy Power.
Are out. Enjoy.
The Central Bank and Financial Regulator have released a document outlining their methodology in setting capital requirements for the banks. The banked calls this process its Prudential Capital Assessment Review (PCAR). It is available here.
There were things I liked in today’s announcements and things I disliked. More of the latter than the former.
Today’s media have lots of what appear to be leaks about what AIB’s capital requirements are going to be. I say “appear to be” because reliable leaks tend to lead to all the journalists singing off the same hymn sheet and reporting the same figures. In this case, Business and Finance are reporting a capital requirement of €7.5 billion, the Irish Independent reported a requirement of “up to” €7 billion and the Irish Times are reporting “some €6 billion to €7 billion”. So I’d take these with a pinch of salt for now.
What isn’t being reported, however, is quite how bad that news (if such it is) would be for AIB’s current shareholders. AIB’s 2009 annual report showed that the bank had risk-weighted assets of €120 billion at the end of last year. If €20 billion in property loans are transferred to NAMA and replaced with NAMA bonds (formerly known as free money from Europe) then (assuming a risk weight of one for the property loans) this would reduce risk weighted assets to €100 billion.
It has been heavily flagged that the Regulator will be looking for a core equity capital requirement of 8 percent, so this would require the bank to have €8 billion in core equity capital and I’d assume that the preference shares would not count towards this total.
The annual report tells us that at the end of last year, the bank had what it called “core equity capital” of €9.5 billion, but this included €3.5 billion in government shares.
Now consider what a capital requirement of even €6 billion would imply. If the bank needs to have core equity of €8 billion, then a requirement of €6 billion means that after the transfers and writedowns, AIB would have equity capital of €2 billion. This would mean losses of €7.5 billion on the transfers and writedowns. As far as I can see, this would mean the transfers wiping out the private equity in the bank.
Perhaps I’ve done these calculations wrong: Commenters feel free to tell me what’s wrong with the above. There certainly seem to be shareholders out there who don’t agree with it. In any case, we won’t have long to wait.
The National Competitiveness Council reports on key competitiveness issues facing the Irish economy together with recommendations on policy actions required to enhance Ireland’s competitive position.
One of the NCC’s annual publications is Benchmarking Ireland’s Performance. In 2009, this analysis of Ireland’s competitiveness performance used approximately 140 indicators to see how Ireland compares internationally on, for instance, living standards, export performance, prices and costs, productivity, innovation and infrastructure. Now, in preparation for the 2010 report, the NCC would welcome suggestions for additional/alternative internationally comparable indicators that could further our understanding of Ireland’s relative competitiveness.
If you are aware of such indicators and would like to suggest them for inclusion, please email firstname.lastname@example.org .
Previously used indicators can be seen in the Annual Competitiveness Report 2009, Volume One: Benchmarking Ireland’s Performance.
Mr Justice John Cooke made the order following an application by lawyers on behalf of the Financial Regulator.
The application was made under the 1983 Insurance act.
The court heard the Regulator took this action following serious concerns about the way the group was managing its affairs.
The Times reports
The court heard that the company had moved from a position where it had an excess of assets over liabilities of more than €200 million to a position where it had €200 million of liabilities over assets.
As if today wasn’t busy enough already.
Without knowing the details of today’s deal, it is still worth thinking about the macroeconomics of public sector reform. I will take it that the deal delivers widespread productivity growth in the public sector.
All else equal, an improvement in the quality or output of public services should be valued by the population. It is desirable that this be reflected in the measurement of GDP and various countries are attempting to capture quality and output measures for public services to this end. (The alternative is to measure public sector output by the volume of inputs – but this cannot capture productivity growth.) The value to the population of extended opening hours, for example, should be considerable. It would be helpful if Ireland made efforts to improve the measurement of the public sector contribution to GDP.
Next, for given levels of output and quality, an improvement in productivity means that the public sector requires fewer workers. This expands the supply of labour to the private sector. This will benefit private-sector enterprises, including via the attendant downward pressure on wage levels. A cautionary note: the initial impact of technological progress can be contractionary, since rigidities in the labour market may mean that it takes time for private-sector employment to expand to absorb the extra supply of workers.
Next, the financial savings from the reduction in public sector numbers [and/or the elimination/reduction of premium payments for some types of overtime] can be allocated in several ways: (a) reduce the deficit; (b) increase the provision of public services [equivalently, avoid service reductions] ; (c) reduce taxes [equivalently, avoid tax increases beyond what is inevitable]; or (d) increase public sector pay levels [equivalently, partial or full restoration of previous pay cuts].
It is currently unclear about the intended allocation of savings across (a) through (d).
I further note that uncertainty in the provision of public services is damaging for the population, such that the commitment to avoid strike action and other types of service interruption is very welcome.
Finally, as part of the overall package, a commitment to no further pay reductions is also welcome by providing certainty to public sector workers – this should reduce the level of excess precautionary savings. (I made this point back in January 2009 in my paper “A New Fiscal Strategy for Ireland” – the ideal time profile for pay cuts is to make a significant initial cut but not to pursue a sequential process of gradual pay cuts.) Since there are likely still significant pay premia for many public sector occupations, it will be important to closely monitor future public pay dynamics by reference to labour market conditions across the economy.
The Minister for the Environment has made another announcement on municipal waste policy.
There are two components. One is not new: There is to be a cap on incineration. There is no rationale for creating an artificial scarcity, as explained by Gorecki and Lyons. Using both price and quantity instruments is double regulation. Tinbergen (1952) shows that this is unnecessarily costly.
The new element in the latest announcement is that the incineration levy is not constant, but increases with the size of the incinerator. Both the ESRI and the Eunomia report recommend an incinerator levy, albeit at different levels. However, they recommend the same levy, per tonne, regardless of the size of the incinerator — although one could argue that larger incinerators burn cleaner and therefore should have a lower levy.
There is no economic or environmental rational for putting a higher levy on larger incinerators.
UPDATE: Story in the Irish Times
UPDATE2: PJ Rudden says the proposed levies may be illegal. I’ve heard say that it would be anti-competitive to put one levy on a small incinerator in Cork and another levy of a big incinerator in Dublin, but as inter-county trade in waste will be verboten too, I’m not convinced that that argument holds.
UPDATE3: RTE looked at the letters between the City Manager of Dublin and the Minister for the Environment; they are not particularly friendly to one another.
The main points are summarised in this IT article.
Tomorrow we should finally see a resolution of much of the uncertainty that has been hanging over the Irish banking system. We are being told that the estimated prices for NAMA transfers will be announced, as well as the capital requirements set by the Central Bank and the new legal framework for the Central Bank and Financial Regulator.
With the news so soon to be released, there is little point in me speculating as to what is going to happen. What I would flag, however, is that there is something of a disconnect between two sets of statements doing the rounds in today’s media coverage.
First, there has clearly been widespread leaking that the NAMA loan transfers will see some banks taking considerably larger writedowns than had previously been expected. For instance, in the Irish Independent, Emmet Oliver writes that “AIB is set to be hit with a discount of up to 40pc”.
Second, much of the coverage mentions the idea of the state owning 70 percent of AIB and 40 percent of BoI. See, for instance, here and here. And note that Emmet Oliver’s full sentence is “AIB is set to be hit with a discount of up to 40pc, making majority State control all but inevitable” and he mentions the Minister’s “plan to take a 70pc stake in the lender.”
The disconnect is that these two sets of figures don’t seem to add up. There is nothing new about the idea of the state potentially owning 70 percent of AIB. Even based on previous expectations for NAMA discounts, this was always a possibility. For instance, I’m looking now at a Davy stockbrokers report from April of last year that projected a base case of the government owning 78% of AIB.
However, it is hard to reconcile the continuing circulation of the same ownership statistics as before with the new information (if such it is) on discounts and also on capital levels.
To give a concrete example, AIB’s annual report says that it had €9.5 billion in core equity capital at the end of 2009. This included the government’s €3.5 billion in preference shares (this isn’t core equity in my book, or most people’s, and it is likely to be converted to ordinary equity.) So that leaves €6 billion in private core equity capital. AIB is supposed to be transferring €24 billion in loans to NAMA. Forty percent of €24 billion is €9.6 billion.
So, do the math on this and you’d probably come to a different conclusion about ownership percentages than have been flagged by the media. One way or another, we’ll find out tomorrow, but today’s leaks are confusing, perhaps deliberately so.
Update: This post should have been clearer that AIB’s annual report already allows for €4.1 billion in provisions for losses on loans going into NAMA. So the calculations would involve an additional €5.5 billion in losses over and above that. With half a billion in equity capital and the need to get up to a core equity ratio of eight percent, the 70 percent state ownership doesn’t add up. Still, perhaps I’ll see tomorrow how it’s going to add up and still end up with the 70 percent outcome.
In today’s Examiner, PJ Rudden estimates the costs of changing government waste policy (as opposed by the ESRI) at around 2.5 billion euro and warns that environmental quality may deteriorate too. As Rudden points out in Friday’s Times, his cost estimate omits the damage to Ireland’s reputation should the government decide not to honour the contract with Covanta, and indeed the cost of breaking the contract.
For Greece (or any other fiscally-challenged member) to ‘leave the Euro’ involves the launch of a new curreny. From scratch. People talk as if the drachma lives on, cryogenically preserved in some icy Limbo for Currencies.
So the Greek government could thaw it out overnight, at some devalued exchange rate, and Bob’s your Uncle. This is moonshine. The Eurozone is not a fixed-exchange rate system, it’s a common currency area. The drachma has been abolished. This parrot is deceased.
Launching a new currency is a formidable undertaking in calm circumstances. In current Greek circumstances, and abstracting from the enormous logistic challenges, it is not do-able. There would be little point launching a new currency unless people could be induced to hold it. The prospectus would have to mention the debt ratio at 113% of GDP and rising, weak competitiveness, the largest adverse sovereign spread in the EZ and so forth. Who could be compelled to hold this currency even briefly (while it is being devalued) apart from domestic Greek recipients of pay and social transfers? Does anyone believe that the Euro would disappear from Greek trade and payments? Existing debts would have to be honoured in Euro – there is nothing else at present. Not even lawyers could hold that contracts were to be enforced in a currency which did not exist at the time the contracts were entered into.
There are 16 countries in the Eurozone, but 17 European countries use the Euro, the 17th. being Montenegro, which decided, at independence in 2002, not to launch a new currency. They use the Euro, do not get any of the seignorage as far as I know, but don’t have to spend half their lives in Frankfurt at ECB meetings, which sounds like a reasonable deal. (Memo to Montenegro: You may not have a currency to worry about, but you do have banks. Watch it!).
Who can say that Greece, having ‘left the Euro’, would not become a bit like Montenegro, with admittedly an unloved drachma for government internal transactions but most of the economy dollarised (or Eurinated)? Lufthansa reduces capacity a little on Athens-Frankfurt business class, but what else changes?
David McWilliams has advocated in his SBP column that Ireland should choose to ‘leave the Euro’. Please explain, in great detail (this is not a transition-year project) precisely
– how the introduction of a new currency in current circumstances would be executed, and
– how it would pan out in macro-policy terms.
German and other advocates of an expulsion option might join David in this exercise.
Following on from yesterday’s post on misleading hyperbole about Greece choosing to leave the euro or being expelled from it, it was truly depressing to hear an Irish minister today raise the prospect of Ireland having to leave the Euro.
On RTE’s Saturday View program, Minister Eamon Ryan said the following in relation to Anglo Irish Bank:
It would be so nice if we could say we’ll let it go and that will be the end of that. The reality is … and that’s kind of Fine Gael’s position and what Labour seems to be saying. There are .. That means that we have to go and effectively say to the European Central Bank, who has a lot of money in deposit in Anglo, and say sorry we can’t pay you back. Now the European Central Bank, it hasn’t allowed a bank fail across Europe. So we would probably then have to leave the Euro. Now the risk of that, in terms of the tens of thousands of jobs that could leave this country because they’d say well Ireland is a riskier country to do business in, we don’t really want to do business there. That is what you’re talking about. So, it’s not easy, it’s not palatable but that’s the choice you’re faced with.
When RTE political reporter Brian Dowling then discussed the idea that there were alternative options to take, Minister Ryan confronted him saying “Do you think we should leave the Euro?”
I think that these are extremely unfortunate statements for an Irish government minister to make.
The facts are as follows.
1. Whatever happens with Anglo, Ireland will not be leaving the euro. Minister Ryan’s assertions that we would essentially be expelled from the Euro if an Irish bank failed to pay back the ECB are groundless. This is not just my opinion. An ECB legal working paper summarises this issue as follows: “while perhaps feasible through indirect means, a Member State’s expulsion from the EU or EMU, would be legally next to impossible.”
2. The ECB has always been aware that it could lose money from making loans to a bank that is then unable to pay it back. This is why its loans to banks are all collateralised, based on a well-developed list of eligible collateral. This list does not include development loans. While it is still possible for the ECB to lose money on its loans to a failing bank (if the collateral turns out not to be worth the value of the loan) there has never been any rule that such an event would result in the country the bank resided in having to leave the euro.
3. There are, in any case, options for dealing with Anglo’s insolvency that could save the taxpayer money without going as far as failing to repay its ECB loans. For instance, Anglo could be declared insolvent and its subordinated bondholders fail to be repaid, while the Irish government could choose to pay back other more senior creditors. There are serious issues to discuss here. The prospect of leaving the Euro is not one of them.
The bottom line here is that Minister Ryan’s statements about leaving the Euro are without foundation. However, it is perfectly possible that they could form the basis for unfounded speculation that Ireland is somehow on the verge of leaving the Euro. I would urge Minister Ryan to issue a clarifying statement correcting these assertions as soon as possible.
As we await perhaps the most momentous set of financial decisions ever taken by an Irish government, the consistent evidence that senior Ministers do not understand the banking situation is extremely worrying.
Peter Boone and Simon Johnson point out some potential limitations of the Canadian banking system in this post over at The Baseline Scenario.
I read time and again, for instance here, that Greece’s debt crisis “threatens the euro”. Indeed, there are lots of right-minded people around Europe who worry deeply about this threat and have determined that a Greek default has to be avoided to save the euro. I’m having trouble, however, figuring out what that this is supposed to mean.
There seem to be different interpretations of what the “threat to the euro” is. The more dramatic interpretations invoke the idea of an existential threat. Others view it as involving reputational harm. I’ll take each of these ideas in turn.
This new CGFS study provides an interesting analysis of the difficulties in cross-border funding markets during the crisis, especially in relation to foreign-currency positions.
Both Donogh Diamond on last night’s Prime Time and Simon Carswell in this morning’s Irish Times provide useful overviews of the “Anglo options”. But there is a certain surrealness to the discussion. Behind the debate is what might be called an “extreme contagion” view of default on any bank liabilities. Investors have done a good job convincing the government that bad things will follow any imposed losses. This supposes some combination of backward-looking and grudge-holding market participants. It also seems to be based on the idea that Irish borrowers operate in narrow segments of the international debt markets, and investors there must not be annoyed under any circumstances. The media has taken the view that we can’t know what the consequences of loss imposition would be, so we should probably play it safe.
Here is the text issued by the EU leaders:
We reaffirm that all euro area members must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for the economic and financial stability in the area.
We fully support the efforts of the Greek government and welcome the additional measures
announced on 3 March which are sufficient to safeguard the 2010 budgetary targets. We recognize that the Greek authorities have taken ambitious and decisive action which should allow Greece to regain the full confidence of the markets.
The consolidation measures taken by Greece are an important contribution to enhancing fiscal
sustainability and market confidence. The Greek government has not requested any financial
support. Consequently, today no decision has been taken to activate the below mentioned
In this context, Euro area member states reaffirm their willingness to take determined and
coordinated action, if needed, to safeguard financial stability in the euro area as a whole, as decided the 11th of February.
As part of a package involving substantial International Monetary Fund financing and a majority of European financing, Euro area member states, are ready to contribute to coordinated bilateral loans.
This mechanism, complementing International Monetary Fund financing, has to be considered
ultima ratio, meaning in particular that market financing is insufficient. Any disbursement on the
bilateral loans would be decided by the euro area member states by unanimity subject to strong
conditionality and based on an assessment by the European Commission and the European Central Bank. We expect Euro-Member states to participate on the basis of their respective ECB capital key.
The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possible by risk adequate pricing. Interest rates will be non-concessional, i.e. not contain any subsidy element. Decisions under this mechanism will be taken in full consistency with the Treaty framework and national laws.
The World Economic Forum has released its latest Global Information Technology Report, highlighting the “Networked Readiness Index”. I do not know what that means, but it probably has something to do with the Smart Economy, the government plan that is mentioned in the introductory chapter of the report. Ireland ranks 24th, towards the bottom of the rich countries and at par with the best of the middle-income countries.
The index consists of 3 subindices, each consisting of three subsubindices, derived from a total of 68 indicators.
As everything depends on the arbitrary weighting of the indicators, it is more instructive to look at the bottom level indicators.
Ireland is 24th out of 133 assessed countries. What is dragging us down? I’ll list the indicators on which Ireland is 48th or lower:
- Burden of government regulation: 74th
- Intensity of local competition: 49th
- Time to enforce a contract: 60th
- Residential telephone connection charge: 92nd
- Residential telephone subscription: 118th
- Fixed telephone line tariffs: 52nd
- Business telephone connection charge: 76th
- Business telephone subscription: 92nd
- Availability of new telephone lines: 53rd
- Government prioritization of ICT: 63rd
- Government procurement of ICT: 59th
- Importance of ICT to government vision: 56th
- Government success in ICT promotion: 64th
There is no need to comment on the above.
Ireland scores well on a number of things (12th or higher):
- Judicial independence: 9th
- Number of procedures to enforce a contract: 1st
- Level of competition: 1st
- Quality of education: 8th
- ICT imports: 1st
- ICT exports: 10th
A recurrent proposal in the ongoing debate about institutional reform in Ireland is that the number of members of Dáil Éireann be reduced from the current level of 166. Perhaps this particular proposal receives prominence because it’s relatively easily understood, and is seen by some as a satisfyingly visible response to widespread alienation from politicians and politics as practised in Ireland. It receives additional and weighty support from the most recent (and much more wide-ranging) article in the Irish Times series on political and economic renewal, by UCD Professor David Farrell which you can read here.
While appreciating that it’s perhaps unfair to evaluate any one such proposal in isolation from the broader set of ideas with which it’s typically linked, I’m genuinely puzzled as to why it seems to have such immediate resonance and support, beyond the generalised antipathy towards elected politicians, an antipathy which some of them seem willing to enable, by competing to support a culling of their present –and future–numbers.
Let me explain why I think the reasoning behind this sort of proposal is problematic, with a nod towards a little naive economics argument towards the end.
More releases from the CSO:
The latest national accounts release shows the scale of the contraction in 2009, with national income falling far more than the decline in production (the foreign-owned firms doing better than domestic firms).
The BOP release shows that the current account deficit has narrowed to 2.8% of GDP.
Yesterday’s QNHS report paints a picture of a very depressed labour market. The seasonally adjusted unemployment rate for the fourth quarter of 2009 was 13.1%.
It is perhaps worth reminding readers of how the unemployment rate is measured in Ireland. The QNHS, a large nationally representative survey, provides the official measure of the unemployment rate. The survey asks questions to assess whether the person is really participating in the labour force and then, if this is the case, whether they are in employment. So the survey provides measures of both the labour force participation rate and the unemployment rate.
The QNHS takes some time to process, so it’s release is not very timely. For this reason, the CSO also publishes a “seasonally adjusted standardised unemployment rate” which extrapolates from the most recent QNHS data using Live Register figures on the number of people claiming benefits. Sometime this extrapolation is accurate, sometimes it’s not.
In the case of 2009:Q4, the extrapolation was not accurate. The most recent Live Register release, reported standardised unemployment rates of 12.4 in October, 12.4 in November and 12.5 in December. These data had suggested that the unemployment rate was flattening out. However, the QNHS now reports that the seasonally adjusted unemployment rate rose from 12.5% in 2009:Q3 to 13.1% in 2009:Q4.
The most recent Live Register release reported an unemployment rate of 12.6% in February. A simple extrapolation from the QNHS release would suggest that this would be revised up to 13.3%. Overall, the picture has changed somewhat from one in which the unemployment rate appeared to be flattening to one where it still seems to be rising.
A noteworthy feature of the QNHS data is that the increase in the unemployment rate is occurring despite a significant decline in the participation rate. This rate has dropped from 64.1% in 2007:Q4 to 61.5%. For comparison the decline in participation in the UK and US over roughly the same periods has been about one percentage point. So this is an extra 2.5% of the labour force that is no longer counted as unemployed because they are not looking for work.
Perhaps surprisingly, the decline in participation has been most concentrated amongst men. The male participation rate has declined from 73.5% in 2007:Q4 to 69.7% in 2009:Q4 while the comparable decline for females has been from 54.7% to 53.5%. One possible explanation has been the concentration of job losses in the construction sector. Very few women worked in the construction sector, while male construction employment has declined from a peak of 263,000 in 2007:Q2 to 122,000 in 2009:Q4. The decline in male participation may reflect discouraged former construction workers leaving the labour force.
The male unemployment rate, which prior to the recession was similar to the female rate, has risen from 4.8% in 2007:Q3 to 16.6% in 2009:Q4. The comparable rise in the female unemployment rate has been from 4.0% to 9.0%.
Finally, the data show that long-term unemployment is becoming a more important factor. The QNHS shows that by 2009:Q4, one third of the unemployed had been out of work for more than a year; this share was up from one-fifth at the start of the year.
John Bowman has put together two clips based on interviews with R. C. Geary to commemorate the ESRI at 50. The first of these was broadcast on RTE last Sunday (March 21st) and may be played back here.
It is vintage stuff and well worth listening to. He tells a great joke about old age at the end of the clip.
Younger econometricians among you will be amused to learn that the reason he advocated the Geary tau test for autocorrelation as an alternative to the Durbin-Watson was that it saved on computational effort!
The next programme with be on Sunday morning (28th March).