Iceland: Report of Special Investigation Commission

English-language versions of some of the report into Iceland’s financial crisis are now available here.

Update: this Powerpoint file contains the main points.  Plenty of lessons for Irish readers.

Update:  A panel of philosophers considered the ethical failures during the Icelandic boom and bust: the one-page summary is here.

Greek Bailout Unveiled

So finally we see the terms of Greece’s impending bailout. €30 billion to be made available from EU countries (€500 million potentially from Ireland) at an interest rate of about 5%. Apparently, a further €15 billion is available from the IMF. To my mind, the interest rate is a bit lower than might be expected for an emergency bailout that should be acting as a serious incentive to get the Greek fiscal house in order. The operation certainly seems to be slanted towards carrot rather than stick.

What next? Peter Boone and Simon Johnson discuss this issue and are not confident that Greece can emerge from the crisis with access to private debt markets. They worry about Portugal being next. We worry about something else.

Profile of David Drumm

The Boston Globe has published a piece about David Drumm of Anglo-Irish Bank. You may read it here.

Brendan Keane on Municipal Waste Management

Brendan Keane of the Irish Waste Management Association takes issue with Scott Whitney’s piece of last week.

You can see for yourself who has the better arguments.

A lot of people in this debate (incl. IWMA and DCC) seem to believe in the virtues of vertical integration of waste collection and waste disposal. I do not understand that at all. A collector should deliver waste to the disposer with the lowest cost, regardless of ownership. There are no economies of scope or issues with information or contracts that would favour vertical integration.

(There is a coordination problem between waste separation at source and final disposal. For example, mechanical-biological treatment (MBT) is more valuable for aggregated waste streams than for disaggregated ones.)

Mr. Keenan and Political Economy

A common jibe that journalists and politicians level at academics they disagree with, or perhaps just plain don’t like, is that the academics are disconnected from reality by virtue of their ivory tower employment. In relation to economists, this often takes the form of the tired line about the discipline originally being called “political economy” and academics putting forward proposals that are “good economics” but “bad politics”.

Brendan Keenan’s column in today’s Sunday Independent is a classic example of this genre. Mr. Keenan argues that the various economists associated with this blog (the “dissident economists” formerly known as “opinionated economics lecturers”) are politically naive and their advice unsound. Specifically, Keenan proposes that we would be better off if, contrary to recommendations emanating from this site, the government had paid more to the banks for the NAMA loans and demanded lower capital ratios.

There is such a thing as political economy. Anglo would still have been a nightmare, but a somewhat more generous payment from Nama, and a less stern view on bank capital, would have made the numbers a lot less frightening.

That might have made it easier to get the deal with the trade unions approved, and get another unpleasant Budget through in December. Not only better politics, but possibly better economics than worrying about Tier One capital and Long-Term Economic Value.

I’m not sure that either the politics or the economics of this column are particularly compelling.