Month: April 2010

Public Sector Reform and Policy Reform

The proposed agreement with the public sector unions is intended to facilitate public sector reform.  In addition to reform in the delivery of public services, the reform agenda may also be interpreted as extending to reforming the role of the public sector in the process of policy development.  In this regard,  Brendan Tuohy recently contributed an interesting reflective article in the Irish Times, while there is also a critique of the Department of Finance by Eddie Molloy in today’s edition.

In thinking about how policymaking can be improved in Ireland, I invite the readership to offer their views on how policy development can be improved, especially in terms of the advisory role played by civil servants and other public sector policy officials.

Anglo and Quinn

Let me see if I have this right. Quinn Group has debts of €4 billion, €2.8 billion of which is owed to Anglo. Quinn Group used some of this money to acquire shares in Anglo which it has lost about €3 billion on. Now Anglo is proposing to take over Quinn Group including its insurance arm but the Financial Regulator isn’t happy with this idea and is going ahead with appointing administrators for Quinn Insurance. (Irish Times story here.) And people are on the streets protesting against the Regulator, apparently favouring a return to light-touch regulation. It’s all pretty strange stuff.

The serious point here: We are where we are in large part due to very serious regulatory failures. If the first time our new regulator steps in and deals with what he sees as serious failures to comply with regulations, there is any sense of the government (any arm of it) stepping in to protect those who failed to comply, then this would do serious damage to our attempts to build an image of having made a fresh start on the regulatory front.

Building a Green Economy

Paul Krugman reviews the economics of building a green economy in this long-form article for the NYT magazine.

Daft Report for 2010:Q1

The latest Daft report is out, including a commentary from Brian Lucey. The analysis of asking prices is, as always, interesting and useful. However, given the evidence on how long it is taking units to sell, it seems clear that asking prices are still above what would be required to produce a normally functioning market.

The recent receiver-driven apartment sales in Mullingar that attracted considerable buying interest (Independent story here) perhaps provide an insight into the gap between asking prices elsewhere and what would be needed to attract demand. The two-bed units in Mullingar were priced to start at €82,000 and I seem to recall that the median two-bed in this scheme was selling for €90,000. For what it’s worth, a non-scientific comparison shows that the average asking price for two bed units in Westmeath in the Daft report is €162,000.

Greek Bond Yields

The yield on Greek government bonds has now crept up to more or less where it was prior to all the EU meetings of the past few months (see here.) I’m not sure why the various annoucements haven’t helped and newspaper reports like this one and this one don’t explain as much as I’d like.

If the high bond yields are a sign of doubts about whether a rescue is actually going to happen, and thus the debt may be defaulted on, then the eventual arrival of the cavalry (in the form of the EU) to keep the debt rolling over would end up bring the yields down to more sustainable levels and hopefully stabilise the situation. A less sanguine interpretation of current events offered to me by a colleague is that the terms of the deal being offered by the EU—in which any lending would be at current market rates—doesn’t really offer Greece a route out of insolvency because bond yields at this level are not consistent with stabilisation of the public finances.

I’m more inclined to believe the former intepretation and that the EU will prevent Greece defaulting. Whether it should is a different matter.