Barry Eichengreen writes about the Greek situation at Eurointelligence: you can read it here.
Daniel Gros has an FT comment here.
Both emphasise that the main challenge now is for Greece to undertake a very sizeable fiscal adjustment.
Update: The Economist has a nice article on the Greek situation here.
Ben Broadbent and Kevin Daly at Goldman Sachs have released a new study examining how the composition of fiscal adjustment packages affects the overall economic impact of fiscal tightening: you can read it here.
Occasionally we get accused of only posting about bad news. I’m not sure that’s fair. The fact is there’s been plenty of bad news to comment on and some of it eye-popping enough to warrant a posts with a bit of additional analysis. That said, yesterday’s release on February retails sales was encouraging, so I thought I’d just point people towards it. After eight quarters in a row of falling retails sales, we seem to be stabilising. Maybe it’s time to have another round of “call the bottom of the recession” given that John the Optimist’s plucky call of a bottoming out last summer doesn’t seem to have worked out.
I was wrong. I previously argued that subsidies for home insulation are an expensive way to reduce carbon dioxide emissions. The SEAI has now release a post-hoc assessment of the Warmer Homes Scheme. The executive summary puts a brave face on, but if you have a look at the detailed results, you soon discover that the Warmer Homes Scheme seems to have had no noticeable effect on fuel use (and hence emissions), poverty, comfort, or health. Most results are insignificant, a few are significant with the right sign, and a few significant with the wrong sign.
One of the striking results is that the control group (without subsidies) have put in about as much insulation as the intervention group (with subsidies).
The research is not brilliant, so perhaps there is more to it, but for now the conclusion must be that the Warmer Homes Scheme is an expensive way to achieve nothing.
The SEAI should be praised for studying the impact of their interventions and for publishing the results.
NAMA CEO Brendan McDonagh appeared today before the Oireachtas Committee on Finance and Public Service. Here‘s a copy of his opening statement. Normally, when there are important Oireachtas committee meetings, I usually have to wait for the transcript to go up on the website. However, thanks to the tireless work of our friend Jagdip Singh, you can get a lot of information on what happened today here and here as well as lots of excellent questions.
One statement from McDonagh that got a lot of attention today was that, of the loans in the first tranche, only one-third are paying interest. I wasn’t too surprised about this because it tallys well with information from the annual reports released by Anglo, AIB and Bank of Ireland.
As I noted earlier in comments, the amounts going in to NAMA from these banks in terms of initial face value are as follows: €36 billion from Anglo, €23 billion from AIB and €12 billion from BoI. That’s a total of €71 billion.
All three banks have released detailed analyses of the loans going into NAMA (here, here and here). From these, we know that €6.6 billion of Anglo’s NAMA-bound loans are neither past due or impaired while the figure for AIB is €10.4 billion and for BoI is €5.4 billion. Add them up and we get that, according to the banks own figures, only $22.4 billion of these loans are performing.
So, according to the figures released by the banks, of the original €71 billion in loans made, only €22.4 billion or 31.5% are currently performing.
One can also point out that if the discounts from face value of 50% for Anglo, 43% for AIB and 35% for BoI are applied across the board to the rest of the tranches, then NAMA will pay €18 billion, €13 billion and €8 billion respectively for a total of €39 billion for the loans from these three banks. So, for these banks, we are paying €39 billion euros for a portfolio of loans of which only €22.4 billion are ostensibly currently generating any revenue.