The Regling-Watson Report

This report is available here.

9 replies on “The Regling-Watson Report”

I am sure that there is ample shelf space for both reports on the many shelves in the Government Departments.

Rather than seeking to apply the paint of blame to individuals, surely it is of more importance to see that these reports be properly digested by the permanent government in this country?

Its ability to do so will be a clear metric of its fitness for purpose!!!

As opposed to being a library for reports that it is unwilling or unable to digest.

Running after politicians at this stage seems like an indulgence of a mob.

The politicians, at least, face us every few years!

Nothing in this report that we do not know already. What I read is failure was and is systemic. Nobody is really to blame. You can all continue to draw your pensions and breathe a big sigh of relief. Waste of paper.

@Philip Lane

Ta for the links. Wonder will I learn anything we do not already know?

Nothing new – but it’s more shocking when written up.

“In other words, a marked slowdown in the economy, and in the property sector in particular, was unlikely to end in a soft landing for significant parts of the banking system. Serious stress in the financial system was almost unavoidable – even if the Lehman Bros event had not administered a huge shock to liquidity. This is the key point that virtually all parties (including the 2006 IMF Financial System Stability Assessment) basically missed.”

“The fact is that supervisors, right to the end, clung on to the hope of a soft landing for the economy and the property market, as did a much wider community of opinion in Ireland (to the extent such opinion foresaw any end to the boom at all). Supervisors did not focus strongly on the extent of the possible, and really rather likely, swing in commercial property values, when the economy would slow down after a period of high consumption and overbuilding. It is hard to view the eventual impact of this on the capital of certain institutions as an exceptional or unforeseeable event. Moreover, this property lending was of a common-or-garden kind: not exotic, or complex, or hard to assess through esoteric statistical models. And it constituted a sword of Damocles hanging over the banking system.”

For “supervisers” also read the DoF and Minister for Finance Cowen.

Best quote – P 16

“Rating agencies helped to design the products that they then rated”

An excellent and very clearly written report. The superficiality is natural as it admits it was complementary to the other report.

It was not therefore to probe into the long, tangled and deliberately obscured history of government with the banking “institutions”. A little disappointing that there was no hint of such a relationship despite the DIRT scandal and IFSC. These were obvious even to such a report? No consideration of the small nation effect so evident in Iceland either, aka “the dogs in the street”!

So, not much controversy! Very welcome criticism of countercyclicality. No probing of why the abundantly successful economy started to go so wrong, or even any apparent curiosity? The authors will be welcomed for tea throughout the country!

Prof. Hans-Werner Sinn of the Ifo institute has written a chilling article on what’s in store now for the debtor nations as German banks begin to invest at home.

Across the board, the business models of the debtor states have collapsed.
From 1995 up to the outbreak of the crisis in 2008, Germany had an average net investment rate of only 5.3 percent of net domestic product. That was the lowest rate of all OECD countries. In 2008 Germany had saved €277bn in all sectors (private households, businesses and government); that much money was available for net investments, but in fact only €111bn was invested. The lion’s share of the savings, €166bn, flowed as capital exports abroad, far too frequently via the dubious businesses of the state banks, for which apparently no risk was great enough.

Comments are closed.