Honohan at Renmin University Post author By Philip Lane Post date August 18, 2010 His Beijing speech is available here. Categories In Banking Crisis, Fiscal Policy Tags Banks and fiscal policy 4 Comments on Honohan at Renmin University ← Leading the world in renewables → NESC on Ireland and the Euro 4 replies on “Honohan at Renmin University” “For over a decade the budget was in surplus (averaging over 1½ per cent of GDP) almost every year. No need, it seemed, for restraint in spending, and so, after years of relatively disciplined government budgeting, there was a relaxation of spending controls—one I will say which was broadly welcomed across most of the political spectrum.” As usual, the Governor wields his verbal rapier with precision. The political classes didn’t get it then; and they still don’t get it. The focus of the governing factions is on managing the implementation of the diktats from Brussels and Frankfurt so as to minimise the extent of the inevitable electoral rout. The opposing factions are only concerned about maximising their relative strengths in a coalition arrangement. Ordinary citizens who pay for everything and from whom, in theory, all political authority flows come in a distant third. As we are accustomed to, well written and cogent, with many interesting points. The governor is constrained in what he can say, and I see on the budget he says this: “Markets still evidently need to be convinced about the determination and ability of national governments to deliver on their fiscal consolidation programmes”. “Further details of the [Irish] measures being implemented to ensure budgetary consolidation are in preparation. Other countries have followed with their own plans. There is, for these stressed sovereigns, no question as to whether national growth is best served by bringing the public finances back promptly to a convergent path: the impact on funding costs and confidence surely more than offsets any short-term adverse impact on domestic demand from lower net public spending”. For the home audience: INBS is of systemic importance. For the international audience: “to which can be added about €4 billion mainly to cover one small building society” We live in interesting times. Comments are closed.