At the risk of adding to the gloom, here is Willem Buiter’s widely discussed “Sovereign Debt Crisis Update.” A sample: Despite the recent drama, we believe we have only seen the opening act, with the rest of the plot still evolving. Although we have not had a sovereign default in the AEs since the West German […]
Monthly Archives: November 2010
A simple question
What will have to happen before the powers that be decide that the strategy of making Ireland fall on its sword in order to prevent contagion isn’t working?
Mit solchen Freunden braucht man keine Feinde mehr
Here’s why Angela Merkel insists on being tough: http://www.bild.de/BILD/politik/wirtschaft/2010/11/24/irland-pleite/muessen-wir-am-ende-fuer-ganz-europa-zahlen.html
Macroprudential taxation
Over at VoxEU, Jeanne and Korinek discuss a time-varying macro-prudential tax on debt that would internalize and hence reduce the risk of a bust in the market for collateral.
Rollover Risk and the Crisis Resolution Mechanism
Gauged by yesterday’s market reaction, the EU-IMF support package did little to dampen longer-term default worries on Irish debt. The yield on the 10-year bond rose on Monday after an initial rally, even as the yield on 2-year bonds fell. Potential buyers continue to have a number of doubts about Ireland’s creditworthiness: doubts about the […]
Cancun, climate, and weather
Fokke & Sukke are proud weathermen The outcome of the climate negotiations … can now be predicted months in advance. The 16th Conference of the Parties to the United Nations Framework Convention on Climate Change and the 6th Meeting of the Parties to its Kyoto Protocol has started today in Cancun. It will last for […]
Model T politics
It appears that we can elect any kind of government we want, so long as it is black. As Jacques Chirac might say, il a manqué une bonne occasion de se taire.
Beware of journalists bearing history lessons
Today’s Irish Times contains this gem from Stephen Collins: Another issue that did not get serious traction in the talks was the simplistic call to “burn the bondholders” for which German chancellor Angela Merkel has to take a lot of responsibility. The European Central Bank was adamantly opposed to the notion as any such move […]
Forfas: Review of Labour Cost Competitiveness
This report is available here. Summary: This report examines the scale of the competitiveness challenge facing Irish firms and considers the reasons and implications for the deterioration in Ireland’s cost base over recent years. It looks at recent labour market developments in terms of employment and earnings trends including setting earnings trends against the international […]
European Commission’s Autumn Forecast
The details of the 2011 and 2012 forecast for Ireland are here. The full release is here.
Central Bank PCAR Statement
The Central Bank’s new PCAR statement hasn’t yet been linked to on the site so here it is. This is the most detailed statement released yesterday in relation to the future of the Irish banking sector.
Government Statement on Joint EU-IMF Programme
The Government’s statement on the joint EU-IMF programme for Ireland is available here. Update: See here for joint EU-IMF statement; here for IMF press release.
Migration, the limits of internal devaluation, and the bailout
It is time to dust off old ways of thinking about the Irish economy that were useful in the past. In the long run, migration sets a floor to Irish wages. It has been thus ever since the Famine of the 1840s, and I don’t believe that the Irish have become less mobile in the […]
Banking Crisis, Bondholders and the Single Currency Project
When a country finds itself overburdened with debt, the solution – if the debts are denominated in its own currency – is to inflate its way out of the problem. Debt is denominated in nominal terms so inflation reduces the real debt burden. Ireland cannot do this, but the ECB can. It would not do […]
Taking Stock
It is a day for taking stock after an extraordinary week. On Wednesday, the Government unveiled its four-year plan for stabilising the debt ratio with about as much political acceptance as could be expected. Yet by the end of the week the expected probability of default on sovereign debt implied by bond yields had increased, […]
It was all the fault of foreigners
In the past week or so there have been plenty of attempts by the Dublin elite who have sleep-walked this country into catastrophe to blame others. For an example, see the quotations in this article. If Chancellor Merkel had kept her big mouth shut, the implication is, everything would have been alright. This line of […]
2009 data on household living conditions published
The CSO has just released the 2009 results of its annual Survey of Income and Living Conditions. SILC is the official source of data on household and individual income and also provides a number of key national poverty indicators, such as the at risk of poverty rate, the consistent poverty rate and rates of enforced […]
Krugman on Ireland
Paul Krugman provides an update on his interpretation of the Irish crisis in this article.
More on the Four Year Recovery Plan
The Irish Times also published my reaction to the recovery plan yesterday.
The Four-Year National Recovery Plan
You can read my view on the Four Year Plan here. My comment included two additional paragraphs which were cut, I suppose due to space constraints: “The current economic and financial crisis has slowed down economic growth in the advanced economies which are Ireland’s main trading partners. Against this background, the assumption of a strong export-led […]
Don’t Start From Here
The Economist provides a useful summary of the pros and cons of taking on the holders of senior bank debt: you can read it here. The new issue also has articles on contagion and the funding of Irish banks.
Rehn Spokesperson on Bank Senior Debt
On Morning Ireland a few hours ago, Amadeu Altfaj Tardio, Spokesman for the European Commissioner Olli Rehn, was asked by RTE’s Rachael English (about 5.08 minutes in) whether the EU would countenance senior bond holders sharing the burden as part of the Irish bailout. Possibly Amadeu didn’t quite understand the question (though he was asked […]
The sputtering foreign engines of assumed Irish growth
The four-year plan assumes that Irish GDP will grow in real terms by around 2.75% per annum over the next four years. For good measure, it throws in a little bit of assumed inflation as well (0.75%, 1%, 1.25%, 1.5% — a suspiciously smooth progression, would you not say?). In the context of the proposed […]
Policy Failures and the Crisis
I have a letter in the FT today responding to Martin Wolf’s article yesterday: you can read it here.
More on the Four-Year Plan
I give my view in this article in today’s Irish Times.
Brian Lenihan on the Plan
His article in the FT is here.
Four year plan: Energy and environment
Overall, the four year plan repeats many of the things that we have seen before. It is not a new strategy. It is more of the same. The broadening of the tax base and the pension reform are steps in the right direction. Strikingly, there is no culling of quangos and no privatization. There will […]
The Four Year Plan
The plan is here.
Martin Wolf: Ireland Refutes the German Perspective
Martin Wolf analyses the structural flaws in the design of EMU in this article.
EFSF Charging 7%?
During the discussion of the bailout on Prime Time tonight, the prospect was raised (and not denied by Minister Batt O’Keefe) of the EFSF charging 7% to Ireland for its loans. It may be worth taking at look at the calculations that I did on this issue a few weeks ago. I worked out the […]