Amato and Micosi on monetary union Post author By Richard Tol Post date December 10, 2010 More relevant stuff over on Vox. Amato et al. say sensible things. So does Micosi, but he is less polite (although more polite than Colm’s friend). Categories In Bailout, Banking Crisis, EMU, European economy, Fiscal Policy, Monetary policy 13 Comments on Amato and Micosi on monetary union ← Pithy → The EU Commission’s View of Ireland 13 replies on “Amato and Micosi on monetary union” Sensible things indeed. But “An open letter to the President of the European Council”? Are they serious? They might as well be writing an open letter to Santa Claus. It would be more in their line to be sending a letter by express mail to Freiburg, where this weekend the real leaders of Europe (Merkel and Sarkozy) are stitching up the rest. @bazza Please. Herman van Rompuy is not Santa Claus! He’s the Holy Roman Emperor. Amato et al write in their conclusions: Europe’s debt sustainability challenge is basically a problem of getting debt-to-GDP ratios down. Most of the focus to date has been on the top part of that fraction – i.e. reduction in the growth of public debt. While important, the most critical factor in the long run is the restoration of GDP growth. Where is it carved in stone that GDP growth is an achievable objective in a world whose population is growing relentlessly and whose energy resources are depleting? It is almost impossible to have a fruitful debate with economists whose vision is so limited. “The greatest shortcoming of the human race is its inability to understand the exponential function.” – Albert A. Bartlett http://www.thesocialcontract.com/artman2/publish/tsc1601/article_1342.shtml Not Relevant… but is anyone watching Tubridy asking leading questions to GB. GB is not going to lay any blame on BC on Irish TV (this is political economy) GB = finish economy minister of his generation. @all New York Times End to Ireland’s Financial Crisis Starts With Banks http://www.nytimes.com/2010/12/11/business/global/11ireland.html?_r=1&hp Worth a read … as Stiglitz is cited here ““Unless they figure this out better, they are exacerbating their own problems, … and they will compound the weaker economy with a negative dynamic.” 2_of_7 makes a guest appearance … and politics.ie takes the ribbon on the blogs. @ CG Gordon Brown thinks economic growth is the answer too. I always think about economic growth in terms of Suds’ jowls. The last 40 years have been great for economic growth and for Suds. He started off at say 10 stone and now he is probably 18 stone. Year on year that’s an impressive growth rate. And the Irish economy is several multiples of its size 40 years ago. Now we are told that we need more economic growth. And 2% of today’s economy is massive. How much more can Suds eat ? When will he keel over? @seafoid You’ll enjoy this: http://steadystate.org/discover/humor/ @Bazza The “real leaders” might be trying to do a bit of “stitching” but it may well be a threadbare tapestry they are trying to mend. Best…L @David O’Donnell re Nyt article. the really interesting part is the Alan Dukes does not believe that 35b is enough for the banks. @ceteris paribus Yes. I had not seen this as ‘explicitly’ flagged elsewhere from The Vichy-Bank Regime … Good to see more European voices getting involved. People say that we had no cards to play but a vocal voice speaking out from Italy shows that fear of contagion is the best card we have. @Everyone Interesting post from thepropertypin with a viewpoint that is common there but little expressed here or in the media. Perhaps explains lack of sympathy from the EU, or perhaps they just have a lack of sympathy full stop: Re: Ireland making a deal on our banks with the Chinese in return for special privileges: “The country has been whoring itself to all comers for the last 40 years. It is little more than a tawdry tax haven. No other western country has an economy like Irelands. 90% of its exports come from multi-national corps who are only in the country for tax reasons. The official economy is 140B. Factor out the tax evasion MNC sector and its more like 90B. When you then realize that government expenditure is more than 60B then you will start to understand just how dysfunctional the Irish economy is. The dirty little secret is that the official economy of Ireland is now little more than a pimple on the side of the real Irish economy, the IFSC. The IFSC had a (public) cash flow of over 600B last year. Almost all of it was due to activity to avoid tax and regulatory control. If you want to know why the senior bond holders are sacrosanct and the ECB/IMF bailout teams payed more attention to foreign bond holders than the Irish government then look no further than the Grand Canal Basin. Ireland sold off its sovereignty decades ago and the voting public did not care as long as they got their medical cards, profligate welfare payments, section 23’s and their EU grants and could avoid the very hard work needed to build a genuine, balanced economy like Finlands or Denmarks.” Micosi’s piece doesn’t make much sense to me. He seems to be one of those people who still think this is simply a problem of market confidence. It just isn’t, unless you live in a fantasy world that makes it possible to be completely oblivious to the presence of the gigantic bubble and its bust, the banking sector problems, and all the other fundamental issues that have manifested themselves in the market’s attack on the bonds. Comments are closed.