Commenter zhou_enlai raised the possibility earlier today of a debt buyback from the ECB. Such a buyback provides an interesting “third way” between the problematic bail–out strategy (new lending in the hope that some combination of growth/limited bank losses/primary budget surpluses will restore solvency) and the problematic bail-in strategy (restoring solvency through default).
Barry Eichengreen recently wrote an article in a German newspaper aimed squarely at the German business and political elite, castigating them for their hesitancy and lack of generosity toward the Irish bailout. Kevin O’Rourke has provided an English translation, and has described Eichengreen’s article as “magnificent and angry.”
The ESRI’s SWITCH model analysis of the distributional impact of the budget is now available (Irish Times article here). It will come as no great surprise to anyone who actually looked at the numbers that the budget was a good deal more progressive than much of the early commentary suggested. Given the importance of political acceptance under the current circumstances, I cannot understand why the Government did not have this analysis completed in advance and released on budget day.
I draw on arguments from some recent blog posts on the default question in a piece for today’s Irish Independent.
Various commentators, both domestic and foreign, have been arguing that Ireland’s adjustment process is difficult enough as it is, without needlessly saddling ordinary citizens with other peoples’ debts.
Brian Lenihan has had enough, calling “for an end to discussions about Ireland defaulting on its debt, saying the debate has done “huge damage” to the country.”
People should not be surprised that there’s a huge erosion of trust in the Irish banking system when we’ve an endless debate on whether we should be defaulting on the payment of our obligations,” he said.
I hope the FT and the rest of them are listening. You may think you are speaking up on behalf of Irish (and EU) taxpayer interests, but you’re actually doing great damage. (Exactly why deposits started to leave the Irish banking system months before this debate began is unclear to me, especially since no-one has suggested burning the depositors, but that is another issue.)
Careful now.