Year: 2010

Clifford on incineration

Michael Clifford is not impressed by the Minister of the Environment, arguing that a minister should follow or change government policy (rather than oppose it) and that a minister of the environment should seek what is best for the environment (which, in this case, is implementing government policy).

He might have added the damage to Ireland’s reputation as a place where contracts are upheld, but I agree otherwise. See here, here, here and here.

UPDATE: Scott Whitney (of Covanta) too agrees and adds some more information.

AIB Watch: April 4th Edition

Super Tuesday turned out not to be so super at giving us a better picture of what’s going to happen to AIB. Indeed, I’ve been puzzling over some aspects of the announcements and coming up with a decent picture of what’s likely to happen requires a fair few calculations and assumptions. But here goes. I’ll break this up into two bits. Capital requirements and NAMA transfers first and then asset disposals second.

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Lenihan Says NAMA Will Stop Houses Prices Falling

In an interesting prediction, the Minister for Finance, Brian Lenihan, has said that Irish house prices will now hit bottom thanks to the NAMA transfers. The Sunday Independent reports:

Yesterday, Mr Lenihan told the Sunday Independent: “One of the good things about the steep discount, averaging 47 per cent, is that the residential property market will now be stabilised at a realistic level.”

He added: “You can now buy in confidence that the price is realistic.”

Perhaps I’m being stupid here, but I’m having troubles linking (a) The setting of prices that the government is willing to pay to banks for non-performing property loans (largely backed by commercial or development property) with (b) Prices that people are willing to pay for residential properties.

The Minister reckons the NAMA transfers will act to boost the residential property market. Just playing devil’s advocate, one could point a large surplus of properties for sale, high unemployment, pay cuts, future tax increases, higher mortgage interest margins, and future increases in ECB interest rates as factors that could act against whatever positive effect the NAMA transfers are supposed to have.

Anglo: What Are The Options?

The public debate of the past number of days has focused on the question of whether Anglo Irish Bank should be wound up and whether that could save the government money. However most of the political discussion and, unfortunately, much of the discussion on this blog, has failed to shed much light on what are the real choices available to the government and what the relevant tradeoffs are.

Both the pro- and anti-windup supporters have produced unhelpful arguments. The government have a stronger case for their actions than most people think but they have undermined themselves by citing cost figures for a windup that are literally incredible. Meanwhile, pro-windup advocates have often given little consideration to the nature of Anglo’s liabilities.

This post is an attempt to describe the issues at hand in a reasonably comprehensive way without trying to fully endorse either government or opposition positions.

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Special Resolution Regime for Banks

John McHale writes on the desirability of a special resolution regime for banks in today’s Irish Times: you can read it here.