Alan Ahearne’s Paddy Ryan Memorial Lecture at NUI (for now) Galway is available below. He gives a rationale for current government banking and fiscal policy (HT Stephen Kinsella).
Year: 2010
Minister Batt O’Keeffe announced this afternoon that the Government has decided to scrap the National University of Ireland. UC Dublin, UC Cork, NUI Maynooth and NUI Galway were the constituent colleges. The total number of universities in Ireland has thus been increased, at a stroke, from four to seven. Ireland should now soar up the universities-per-capita league tables.
Sadly, it will no longer be possible for the NUI to play the role envisioned for it in the 1950s by Flann O’Brien (Myles na Gopaleen). He ended an Irish Times controversy about academic snobbery and the excessive use of academic titles by proposing that NUI should simply confer doctorates on all Irish citizens at birth. Although the government appears to have embarked on a slower progress toward the same destination.
There will now be a difficulty in arranging the next Seanad election, for which the graduates of NUI form a constituency. Unless of course….
Last month, we discussed how the the EU had prevented AIB from paying coupon payments on certain bonds, which will prevent them from paying dividends on the government’s preference shares, which in turn will trigger the right of the National Pensions Reserve Fund Commission (NPRFC) to acquire ordinary shares equivalent to the amount of the dividend. Bank of Ireland has now made a similar announcement. Here‘s the press release. The highlight:
In accordance with the terms of the 2009 Preference Stock, the NPRFC would become entitled to be issued, on February 20, 2010 or on a date in the future, a number of units of Bank of Ireland Ordinary Stock (based on the average trading price of Ordinary Stock in the 30 trading days prior to February 20, 2010, assuming the Ordinary Stock was settled on that date) related to the cash amount of the dividend that would otherwise have been payable (€250m), should there be no change in these circumstances. The Bank is, however in ongoing discussions with the Department of Finance and the EC on this and other related matters as part of our overall engagement on the Bank’s restructuring plan and accordingly, this outcome is not certain.
So they’ve got a month to engage their way out of what would be a serious dilution of the current private ownership, even prior to any recapitalisation required by the losses triggered by NAMA.
After repeatedly ruling out the idea that a banking inquiry would occur in the near future, the government has now released its own proposals for exactly such an inquiry. The formal proposals are here (this is an amendment to Labour’s proposal) while the Minister for Finance’s speech on the issue is here.
The essence of the proposals are as follows:
The inquiry will have two stages.
First, the Government will immediately commission two separate reports – one from the Governor of the Central Bank on the performance of the functions of the Central Bank and the Financial Regulator and the second from an independent ‘wise’ man or woman with relevant expertise to conduct a preliminary investigation into the recent crisis in our banking system and to inform the future management and regulation of the sector. These reports will also consider the international, social and macro-economic policy environment which provided the context for the recent crisis. I expect both reports to be completed by the end of May this year and laid before the Houses shortly thereafter.
The second stage of the inquiry will be the establishment of a statutory Commission of Investigation which will be chaired by a recognised expert or experts of high standing and reputation. The terms of reference for this commission will be informed by the conclusions of the two preliminary reports. The aim will be for the commission to complete its work by the end of this year. Its report will then be laid before the Oireachtas for further consideration and action by an appropriate Oireachtas committee.
A couple of initial observations. First, as I understand it, it seems unlikely that the second stage will involve any public hearings. The Commissions of Investigations Act of 2004 (link here) states that:
A commission shall conduct its investigation in private unless (a) a witness requests that all or part of his or her evidence be heard in public and the commission grants the request, or (b) the commission is satisfied that it is desirable in the interests of both the investigation and fair procedures to hear all or part of the evidence of a witness in public.
Neither (a) or (b) seem too likely to occur.
Second, to my mind, the request that the Governor of the Central Bank be charged with writing the definitive report on its past performance puts Patrick Honohan in an invidious position in light of the fact that he will have to work on a daily basis with many of the staff who remain on from the previous regime.
Third, the terms of reference only go up to events up to September 2008. I would prefer to see the date extended at least up to early 2009 as there are serious questions to be asked about the Regulator and Department of Finance’s understanding of the scale of the problem facing our banks and the advice they received from outside sources such as PWC (see here and here).
Here is an interesting attempt to quantify the effect of recessions on mortality in EU countries. (To access the full article you will have to go to a subscribing library.) The authors claim that rising unemployment is associated with more deaths from violence (suicide and homicide) and alcohol abuse, but fewer deaths from road accidents. No significant effects were identified on other causes of mortality. The net effect on overall mortality is very small.
Two countries – Finland and Sweden – are identified as having social support policies in place that are particularly effective in mitigating the adverse health effects of rising unemployment.