Robert Merton will give the RIA Hamilton Lecture on October 15 at TCD on the topic
Observations on Mathematical Finance in the Practice of Finance
The event is free but you need to book a spot: the details are here.
The quarterly national accounts for 2010:Q2 have been released. They show seasonally adjusted GDP declining 1.2% quarter over quarter and seasonally adjusted GNP down 0.3%. Year over year, real GDP is down 1.8 percent and GNP is down 4.1 percent. Nominal GDP is down 3.6 percent year over year while nominal GNP is down 6.2 percent over the same period.
There were also revisions to the first quarter figures. Seasonally adjusted quarter on quarter growth in GDP was revised down from 2.7 percent to 2.2 percent, while the decline in GNP was revised from 0.5 percent to 1.2 percent.
It is now pretty clear that the government and Anglo management are shaping up to do a buyback deal on Anglo’s outstanding €2.5 billion in subordinated debt after the original CIFS guarantee expires at the end of the month.
Here’s my question. Given that
(a) The terms of these securities allow for the possibility of them not being paid back if the bank is insolvent (this is why banks get to count these securities as part of their regulatory capital).
(b) None of this debt matures until 2014 at the earliest (see page 56 of Anglo’s interim report).
(c) These bonds will no longer be covered by a state guarantee.
why would we do this? Why not let the bonds sit as an obligation of the Asset Recovery Bank, let it go about its business of recovering value from assets, and then let the next government make a decision in 2014 as to whether we want to put in taxpayer funds to pay off these bonds?
Those of you who want to comment that you think a bond buyback is a good idea might help clarify things a bit by explaining what type of deal you would offer (i.e. how much of our money you’d give the hedge funds and other distressed debt outfits that now own these bonds.)
The Government has just announced its plan to increase the number of non-Irish students in higher education by 50% between now and 2015, and to increase the “value” of the university sector by one third to 1.2 bln euro. The news bulletin and press release emphasize the targets, but are hazy on the implementation. After some digging, the underlying report can be found too. In this regard at least, education has something to teach to the other departments.
The report has a snappy title and great graphics, but is a bit hazy on the actual plan. It would of course be great if tens of thousands of non-EEA students would flock to Irish universities and pay a hefty fee that would cross-subsidize Irish students. But why would they? Ireland has the advantage that it teaches in English — but so do Australia, Canada, New Zealand, South Africa, the United Kingdom, the United States and, indeed, the Netherlands. Parents who wonder where to send little Yuan or precious Sujata may look at one of the university rankings and decide that there are more prestigious universities elsewhere. Ireland could compete on price, but that defies the purpose. Why would the Irish taxpayer subsidize the education of foreigners?
These considerations are not part of the report. In fact, little thought is given to the students or their parents. Two concrete measures are proposed. First, it will be easier to obtain a student visa. Second, there will be a major branding campaign. While branding is largely in your own hands if you sell butter, lager or dance, education is a harder sell. Substance should back up the image. Sending your kid abroad for 3-4 years is a major decision. The potential client is well-informed.
The report has an interesting factlet: Ireland has the highest proportion of students in the EU who study abroad. If our own students have so little confidence in the Irish universities, why would foreign students want to pay for the same?