Year: 2010

Bike paths to somewhere

Olivia Kelly reports that the national cycle path network has been unveiled. As is all too common, there is no trace of this with the Department of Transport or the National Roads Authority. There is a powerpoint from January 2010, though, which is consistent with Kelly’s description.

I’m all for cycling. I cycle to work. I wish more people would cycle, so that there are fewer cars on the road (they’re a menace, not just to women). A proper cycling policy is one of the few ways in which carbon dioxide emissions can be cut fast.

The national cycling network disappoints. Its primary aim is to connect Ireland’s main towns. People do not commute by bike from town to town. The distance is too large. Bike commuters travel from the near suburbs to the city centre (and back).

The cycle paths are for recreation so. It is instructive to compare the NRA’s proposed network to the one proposed by Failte (page 19). The Failte one takes the cyclist through a scenic landscape from one place of interest to the next. The NRA one takes the cyclist on the shortest route from population centre to population centre.

Bikes are not cars. You use them in a different way for a different purpose.

Money Pit

This week’s edition of The Economist reports on the lrish banking crisis: you can read it here.

Alternative Stress Tests from OECD and Citi

One of the aspects of the CEBS European stress test exercise that has been commented upon quite widely is their decision to only apply haircuts to sovereign debt held on the trading books of the banks examined. However, most of these bonds are held on the “banking books” on the understanding that they are being held to maturity and the CEBS exercise assumed no sovereign defaults over the time horizon considered, so no haircut was applied to this portion of the bond portfolio.

In reality, the trading book\banking book distinction is arbitrary. In the case of a default or restructuring on these sovereign bonds, the distinction is meaningless. In the case of a bank failing, the distinction also doesn’t mean much: If the assets of the bank need to be sold off to meet liabilities, then bonds originally intended marked as hold to maturity the banking book may still have to sold off at market values.

I’ve come across two interesting alternatives to the CEBS stress tests. The first is this report from the OECD, which takes a macro look at the topic. They calculate that 83% of the exposure to EU sovereigns is held on the banking book and the report gives a good sense of the exposures of banks in different countries to various types of sovereign risk.    

The other alternative comes via the Calculated Risk “Some Investor Guy” series on sovereign debt. The Guy linked to this rapid response piece from Citi, redoing the analysis on a bank by bank basis. Applying the haircut to the banking book as well as the trading book, the number of European banks that fail the test rising from 7 out of 91 to 24 of 91.

NESC on Ireland and the Euro

The National Economic and Social Council have released a report titled “The Euro: An Irish Perspective”.  The media release is here while the full report is here.

Honohan at Renmin University

His Beijing speech is available here.