The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
The article is here.
Such a distinguished central banker should have a currency of his own to manage!
(Actually I’m not really sure about that; but the more I see of the ECB the more I lean that way.)
The governor is also a member of the European Central Bank’s governing council.
Honahan is reported to have been the leading negotiator for Ireland of the EU/IMF deal.
Would that not be a conflict of interest?
Are his loyalties to the stabilisation of the Euro and the ECB or is it to the Irish State? Although the two may have been considered to be the same thing in more rosey times it is at least questionable in current times when it seems the ECB is content to saddle a small nation with massive banking debts.
It seems to me the role of the governor of the central bank is currently set up on the assumption that the interests of the Irish state and the ECB are one and the same.
I am not calling upon the integrity of the man but merely asking if he was put in a very unfair compromised position?
From Colm McCarthy’s Article yesterday
“The wheels have come off the deal agreed by the previous government with the IMF, the EU Commission and the European Central Bank last November. Not because the deal was unfair or because the budgetary tightening cannot be delivered, but because the financial markets have concluded, correctly in my view, that the Irish banks cannot be restructured within the financial parameters of the deal.”
AFAIK, the ECB is a genuinely decentralised organisation of EZ CB’s so I’m guessing it’s legit for him to put Ireland’s interest first?
What a load of waffle from Garrett-
“His handling of the bailout was very skillful. When the government went into a mess on this issue, he saved the day by revealing on his own account what was happening.”
There is no crisis
Also from Bloomberg today on the banks seeking to put off the evil day-
“When the teams from the EU, ECB and IMF arrived in November, they probably thought they would find huge holes remaining in the banks’ loan books, but they did not,” said Alan Ahearne, who was economics adviser to Brian Lenihan, the former finance minister. “It’s not that there’s some black hole in the Irish banks that hasn’t previously been discovered.”
So why are we locked out of markets and stress testing the banks again?
maybe its just a bad dream
But Governors of the national central banks are also members of the ECB governing council. The primary function of the members of the governing council is to ensure inflation is 2% or below.
Burning bondholders is surely counter to stability?
“The Executive Board is responsible for the implementation of monetary policy defined by the Governing Council and the day-to-day running of the bank. In this it can issue decisions to national central banks and may also exercise powers delegated to it by the Governing Council.”
I often picture Honahan as Lord Cardigan leading the Light Brigade into the teeth of the Russian guns as he systematically destroys the Irish economy in the process.
Or last year, when he was frequently hauled out by Lenihan to berate the markets like King Canute telling the tide to go back:)
Occasionally, he makes me smile as he ashen faced tells us, oh the accounts much worse than we initially thought:
“A year ago, Honohan and financial regulator Matthew Elderfield produced estimates of the banking losses and their capital needs. Six months later, the central bank increased the amount for Dublin-based Allied Irish Banks Plc (ALBK) by 3 billion euros, or 40 percent.”
The story of Honahan’s dealings to mend the banks is like something out of Laurel & Hardy: “Well here’s another fine mess you’ve gotten us all into”
The arrival of EU/IMF was a surprise for him.
But credit where credit is due he supported Nama (*cough*#). So the Nama mess is partly at his door as well.
And the €85 bn bailout of which €35 bn earmarked for zombie banks and the rest to go to Croke Park, sure he’s there on that pile of rubbish as well.
But surely he excelled when he came home with 5.83% .
Ah right, he’s a big spender intent on making Ireland’s ‘recovery’ from economic collapse the most expensive in history.
But he’s not fed up enough with us yet. For that, we have to await the outcome of The Charge of the Light Brigade 11 presently being shot in Brussels.
His secret plan is to bring this economy to the big D…DEFAULT
1. Negotiate a haircut on the bailout of 1%
2. Refuse to negotiate on CT
3. Insurance scheme against future bank losses.
Now 3 comes from Fine Gael’s manifesto where every second word is, you guessed it, ‘insurance’; but its for the future. Ahem, the problem is the losses on the loan book!
4. The ECB should take a stake in our zombie banks
For Honahan, thats a bit troublesome, debt for equity swap and messy bits like that. No worries, EU/IMF and ECB are ignoring FG so far on that and there’s very little coming out of them on that embarrassing demand.
So, led by Ireland’s native Lord Cardigan we have imminent failure of the Light Brigade Irish negotiators followed by default building up to the greatest economic fuUP of a country’s economic prospects in history.
Its not good enough to create a mess, to really finess the mess, you have to completely fUP cleaning up the mess!
There again, the man has his supporters especially among FF.
A puff piece that shies away from asking the hard questions. Patrick Honohan is no doubt a man of great probity and intellect but he is not above making mistakes like the rest of us.
1. Why did he stand behind estimates that were ‘overtaken so quickly by events’. Shouldn’t that fact make us pause before everyone wholeheartedly anoints him as our saviour?
2. Estimates of bank losses ave been revised again and again and again. And Patrick stood behind each estimate, staking his credibility.
3. If he is so sick of shovelling money into the banks now, perhaps he should have listened to people like Morgan Kelley a year or two ago. It might have saved the country some money.
I’m pretty sure he is smart enough to have thought of the above points himself. The fact is that a position of authority often forces people to compromise. We should acknowledge and accept that instead of unrestrained hagiography.
I’m sure The Governor has read Hegel in his spare time …
The unfortunate Mr. Neary is frequently and relentlessly pilloried for trusting the stress tests that underpinned his understanding of the liquidity of the irish banks. Mr. Honahan and Mr. Elderfield conducted a fresh round of such tests with significantly greater resources at their disposal and still came a cropper. Their reputations appear to remain intact…one more indication of the peasant-like deference that seems to overcome us as a nation. Maybe, in this instance, the closeness of the academic circle is at play and the fact that many of the lead contributors here have unreservedly supported Honahan as ‘one of their own’ since his elevation. Much the same suspension of critical faculties that allowed the mess we’re in to go unremarked (the few exceptions excepted) in the first instance. Managing, negotiating, sizing up and dealing with shrewd, ruthless and self-serving operators require more than academic wit or more than simply not being Irish in the case of the Regulator – the crowing glory of the Green party’s dalliance with power appears to have been to insist on an non-irish person for the job!
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