Bank Credit Flows and Eurozone Stability: Conference Panel QA Session

The excessive flows of bank credit during the bubble, and the shortage of bank credit after the crisis, are key elements in Ireland’s current economic distress. Prior to the crisis, economists thought they understood the behaviour of bank credit flows, but we were sadly wrong.  The talks at the conference next week explore the new research frontiers regarding bank credit flows and stability. The conference website now includes a google talk link where participants can pre-submit questions for the panel session, and links to some research papers associated with the presentations. There will also be an opportunity to pose questions during the conference panel session. The panel session will be chaired by Professor Karl Whelan of UCD.

There will also be opportunities for discussion/interaction during conference breaks. If you are a (quote) “faintly dim former rugby player” or a faintly dim rugby dad like me, there will be a corner of the coffee room where we can converse in whispers about the sport and its undeserved bad publicity.  

9 thoughts on “Bank Credit Flows and Eurozone Stability: Conference Panel QA Session”

  1. @ Gregory Connor,

    I welcome the above, as the subject matter for a conference. I think it has the potential of being a very important event for Ireland and thinking about our situation. Thanks for the advertisement. My suggestion would be, there needs to be amalgamation of local authorities in Ireland, into regional districts, with plans for credit application tied to positive and well structured medium term employment and local economic growth plans. If we do not begin to foster some of these skills at local government very soon in Ireland we will never be able to break out of the cycle we saw in the Celtic Tiger. I think that Ireland created the likes of the builders during the boom period, because there was such little competition for credit applications coming from our regional government levels. That is, where regional government bodies are required to borrow directly, as opposed to being delivered funds from the national levels of government, through some quango or daft kind of distribution policy or scheme. The national-to-regional government credit distribution system is very expensive, and as far as I can see, the regional levels of government don’t seem to appreciate where the credit comes from. No more than the Irish borrowers in property did, in the private sector. In fact, in many instances where there was a public private partnership vehicle created between the two, it turned out to be a disaster, because neither side were up to the task.

    The impulse of some local authorities was to erect glass monoliths all across the country to signify their own perceived importance. There is one such building beside me, which costs the local authority €80k per annum to get its fantastic structural glazing feature cleaned by mountaineering specialists. Like they say, it is good work if you can get it. There is no framework for doing post occupancy evaluation, especially in organisations who are building out the same infrastructure again and again. Take third level campuses as an example. There are 17 institutes of technology around our small country, each one, a mirror image of the other, for all intents and purposes. We have nine university campuses I think. But there is not framework for sharing of ideas between them, in terms of solutions that work or don’t work.

    You can look at the same in our hospital infrastructure. I visited a new part of a hospital recently, where the food intake/outgoing pathways crossed, and therefore half of the new building was un-usable for fear of cross contamination of waste and food. Again, absolutely no framework for post occupancy evaluation. And these kinds of projects, remain in use for generations un-changed, so it is a huge problem which could be avoided. Now, it is very difficult for such bodies, to find their own credit supply lines, unless they begin to take their economic responsibilities and investment management and planning seriously. It has been argued that no Irish government department developed skills in financial management, because it was always assumed, the department of finance took care of it. It is interesting to note, that under our new public procurement system introduced by the department of finance, the trend seems to be to remove even further financial responsibility from departments and concentrate it even more in one location. It should also be noted, that the department of finance took over the public procurement administration during a period in Irish history in the 2000s, when the private financial institutions were running amok. I would argue strenuously in Ireland, that we need to re-look at de-centralisation of financial management back down to department(s), but also back down to region(s). I believe that to be the best route to restoring our reputation in sovereign debt markets. Once we do that, that situation will ease for the private debt markets, vis-a-vis Ireland.

    Anything we do in Ireland in terms of credit policy, development policy, employment policy depends on the reputation of government branches, not at national level, but at this granular level I believe. That is, our ability to gain capital, make efficient use of it, and track the expenditures. This in my view, is how to work intelligently within any kind of credit distribution system. It is unfortunate though, during the Celtic Tiger, we ended up with the version of the credit delivery system that we did. I would argue, it was not a credit delivery system at all. But rather a primitive way to do off-balance sheet creations, for the purposes of moving assets off of principal banks’ accounting books. We gave our off-balance sheet creations arms and legs, and lauded them as risk takers. BOH.

  2. Gregory wrote,

    If you are a (quote) “faintly dim former rugby player” or a faintly dim rugby dad like me, there will be a corner of the coffee room where we can converse in whispers about the sport and its undeserved bad publicity.

    A suggested format for conferences in my view, would be to borrow from the likes of the motor head events. You have folk who are expert in engine power, transmission systems, electrical systems, control systems, suspension systems, steering, braking etc. Most of my contribution above, stems out of an interest in the distribution of power, as opposed to the creation of it. I have been listening to voices such as Constantin Gurdgiev for a number of years, now. If you want ‘the power’, you need to go to Gurdgiev’s stall. He understands the capabilities of a 2.0 million approx. working/tax paying population on an island, and has modeled what is possible, in terms of turbo-boosting that engine, and extracting every last drop of performance from it. But it appears to me, that Gurdgiev’s fascination or concentration is not with the other parts of the system. It is not much use in producing the power in the raw state unless one can also see, how the distribution aught to function. The ideal thing from an Irish economic point of view, would be to have a number of stalls from which one can gain the ideas/services one requires to build the ultimate vehicles, fit for the road, in the 2010’s, 2020’s, 2030’s etc. BOH.

  3. Leaving aside the cronyism, the concept of an elite esprit de corps

    bonus incentivised culture of pumping money out to whoever could

    be persuaded to take it, leaving aside the discovery by Nama of a

    lack of documentation, duplication of documentation illegally set

    against multiple loans, perhaps the conference could call for a full

    investigation by the CAB.

  4. Anyways, had to split the post in 2 to send, second part for no apparent reason cannot be sent, so you’ll have to makedo with the first part above, only me experiencing these problems?

  5. Colm Brazel writes,

    Leaving aside the cronyism, the concept of an elite esprit de corps bonus incentivised culture of pumping money out to whoever could be persuaded to take it, leaving aside the discovery by Nama of a lack of documentation, duplication of documentation illegally set against multiple loans, perhaps the conference could call for a full investigation by the CAB.

    All true. I argued elsewhere at the Irish Economy blog recently, that in order for Ireland to truly benefit from the injection of credit in the 2000s, would require a lot more social development, as well as economic development. That is, the notion that in times of plenty, the best policy may not be to concentrate the bulk of a resource such as credit flows, into a quite small sub-set of the larger population. The issue is as wide, as it is deep. BOH.

    http://www.irisheconomy.ie/index.php/2011/05/01/is-the-grievance-against-the-ecb-overdone/

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