Greek Referendum

Papandreou says

“We have faith in our citizens, we believe in their judgment and therefore in their decision,” Mr Papandreou said after rejecting a call for early elections by some socialist politicians. “All the country’s political forces should support the [bail-out] agreement. The citizens will do the same once they are fully informed.”

Does he believe this? What are the implications for the euro?

EFSF Scales Back Irish Bond Issue

This is hardly confidence-inspiring news. EFSF is supposed to save the Eurozone and offer Ireland cheap and long-term funding. What if the markets decide not to play ball and decline to offer the facility sufficient funding at low rates or long maturities?

The eurozone rescue fund has scaled back a planned bond issue designed to finance the bail-out of Ireland amid uncertainty over the level of demand.

The offering will provide a key test of investor sentiment after the announcement last week of new plans to tackle the eurozone debt crisis.

The bond from the European Financial Stability Facility will only target €3bn, instead of €5bn, and will be in 10-year bonds rather than a 15-year maturity because of worries over demand. A 10-year bond is more likely to attract interest from Asian central banks than a longer maturity …

Already delayed from last week, EFSF officials decided to price this week because market conditions could deteriorate if they held off any longer.

The bond is expected to price at yields of about 3.30 per cent, and about 130 basis points over Germany, the European market benchmark. This is a big mark-up since the middle of September when existing 10-year EFSF bonds were trading around 2.60 per cent and only 70bp over Germany.

Not good.

Update: Eoin points us to an Oct 13 statement indicating they intended a €3 billion issue. Thanks Eoin. It appears the FT over-egged this one. They’re probably right about the delay, the reduced maturity and the higher yield

State Investment Bank

Michael O’Sullivan and I have an article in today’s Irish Times arguing for a state investment bank. Some links to supporting materials are below the fold.

An fliuch mor

Writing in the aftermath of the 2009 floods, I warned that flood and emergency management needed an overhaul lest the waters return. I prefer to be wrong.

The economic damage of the 2011 floods will probably be smaller than in 2009. But this time, two people died. Ciaran Jones was a hero who put himself in harm’s way to help others. Cecilia de Jesus drowned in her home. Why is there no gauge on the Poddle linked to an evacuation alarm?

Flood management is about the prevention of floods. No flood management system is perfect, so emergency management is needed to manage the residual risk. Last Monday, both flood and emergency management failed Dublin.

Ireland is behind schedule to meet its EU obligations to assess flood risks and develop management plans. But why do we need the EU to tell us to protect our property and life? Flood protection design standards are low compared to other countries, and once-in-fifty-year defenses are breached remarkably often. Cities abroad are working hard to create retention basins and drainage channels for storm water. Dublin, a spacious and green city by comparison, has not done so.

Preliminary analysis by Met Eireann shows that the rainfall of the 24th October in Dublin was not unprecedented. More rain fell on 11th June 1963 and on 11th June 1993. A city like Dublin should be robust to events like that.

People have short memories, and politicians even shorter. After each flood, there is a call for better protection. That fades as the waters retract. Priorities change. The recent protest against the Clontarf flood defenses is a good example.

Last Monday also say failures in emergency management. Met Eireann issued a severe weather warning on Saturday. It was not accurate but extreme rainfall is fiendishly hard to predict. The warnings were actually fairly close to what came to pass. But while we have a tried and tested system for real-time weather prediction, we do not have a system that tells us where the water is likely to go once it has hit the ground. In fact, there are few gauges on rivers and streams. For instance, the OPW collection of hydrometric data omits the rivers Dodder, Poddle and Slang, where most of the mayhem was concentrated. The gauges that are there, are not linked to an early warning system.

A gauge on the Poddle would have warned that the water was rising dangerously high. The alarm could have been raised in Harold’s Cross. Celia may have had a chance with a few minutes warning.

A number of county councils now use MapAlerter, a service that sends out email and SMS messages to everybody in a particular area in case of emergency. Dublin does not use this system or any other.

Met Eireann issued a severe weather warning on Saturday. 48 hours later, the keys to flood gates and sand bags were still missing. That is just not good enough. Local flooding occurred to the untrained eye around 5 pm. The weather radar showed more rain coming. The emergency plan was invoked at 9 pm only, less than one-and-a-half hour before high tide. Why so late?

Water moves fast and with force. You have to act before the flood barrier breaks. In 2011, as in 2009, emergency workers followed the water. They did all they could, but there is little that can be done at that stage. Barriers need to be reinforced before they break. People need to be evacuated before the water reaches them.

In Cork and elsewhere, locals have done much to prevent a recurrence of the awful events of 2009. The national government has been less forthcoming. Dublin did not learn from what happened in Cork. The response to the 2009 floods was hampered by the Byzantine structure of flood management at the national level. The 2011 floods were local, and the line of command clear.

And now? Media attention will wane. There will be a few angry debates in the councils and the Dail. We will wonder why a shopping centre was build in a flood plain. We will wring our hands about the lack of accountability in the civil service. A committee will investigate and make sensible recommendations that will be ignored. Instead of waiting for those wise words, it is obvious what needs to done and now is the time to do it.

Early warning systems need to be put in place as a matter of urgency. That is fairly cheap and does not require intrusive intervention to awake the NIMBYs. The government should stop dragging its feet on the catchment flood risk assessment and management programme. Real-time hydrological prediction models must be developed, and not just for fluvial floods.

All this costs money. But Science Foundation Ireland has a large budget, not all of which is spent wisely. Let it fund the best hydrologists in the world to study Ireland. There are harebrained government subsidies in the areas of energy, transport, sport and what not that can be transferred to flood management without any great loss except to the cronies of governments past.

Heavy rains are inevitable. Flood damage is not.

Economic Renewal: Increasing Ireland’s Productivity and Growth

In a new initiative, the ESRI is running a series of half-day conferences on emerging from the crisis, with the first event focusing on productivity and growth.  The first event takes place on November 9th and the details are here.