October 25: Public Roundtable on The European Debt Crisis

On Tuesday October 25th, Trinity College Dublin will host a public roundtable on the European Debt Crisis, as part of the Policy Institute’s 2011-2012 Henry Grattan Lecture Series.  Co-hosted by the IIIS, this will feature some very good international experts:

  • Mike Dooley (UC Santa Cruz)
  • Peter Boone (LSE)
  • Jean Pisani-Ferry (Bruegel)
  • Ciaran O’Hagan (Societe Generale)

This event will take place 4pm-5.45pm.  The event is free – all welcome.  Please let Helen Murray at Policy Institute know if you plan to come along (policy.institute at tcd.ie).

More details are available here.

3 replies on “October 25: Public Roundtable on The European Debt Crisis”

@ Desmon Brennan

The secret is that the duo do not yet have a plan.

If their advisers are in need of one, they could usefully consult the comment by Colm McCarthy in today’s Sunday Independent.


Somebody might also explain to them the fallacy of post hoc ergo propter hoc. The Dutch, for one, appear to have grasped it as they are arguing for the appointment of Commissioner to oversee the implementation of the strengthened Stability and Growth Pact, a practical step, rather than indulging in further kite-flying, as Merkel does again today, on the supposed need for treaty change and a fiscal union. (They are, no doubt, chastened by the experience of the failure of the Dutch electorate to ratify the defunct European Constitution).

The reaction of the markets tomorrow to the Dexia deal, the details of which, unlike the secret plan, have to be announced, will bring the rhetoric down to earth. And the rest of the international financial community is hardly going to stand idly by cf. article by Donal Donovan in today’s SBP.

The paper by Philip Lane and his associated economists is an additional element in the growing expert consensus on what needs to be done.

And there is a meeting of the European Council on 17 October.

Well here’s my shopping list for a plan:

######Retrospective/Immediate fixes

1) Monetary (a) – Endogenous to Euro area
Cut rates, and engage in QE in regions where money supply is irrationally low

2) Banking
Publish proper stress tests, with open econometric models. Introduce a common resolution scheme for cancelling sub debt / converting equity to sub debt. Decide on recap mechanism for the banks.

3) Financial Stability
Create an acting EU wide Financial Stability Secretariat. It’s main function shall be as primary source of advice to heads of state. For now just get the staff in, it need not have any powers (and need require no treaty change). At least having one body to produce clear options, will reduce the cacophony

4) Markets
Announce intention for Philip’s ESBies. Quit the nonsense quibling over derivatives markets and financial transaction tax…promise to do nothing and stay quiet on these for 3 months (the naked self interest of various countries here is causing a fight that we can’t have now)

5) Fiscal Rules
Top level fiscal rules may need strengthening, but most importantly, serious mid-bottom level analysis is needed per country. Establish a Fiscal monitoring authority, with _thousands_ of staff. It should produce LOTS of info…afterall…hundreds of billions are invested annually in sovereigns…so info will cost. Initially this need have no formal authority…just staff, else the lead time will be unacceptable.

6) Economic reform
The Ez heads mean NOTHING here will have short term credibility, so no sense in relying on this

7) Current sovereign debt
Crystalize the existing losses by 1 of 2 methods
a: partial market defaults
b: solvent Euro countries pay, and are issued with 15 yr super junior bonds for up to 80% of some countries, and if appropriate, take collateral

8) Monetary (b) Exogenous to Euro Area
Currency wars are a real risk…and China/US imbalance a joke…agree some truce for 6 months


1) Monetary (a) – Endogenous to Euro area
One size fits all interest rate is old world. Pro cyclical variants need to target economics regions, and asset concentrations. So if boomy/bubbly: a surcharge, if recessiony: a reduction. This will create an overall fund, whose balance should tend towards zero over long periods (and this should be in addition to other macro prudential measures, such as requiring more risk capital)

2) Banking
Liase closely with. Monetary above to tackle capital flows. Improve micro prudential supervision, chiefly around information quality. Create new banking reports, to augment the existing financial info. These reports should be for the markets.

3) Financial Stability
Create a Euro area head of Financial Stability. The ECB and regulators should report to this new body.

4) Markets
Create new market venues for debt instruments and their derivatives. These trading and clearing platform(s) should massively increase transparency, and aid counterparty risk analysis…rather than instead be the silly bunfight whereby Germany is trying to take over the City of London

5) Fiscal Rules
Formalise the new fiscal rules mechanism, much along the lines of what was recently proposed

6) Economic reform
The Italian labour market is nuts , ditto Spanish business regulation, Portugese criminal law, Italian and Greek everything…make reforms here contingent on the below: …also don’t expect much

7) Future sovereign debt
Philip’s ESBies

8) Monetary (b) Exogenous to Euro Area
Need to better understand trade patterns, and query the USD status as global reserve currency, suggest co-operate with China, US et al to seek improvement here.

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