The Irish Financial System – Conferences

The papers from today’s ESRI Renewal conference are here.

The site for the Central Bank’s SME conference on Friday is here.

By the way, details of Dublin’s Central Library Lecture Series on the Irish Crisis are here.

19 replies on “The Irish Financial System – Conferences”

Neil Crosby Professor of Real Estate and Planning Reading University comments on Independent article;

Jim, The analysis may be simplistic but unfortunately it is not flawed. Banks ask valuers to tell them what the market value/exchange price is at a point in time and then lend vast amounts over time based on that simple number. The surveyor gives them that simple number and do not think it is their job to tell the banks that the question they have been asked is stupid on its own and what they should have asked for is the underlying value. It was obvious in 2005 and 2006 that prices in the property market were higher than could be sustained by any rational cash flow analysis. But in a culture that rewards individuals for short term performance rather than longer term perspective, it was in neither the bankers’ nor the valuers’ interests to stop it. I cannot see anything in what the UK regulatory authorities have proposed that makes me think they understand the role of property valuation in driving asset bubbles and will prevent it all happening again sometime in the 2020s.

Neil C, Property Academic, UK

@ Brian O’Hanlon

Thanks for that: plenty in there to chew on. I hope it was a rewarding experience for you.

I particularly liked: “The solution to the lack of markets for produce, was to give everyone credit cards.”

For what it is worth. I recommend the paper as well worth the time to read. It grapples sincerely with the issue of what the ‘bleep’ just happened, where are we now and what might possibly be a good way to go.

If the Dork is watching in his less prophetical mood – what do you make of this as a summary?

@ Gavin,

Note on David Harvey, The Enigma of Capital. The quotation you liked from David Harvey is indeed interesting. I would comment, that David Harvey’s work is useful, because he sort of floats above everything else – the Roubini’s, Krugman’s, Whelan’s, Roghoff’s etc (people who are very broad thinkers to begin with) – and attempts to offer some broader conception still, about it all.

I have offered the comparison to some people, between Harvey’s work, and that of someone like Chomsky. Chomsky, I mean, being another one of these pied pipers, that one cannot tie down to one academic area per se, but nonetheless, a lot of people can read him, because he ties together so many disparate ends.

Having said that, not many people can, or try to operate at the stratospheric altitudes that Chomsky, or Harvey fly at. I mean, there is no obvious path of academic career building, which generally lends itself to one’s becoming a Noam Chomsky or a David Harvey.

It also makes it difficult to use Harvey or Chomsky for citation purposes. I have a strong feeling that when many undergraduates and masters students are put to the test – and faced with the challenge of submitting a requirement paper – they may in the end leave the Chomsky’s or the Harvey’s out of their citation list. They are operating too high in the stratosphere, and student grades generally go to those that can focus inwards, rather than outwards. BOH.

With regard to the Central Bank SME conference I noted this welcome development a couple of weeks back.

‘Bank of Ireland in line to get €150m credit facility for small business loans’

“The EIB, led since last month by former German foreign minister Werner Hoyer, does not lend a set amount per member state in any given period.

“However, Mr Hoyer adopted a positive stance when asked yesterday whether there was a case to be made to increase lending to a country like Ireland, which is the beneficiary of an EU-IMF bailout.

““We should have a somewhat closer look at Ireland in these times,” he said.”

Another interesting article on ordoliberalism, related to the above:

“Germany’s approach to crisis lost in translation”

“Analysts in Berlin suggest that, to end the stand-off in the crisis, Germany’s partners should focus on issues where movement can be expected in Berlin.

““Instead of attacking excessive [German] austerity . . . a more promising strategy would be to demand pan-European growth and investment programmes,” write Sebastian Dullien and Ulrike Guérot of the European Council on Foreign Relations in a recent paper, The Long Shadow of Ordoliberalism. “Instead of opposing balanced budgets, asking for more time in reaching them might be met with more understanding from Berlin.””

This links back to the advancement of structural funds for countries in programmes which was solemnly signed off on in July and October last year and has still not been delivered.

At the Croke Park economic conference I asked Joan Burton why these agreed structural funds had not come through, and she gave a two word reply. Sadly I forgot to ask whether this was for public consumption.

But I noted in Angela Merkel’s speech on the Greek ‘bailout’ to the Bundestag as reported by the Guardian:

“She [A Merkel] also touches on the growth issue, saying that increased flexibility in the way that EU structural funds are spent could help promote growth and competitiveness.”

So the structural funds are still being used as a carrot, when they have already been committed in writing. This is a door at which Ireland could usefully keep pushing.


Pan-European growth is exactly what we need but it’s hard to see it happening in the short term. I have a brilliant idea to return Ireland to growth though. I’ve discovered an industry that never gets affected by downturns – and in some particular types of troubling times, actually increases production! Maybe we could cook up some low corporation tax deal to persuade them to come and set up their factories over here?

Not a runner. The arms industry is the strongest bastion of state-sponsored enterprise in free market countries, even where the firms are not state-owned. They want the jobs for their own.


“Oops, sorry. That should be addressed to PR Guy.”

That’s OK – I’ve been called worse.

Perhaps we could create our own arms business….. though I do recall a rather derogatory joke about an Irish tank….. maybe not. There might possibly be a small impact on our neutrality too – not that that fig leaf is much more than shredded pulp these days.

an off topic request!

This Project Syndicate oped proposes cutting payroll tax and raising Vat as a means for increasing competitiveness (a proxy devaluation):

Would same(cutting employer’s prsi +raising vat) have merit here?

If so,should all “payroll” taxes be switched towards employer obligation,in order to allow maximum flexibility of this method ?

I have an interesting discussion topic for your conferences.

Quote from an interview with Yanis Varoufakis (Head of Economic Policy Dept. Athens University)…..

“There have been some interesting studies that reveal how common decency and ‘other’-regarding norms are weeded out of students of economics very early in their undergraduate career. Take the example of the generalised prisoner’s dilemma below:

Young men and women are given some money (e.g. $10) and asked to contribute (each one separately from the rest, and in perfect anonymity) all or part of it to a common purse. Then, the contents of the purse are multiplied by the factor of, say, three and the contents redistributed among all of them independently of their contribution. Clearly, the best outcome for the group is that each contributes all of his or her windfall to the common purse and, that way, each gets a return three times as large. The problem here is that there is a temptation to let others contribute while you do not (since that way you get your share of three times of their contributions and, to boot, you have also kept your own money).

What we find in experimental studies involving real students, who play the above game with real money, is something quite startling: students of economics were significantly less willing to contribute to the common purse. Moreover they were more pessimistic about the prospects that others would contribute! So the question arose: Is it that economics attracts the less cooperative, more ruthless young persons? Or is it that exposure to economics makes them relatively more ruthless, pessimistic and aggressive?

To find out, the experiments were repeated separately for first semester first year undergraduates (before they were ‘contaminated’ with economics or other subjects) and for students who had just graduated. Guess what: Amongst the fresh(wo)men who played the game, the ones that had chosen to major in economics did not behave differently to the rest. They were equally willing to contribute. Therefore no evidence was found supporting the hypothesis that economics attracts misanthropes. On the other hand, amongst graduates those with an economics training stood out from the rest: they were much less likely to contribute, and more pessimistic about the others. The conclusion is inescapable: a training in economics significantly increases the probability that a person becomes less sociable, more aggressive, less cooperative; in short, miserable.

Why and how is this indoctrination taking place? The answer is simple: Economists are all about creating determinate models; ‘closed’ models that predict behaviour. To do this, they need to assume a particularly narrow minded form of rationality (which I call ‘instrumental rationality’): you are rational to the extent that you deploy your means efficiently in the pursuit of given objectives. When a young person is told repeatedly that to be rational means to be ruthlessly instrumental (i.e. to treat others as a means to one’s own ends), and that contributing in this game is for sissies (or, more ‘scientifically’, irrational), is it any wonder that a training in economics makes young persons more brutish and nastier?

The end result is that youngsters with a heightened sense of civic responsibility either drop out of economics, in a bid to retain it, or manage gradually to shed it; to adopt ‘instrumental rationality’ in their own daily life and mindset. Suddenly, the models begin to shape the modellers, rather than the other way round. It is a subtle process of change that turns economists into simulacra of themselves in a hopeless pursuit of ‘closed’ models that validate their own sad ‘conversion’. Seen from a different perspective, what we have here is a remarkable Darwinian process that guarantees the survival and dominance, within economics departments, of the anti-social, aka instrumentally rational, fools.

As for the Crisis and its effects on economics students and departments, I am afraid it has done nothing to ameliorate this Darwinian mechanism within existing economic departments. The norms of instrumental reasoning are so powerful that not even the earthquake of the Crisis has had the power to unsettle them. I have a hunch, however, that what the Crisis will do is speed up further the rate of decline in the number of youngsters interested in studying economics. This is the good news. The bad news is that they will not turn to other social studies but to pseudo-disciplines like marketing, business, advertising etc.”

The rest of the interview is here:

The whole cabal is composed of bankers including their top class economists, mortgage insurers including their top class economists, Central Banks and their TCEs’, Dept’ of Finance and its TCEs’, agents engaged in the sale, seller, valuator, buyer, permitting authorities, solicitors. There are checks and balances built into the cabal in normal countries that do not let things run amok. The media of course is the enabling claque urging on the gullible buyers. There is a positive relationship between property advertising carried and optimistic articles.

To say the banks are bound by valuations alone is quite simply not a reflection of what normally occurs. A careful eye is kept on property market valuations by the first four entities listed above. Particular attention is paid to average incomes and their inflation rate and property value with its inflation rate. The ratio of the average income to the average price of residential property and the trend is also important. The history of similar movements must also be evaluated with particular attention being paid to the eventual outcomes such as building busts, stagnation and collateral damage to the larger economy.

I know Ireland is a special case and residences in Geneva reached 12 times the average annual wage in the past. A look at a random dozen European countries over fifty years would provide enough actionable information for even the graduates at the bottom of their graduating class to able to advise their bosses when the alarm bells were ringing. I am talking here of the economists who were tasked with keeping an eye on the property market. I do not believe that those economists were about as useless as the mass media claque. There must be files in the banks, Central Bank, Mortgage Insurers, DoF, and Regulator full of documentation that will restore the reputation of Irish economists.

The recently published book by David Graeber, Debt- The first 5,000 Years. is an eyeopener. I have not gone past the first 100 pages but there are ideas in the first couple of dozen pages that are worth the price of the book.

@Mike Hall

I wonder if Yanis Varoufakis would be interested in conducting a similar study with actuaries. I’m sure they make most economists look like liberal, socially normal saints.

As for doing the study with PR Guys…. forget it. They all assume the worst in others.

@Mike Hall

“PR masquerading as information ‘media’ is a different story.”

Oh, I could tell you some toe-curling stories about PR pretending to be ‘news’. Cardiff University did a good piece of research on that once – how productivity driven journalists simply…. no, I mustn’t.

Back in the Real Productive World

CREDIT CONDITIONS for Irish small and medium enterprises are worse that for their European counterparts, a conference organised by the Central Bank was told yesterday.

The conference also heard that though Irish SMEs may be less productive than foreign companies, they employ considerably more people.

Central Bank governor Patrick Honohan said SMEs were facing a dual challenge in terms of funding. On the one hand, there is “massive credit misallocation”. On the other, the depletion of the personal wealth of many families leaves them unable to fund start-ups and expansions with their own funds and “the lack of bank credit is likely to be a more serious drag on the recovery than it might otherwise be”.

Useful stuff.

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