My slides from this evening’s Policy Institute event are available here.
Month: March 2012
Michael Moore of QUB raised an interesting point with me last week. A NO vote would not affect our membership of the IMF. Presumably, Michael asked, we could still turn to it if/when we need a second bail-out? And recall that the troika – the coalition of the willing – was just put together because it was considered demeaning for the EU that a member state should seek a bail-out from entirely external sources. Given all the indications of how much the IMF has changed in the wake of the Stiglitz critique, they might even have a better deal to offer than our EU partners.
Michael, of course, likes to lace his stews with chili. But still…
Then, though, it would be up to our American partners. A senior IMF official confirmed to me over the summer the veracity of Morgan’s account of the Geithner veto. Soundings to be taken over St Patrick’s Day at the White House?
Randy Wray is a prominent economist writing in the post-Keynesian tradition, and is very prominent in the debates online around Modern Monetary Theory. He has an intriguing paper on a jobs guarantee scheme for Ireland here. I’m sure our readers will have lots to say about this proposal, and it is welcome food for thought.
Paul De Grauwe argues that the LTRO operation is a poor substitute for direct ECB intervention in the sovereign debt market in this FT article.
In comments on Philip’s Sunday Business Post article, Bryan G raises a number of important points about what actually changes as a result of the Fiscal Compact. I think an important role for this forum is to discuss what the Compact actually does, so thanks to Bryan for focusing on the question. For one thing, it may reveal areas where clarifications from the Commission are required so informed decisions can be made.
Bryan G identifies what he sees as the major consequences of the Compact:
(a) requiring rapid convergence to MTO [Medium-Term Budgetary Objective]
(b) limiting the scope for temporary deviations due to exceptional circumstances
(c) requirement for an automatic correction mechanism
(d) requirement for Member States that have been made subject to the excessive deficit procedure to put in place budgetary and economic partnership programmes
(e) the ex ante reporting of public debt issuance plans.
(f) defining the scope and procedures for Euro Summit meetings
Points (d) and (e) are the subject of the proposed two-pack. Point (f) seems uncontroversial. I think Bryan G is right that point (c) is a — indeed I would say the — critical element of the Compact, and relates to the requirement to put a correction mechanism into “binding and permanent” national law. From my reading of the proposed Compact and the revised Stability and Growth Pact (SGP), I do not see the case for (a) and (b) being real innovations.