The Politics of Sovereign Debt, DCU, June 12

The Politics of Sovereign Debt
The Helix, Dublin City University, 12 June 2013

The debt crises in Ireland and Europe require a combination of political
and economic analysis.  This conference includes cutting-edge papers from
leading international scholars.

950-1040: Dr Lauren Phillips, London School of Economics and Political Science
Chair: Paschal Donohoe, TD
Paper: Lauren Phillips, Politics, Policy and Sovereign Debt Market Volatility
in Advanced Economies

1040-1130: Dr Michael Bechtel, University of St Gallen
Chair: Stephen Donnelly, TD
Paper: Michael Bechtel, Jens Hainmueller, Massachusetts Institute of Technology,
Yotam Margalit, Columbia University, Studying Public Opinion on the Eurozone
Bailouts

1150-1250: Prof Marc Flandreau, Graduate Institute, University of Geneva
Chair: Prof Gary Murphy, DCU
Paper: Marc Flandreau, Causes and Consequences of Bondholders? Organizations
in the Nineteenth Century: A Revisionist View and a Research Agenda

140-230: Dr Roman Goldbach, University of Dresden
Chair: Dr Tim Hicks, Trinity College Dublin
Paper: Roman Goldach and Christian Fahrholz, Friedrich Schiller University,
Jena, The Euro Area?s Common Default Risk: Evidence on the Commission?s Effect
on Uncertainty

230-320: Dr Iain McMenamin, DCU
Chair: Dr Niamh Hardiman, University College Dublin
Paper: Iain McMenamin, Michael Breen, Juan Muñoz-Portillo, DCU, Elections,
Institutions and Sovereign Debt

340-430: Dr Joachim Wehner, London School of Economics and Political Science
Chair: Dr Donal de Buitléir, publicpolicy.ie
Paper: James Alt, Harvard University, David Lassen, University of Copenhagen
and Joachim Wehner, The Politics and Economics of Fiscal Gimmickry in Europe

The conference (including lunch and coffee) is free.  However, pre-registration
is necessary.  Please email juan.munozportillo2@mail.dcu.ie to pre-register.

Comments

comments

28 thoughts on “The Politics of Sovereign Debt, DCU, June 12”

  1. “and Joachim Wehner, The Politics and Economics of Fiscal Gimmickry in Europe”

    http://www.nybooks.com/articles/archives/2009/apr/30/herr-wehner/?pagination=false

    Herr Wehner

    By Gottfried Benn, Translated from the German by Michael Hofmann

    This is mine
    Herr Wehner
    he was our house-tutor
    died early of phthisis
    once he’d infected my youngest brother
    who died of meningitis tuberculosa.

    Came from Lissa
    son of a blacksmith
    always went around in wooden clogs
    which was unusual with us
    Liska his bride
    stayed with us over Whitsun once
    daughter of a police major
    ergo different class
    the giggling in the evenings
    when the mosquitoes buzzed
    and it was our bedtime,
    but, as I heard later,
    it was a rocky marriage.

    Herr Wehner,
    what makes him mine
    is the fact that he is buried somewhere
    rotting away in a collective farm in (now) Poland
    no one in the village
    will remember him
    but he sometimes appears to me
    grey and isolated
    under certain historical aspects.

  2. Ireland currently has at the helm of economic policy the distinguished economist Richard Bruton who in 2008 “welcomed” the possibility of extending the taxpayer bailout of uninsured depositors in Irish banks to uninsured depositors of foreign banks.

    http://www.independent.ie/business/irish/government-may-extend-400-billion-guarantee-after-plan-approval-26481457.html

    I quote

    Richard Bruton, finance spokesman for the opposition Fine Gael party, said he ”welcomed” the potential extension of the bill.
    ”I think it’s accepted as being a good thing in terms of preserving a fair balance, a level playing field,” Bruton said on RTE Radio today. ”

    Can someone tell me up straight: How do these dopes stay in power?

    Too bad for the British taxpayer that Richard Bruton’s “welcome” of the idea of Irish taxpayers guaranteeing the uninsured depositors in HBOS did not pan out. Would have saved them a cool 15B pounds.

    http://www.guardian.co.uk/business/2013/apr/05/hbos-bank-that-couldnt-say-no

  3. I think Primal Scream said it a while back

    “the name of the game is power and if you ain’t playing power you are in the wrong place ”

    http://www.youtube.com/watch?v=L3vvn2qOh58

    But there is a high ineptitude quotient too.

    Interesting that Olli is chief boxwallah too. Finland was the only European country that paid off its WW2 debts in full.

  4. http://www.irishtimes.com/culture/media/future-of-newspapers-dominates-conference-agenda-1.1393007

    The Media Future Conference, in the Pavilion Theatre, featured a strong contribution from novelist Roddy Doyle, who blamed the Irish secondary school system for stamping out creativity, causing the groupthink which was the reason “the country was now “f****ed”. Doyle was speaking about his work with the Dublin-based young people’s creative writing centre Fighting Words

  5. Fitch upgrade Greece to bb-
    Wait ’til all their youth is unemployed – they’ll regain AAA.

    So this is the politics economics mismatch at its best. It’s a farce

  6. “This conference includes cutting-edge papers ”

    Genuine question: can anyone explain what “cutting-edge” means in this context?

    I once – many years ago – went to the premiere of a Jackie Chan movie called ‘Purple Storm’ (or was it ‘Purple Rain’? I forget) in London….. at 11am in Soho Square.

    The director, a friend of mine living in Hong Kong, promised me it was ‘cutting-edge’ Asian film-making and asked me to bring a Chinese girlfriend if I could. I duly obliged – a lovely architect lady who I desperately wanted to impress….. she was just stunning (“stick with me darling and I will take you to film premieres”, etc.). It was so bad, she made me go to her local Chinese restaurant in London for a late lunch and eat chicken feet as a punishment. It was an awful experience (both the film and the chicken feet) and she didn’t let me take her out again for about 5 years.

    It could have all been so different if I hadn’t fallen for that “cutting-edge” 5hit.

  7. Back to Roddy Doyle above

    I have been reading “Irish poetry since 1950” by John Goodby recently and there are more than a few links to the current situation.

    Nationalism elided religious class and gender distinctions in the interests of an inefficient and often complacent bourgeoisie (Bew Hazelkorn and Patterson, 1989)

    and isn’t it still the same?

    As Kavanagh observed in 1952, “the great wet blanket of Fianna Fail smothers the imaginative life of this country” (Kearney 1992)

    Some things never change

    I wonder who is writing good poetry on the current mess.

  8. @ Gavin

    Krugman asks

    “Why did austerity economics get such a powerful grip on elite opinion in the first place?”

    Why did the Iraq war seem like such a good idea at the time?
    Because it was good for cashflow.

  9. @DOCM

    To repeat the by now well-known remark by Jean-Claude Juncker; “We all know what we need to do; we just do not know how to get re-elected if we do it”.

    I think Kevin O’Rourke’s take on this is a little more plausible.


    We all remember Jean-Claude Juncker’s statement that “We all know what to do, but we don’t know how to get re-elected once we have done it”. He got it half right: they certainly don’t know how to get re-elected. But it is also clear that they really don’t know what to do about the economy either.

    After three years of utter, dismal, disastrous, humiliating, failure for the ECB/Commission/EPP/Creditor State consensus to improve the European economic situation might it not be time to accept that maybe, just maybe, they do not understand the problem?

  10. My apologies if this has already been posted (and its only slightly related) but this article in Spiegel on the Netherlands is interesting.

    http://www.spiegel.de/international/europe/economic-crisis-hits-the-netherlands-a-891919.html

    No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.

    How sad for Mark Rutte’s Calvinists for Commonsense Fiscal Consolidation that his all his confidence summoning cuts seem inadequate to the task of a financial crisis.

    Now why were the creditor nations so keen on Ireland leaving no bondholder left unpaid I wonder?

  11. Shay, isnt Kevin O Rourkes take quite different than yours though? (Or how I read it, so apologees if Im wrong)
    KOR seems to be arguing incompetence (or perhaps ideology) is to blame..whereas you argume it is primarily class interests? (Or am I missing something)

  12. There is a free lunch at the event and it is likely a costly one with so many participants coming from distant climes.

    Maybe it will be worth it or maybe not. It always helps when someone else pays.

    It’s interesting to observe what happens when something is perceived as free by policy makers e.g. 40 years of EU farm welfare – – note I said ‘perceived.’

    In 2012, the average direct payment per farm was €20,534 comprisinga shocking 81% of farm income; only one third of farms are economically viable; 27% of farmers have an off-farm job and there are more Irish farmers over 80 years of age than under 35.

    According to Savills, the estate agents, in 2007, in France, each field changed hands at least once every 70 years, but in Ireland on average a field changed hands every 555 years! Total annual turnover in Ireland was less than 0.2% of the total acreage. Countries with sales restrictions, such as France, had the cheapest land.

    Some countries such as France give sales priority to young farmers but who would risk the hullabaloo that such a proposal would trigger in Ireland??

    PR Guy has wondered about the use of the ‘cutting edge’ adjective.
    It’s part of the Irish spoofers’ lexicon that also includes ‘world class’ and ‘centre of excellence’ – – the latter is usually a classic case of putting the cart before the horse.

    Remember those halcyon days when Mary Harney twittered about Ireland Inc and the Promised Land that was really a desert?

    The term ‘high quality’ jobs was introduced to the official lexicon when Micheál Martin, currently Fianna Fáil leader, was minister for enterprise. He had a weakness for vacuous superlatives and clichés.

    He once used ‘cutting edge’ and ‘state of the art’ in the same sentence. The current incumbent, Richard Bruton, has carried on the tradition.

    Skirting by the bog of austerity, there is an interesting example of the difficulty of finding the magic formula for sustainable growth while Paddy Muggins, the Irish taxpayer, picks up the lunch tab.

    Elan, once the most valuable Irish company, the world’s 20th biggest pharmaceutical firm with a global payroll of 1,700, has been reduced to a cash/royalty shell with about 100 employees. It has tax losses of about $4bn and its disposals have brought bonanzas to the shareholders. What about Paddy Muggins’ investments?

    Elan: Most valuable Irish firm becomes cash/ royalty shell

    Wonder if Bruton and the other devotees of the failed smart economy strategy will learn any lessons? That is one stupid question!

    It’s over 3 years since 28 ‘people of standing’ – – members of the Innovation Taskforce, signed off on a document which suggested that 235,000 net high tech jobs could be created in Ireland in a decade. What pearls of wisdom are they now dispensing, at almost a third through the timeframe?

  13. TK Whitaker’s 1958 paper “Economic Development” opened with an observation. “The greatest fault lies in pursuing a policy after it has proven to be unsuitable or ineffective”.
    Quite.

  14. It is to be hoped that the “free luncheon” will be “cutting edge” (in terms of representing Irish university cuisine for the distinguished visitors).

    The PEW survey makes for a fascinating read.

    http://www.pewglobal.org/2013/05/13/the-new-sick-man-of-europe-the-european-union/

    There is ammunition in it for participants on all sides of the debate.

    The message that I draw from it is that European voters are, in general, disillusioned, most with their own leaders and then the EU (apart from German voters who seem to be living in a cocoon carefully nurtured by Merkel) but that their solution is not what Krugman et al recommend i.e. European voters want (i) cuts in expenditure funded by taxpayers and (ii) to retain the euro.

    The debate comes back to the issue of what constitutes a free lunch. The current charade in relation to negotiation of Croke Park III illustrates that hidden dialogue beneath the public one. Taxpayers now wish to drill down to establish how and where their money is being spent. Those expending it are increasingly aware of this reality, whether they admit to it or not.

  15. @rf

    Shay, isnt Kevin O Rourkes take quite different than yours though? (Or how I read it, so apologees if Im wrong)
    KOR seems to be arguing incompetence (or perhaps ideology) is to blame..whereas you argue it is primarily class interests? (Or am I missing something)

    I do not have a good answer to that but for me the influence of class interest fits in better with how the Eurozone elites have dealt with the European component of the global financial crisis then mere incompetence. They can not change their interests and therefore they will not change their minds – evidence be damned.

    Now there are obviously some people (Rehn, Trichet, DG-ECFIN) for whom stolid incompetence and ignorance is enough of an explanation for staying the course with strong determination but looking at the gallery of rogues at the forefront of European policy making (the ECB, Buti, Sarkozy, Merkel, Monti) class interests seem like a better unifying factor even if the class of technocrats, center right politicians and bankers is a novel one (look at our own John Bruton though, flowing effortlessly between these roles).

    I do not think that in the case of neoliberalism there is any difference between the ideology and the perceived class interests of its proponents.

  16. Class + incompetence = Battle of the somme. Common enough
    Austerity = iraq war
    Where
    Growth = WMD

  17. On the matter of identifying candidates class interest Brian Wood’s Senior mentioned the University of Bocconi recently – it is a highly regarded private university in Italy with an influential business school. I think the Krugmanator mentioned it in his recent “Kicking austerity’s corpse a few times to make sure its dead.” article on austerity in the NYT review of books.

    Anyway Bocconi produced Alberto Alesina, Mario Monti and most interestingly of all, Jörg Asmussen.

    Small world, eh?

  18. Substantial article on the impact of austerity on health.

    “‘Recessions can hurt, but austerity kills'”

    Interview with author of a new book: “The Body Economic: Why Austerity Kills” by David Stuckler, Sanjay Basu

    ‘Countries such as those in Scandinavia that took what Stuckler terms “wise, cost-effective and affordable steps that can make a difference” have seen the impact reflected not just in improved health statistics, but also in their economies. Which is why, occasionally, the austerity argument angers him.

    ‘”If there actually was a fundamental trade-off between the health of the economy and public health, maybe there would be a real debate to be had,” he says. “But there isn’t. Investing in programmes that protect the nation’s health is not only the right thing to do, it can help spur economic recovery. We show that. The data shows that.”

    ‘Drilling into the data shows the fiscal multiplier – the economic bang, if you like, per government buck spent, or cost per buck cut – for spending on healthcare, education and social protection is many times greater than that for money ploughed into, for example, bank bailouts or defence spending.’

    http://www.guardian.co.uk/society/2013/may/15/recessions-hurt-but-austerity-kills

  19. @rf

    I think the class based analysis of the unnecessary prolongation of the European component of the global financial crisis is also gaining ground in the mainstream, witness this “elite interests foiled my recovery” musing from Krugman (about a Noah Smith post.

    @Paul Krugman, warrior for truth

    Elites, he <Noah Smith> argues, see economic distress as an opportunity to push through “reforms” — which basically means changes they want, which may or may not actually serve the interest of promoting economic growth — and oppose any policies that might mitigate crisis without the need for these changes:

    I think many of this blogs contributors and most of the European technocratic elite were far more concerned with using the global financial crisis (a huge market failure, enabled by various neoliberal “reforms”) and Ireland’s little piece of it as an opportunity to pursue, guess what, neoliberal market reforms.

    Did I mentioned the political right disgusts me with its opportunism, dishonesty and indifference to human suffering?

  20. Last post had formatting error.

    @rf

    I think the class based analysis of the unnecessary prolongation of the European component of the global financial crisis is also gaining ground in the mainstream, witness this “elite interests foiled my recovery” musing from Krugman (about a Noah Smith post.)

    @Paul Krugman, reluctantly drafted into the class war

    Elites, he <Noah Smith> argues, see economic distress as an opportunity to push through “reforms” — which basically means changes they want, which may or may not actually serve the interest of promoting economic growth — and oppose any policies that might mitigate crisis without the need for these changes:

    Years ago Ezra Klien talked about this, except in a disturbingly positive way.

    I think many of this blogs contributors and most of the European technocratic elite were far more concerned with using the global financial crisis (a huge market failure, enabled by various neoliberal “reforms”) and Ireland’s little piece of it as an opportunity to pursue, guess what, neoliberal market reforms.

    Did I mentioned the political right disgusts me with its opportunism, dishonesty and indifference to human suffering?

  21. Yeah that all seems reasonable, I think I agree more or less with minor difference of emphasis on various parts.
    I def agree with your take on those pushing ‘reform’. Really missing the forest for the trees, at best

  22. “Did I mentioned the political right disgusts me with its opportunism, dishonesty and indifference to human suffering?”

    You did!

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