McHale steps down as IFAC Chair

John was the first chair of Ireland’s fiscal advisory council, and he can take a share of the credit for the development of IFAC in terms of its analytical capability as well as the organisation supporting the Council members as his term ends. The Irish Times carries the details here.

By Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

14 replies on “McHale steps down as IFAC Chair”

Pat Lam is delighted. Strong rumour that McHale has signed on with Aki and Dillane to bring some expert ‘space’ to Connacht’s push for European Glory. Spose full-back might be his best position now that the shackles of Angela’s Corset are to be set loose!

@John McHale

Spose there might also be a chance now for a briefing paper on what you, personally, really think of applying the SGP to a region which has been financially raided for 40-5o% of its GNP. Or to a larger area with regions at different stages of socioeconomic development? Looking forward to it.

Professor McHale deserves enormous credit for taking on this role in the first place and succeeding, against all the odds, in making IFAC an important, and permanent, feature of the budgetary process. With regard to the latter, the system is still stuck in an out of date structure but the pressures for modernisation are such that it must catch up. It is no longer a question of if but when.

John has done an excellent job at building up the technical capacity of the Council as well as being a strong communicator of the Council’s messages.

He is leaving behind a body which is highly respected despite its relative youth. I wish him well in whatever role comes next.

On one level I am very sorry that John McHale has decided not to seek reappointment to the IFAC. On another, I think it’s a great tribute to the man himself.

What I recall from the early ‘days of crisis’ are his erudite contributions and interpretations within the mainstream media of the various manifestations of that crisis, and his professional integrity in that time-honoured tradition of the scientist speaking ‘truth to power’.

So his departure is to be regretted, as his presence as Chair of IFAC operated in all of our interests. Irrespective of how the government-of-the-day received the advice of IFAC, it’s credibility was never open to challenge. What John McHale and his colleagues ensured was that their advice stood apart from any immediate political considerations. They fed into a system of policy-decision-making, yet never sought to dominate it by their professional views or the logic of economists’ assumptions.

His decision to retire, and the stated reason for it, thus fit with ideal of the ‘honest broker’ model of providing expert advice to policy-makers. To paraphrase the IT report, John McHale says he wants to now leave the door open to new ideas and creative approaches after five years at the helm of IFAC. That’s laudable, to say the least of it.

It all serves to indicate his personal integrity. Plus an awareness that hanging around too long within the citadels of power might inevitably lead to a form of ‘soft power’ ”corruption”. Not the ‘brown envelope’ type – more that of assuming intellectual superiority and knowing better than the typical mass of ‘proles’ about how the world should be run sort-of–thing. It appears that Prof. McHale wised up to that course of vulnerability from the outset and would have no truck with it.

As an ordinary citizen, my thanks to him for all his work in the interests of all of us among the wider public. Best wishes to him also in his future career.

His contributions on this site before he took the job were usually insightful. The global macro situation now is far worse than it was in 2011. The UK was still coherent 5 years ago. Very tricky territory for economists when the time value of money is suspended.

I would like to congratulate John McHale on his excellent stewardship of the IFAC. They have shown themselves to be independent and have continued to focus on the need to reduce the National Debt at a time few are focused on it.
I remember having some verbal jousting pre 2011 with John when he was advocating that Ireland should not default on our national debt.

At that time interest rate norms suggested anything over 120% debt to GDP was unsustainable and I couldn’t see how Ireland could sustain such increasing debt levels. I was also still disgusted by what is known as the ‘odious’ element of it (Privitisation of Private bank debt)

Fairly soon after interest rates fell toward 0 and haven’t moved much since.
Thus making higher debts sustainable until if/when interest rates rise again.

His “hang in there baby” advise proved largely correct so far and the IFAC calls to use the breathing space to pay down debt showed his sincerity. Even though we are still using 8-10% of our tax receipts to pay interest on debt it is probably a better outcome than the financial correction that would have resulted in a default.


Courtesy Eurointelligence.

10y spreads

Previous day Yesterday This Morning
France 0.277 0.276 0.274
Italy 1.368 1.350 1.349
Spain 1.082 1.056 1.052
Portugal 3.146 3.179 3.178
Greece 8.681 8.598 8.63
Ireland 0.458 0.456 0.458
Belgium 0.221 0.222 0.220
Bund Yield 0.026 0.028 0.029

“Even though we are still using 8-10% of our tax receipts to pay interest on debt it is probably a better outcome than the financial correction that would have resulted in a default.”

Better outcome? Absolutely not! Those financial institutions ran ‘amok’ – courtesy of the high mis-management (by their respective top managements) of their clients and customers monies. And when those institutions began to fail (or indeed did fail) the hapless taxpayer was volunteered to divert part of their disposable incomes to ‘dig-out’ the narcissistic sociopaths then in charge of those private, commercial financial entities. And God help the taxpayers – some of those obscene folk are still there or have been simply substituted. Theft it was; theft it is and theft it will be. If its anything else, then can someones please explain why not.

You rob a bank at gunpoint – the insurance will probably make up part of the loss. You bankrupt your bank through managerial incompetence – then you become elegible to unconditionally pickpocket your customers, their kin and any other unfortunate you can mug to make up part of your loss. That’s nice, that is. Only its not. Thousands of innocent folk have been seriously harmed. And will continue to be harmed. And that a ‘better outcome’. Like f**k it is!

The Euro was designed without any of the apparatus to manage a financial crash. No deposit insce, no bank recap, no least cost resolution no lender of last resort. Gan sult, gan seod , gan sport gan spionnadh. Is breoite mise. That cost Ireland around 60bn.

The core memes of the Euro worship debt.

So McHale may or may not have been right. Draghi brought out the put which got yields back down to whiskey tango foxtrot . The point is there is no Sov margin for the next crash.

And debt is out of control. So it is very like the French revolution. Too early to say.

@seafoid Hence the reason I included 2 short but important words. “His “hang in there baby” advise proved largely correct SO FAR”

@ Brianwoods
I take your point and i also think a complete crash would also have been an opportunity for certain sacred cows to be slain but the power the owners of national debt have over Nation states which default should not go unnoticed.

The Fiscal Responsibility Act, and IFAC came as part of the bailout conditions. Since we exited the bailout, it is hard to see why we should respect any of the terms attached. If we have laws that we cannot repeal, because someone else isn’t happy, then we have a problem with sovereignty. The lesson from across the Irish Sea seems pretty clear in that regard.

This body is supposed to provide ‘advice’ to us. Now I am happy to be advised by my doctor to stop smoking but that is is far as it goes. If I choose to continue, the consequences will be mine. If my doctor attempts to legislate to stop me smoking, then that is tyranny. I think we can share many of @DOCM’s health concerns without necessarily accepting his prescription. @Paul Hunt regularly targets the national culture of gate-keeping and vested interests which causes Nations to Fail..

I have listened with interest to what John had to say, before and during his time on the Council. He certainly came across as expert, hard-working and sincere. It would be interesting to know what sort of ‘new voices’ he would like to see.

The current voices seem pretty tightly connected to IMF, OECD and Central Banks. The implication is that our government needs to sit up straight in their desks and listen to teacher. No more of that oul juvenile Ballymash please.

I am not questioning the personal integrity or the professionalism of the incumbents, who are all obviously high achievers. There is a legitimate concern, however, about the way in which the economics profession, and economics departments, appear to have been drawn into a neo-liberal agenda over many decades.

Gate-keeping and vested interests don’t just exist in Ireland, and the brown bag is gone out of style. The destruction of industrial jobs in Europe, and the failure to invest in capital development, is not any sort of accident. It is a planned and deliberate upward transfer of wealth, fuelled by a grossly irresponsible and unsustainable explosion in private credit.

As @seafoid points highlights yet again, sovereign bond yields have been ‘fiddled’ by Draghi and the ECB and are therefore meaningless.. This unprecedented, market-distorting manoeuvre is coming under increasing fire from the German economic community.

Of course, Draghi knew it is unsustainable, but the reality is that he had no choice in a crisis. In other words, he had to kick the can down the road, and so postpone the day of reckoning.

SuperMario could have resigned of course, but he didn’t. Looks like this one is going to be played out to the bitter end.

Thank you John and best of luck in all your endeavours.

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