Paul Sweeney in The Irish Times here.
Author: The Irish Economy
The CSO have published the National Income and Expenditure Accounts for 2019 including modified Gross National Income (GNI*). They can be accessed here. The Q1 2020 Quarterly National Accounts in International Accounts are available at the same link. The International Accounts include an estimate of the modified Current Acount, CA*.
Two information notes were also published: one on the impact on COVID-19 on the Quarterly National Accounts and one on estimates of overseas tourism expenditure across various CSO publications. Again available at the above link.
The Fiscal Council has published its first Long-Term Sustainability Report. The full report, a summary and other accompanying material is available here.
From Saturday’s The Irish Times, David McWilliams writes:
Luckily for us, there is no financial constraint for a craic bailout. The ECB has set interest rates to zero. The NTMA borrowed billions this week at negative interest rates. This means that money is free.
The State needs to spend when the private sector is saving, which is what is happening now. The country should issue a perpetual bond, as George Soros is advising the EU to do, or a 100-year bond as Austria did two weeks ago, to cover spending.
At zero interest rates and with the ECB ready to buy whatever the government issues, fiscal policy becomes monetary policy. This means the Government just issues IOUs, gets the money and can spend the money whatever way it chooses. A craic bailout should be first on the list.
And in the Sunday Business Post, Aidan Regan proposes:
Here’s how it works. The government issues a 20 year fixed interest rate bond that amounts to the equivalent of 10 per cent of gross national income. This equals around €30 billion. The Irish state could issue this type of long term bond tomorrow at effectively zero per cent. If you adjust for inflation, it would mean that the markets will pay the government to do it.
Taking this sum of money, the government would create a rigorously independent body to oversee the creation of a new national wealth fund. The board of the fund would employ various asset management experts to invest the money on behalf of the state. They would be mandated to generate a capital return of anything between 4-8 per cent per annum.
Basic mathematics would suggest that the probability of the Irish state generating a return greater than 0 is high. And anything above 0 means the state can pay off the debt while creating wealth and value for its citizens. If the compound interest return to the people’s wealth fund was 5 per cent, the Irish state could repay the debt issued to create the fund in less than 15 years. After this point, all capital returns go back to Irish society.
But more importantly, the state now owns the capital assets that it bought to generate the return. The Irish state has gone from being a debtor to a wealth owner. It has created value. If Apple or Amazon stocks go up, then so does the wealth of Irish citizens. This is because they now own a part of these profitable tech firms through their national wealth fund.
Patrick Honhan in The Irish Times today. Based on presentation to the Royal Irish Academy earlier in the week (slides; video).