The lead story on the NYT website asks where the next debt blowup may take place: you can read the article here.
The new scheme is described in this document.
Here‘s a paper on “Containing Systemic Risk” which I submitted to the European Parliament’s Monetary and Economic Affairs Committee in relation to its Monetary Dialogue with ECB President Trichet.
I’m one of a panel of “experts” that briefs the committee. Here‘s a link to the page that contains all the expert papers for this year. Click on 7.12.09 and you’ll see papers by other economists on the topic of systemic risk as well as some interesting papers on the Monetary Exit Strategies.
Writing in today’s Irish Times about the upcoming budget, Pat McArdle states
the first thing to do is to try to disentangle the two crises that confront us, namely, the bailout of the banking system and the budget. The two are inextricably but incorrectly linked in the public mind.
He is highly critical of people who suggest there is any such link and the piece includes the now-standard McArdle swipe at academics who “should know better.”
McArdle’s principle objection is to those who see any link between the €4 billion injected into Anglo Irish Bank this year (and perhaps a similar amount next year) and the €4 billion in tax and spending adjustments scheduled for the upcoming budget.
The government caps the pay of bank Chief Executives but not of their more junior colleagues, leading to AIB’s creation of a new post of “Managing Director”, presumably in an attempt to exploit the loophole. The comedy of errors continues.
Patrick Honohan warns that banks need to be able to offer competitive remuneration packages. But don’t Irish banks need to return to the much more staid banking practices of decades ago, and will have the regulators looking over their shoulders to ensure they do so? It is not clear to me that these institutions will require Goldman Sachs-type globetrotters as CEOs; I suspect there must be many people capable of performing these functions, whose opportunity costs would be well below the level of the cap.
On a tangentially related point, I see from yesterday’s Sunday Tribune that Maurice Manning, as President of the Irish Human Rights Commission, earns a higher salary than the Taoiseach. Much less responsibility, and this salary has to be well above Manning’s opportunity cost (as a former middle-ranking academic and senator). No global competition arguments apply to such political appointments. Definitely something wrong here.