In Billy Wilder’s classic movie “One, Two, Three” James Cagney plays a hard-charging marketing executive coaching his clueless son-in-law on the correct answers to give during an important job interview. The son-in-law is told to describe the current international situation as “serious, but not hopeless,” but during the job interview he mangles this and describes it as “hopeless, but not serious.” The interviewer is impressed with his originality and insight. The same mangled answer might apply to the current Irish economic situation: hopeless, but not serious. The corner has been turned. The Irish economy will now experience a slow, steady recovery as the IMF-guided programme unwinds the deep structural flaws that developed in the Irish economy during the credit-fueled bubble of 2002-2007.
Category: EMU
Barry Eichengreen provides a reading list here.
Over a VoxEU, Stanley Black suggests a way of breaking the EMU without breaking the Euro.
Was it a mistake for the Irish government to use a clever ploy to “park” Nama bonds at the ECB? Was it the non-standard use of the ECB’s temporary liquidity facility as a source of long-term bank sector funding that led the ECB this week to demand an Irish debt restructuring? Or should the ECB have accepted that they needed to provide long-term risk capital to the Irish banking sector in this non-standard way, as part of their role as euro-area lender of last resort?
Gavyn Davies has a good piece in the FT today. Some may respond that the deeper cooperation he calls for is politically impossible, but if that is the case then we have a real problem.