The new bulletin is available here.
Slí Eile asserts that the culture of secrecy is alive and well in policy making in Ireland. Here’s the full essay.
The rest of this post is about a related topic, and the about an irregular commentator to this blog: Pat Swords.
Once upon a time, Pat asked the relevant authorities in Ireland for the benefit-cost analysis that underpins the public investment in wind power in Ireland. This is a perfectly reasonable request, as the public investment is substantial. There are three sources of money: tax revenue, reinvestment of profits by state-owned companies (which could have been paid in dividend to the owners aka the tax payer), and public services obligations (i.e., levies on electricity that are not quite taxes but feel the same way).
Pat’s request was refused, and so started a protracted legal battle, involving the Department of Energy, various other government bodies in Ireland, DG Environment, the European Ombudsperson, and the UN Economic Commission for Europe. There are a number of complications. Pat asked for information that probably should exist but as far as I know does not. Pat requested information under the Aarhus Convention, a UN treaty that was not ratified by Ireland. However, it was ratified by the EU, and Ireland has transposed the corresponding directive. Ireland’s renewable target is similarly derived from EU targets, the justification and even documentation of which leaves much to be desired. Europe part-funded some of the infrastructure that underpins the expansion of renewables. And there are other parts of the Acquis that may pertain to this case.
I’m no lawyer so I will not opine on the likely outcome of the case. I would have used less abrasive language than Pat is wont to. I agree with Pat that the renewables targets are expensive. I fail to understand that there are any benefits from having such a target. I am aware of the long list of wonderful things that are claimed to be benefits of renewable energy. I do not think any of them stacks up.
Most importantly, I think that a democratic government should be open and transparent, and be able to explain how and why it spends our taxes or implements costly regulation. There is often a good reason, or matters may be beyond our control.
If Pat wins this case, the ramifications could be widespread. Renewable energy is surely not the only area in which the Irish government has made dodgy and badly documented decisions. The Aarhus convention only applies, however, to policies that touch the environment.
Here’s the full story. It’s long, complicated, and occasionally intemperate.
Morgan Kelly’s comments (and research paper) last month on mortgage debt restructuring forced the government to come up with an expert group to recommend solutions to the problem of highly indebted households. The expert group’s report will be presented to Cabinet this week and has helpfully been leaked before that. Today’s Sindo carries a small piece by John Drennan on the content of the ‘Keane’ report that raises more questions than it answers.
In addition to really, seriously, and, like, really, advising people who can do so to pay off their mortgages, the report contains some specific recommendations. From the piece, then:
“Homeowners who can no longer pay the mortgage could negotiate with their lenders to hand back the property but remain on as tenants.
Banks who repossess homes will then lease them to local authorities to deal with housing shortages.
The timeframe to get discharged from bankruptcy to be cut from up to 20 years to just three years.
People facing bankruptcy will be offered a “non-judicial” route — meaning they won’t have to go through the courts in all cases.
The Money Advice and Budgeting Service will be beefed up with hundreds of “front-line” financial advisers who will deal exclusively with distressed mortgage holders.”
The most important part of the report is contained in a rather throwaway sentence–that banks “should engage in debt settlement“. The mechanics of this process (or processes) of debt settlement are very important and should be discussed on this blog and others when the full report is eventually published.
It looks like the group is taking a multi-pronged approach to the problem, which is welcome. It also looks like there is some attempt to deal with the issue of those who will never pay their mortgages via movements to local authority lists. That is not a simple process either, as NamaWineLake has recently shown.
It is important to note the timescales here. Right now, according to the government’s legislative programme, any bill to reform our bankruptcy laws is not even a twinkle in Minister Shatter’s eye, despite his assurances that the personal insolvency legislation would be substantially complete by Christmas or early 2012. That means the lynchpin of the strategy–that people can fail, and fail relatively cheaply through expedited personal insolvency proceedings–will likely not be in place before the summer.
Other questions present themselves, such as: when ‘negotiating’ with a bank on whether to hand the house back and/or rent it back again, will there be a code of conduct for these negotiations? Who will decide?
Third, the super-MABS body may only have an advisory role, rather than an adjudicatory role in the debt resolution process, meaning that the banks retain most of the power in the debt resolution process. Or not. We just don’t know.
The sooner this potentially very important report gets 100% leaked after Cabinet approval, the better.
The lead story in today’s Irish Times carries the headline “Overseas deposits at Irish banks increase significantly”. Well, here’s a chart showing non-resident deposits for the three definitions of the Irish banking sector published by the Central Bank: All Banks, Domestic Group (which excludes IFSC banks) and Covered Banks.
How many of you can see the series increasing significantly at the last data point, in the usual sense of the word, meaning a large increase? It appears the headline reflects the following wording provided by Dan O’Brien (who would not have written the headline): “The small but significant increase in deposits …” In other words, Dan is saying that overseas deposits didn’t rise significantly but the small uptick could potentially be a good sign for the future.
Beyond the headline (sub-editor screwups seem to be very common at newspapers) what’s odd about the story is that even though the latest data on overseas and resident deposits don’t show much more than a continuation of recent trends, the rest of the piece treats the release as though something interesting has happened, including the obligatory crowing from Minister Noonan:
The Central Bank statistics on deposits point to a stabilisation of the Irish financial system. Responding to the developments, Minister for Finance Michael Noonan said the “deposit figures illustrate growing national and international confidence in the Irish banking system. It is particularly impressive that the deposit position of the Irish banks has improved at a time of such global uncertainty.”
He described the cash inflows as an “an endorsement of the Government’s restructuring of the banking system. This restructuring has reduced the cost of the banks to the State and has also seen the banks beginning to access international money markets without the benefit of the State guarantee.”
For those interested in actually seeing what’s going on with deposits (yes I know the chart above is rubbish — I don’t know how other people get decent quality graphs up on this site!) here’s a Powerpoint presentation (also here in grimer PDF) with charts for total deposits, non-resident deposits, resident deposits, and private sector resident deposits. In addition to the Total/Domestic/Covered breakdown, I’ve provided charts for an IFSC/Domestic Non-Covered/Covered breakdown.
I surmise from these charts that the non-resident withdrawals have largely tailed off and that the trend for resident deposits in the covered banks remains a downward one.
This article for the World Financial Review provides a summary and update on the longer paper that I released earlier this year.