James Heckman’s work on human capital investment has been prolific over the last number of years and has major implications for a wide range of policy areas. His papers are rarely easy reading, drawing from detailed structural econometric models that he has developed over several years with colleagues. A new website outlines his basic ideas in short and accessible videos and documents (h/t Colm Harmon who is one of a number of colleagues in UCD working on this area in Ireland). This is as close as it gets to a clear answer to a major question in Economics and is essential for any policy people who read this blog across fields such as health, education, social policy, criminal justice and a range of other fields. Heckman has emphasised rigorously designed and evaluated early childhood interventions that promote a broad range of skills and personal development.
Robert Merton will give the RIA Hamilton Lecture on October 15 at TCD on the topic
Observations on Mathematical Finance in the Practice of Finance
The event is free but you need to book a spot: the details are here.
The quarterly national accounts for 2010:Q2 have been released. They show seasonally adjusted GDP declining 1.2% quarter over quarter and seasonally adjusted GNP down 0.3%. Year over year, real GDP is down 1.8 percent and GNP is down 4.1 percent. Nominal GDP is down 3.6 percent year over year while nominal GNP is down 6.2 percent over the same period.
There were also revisions to the first quarter figures. Seasonally adjusted quarter on quarter growth in GDP was revised down from 2.7 percent to 2.2 percent, while the decline in GNP was revised from 0.5 percent to 1.2 percent.
It is now pretty clear that the government and Anglo management are shaping up to do a buyback deal on Anglo’s outstanding €2.5 billion in subordinated debt after the original CIFS guarantee expires at the end of the month.
Here’s my question. Given that
(a) The terms of these securities allow for the possibility of them not being paid back if the bank is insolvent (this is why banks get to count these securities as part of their regulatory capital).
(b) None of this debt matures until 2014 at the earliest (see page 56 of Anglo’s interim report).
(c) These bonds will no longer be covered by a state guarantee.
why would we do this? Why not let the bonds sit as an obligation of the Asset Recovery Bank, let it go about its business of recovering value from assets, and then let the next government make a decision in 2014 as to whether we want to put in taxpayer funds to pay off these bonds?
Those of you who want to comment that you think a bond buyback is a good idea might help clarify things a bit by explaining what type of deal you would offer (i.e. how much of our money you’d give the hedge funds and other distressed debt outfits that now own these bonds.)