The IMF and Fears of an Irish Default

The response to Brian Lucey’s article has been quite astonishing (over 300 comments at last count!).   Although clearly we don’t all agree, the debate has been enlightening – and entertaining – thanks to Brian and the many excellent participants on this site.

But with all the excitement over default, I think we passed over too quickly the important set of IMF fiscal policy papers that Philip linked to on Wednesday.   The papers provide a useful analytical perspective on Ireland’s fiscal challenge, which could frame a more productive discussion on fiscal (and indeed banking) policy.

Continue reading “The IMF and Fears of an Irish Default”

Poolbeg: New spin

In yesterday’s Prime Time, Paul Cunningham revealed that there is a break clause in the contract between DCC and Covanta. The write-up is here, and it is about as informative as the broadcast.

Under certain, unspecified conditions, either party is free to walk away tomorrow. Not having seen the contract, I can only guess that a ministerial campaign against government policy is not among those conditions.

Does this change the calculus of the desirability of incineration of Poolbeg? Two arguments have not changed. We’re still in breach of the landfill directive, and the alternatives to incineration are expensive and will take a long time to plan and build. Two other arguments would change their importance. We may need to pay less compensation to Covanta, but the signal “Ireland: Closed for business” would be louder.

It may of course be that both parties have invested so much already that they have no desire to walk away.

Cue the green trolls.

UPDATE: The Dublin City Council says that RTE’s report is incorrect. IWMA says the taxpayer will pay 2 billion euro for the incinerator.

Lucey on Anglo Loss Sharing

Brian Lucey makes the case for senior bond holders to bear a share of the Anglo losses post-September.   You can access his Irish Times opinion piece here.

Lex on Nama

The FT’s Lex column gives its pithy assessment of Nama.

A flavour:

Nama is an odd creature: part debt collection agency, part property developer. As well as toxic loans, it may end up with a portfolio of property which was collateral for the banks’ lending binge. It was meant to fix the broken banks, convince taxpayers they might be repaid and reassure the markets the banks’ liabilities would be met in full. Facing in three directions, it has not appeared convincing in any: slow, bureaucratic, initially indecisive, almost excessively transparent (every toxic loan is assessed individually).

It concludes a bit more hopefully.

IMF: The Fiscal Situation in Advanced Economies

The IMF has released three major studies on the fiscal situation in advanced economies.

The summary is here, while the papers are available at: