Categories
Bailout

Leogate and Green Jersey Economics

Throughout Ireland’s economic crisis, our government has adopted policies based on overly optimistic assumptions. The language of corners turned, manageable problems and final estimates has dominated communication of these policies. And throughout this period, the approach of the Serious People in Leinster House and at institutions such as the Irish Times has been to attack those who question these overly optimistic assumptions as unpatriotic folk who are talking the economy down.

Against that background, this green jersey editorial from the Irish Times on Leo Varadkar’s comments is deeply depressing. It adopts Michael Martin’s ridiculous line about “loose talk costing jobs” as if serious businessmen thinking about creating jobs were not already aware of the likelihood of a further EU-IMF deal for Ireland. It makes claims about sovereign bond markets that serve to illustrate that the writer clearly doesn’t understand these markets. If Leo’s comments created “doubt and uncertainty in financial markets among those that most matter, the bond investors from whom the State hopes to borrow again next year” then how come sovereign bond yields didn’t budge?

Then we get this gem:

As the euro zone debt crisis has unfolded, Ireland has lost credibility and sustained major reputational damage at various levels – government, public service, banking and business – which the Fine Gael Labour Government is attempting to regain and restore. This was best exemplified last November when talks about an EU-IMF bailout were under consideration while Fianna Fáil ministers issued public denials. It will take some time to re-establish trust in what governments say and confidence they can deliver on commitments made.

So Fianna Fail lost credibility by lying about the scale of our problems and ultimately denying things that everyone knew were true. And the IT’s reaction to this loss of credibility is to condemn a minister who makes a statement everyone knows to be true and to encourage the government to repeat a mantra about “no second deal” that will, in time, be just as discredited as the previous government’s approach.

The Irish Times may not wish to hear government ministers admitting that, despite best efforts, we may not be able to get back to the bond market. However, the “everything’s going to be fine” approach runs the risk of being exposed as just as false as the corner-turning rhetoric of the previous government. And it hardly helps with negotiating better terms on the current deal.

Categories
Banking Crisis

Free Speech and the Green Jersey

Last night’s Week in Politics Show on RTE provided a fascinating illustration of how bizarre the debate over the National Asset Management Agency has become.

Presenter Sean O’Rourke introduced a report on the Dublin Economics Workshop in Kenmare (18 minutes in) by quoting Denis O’Brien’s comments about academic economists spending all of their time twittering and taking out ads in the newspaper. The report itself showed Morgan Kelly criticising NAMA on the grounds that it relied on extreme upper tail optimistic assumptions and that it would still leave them undercapitalised.

The report then showed Pat McArdle, former economist with Ulster Bank, responding to Morgan Kelly as follows (22 minutes in):

Freedom of speech is fine and we’re all in favour of it. But there are sometimes when you have to temper things in the greater interest.

Following the report, presenter Sean O’Rourke effectively endorsed this line of reasoning, immediately putting the following question to Pat Rabbitte: (24 minutes in)

Is there something to be said, and this is a theme that Garret FitzGerald has touched on in the last couple of weeks in his column, that there may be a case for people to pull on the green jersey as it were, set aside some of their more extreme doubts about NAMA and just see it through and give it a fair wind?

So this is what it’s come to. People can object to the government’s policies on the budget or health or education or whatever but objections to NAMA—an initiative that involves spending up to €54 billion of public money—must be condemned as unpatriotic.

In a supposedly open and democratic republic, this idea—that you should refrain from objecting to a government’s economic policies because this criticism runs counter to the national interest—would normally be considered morally repugnant. It says a lot about this country that this opinion is now being regularly aired by mainstream commentators in our print and broadcast media.

The programme had plenty of other stomach-churning stuff such as McArdle’s claims that Kelly had just dreamt up his criticisms of NAMA in the last week, junior Minister Dick Roche’s claims that Morgan was being “brittle” in response to McCardle, followed up by bizarre stuff about how this put him in mind of the need for more one-armed economists. And best of all, when Pat Rabbitte failed to agree to pull on the green jersey, O’Rourke told him:

But coming back to NAMA, they’re operating on the best available advice from say the head of the Department of Finance, from experts in Europe, from the European Central Bank, from the new Governor of the Central Bank.

Ah yes, the European Central Bank and the new Governor. Sean must have forgotten about Bo Lundgren and the IMF.