I’ve been very busy because of personal and professional commitments over the past few weeks and haven’t had any time for blogging. I’m planning to post some stuff soon (starting with comments on the promissory note deal). Here‘s a post that discusses a talk I gave on Friday at a Chicago Booth workshop called “How Costly Would a Euro Exit Be?”
Today, I’m giving a presentation titled “Ireland’s Bank Debt and What Can be Done About It” at the IIEA’s conference Exiting the Crisis. The slides from my talk are available here as a PowerPoint slideshow and here in PDF.
The presentation is based on this earlier blog post, though I think that post failed to emphasise enough that I prefer a restructuring of the promissory notes within the current ELA arrangement to replacing ELA with a loan from the ESM.
The slides were prepared prior to today’s EU banking announcement but are, if anything, more rather than less relevant as the summit did actually make some progress towards EU risk-sharing in relation to bank recapitalisation costs.
Despite this morning’s euphoric claims from Enda Kenny and Eamon Gilmore that this is a “seismic change” and a “deal changer”, I would recommend serious caution. Ireland’s bank debt is a complex sui generis issue and its resolution will not fit easily into the tools the EU is now developing to deal with banks elsewhere. There is lots of negotiating still to be done and premature celebrations can be counter-productive.
Yesterday, I gave a presentation on “Target2 and the Euro Crisis” at the Bank of England’s Centre for Central Banking Studies. The slides from my talk are available here as a PowerPoint slideshow and here in PDF. Probably needless to say but the content of the presentations reflects only my own views and its presentation at the Bank of England does not imply their endorsement.
I stressed that while I believe the fiscal parameters specified in the Treaty are overly tight, and will lead to fiscal contraction in Europe even in countries that don’t need to make such adjustments, there are strong arguments for Ireland to sign up for the Treaty and then work to promote growth-enhancing policies after we have signed up.
I’m guessing Stephen Collins would think that I’ve still left myself “open to misinterpretation” with these comments but if Labour had wanted someone to tell them the treaty has no flaws, I’m guessing they would have asked someone else.
I will post more detailed comments about various aspects of the treaty in the coming weeks.
I stressed the need to boost aggregate demand in the core countries as a key requirement for solving the debt problems facing the periphery. It is interesting to see the developments over the past few days in which many senior European politicians have begun to stress the need for pro-growth policies. As I stressed in this Vox-EU article from February, it is still not too late to make the Fiscal Compact less restrictive.
I gave a talk this morning on the outlook for the Irish economy to IBEC‘s national council. You can find the slides here as a PowerPoint slide show and here as a grimier PDF. Some charts were borrowed from NTMA’s recent (very green!) presentation and also one from a Citi report. Imitation, flattery and all that.
I don’t claim to have the time or expertise to do short-term forecasting of the Irish economy but I’ll note that one data point that is more positive than I had assumed when giving the talk this morning was the increase in seasonally-adjusted employment in the QNHS release.