Close enough that prominent people are raising the spectre of capital account flight already underway. Today saw a bleak op-ed in the Irish Times by former European Commissioner and GATT/WTO head Peter Sutherland. Now Sutherland arguably got his hair singed on the other side of the crisis as a RBS Director (a position relinquished a few weeks ago). His key point is that a crisis could originate not from directly within the public finances (at least the finances as they were) or from bad loans of banks but from a loss of bank deposits and in that sense very much an emerging market style of crisis —
Author Archives: P O Neill
Serbia knocking on IMF door
It’s reported today from Belgrade that the government of Serbia intends to ask the IMF for a fairly substantial program loan of around $2 billion (which would be a scaling up of a precautionary $500 million facility already in place). One striking thing about the rationale for the request is the speed in deterioration of prospects that it signifies.
Let’s make it G21
Everyone still calls it the G20. But perhaps as a result of all the Spain blogging here 🙂 Spain is again invited to the G20 summit despite not being a formal member; in November in Washington it was apparently done as a wheeze involving the EU seat at the table, but this time the UK as G20 chair has simply invited Spain without going through any technicalities. It’s a sensible decision, but one which highlights the membership threshold problems that any such group faces.
A year is a long time in economic forecasting
The European Commission today released its assessment of the Stability and Growth (optimistic words these days) Programmes of 17 EU member states. The news was in 6 of them, where in addition to issuing “invitations” to the governments to make adjustments, it initiated excessive deficit procedures for them as all had deficits exceeding 3% of GDP in 2008 and couldn’t use the usual excuses for doing so. The six are Ireland, Greece, Spain, France, Latvia, and Malta. There’s a lot of data in the report and nice summaries of the overall growth and fiscal position in each country but a few stand out. Â
What the IMF said about the UK in 2006
It’s interesting to look back at international financial surveillance in the run-up to the global economic crisis and look at which risks were foreseen and by whom. 2006 is highly relevant, because it was the last full year before the crisis (which blew up in late summer 2007). Below is a couple of paragraphs from the IMF’s surveillance report for the UK in 2006 relating to financial sector supervision. Remember this is the system that was created by, and ultimately overseen by, Gordon Brown.
Before the Baltic Tigers
Former PM of Estonia Mart Laar has an interesting opinion piece in the Wall Street Journal today; incidentally his bio notes that besides his stints as PM, he was (is?) an economics advisor to the government of Georgia. Anyway, being an opinion piece, he’s pushing his view that bad government policy decisions have played an underestimated role in the economic crisis, and in an age when we’ve seen private sector leaders shown the door far more quickly than top government officials, he has a point. But his view of what constitutes good government policy seems to be amount to whether or not the country had a flat tax. So for instance, he gives his homeland a relatively good grade for its economic condition, compared to Latvia, but then we get the news from Edward today that Estonia turned in the 2nd worst EU growth performance in Q4 last year.  But glaring in its absence from his list of European liberalisers is Ireland, and there’s a reason for that.
Watching it all on TV
There is a lot to pick over in Gordon Brown’s testimony to the House of Commons Liaison Committee yesterday and in particular one suspects that his account of what the Financial Services Authority did or did not tell the Treasury about problems with the HBOS business model is an issue of which we have not heard the last. But there was another claim deserving of scrutiny because it goes to the heart of the lack of preparedness for the crisis —
Not naming names
European Union Commissioner for Economic and Monetary Affairs, JoaquÃn Almunia, takes to the op-ed page of the Wall Street Journal Europe (what he presumably views as hostile territory) to let everyone know that things will have to change in financial regulation. In what is mostly a review of the toxic asset options, he then offers a partial diagnosis —
Switzerland says Yes
To extension of freedom of movement to the most recent EU accession states, Bulgaria and Romania. The poster in the photo from this TSR 1 story is interesting.  Perhaps the Irish government Yes campaign for the Lisbon 2 referendum should think of ideas like this rather than pictures of politicians, as in the failed first referendum.
An Irish eye on Greece
One of the most noticable factors in 2009 has been an upsurge in “street” militancy in reaction to the global economic crisis. Perhaps policymakers could console themselves that trouble in Iceland and Latvia reflected dire economic circumstances, but the wildcat energy sector strikes in the UK and the Waterford Crystal sit-in in Ireland seem to have caught the powers-that-be (including the union leadership) by surprise. Of course when it comes to street activism, we’re all taking lessons from France and Greece, where it seems to be a natural component of politics. But here’s an interesting perspective from Richard Pine, writing for Irish Times readers about what he sees (and doubtless others agree) as fundamental fissures in Greek society which go beyond a standard cynicism about politics.  From the Irish perspective, I read this in conjunction with a now typical day’s bleak news from Ireland and wonder why the people still seem patient (or is it resigned?) with rapidly worsening circumstances.  But of course Europe is still a Europe of nation-states so it’s not easy to extrapolate from one to what we expect in another. Food for thought.