tag:blogger.com,1999:blog-2826531655042170344.post3669915362321601934..comments2024-03-26T11:29:52.986+00:00Comments on Economic Incentives: Banking on bank analysisSeamushttp://www.blogger.com/profile/15679299530222667673noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2826531655042170344.post-24089550292182947532011-04-04T23:19:00.342+01:002011-04-04T23:19:00.342+01:00Hi Stephen,
Yes, the conclusion does depend on th...Hi Stephen,<br /><br />Yes, the conclusion does depend on that. I would view the terminality of the issue in terms of our ability to avoid a sovereign default. Such an event would be the end of the current stage of the crisis and the beginning of a completely new phase.<br /><br />It remains a bit of guesswork at this stage but I think it is becoming clear that the banking debt is not going to be as high as we might have thought.<br /><br />The MoU of the EU/IMF deal allowed for a maximum total debt from the banking crisis of around €60 billion. The final figure looks like it will come in at more than €15 billion below that.<br /><br />This is all a crazy waste of our resources. A €42 billion endowment fund would easily fund the Third-Level sector until my retirement and beyond.Seamushttps://www.blogger.com/profile/15679299530222667673noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-41871513322091484782011-04-04T23:09:55.568+01:002011-04-04T23:09:55.568+01:00Hi Tumbrel,
I agree. The emphasis here was on th...Hi Tumbrel,<br /><br />I agree. The emphasis here was on the banking strategy. Outside of some wooly commitments in the Programme for Government we do not have much to determine how successful the fiscal strategy will be.<br /><br />As a pointed out <a href="http://economic-incentives.blogspot.com/2011/03/swimming-in-debt-of-our-own-making.html" rel="nofollow">elsewhere</a> we are projected to accumulate €95 billion of deficit-related debt over the 2008-2013 period. And even then the annual deficit will still be running at around €10 billion per annum. This must addressed and hopefully after the recent banking furore has eased some of the attention can be divided to this vital issue.<br /><br />I looked at the cost versus borrowing issue <a href="http://economic-incentives.blogspot.com/2011/03/stress-and-sustainability.html" rel="nofollow">here</a>. The cost of the recapitalisation to the State will be somewhere around €63 billion. Swiping €21 billion from the NPRF will leave a debt legacy of around €42 billion.Seamushttps://www.blogger.com/profile/15679299530222667673noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-86365917561649604022011-04-04T21:05:42.478+01:002011-04-04T21:05:42.478+01:00Excellent post Seamus, but doesn't a lot of wh...Excellent post Seamus, but doesn't a lot of what you're saying rely on an operational definition of 'terminal'?Stephen Kinsellahttps://www.blogger.com/profile/02467967365815026744noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-37018118436438590562011-04-04T20:44:13.709+01:002011-04-04T20:44:13.709+01:00Seamus
""But, the evidence now suggests ...Seamus<br />""But, the evidence now suggests that we can get through it using the current strategy. Some people need to realise this and provide alternatives to the strategy rather than simple saying “it can’t work”.""<br /><br />I presume you mean the banking strategy but as you pointed out on another blog, the deficit remains the big issue. There are no proposals to seriously tackle it. Or to tackle it in a way that if equitable and that will have least impact on economic growth. In that overall sense, the current strategy is not working.<br /><br />On your banking analysis, I think you need to make a clearer distinction between the cost to the exchequer of the banking disaster and the borrowing resulting from the cost to the exchequer.Joseph Ryanhttps://www.blogger.com/profile/07581632829548894401noreply@blogger.com