Circles Within Circles

Posted on February 7, 2012 | Leave a comment

This is a paper I wrote in December 2011 for a course in Global Economic Governance, taught be Kemal Dervis and José Antonio Ocampo.

At a global level, the G-20 has tasked the Financial Stability Board (FSB), successor to the Financial Stability Forum (FSF), with pursuing a macro-prudential mandate in close cooperation with the IMF. The EU established in early 2011 a European Systemic Risk Board (ESRB) to pursue a similar mandate at EU level, while the UK is creating a Financial Policy Committee (FPC), on a par with the Monetary Policy Committee, at the Bank of England.

In this paper, I compare and contrast their mandates, capacities, modus operandii, impact to date and perspectives for the future.

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Europe’s Unholy Trinity

Posted on January 31, 2012 | Leave a comment

‘You Can’t Always Get What You Want’ sang the Rolling Stones in 1969. Jagger wasn’t singing about economic policy, but it’s a sentiment felt keenly by policy-makers the world over. They often face difficult choices between conflicting objectives.

Dani Rodrik, political economy professor at Harvard, has described an ‘inescapable trilemma’ at the heart of the world economy: we can have two of democracy, national sovereignty and open markets – but not all three fully and simultaneously.

As Europe’s elite desperately searches for a solution to stave off economic Armageddon, they face a similar trilemma. Technocrats’ assumption of power in Greece and Italy are cases in point. Continue reading →

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Posted in Articles for SIPTU's Liberty, Euro, Ireland

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Dear Blogosphere…

Posted on January 11, 2012 | Leave a comment

To all of you who told me over the years that I’m so full of hot air I should be blogging… this is for you! I finally got around to it.

To take the bare look off it, I’ve posted some initial content – articles from my monthly column in SIPTU’s newspaper ‘Liberty‘.

For giving me the opportunity to write in my own voice, thank you to Jack O’Connor, Frank Connolly, and Scott Millar.

Watch this space.

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Euro Treaty to Save Monetary Union?

Posted on December 12, 2011 | Leave a comment

Writing in this column two months ago, I suggested that Treaty change would be needed to save the Euro. Where once such talk was taboo, it is now clear that we are faced with such constitutional change, irrespective of the UK position. A real fiscal union would involve transfers to those regions for whom a one-size-fits-all monetary policy is inappropriate. What is in prospect is not a fiscal union, however, but an austerity club.

European leaders have finally realized the need for bold reform, but they’ve completely missed the point. The Eurozone crisis is less about members’ debts, and more about their competitiveness. Continue reading →

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Posted in Articles for SIPTU's Liberty, Euro, Uncategorized

Occupy White House

Posted on November 1, 2011 | Leave a comment

When Barack Obama was elected on a wave of euphoria three years ago this month, the US was in the grip of its deepest recession since the 1930’s.

Times were tough, but when the silver-tongued President-elect spoke of hope and change, of America as a place where all things were possible, he spoke to the American dream. People wanted to believe.

After three years of economic pain and political bickering, Americans are angry and frustrated. They have lost faith in their political class. For the first time in living memory the American dream itself is being called into question. People are no longer so sure that if they work hard and save hard, they will be able to provide a secure future for their children. Continue reading →

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Posted in Articles for SIPTU's Liberty, United States

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The Evolution of Global Economic Governance: G7 to G8 to G20

Posted on October 30, 2011 | Leave a comment

First constituted in 1975 as a G-6 meeting of advanced economies’ finance ministers, Canada joined the following year, making it a G-7. Beginning in 1994, G-7 meetings were followed by ‘political’ meetings, to which Russia was invited. Russia became a full member of the G-8 in 1997. It participated in all discussions, bar some that related to financial issues. Until 2003, the G-7 continued to meet separately in advance of the G-8. Continue reading →

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Can the euro be saved?

Posted on September 30, 2011 | Leave a comment

Yes, it can.

The real question is whether there is a coalition of the willing to move beyond rhetoric and do what it takes. A related question is whether those with the power to save the euro have the democratic mandate to do so.

Events this summer laid to rest any remaining doubts that the European monetary model is flawed, and ultimately unsustainable in its current form. 

There is a broadening consensus forming around the need for deeper economic and fiscal integration to steady the ship. ‘Eurobonds’ have been the rallying call of the left as a means of effectively cross-subsidising weaker eurozone members, and there is certainly much of merit in this idea. ‘More Europe’ may be part of the answer. Continue reading →

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Posted in Articles for SIPTU's Liberty, Euro

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Lessons for Ireland from Obama’s Jobs Plan

Posted on September 26, 2011 | Leave a comment

Barack Obama knows that his 2012 re-election chances may hinge on his ability to tackle unemployment which has remained stubbornly above 9%. With the US purse strings in the vice-grip of a US Congress controlled by a Republican Party with a deficit fetish, he knows better than to expect help from this quarter.

If more fiscal stimulus is impossible, whether because of real funding constraints, as in Ireland, or because of purely political constraints, as in the US, then the next best approach is to get more bang from the government buck. It is this concept, formally known as the ‘balanced budget multiplier’, that underpins President Obama’s latest jobs plan. Continue reading →

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Posted in Articles for SIPTU's Liberty, Ireland, Uncategorized, United States

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The Transatlantic Economy’s Summer of Discontent

Posted on August 26, 2011 | Leave a comment

Much of the orthodox analysis of the West’s recent economic travails puts the blame squarely on a failure of political leadership.

Reality requires a more complex narrative.

Yes, the US came inexcusably close to committing hari kari by failing to lift its debt ceiling with a balanced, timely, comprehensive programme for long term fiscal sustainability.

Yes, the European Union struggles to deal with the fallout from the inherent contradictions at the heart of its monetary union.

Certainly, political failure doesn’t help lift the pervading sense of crisis, and the uncertainty it breeds contributes to financial market volatility, but it is market failure, not political failure, that is at the root of our economic malaise.

In short, the West’s growth model is broken. Continue reading →

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Posted in Articles for SIPTU's Liberty, Euro, United States

Is Default the Default Option?

Posted on July 12, 2011 | Leave a comment

Sovereign default is a political choice. There is no specific tipping point where a country’s debt becomes economically unsustainable, and default inevitable.

Market perception of default risk, as measured by the interest rate charged, is determined by a country’s track record in servicing its debts as well as by the size of its debt, the size of its economy, and the rate at which both are growing.

Unlike people, countries never repay their debts; they just roll them over.  In this way, a country can theoretically support a very large national debt, so long as the bond market is willing to lend at a manageable interest rate. Continue reading →

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Posted in Articles for SIPTU's Liberty, Ireland