Cowen accepts some blame for economic crisis

zootroid

From RTE:

Fine Gael's Finance Spokesman Richard Bruton has criticised remarks by the Taoiseach about the collapse of the economy.

In a speech to the North Dublin Chamber of Commerce last night, Brian Cowen admitted that, as Minister for Finance, he should have moved earlier to tackle the property bubble.

Mr Cowen pledged that the Government will never again intervene in the market by offering tax incentives.


He also said there have been 'stunning failures' in corporate governance in the banks.

Mr Bruton described the remarks as a pathetic attempt to pre-empt the findings of the preliminary banking enquiry.

A spokesman for the Taoiseach said he absolutely rejected Mr Bruton's claim.

He also rejected Mr Bruton's claim that he had not acted quickly enough as Minister for Finance to counter the property bubble.

In last night's wide ranging speech, the Taoiseach said the crisis caused untold damage and that those who engaged in fraud will be pursued by the gardaí with determination.

He told his audience that while many would expect him to ascribe the banking crash to international factors alone that was not his view.

There had been domestic vulnerabilities, but at the time, authorities from the International Monetary Fund down had concluded that the Irish economy was robust enough to withstand the shocks.

http://www.rte.ie/news/2010/0514/cownenb.html

So in one instance he accepts there was a property bubble, and that this was helped partly due to the policies of the government, but when criticised by Richard Bruton he doesn't accept any responsibility?

The last part I have put in bold is hilarious, all along the FF party line was to blame international factors (collapse of Lehman brothers), now it seems everyone was blaming international factors, but Cowen knows best and it was partly homegrown too.

I would have a lot more respect for him had he admitted from day 1 that he got it wrong, and also accepted responsibility any time anyone put it to him that he was at fault. But admitting this now does him no favours, especially given how he still acts about it, acting defensive all the time. Had he accepted responsibility from day 1 we might have gotten action that tackled the recession before it crippled us, but instead while he was in denial 250,000 jobs were lost.

Cowen, you're an idiot.

danbohan

zootroid wrote: »

From RTE:



http://www.rte.ie/news/2010/0514/cownenb.html

So in one instance he accepts there was a property bubble, and that this was helped partly due to the policies of the government, but when criticised by Richard Bruton he doesn't accept any responsibility?

The last part I have put in bold is hilarious, all along the FF party line was to blame international factors (collapse of Lehman brothers), now it seems everyone was blaming international factors, but Cowen knows best and it was partly homegrown too.

I would have a lot more respect for him had he admitted from day 1 that he got it wrong, and also accepted responsibility any time anyone put it to him that he was at fault. But admitting this now does him no favours, especially given how he still acts about it, acting defensive all the time. Had he accepted responsibility from day 1 we might have gotten action that tackled the recession before it crippled us, but instead while he was in denial 250,000 jobs were lost.

Cowen, you're an idiot.

looking at this guy {cowen} , you would be scared putting him in charge of a credit union in ballygobackwards let alone the finances of a country . and then we put him in charge of the country , its madness beyond comprehension

kmick

It was always going to end badly when he was promoted "because his time had come" after long service to the party. Its similar to the old civil service thing of time served. Unfortunately time served is not experience/leadership/balls served.

Cowen only had time and its running out.

Liam Byrne

What I love is the part where he says that governments should never again interfere with the property market......

......isn't that precisely what this idiot and his cronies are doing with NAMA in order to avoid a "fire-sale" and keep prices artificially high ?

Also:

I believe that if the unprecedented global financial collapse had not happened, there would have been a soft landing for the Irish economy. However, the overvaluation of properties, and related vulnerabilities within banks, put Ireland in a weaker position when we had to face the global crisis.

I accept that ongoing actions would have been required to address these vulnerabilities even in the absence of the global crisis. To suggest otherwise would, in my opinion, be to bury one's head in the sand.

How, pray tell, would he have even discovered the corruption (proper term for what he calls "vulnerabilities") within Anglo without the "unprecedented global financial collapse" happening ? His party-appointed "regulator" wasn't even looking for them! :mad:

dan_d

http://www.irishtimes.com/newspaper/breaking/2010/0514/breaking8.html
http://www.irishtimes.com/newspaper/finance/2010/0511/1224270129100.html
http://www.irishtimes.com/newspaper/breaking/2010/0513/breaking46.html

Given that the above is just a taste of what Matthew Elderfield has been saying and doing lately, Cowen really has no other option but to hold up his hands and take a portion of the blame.
With a little bit of hope in me, I think "the times, they may be a-changin'".We may have no precedent for charging people for white collar crimes, but now is the time to start setting the precedent. Things have to change - hopefully as a country we've learned a few lessons.( I know I'll be shot down by all the cynics out there, but lads, we've got to change)

Permabear

This post has been deleted.

Kalimah

The advice at the time was that the balance of evidence suggested that the banks had sufficient capital to absorb the likely losses but, that there were vulnerabilities and risks. With hindsight this proved to be fundamentally wrong, however, those were the views expressed at the time.
We now know grave mistakes were made in the judgement of the capital adequacy of the Irish banks and the assessment of future loan losses. It is, however, important to note that no one in the independent authorities ever advised the Government that the capital adequacy was not sufficient or that higher capital adequacy ratios should be imposed.

I love the"mistakes were made" bit. First of all mistakes don't make themselves. They're not some quirk of physics that appear out of nothing. Someone makes them. And in actual fact they were not mistakes. They were all deliberate actions to enrich the FF cronies and golden circle.
And with regard to "wrong advce" why do we pay Cowen 300k plus a year if he can't do the job without "advice". How much were the "advisers"
paid for this "advice". I wonder could I get a job in the area?

It absolutely sickens me to see the country ruined by him and his cronies. If FF had set off a small nuclear device they couldn't have done worse damage. Gilmore was right about economic treason. I've been saying the same thing for a long time.

celticbest

What a suprise to hear that Cowen has actually told some truth for once, he is like a mirror image of Brown in the UK, and I can see him ending up going down the exact same path as him as well.

ardmacha

I'm glad that Cowen is acknowledging what libertarians have always understood: that it was government intervention, and not the alleged "unrestrained free market" that caused the property bubble.

Not so. People do things by themselves. The government didn't help to be sure, but they did not cause the problem. Private sector banks lost all sense of reason and they found willing borrowers.

hardCopy

Liam Byrne wrote: »

What I love is the part where he says that governments should never again interfere with the property market......

......isn't that precisely what this idiot and his cronies are doing with NAMA in order to avoid a "fire-sale" and keep prices artificially high ?

I think we've just signed up for another cycle of boom and bust, the only way NAMA can break even is if property prices re-inflate. Give it another year or two before they start throwing incentives and tax breaks our way. There'll be some kind of relief for builders to complete semi-built estates and grants/reliefs for the all important first-time-buyer.

Permabear

This post has been deleted.

Welease

I'm wondering if the people of Ireland will take the same level of responsibility..

flutered

lack of common sense across the board that was the problem.

Gallagher5

he should have made dis speech last year!!

Scarab80

donegalfella wrote: »

This post has been deleted.

Monetary policy is controlled by the ECB not governments, though the governemnt could have used fiscal policy measures to take some of the heat out of the economy, which they should have done but in fact did the opposite.

As regards liberterian economics, the underpricing of risk in CDO's still shares a portion of blame for the crash, though less in this country than others. There is an assumption of perfect information in liberterian economics which broke down with the creation of complicated derivative financial instruments.

kuntboy

donegalfella wrote: »

This post has been deleted.

Weren't all those booms and busts in the late part of the 19th century due to the "unrestrained free market"? Government intervention will only magnify and postpone the inevitable bust, while giving the illusion of staving it off permanently.

SkepticOne

Liam Byrne wrote: »

What I love is the part where he says that governments should never again interfere with the property market......

......isn't that precisely what this idiot and his cronies are doing with NAMA in order to avoid a "fire-sale" and keep prices artificially high ?

Apparently he said that, were it not for international events, there would have been a "soft landing" in the property market. This could explain why he thinks Nama is a good idea. I wish it was some other country he was ****ing up.

ardmacha

While that is true, the banks would not have had enormous amounts of cheap money to lend had it not been for governments' expansionary monetary policies.

As Scarab80 said, monetary policy was determined by the ECB. The Euro meant that banks had easy access to large pools of money and they hadn't the discipline to use this wisely. Neither had the borrowers, but they often just wanted a house and hadn't the training of the bankers.

silverharp

Scarab80 wrote: »

As regards liberterian economics, the underpricing of risk in CDO's still shares a portion of blame for the crash, though less in this country than others. There is an assumption of perfect information in liberterian economics which broke down with the creation of complicated derivative financial instruments.

But look at the context, The Fed thought it "knew" what the correct interest rate should have been, The Fed policy of setting interest rates acted as a cue to the market, it allowed a real negetive interest rate situation to develop so borrowing to buy anything made sense at ground level

Libertarian economics would price risk more efficiently as market participants would be aware that no back stop is available.

Scarab80

silverharp wrote: »

But look at the context, The Fed thought it "knew" what the correct interest rate should have been, The Fed policy of setting interest rates acted as a cue to the market, it allowed a real negetive interest rate situation to develop so borrowing to buy anything made sense at ground level

Libertarian economics would price risk more efficiently as market participants would be aware that no back stop is available.

But when the real negative return on sub-prime loans was in excess of the return on fed borrowing it still indicates that risk was priced incorrectly.

My point is further that these loans were then collateralised with other loans of varying risk/return rates in such a complicated manner that when it was realised that sub-prime was going bust the holders of the CDO's didn't know what their exposure to that market was.

Free markets work well when things are simple, less so when there is too much information out there to process.

Liam Byrne

Just watched this weasel on Six-One, where he wants everyone to keep "a sense of united purpose" !!!!!

That all depends on your purpose and agenda.....and since you didn't see fit to ask for a "united purpose" when all your Galway Tent buddies were raking it in and siphoning off millions - you can go to hell!

It always amazes me when people start saying "we're all in this together".....only when things are bad.....

BTW, if anyone wants to gamble on getting back a tiny, tiny percentage of the €18,000 this scheister and his mates have gambled away on Anglo - while the former and current staff get way, way more than you - then they're advertising on Facebook now!

It's almost like a Deal or No Deal......give us €18,000 and we'll give you 10p! :mad:
I've reported the ad as offensive and misleading.

silverharp

Scarab80 wrote: »

Free markets work well when things are simple, less so when there is too much information out there to process.

I'd say it differently. Free markets work well when they are allowed to correct as the bad debt is liquidated along the way. Ironically sub prime took off in the 70's and 80's after laws were introduced to force banks to lend in poor areas, they didnt like the risk and found ways to get the crap off their balance sheet. then we had the Fed interfering in financial markets by bailing out LTCM and pushing out credit after dot com and 9/11. Dont you think risk would be better priced if financial firms were allowed to bust from time to time? Now we have Cowen finally getting an inkling that tax breaks and other interfering in commercial markets might cause distortions, gee whiz, I could have told him that a decade ago.

mbur

ardmacha wrote: »

As Scarab80 said, monetary policy was determined by the ECB. The Euro meant that banks had easy access to large pools of money and they hadn't the discipline to use this wisely. Neither had the borrowers, but they often just wanted a house and hadn't the training of the bankers.

People who want housing will do what they have to do to get housed. The FF government in every budget were stoking the hell out of the property market and doing nothing to regulate the money supply. We have total over supply of badly located housing plus a huge debt burden thanks to FF mismanagement. To use the analogy of 2FM's Colm and Lucy, these kids didn't just break the vase, they threw it at the floor.

Now this shyster is trying to hide behind the lack of support for a property tax. The ducking and diving continues.