Whatever happened to Ireland? Prof Morgan Kelly

bobcoffee

Published on Mar 7, 2014
Professor Morgan Kelly of the UCD School of Economics speaks to the UCD Economics Society about how several peculiarities of the Irish economy pose threats to our future recovery.

Youtube link

My Opinion
These kinds of things seem to go over many peoples head, when trying to point out some failures with in the EU.
Many of our "Educated" seem to think that EU is "too big to fail".
Which is funny to me as I spent most of my life listening to that kind of nonsense from American side of things.

My opinion is that there is not enough people being held accountable for their actions, one of the biggest problem is "stupidity" being allowed to repeat it self.

It is a very interesting video and might not agree with everything but the direction is quite solid.

woodoo

It was interesting in the Q & A section he said we could inflate our way out of the crisis in the euro-zone if Germany was to leave.

AlekSmart

bobcoffee wrote: »

Published on Mar 7, 2014
Professor Morgan Kelly of the UCD School of Economics speaks to the UCD Economics Society about how several peculiarities of the Irish economy pose threats to our future recovery.

Youtube link

My Opinion
These kinds of things seem to go over many peoples head, when trying to point out some failures with in the EU.
Many of our "Educated" seem to think that EU is "too big to fail".
Which is funny to me as I spent most of my life listening to that kind of nonsense from American side of things.

While my opinion is there is not enough people being held accountable for their actions one of the biggest problem is "stupidity" being allowed to repeat it self.

It is a very interesting video and might not agree with everything but the direction is quite solid.

Whether one is with Morgan Kelly or agin him,the veracity of his arguement tends to be greatly enhanced by the calibre of those who are sent out to refute it.....

http://www.independent.ie/business/small-business/morgan-kelly-economist-who-called-housing-crash-back-with-sme-warning-30076348.html

Prof Kelly said the governor of the ECB, Mario Draghi, and not the Government had been behind the recent recovery in the Irish economy.

"The ECB has basically kept pumping that sweet, sweet credit into our veins and we haven't had the real crisis yet," he said.

Speaking on RTE’s The Week in Politics, Social Protection Minister Joan Burton appeared to reject such suggestions.

Ms Burton said she would have to be convinced that there was a change of policy at the ECB. She said ECB President Mario Draghi's promise of a bond-buying programme had staved off the eurozone crisis and there was no reason for him to depart from his overall approach now.

This was particularly important given the crisis in Ukraine.

Why,when faced with some clear,cogent and focused arguement would a competent Government sign off on a response such as delivered by Joan Burton ?

Ukraine.....there are not enough eye-rolling smilies on the Internet to do this response justice...:mad:

Coppermouse

I enjoyed his Lecture. It was enlightening and a worry given the lack of transparency and accountability in Ireland. The Politicians will not wish to fan the flames here or draw any attention to it, as this would provoke the ire of their Masters in Europe.

Zamboni

One point that shouldn't be lost over the SME - Is that AIB/PTSB Managers are writing of debt using taxpayers money.
There is no transparency in this process. If there is no transparency, you can almost guarantee corruption.

Balmed Out

Yeah the whole transparency with any debt write downs is something I hope wont fall on deaf ears. Its important that it be made public as his point in relation to debt write downs for the bank managers rugby buddies is a scary possibility / likely already happening event.

bobcoffee

now guys, we all know the poor guys at NAMA some really hard times over the last years.
if their dept isn't being written off, then how could this country ever move forward. :P

Mongfinder General

"The ECB has basically kept pumping that sweet, sweet credit into our veins and we haven't had the real crisis yet," he said.

If they stop pumping credit, or even jack up rates, this will have serious consequences for everybody. Mortgages, currency value, SME loans.

The ECB can afford to do neither. They are about 5 years behind the trajectory of the FED in terms of QE Policy. Kelly is stating the obvious in that we could inflate our way out of the bind but this doesn't look like happening in the medium term and ECB hawks will have their claws out long before that is a possibility.

Credit is the main cause of the crisis. It has become a way of life for most of the planet and most governments cannot do without it. We have accepted living beyond our means but when the creditor gets into trouble itself that's when it must act. ECB does not have a mandate to print money - for now.

Piriz

Mongfinder General wrote: »

"The ECB has basically kept pumping that sweet, sweet credit into our veins and we haven't had the real crisis yet," he said.

If they stop pumping credit, or even jack up rates, this will have serious consequences for everybody. Mortgages, currency value, SME loans.

The ECB can afford to do neither. They are about 5 years behind the trajectory of the FED in terms of QE Policy. Kelly is stating the obvious in that we could inflate our way out of the bind but this doesn't look like happening in the medium term and ECB hawks will have their claws out long before that is a possibility.

Credit is the main cause of the crisis. It has become a way of life for most of the planet and most governments cannot do without it. We have accepted living beyond our means but when the creditor gets into trouble itself that's when it must act. ECB does not have a mandate to print money - for now.

Are you saying there will be a big crash when Irish Banks are stress tested by the ECB?

Scofflaw

Piriz wrote: »

Are you saying there will be a big crash when Irish Banks are stress tested by the ECB?

I don't see that it would happen then, particularly. The problem will basically come if someone manages to stop the ECB from doing what it's currently doing - indirect QE and lending of last resort.

The ECB has no legal mandate for either of those actions, any more than it has to allow high inflation, but it seems, under Draghi, to be doing the first two, and leaning towards the last. Challenges to that tend to come from German eurosceptics by way of the Karlsruhe court.

This continues the "extend and pretend" strategy, and the downside risk of abandoning that strategy is, as Whelan says, not something we should wish on ourselves. The problem, though, is that "extend and pretend" only actually solves debt problems either through repeated and incremental debt capital forgiveness or through inflationary erosion of debt capital.

The ECB cannot do the latter, and while the former is happening, within Ireland, and may yet happen on a grand scale too, it's not happening transparently, because nobody wants to admit it's a necessary part of the solution, especially in the absence of inflation - as such, as he says, the way it seems to be happening here is potentially corrupt. Not necessarily "corrupt" in the sense of bribery securing your debt forgiveness, but "corrupt" in the more general sense of being about who you know, what your background is, etc.

cordially,
Scofflaw

Scofflaw

Scofflaw wrote: »

I don't see that it would happen then, particularly. The problem will basically come if someone manages to stop the ECB from doing what it's currently doing - indirect QE and lending of last resort.

The ECB has no legal mandate for either of those actions, any more than it has to allow high inflation, but it seems, under Draghi, to be doing the first two, and leaning towards the last. Challenges to that tend to come from German eurosceptics by way of the Karlsruhe court.

This continues the "extend and pretend" strategy, and the downside risk of abandoning that strategy is, as Whelan says, not something we should wish on ourselves. The problem, though, is that "extend and pretend" only actually solves debt problems either through repeated and incremental debt capital forgiveness or through inflationary erosion of debt capital.

The ECB cannot do the latter, and while the former is happening, within Ireland, and may yet happen on a grand scale too, it's not happening transparently, because nobody wants to admit it's a necessary part of the solution, especially in the absence of inflation - as such, as he says, the way it seems to be happening here is potentially corrupt. Not necessarily "corrupt" in the sense of bribery securing your debt forgiveness, but "corrupt" in the more general sense of being about who you know, what your background is, etc.

cordially,
Scofflaw

Scofflaw you are always brilliant at succinctly and clearly summing up an issue.

Rightwing

woodoo wrote: »

It was interesting in the Q & A section he said we could inflate our way out of the crisis in the euro-zone if Germany was to leave.

I'm always sceptical of this. What works fine in a textbook doesn't necessarily work in the real world. We only need look at the crazy situation that is unfolding in Japan to see that that doesn't work.

Piriz

is the purpose of the stress test is to find out what is the correct balance sheet of the banks and from that point the ECB direct how solvent the banks are and how they rank in terms of their recent introduction of lending to capital ratios..?

surely when the ECB discover the amount of long term non-performing loans it will want these dealt with in order to crystallise the loss rather than kicking bad loans down the road pretending to be more solvent than they are thus distorting their lending to capital ratios?

(sorry if my terminology is incorrect).

bobcoffee

Priz I do believe that it was mentioned, once a stress test is in place they kind of back down from the information gathered or information avoided.
I am ranting on this one and also have no idea just what I got from the video.

dissed doc

Zamboni wrote: »

One point that shouldn't be lost over the SME - Is that AIB/PTSB Managers are writing of debt using taxpayers money.
There is no transparency in this process. If there is no transparency, you can almost guarantee corruption.

I think they have always done this, but we now know because of the euro making it necessarily public.

If it was pre-euro, we would have devalued the punt, to inflate away the debt inside of the connected people, while normal people would be paying 4-5 punts/litre for petrol etc., .

It's now actually more transparent what these banks do. It's not like the actually made up a new rule book, they are doing what they always did but now it's discussed across countries because of the ECB and EU.

gaius c

I have a lot of time for Morgan Kelly but I think he has underestimated just how far the ECB are willing to go in kicking the can down the road and also misjudged just how serious the stress tests will be (not at all I expect).

Scofflaw

dissed doc wrote: »

I think they have always done this, but we now know because of the euro making it necessarily public.

If it was pre-euro, we would have devalued the punt, to inflate away the debt inside of the connected people, while normal people would be paying 4-5 punts/litre for petrol etc., .

It's now actually more transparent what these banks do. It's not like the actually made up a new rule book, they are doing what they always did but now it's discussed across countries because of the ECB and EU.

I think that's actually true. It's good, though, that it still doesn't match our expectations of how open and transparent it should be.

cordially,
Scofflaw

sarumite

Scofflaw wrote: »

I don't see that it would happen then, particularly. The problem will basically come if someone manages to stop the ECB from doing what it's currently doing - indirect QE and lending of last resort.

The ECB has no legal mandate for either of those actions, any more than it has to allow high inflation, but it seems, under Draghi, to be doing the first two, and leaning towards the last. Challenges to that tend to come from German eurosceptics by way of the Karlsruhe court.

This continues the "extend and pretend" strategy, and the downside risk of abandoning that strategy is, as Whelan says, not something we should wish on ourselves. The problem, though, is that "extend and pretend" only actually solves debt problems either through repeated and incremental debt capital forgiveness or through inflationary erosion of debt capital.

The ECB cannot do the latter, and while the former is happening, within Ireland, and may yet happen on a grand scale too, it's not happening transparently, because nobody wants to admit it's a necessary part of the solution, especially in the absence of inflation - as such, as he says, the way it seems to be happening here is potentially corrupt. Not necessarily "corrupt" in the sense of bribery securing your debt forgiveness, but "corrupt" in the more general sense of being about who you know, what your background is, etc.

cordially,
Scofflaw

I remembering reading this article in the economist (http://www.economist.com/blogs/freeexchange/2014/02/german-court-and-european-central-bank)

The gist of it is that the Karlsruhe court itself may not have the mandate to rule on the subject. From the article

"Two of the eight judges dissented from the ruling on the grounds that the case was inadmissible. One said that monetary and economic policies related to each other and could not be strictly separated, and argued that the ECB’s insistence that OMT was intended first and foremost to restore the monetary transmission mechanism could not be brushed aside so unequivocally."

The article accuses the court of potentially acting our of zeal. If this proves to be the case, then it would be difficult to take serious a charge that the ECB is acting outside of its mandate if the court making said charge was, by doing so, acting outside of its mandate!