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Policy issues concerning Bailout

In the most recent, and high-profile, mortgage sale, Permanent TSB this week announced its intention to sell 14,000 non-performing mortgage loans.  Some commentators have suggested that, instead of selling these loans, that individual borrowers be allowed to ‘make a deal’ with the lender to buy the loan at the intended sale price.  However, this solution is too simplistic. 

The following article by Professor James K. Galbraith appeared in Social Europe Journal on 23 February 2015 and challenges the analysis which has been communicated across mainstream media for several days.

Dr Brigitte Unger director of the WSI (Economic and Social Institute) presented a paper at Social Justice Ireland’s Social Policy Conference 2013 entitled ‘Towards a Social Europe’.  It addresses the threats to social policies after the financial crisis, models for a Social Europe and specific suggestions for creating a Social Europe.

Ireland needs a combination of vision and pragmatic policies that can truly move the country towards a desirable and sustainable future.  We need to focus on evidence rather than on the endless assertions we hear communication each day seeking to defend dubious policy developments.

The full text of the Briefing provided by Social Justice Ireland to the European Parliament's Economic and Monetary Committee on January 17, 2014 Can be accessed here

Isvtán P. Svékely, European Commission DG for Economic and Financial Affairs, presented a paper at the Social Policy Conference 2013 which examined social developments in Ireland at the time of fiscal consolidation.  The paper explored social indicators and challenges ahead.  It was co-authored by Miroslav Florián.

A recently published IMF working paper ‘The Distributional Effects of Fiscal Consolidation’ shows that austerity does not work and will not work for Ireland. 

The findings of the paper shows that fiscal consolidation has had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment.

ƒ Legislation has been passed providing for the orderly wind‐up of IBRC through the appointment of Special Liquidators
who will manage the process
 
₋ Existing funding arrangements with regard to the Promissory Notes between IBRC and the Central Bank of
Ireland (CBI) unwind and the CBI becomes economic owner of the Promissory Notes which are exchanged for
Government bonds
 
₋ NAMA, through an SPV, has been directed to acquire the Exceptional Liquidity Assistance (ELA) Facility Deed
What is happening?
 
The Bill passed today provides that joint Special Liquidators will be appointed to IBRC. When this is done the Central
Bank will become the economic owner of the Promissory Notes.  Apart from the wider economic considerations
concerning IBRC, it makes very little sense at this point to retain two State organisations performing broadly similar
functions. It is now appropriate that the remaining assets of IBRC which, following an independent valuation exercise
  1. The selective use of data by the Troika is leading to inaccurate analysis which in turn is producing inappropriate policy recommendations for Ireland.
  2. Poverty in Ireland is rising despite Troika claims.
  3. The vulnerable have not been protected despite ‘Troika’ claims.

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