BY Simon Johnson – Ireland is in the red.
Is the global economic recovery still on track? The mainstream view is: yes, without a doubt. But increasingly, there are reasons to fear another financial disruption – particularly given the latest developments in Ireland.
The consensus among officials and most of the international banking community is that the global economy has stabilized and is now well down the road to recovery. The speed of this recovery is proving disappointing – as seen in the revised second-quarter growth estimate for gross domestic product in the United States, with annualized growth down to 1.6 percent. But, according to this view, easy monetary policy and still-loose fiscal policy around the world will keep sufficient momentum going.
Never mind that Japan, the United States and most of Europe are running unsustainable fiscal policies, while the Federal Reserve chairman Ben Bernanke is fretting over how to prevent deflation with a limited toolbox, and Jean-Claude Trichet, president of the European Central Bank, is calling for more fiscal tightening. To enjoy this rosy global picture, we are also told to ignore the plight of heavily indebted peripheral euro-zone nations still suffering from uncompetitive wages and prices, and concerns over default, that strangle their credit markets and growth.
An essential part of this relatively positive view is that the euro-zone economies have stopped the series of “financial runs” that, earlier this year, took intense market pressure from Greece to Portugal and Ireland and threatened to move on to Spain and potentially almost everywhere else (except, presumably, Germany). A collapse was averted in large part by the euro-zone countries agreeing to rescue each other – meaning that the Germans agreed to support Greece and other weaker countries – with some additional cash resources provided by the International Monetary Fund.
BY NAMAWINELAKE – ANGLO MUTATION
NAMA wonderland – SUNDAY INDEPENDENT
THE lucrative deal between the State and a company controlled by Johnny Ronan and Richard Barrett for the controversial National Convention Centre will mean the taxpayer will hand the developers €633,000 a week for the next five years — even though their company Treasury Holdings is among the Nama top 10.
Taoiseach Brian Cowen was among the guests at the convention centre opening, hosted in lavish style by the two developers, but Mr Cowen’s attendance has angered the Irish public, according to a Sunday Independent/Quantum Research poll.
The Sunday Independent telephone poll found that 61 per cent of voters did not believe that Mr Cowen should have been a guest of the Nama developers at the reception and hot buffet. Most respondents believed it was an error of judgement to attend a function as guests of developers who have had to be bailed out by Nama, and by extension, the taxpayer.
Treasury Holdings, through its development vehicle Real Estate Opportunities (REO), now has loans totalling €896m in Nama.
The €896m worth of loans originally secured from Allied Irish Bank, Anglo Irish Bank and Bank of Ireland are out of total borrowings by REO of €1.49bn.
The €380m convention centre was built as a public private partnership between the State and Spencer Dock Convention Centre Dublin Ltd (SDCCD), an off-shoot of Treasury Holdings.