Krugman "Government should nationalise 'weak' banks and leave others on their own"

[MsAnneThrope]

Ireland faces hard slog

Some interesting remarks from Krugman, and Hurley of the Central Bank, who were both speaking in Dublin today:

Nobel Prize-winning economist Paul Krugman has predicted that the Irish economic recovery could take five years.

Speaking in Dublin, Professor Krugman said he exepcts that Ireland will face 'a very hard slog' but he said 'the adjustment is working'.

He ruled out Ireland defaulting on debt and said it was hard to see why the cost of Irish Government borrowings had reached such high levels in recent months.

Speaking in the National Gallery at an event hosted by Merrion Capital, Prof Krugman said the Government should nationalise 'weak' banks and leave others on their own

Governor of the Central Bank John Hurley has said after a bad 2009, there will be 'extended and gradual' economic recovery next year.

Speaking to RTÉ News, Mr Hurley said the whole of 2009 will be very difficult.

He said Ireland's economic recovery will take time and be gradual, but that the benefits of the recovery will begin to be seen next year.

He also predicted that the adjustment in house prices over the past 18 months had been inevitable and that prices have further to fall.

Is Hurley being too optimistic about recovery next year? Remember he was the one who said in November 2007:

Irish banks have no significant exposure to the US subprime and that Irish banks had one of the lowest rates of non-performing loans in the EU

Is Krugman's estimate of 5 years accurate?

[athlonedub]

In fainress to Hurley in 07, I think he was referring to non preforming residential property loans - and he was right. The "toxic loans" we have are totally different to US - ours are developer loans.

[atlantic]

Good old Paul the statist, don't blame the government.Its hard to see why government borrowing has been so high in the last few months!!! and this guy won a noble prize.!!!

[MsAnneThrope]

What do you think of his comments about nationalisation? Will his recommendations carry any clout here?

[seenitallb4]

This depends in a large part on what happens internationally. If the rest of the world picks up, we could be out of it sometime in 2010.....but by out of it I mean anemmic growth.
It also depends on other unknowables- how well will NAMA work? Will it get the banks lending again? How significant is the fact that while job losses have increased, the recent figures show a big decrease in the pace of job losses?

Probably the more important strategic question is this: what can we do to ensure that future growth is diversified and is composed of a good balance between FDI, domestic firms who export, consumption and construction? This crisis has made our weaknesses clear to us and we will continue to be vulnerable so long as we fail to address them.

[Akrasia]

Ireland faces hard slog

Some interesting remarks from Krugman, and Hurley of the Central Bank, who were both speaking in Dublin today:







Is Hurley being too optimistic about recovery next year? Remember he was the one who said in November 2007:



Is Krugman's estimate of 5 years accurate?

He didn't say we'd actually recover, he said in 5 years we might stop declining and join our eurozone partners in a 'lost decade'

[Akrasia]

In fainress to Hurley in 07, I think he was referring to non preforming residential property loans - and he was right. The "toxic loans" we have are totally different to US - ours are developer loans.

Why didn't he say that then? Even I was predicting that the collapse of the commercial property market and the looming developer loans and I'm hardly an 'expert'

[anewbeginning]

I doubt very much the bogmen in Fianna Fail will pay heed to what an internationally respected economist like Krugman has to say.

Cowen usually hides his ignorance by saying something like he will do it his way.

[He3]

It is pretty clear the government cheered on the bubble.

Krugman today in Dublin.