Harvard professor criticises Anglo payment
Published 07/11/2011 | 05:00
THE Government should not have handed over $1bn (€725m) to Anglo Irish bondholders last week, Harvard professor and political adviser Jeffrey Sachs told the Kilkenomics festival over the weekend.
The bank guarantee was "not a good decision", Prof Sachs told the economics and comedy festival in a conversation with economist David McWilliams.
Kilkenomics, founded by economist David McWilliams and Cat Laughs impresario Richard Cooke, is a curious combination of comedy and economic punditry that works surprisingly well. Now in its second year, the festival attracted many big names from the economics world.
A decision to stop payments to Anglo bondholders who bought risky bonds was "not like breaching a contract", said Prof Sachs, who was the youngest ever tenured economics professor in Harvard.
Prof Sachs, who had just come from the G20 meeting in Cannes, described the mood at that conference as "half-baked" and complained that there was now "a really odd feeling" that the world was "not what we expected".
Prof Sachs predicted, during the festival's inaugural Raymond Crotty talk, that the solutions to the global economic crisis would come from activists and entrepreneurial politicians rather than the public sector.
"With Ireland you need more proposals on the table and I wouldn't expect the Government to come up with them," he added.
Raymond Crotty was a Kilkenny-born economist who took the government to court in the 1980s to ensure that changes to EU treaties could only be made by referendum.
Other sessions, about topics such as making economics romantic and whether the euro will survive, attracted contributions from former German finance minister Heiner Flassbeck, former Argentinian finance minister Martin Lousteau and commentators such as former Wall Street broker Max Keiser and newsletter writer John Mauldin.
While comedians such as Des Bishop and Neil Delamare ensured most of the talks were amusing, the mood was clearly downbeat.
Both the right-wing Mr Mauldin and the left-wing Mr Keiser said they were buying gold regularly because they did not trust governments to find a solution.
Mr Keiser said European governments and citizens were simply unable to take the sort of radical action needed to stave off a long, destructive recession because they would not vote for governments that would take decisive action. "Europe should dump its bad debt now and rip the band aid off just like Iceland did. But many prefer the drip-feed of bailouts, which creates a slow gradual pain," he said.
One of the most thought-provoking contributions probably came from Indian analyst and banker Vikas Nath who said Greece was so small that it did not really matter. With just 10 million people and an economy that accounted for just 2.5pc of the eurozone, Mr Nath said most people in India or China found the debate irrelevant.
Mr Nath said Ireland should not delay any more. "Don't let it stretch out for years. Don't let it be a death by a thousand cuts."