Saturday 26 May 2018

The Punt : Germans don't think Mario is so super at the moment

Hans Werner Sinn
Hans Werner Sinn
Michael Noonan

HE is the toast of Irish homeowners lucky enough to have a tracker mortgage, but poor old Mario Draghi is getting it in the neck from the Germans.

In a hard-hitting article in the 'Financial Times', Hans Werner Sinn has all but accused Mr Draghi of pulling off the greatest bank heist in world history – by funnelling the savings of thrifty, hard-working Germans southwards, into the waiting arms of the Latin nations. Mr Sinn is one of the most influential economists in the EU's industrial powerhouse, and he's not going to take it any more.

How has "Super" Mario pulled off this coup? By cutting interest rates to the historic low of 0.25pc and other actions aimed at kick-starting the continent's flat-lining economy.

"Draghi abused the euro system by giving cheap loans to the southern countries, of the kind that they would not get on the capital market," he has written in an opinion piece in the 'FT'. "The (Central) bank is escorting private German savings again to southern Europe, where they are reluctant to go voluntarily," he wrote.

Draghi, a native southern European as it happens, felt compelled to react.

"We are not German, neither French or Spaniards or Italian, we are Europeans and we are acting for the eurozone as a whole," he said.

It is all getting terribly unseemly. The Punt reckons it's time for someone – it could be the French or Slovenes maybe, or perhaps our own Patrick Honohan – to utter the immortal advice beloved of British soap writers. "Leave it, Mario, he's not worth it!"

Bad news at Bloomberg

THE PUNT was chilled to learn that Bloomberg has started laying off staff.

Bloomberg has always avoided the sort of layoffs that are common in other organisations, and one of the company's basic beliefs, inculcated in generations of reporters, is that mass lay-offs are a sign of failure rather than a sign of corporate virility.

That concept remains valid. It has also seemed strange to The Punt that the chief executive of company X gets a cheer from the market when he sacks 20,000 employees to cut costs. Any chief executive who allows that sort of fat in his company should have lost his job long before he gets to sack so many others.

Bloomberg is a well-run and highly profitable company, which probably explains why it has avoided the sort of layoffs that are common elsewhere until now.

The layoffs will hit several departments, including culture and sports, according to an email from editor in chief Matt Winkler. The company is scaling back its art coverage and eliminating the Muse brand. It will stop covering sports matches and focus more on sports stories that intersect with business. Bloomberg is also centralising some departments, including the investigative unit.

The layoffs come at a difficult time for news wires in general. Reuters has also recently announced layoffs. Bloomberg's main rival laid off almost 5pc of its 3,000-person news team. Let's hope this spells an end to the bad news for news wires.

The ins and outs of OMT

FINANCE Minister Michael Noonan took a swipe at the great and the good of Ireland's illustrious economic world this week.

He claimed there was a misunderstanding in Ireland, "even at the highest level of economic thinking", about the European Central Bank's government bond-buying programme, Outright Monetary Transactions (OMT).

It appears there's been a whole load of speculation that Ireland may not qualify for OMT now that we've spurned the idea of a precautionary credit line. But that's not right, chided Mr Noonan, who had a lengthy conversation with ECB boss Mario Draghi in a bid to get some clarity on the matter.

And then when he did, he gave off to those economic thinkers who don't have direct access to Mr Draghi for misunderstanding the concept. And who would blame them.

Most things that come out of the ECB are rather hard to get your head around. Plain speaking isn't its strong point.

Mr Noonan said leaving the bailout without a credit line neither rules Ireland in nor out of accessing OMT. But Fiscal Advisory chairman John McHale seems to disagree. "I don't see any confusion around the requirement that you have to be part of a precautionary programme to get access to it... if we had that precautionary programme in place it would seem that we would have had much smoother access to it."

The plot thickens.

Irish Independent

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