Sli Eile on Progressive Economy has already mentioned this but I think it is worth putting up here too. Michael Casey, him formerly of the Central Bank has said that instead of a stimulus package we have gone in the other direction and that it could be ‘the worst own goal in our history’.
The thing is, for some reason this opinion piece didn’t appear where his articles usually do, in the main opinion pages of the Irish Times, snuggled neatly against the editorial. Instead it was published on page 10 of the Innovation supplement. In it he suggests that the Government could be wrong to rely on a three year plan to stabilize the public finances (according to the IMF, Casey says, most attempts to do this in other countries have failed) and to ignore the benefits of a stimulus package. The objections to a stimulus package, he said, are
“…mainly assertions without much research support. For example, the last fiscal stabilisation in the late 1980s was successful for a variety of reasons - reasons that no longer exist. The international economy was growing well; there was no problem with banks, no credit crunch and no fear factor arising from deep recession and job losses.”
By bailing out the banks he adds, the government stopped the flow of domestic deposits into its own coffers. When the mains banks appeared to be unstable Irish people started to put their money in to An Post. When the guarantee was announced they stopped, thus cutting off a potential source of borrowing for the government.
Too strong for the main opinion page then.