What he said…

A useful piece by Michael Taft in response to this particularly narrow contribution by Chris Jones (chief executive of BofI Asset Management, apparently writing in a personal capacity) in the Sunday Business Post.

Jones has decided that:

Folks, the money ain’t there. There is no untaxed honey-pot of rich people to be taxed. Put top rate taxes up to where they were in the 1980s (we are more than halfway there already, by the way) and see how much money we raise. It won’t make a material difference and might just make things worse.

Explain to the public sector that they were hired, with the best of intentions, on a premise that proved to be false. The money to pay them just doesn’t exist. That does not mean they are not valued or that they are not doing a superb job in a dedicated way.

The ‘no cash’ constraint is, unfortunately, absolute and binding.

Interesting – by the way – that we’re now seeing v.2 of the discourse rolled out. A softer kinder language, one which eschews the idea that public servants are milking a system. Oh no, they’re great. We just can’t pay them very much. I guess one might think it an improvement on ‘they’re a pack of workshy dossers creaming the public purse at the expense of everyone else’. Sort of.

But – of course – it’s not just public sector workers that Jones has bad news for, but all public services.

That he comes among us a representative (in a personal capacity) of one of the two sectors of the commercial world most responsible for tipping the economy over is an irony he sees no reason to address. Sure why would he? Even given the fact that he is a beneficiary, in general terms – and specific too in terms of career continuation, from public monies.

Or as Michael puts it… far from it…

The fact is that money is there. It depends on priorities. We can argue the toss over how much and how best it should e spent. I’m sure Mr. Johns would agree that state investment in Bank of Ireland is a good investment based on the probability of return and the protection of our banking system. Clearly, Mr. Johns would say that the ‘no-cash constraint’ is not absolute and binding in this case.

But let’s not forget Conor’s contribution to this here where he shows that Jones is no oracle on matters economic. Or if he is he’s not even up to delphic standards.

Meanwhile the drumbeat about how the austerity programmes may drag down eurozone economies appears to have given the markets a scare… Still, all is well, some aren’t worried.

Jean-Claude Juncker, chairman of the Eurogroup forum of euro zone finance ministers, said the weakness in the euro, down more than 7 per cent against the dollar in the past month alone, was likely due to fears that economic growth in the 16 countries that share the currency will slow.
But markets were acting irrationally, he said.
“There are expectations that growth is slowing down because of the deficit cuts we have to take,” Mr Juncker said in Tokyo.

Yeah, who has any doubts that that will work?

“There is a certain reluctance to believe the Greeks can overcome the current crisis. I don’t think the markets are behaving in a rational way.”

So, when people want their validation they are, and when they don’t they aren’t. Interesting.

But the representatives of the markets, for so long used as a means of prodding the recalcitrants economies back into line with talk of defaults and such like, are now not exactly singing praises of national governments… Take this latest example:

Stuart Thomson, chief economist at Ignis Asset Management, said he expected the euro to continue falling over the medium term, reaching parity against the dollar by the end of 2011.

“Politicians have reduced liquidity risk… but in return have ushered in a new age of austerity in peripheral economies,” he said in a note.

Where’s the gratitude some may ask? Where indeed? Others of us may well ask, ‘now they mention this?’.

Wouldn’t it be a whole lot simpler to simply take a long step back from such irrational entities, perhaps place less weight in their supposed proscriptions, perhaps even operate as if they are a subsidiary element in their relationship with societies? It’s just a thought. It really is.

Finally, for the moment, if you like being depressed by the nexus of light regulation and our financial sector you’ll really enjoy this piece in the Sunday Business Post…