During his visit to Washington last week Brian Cowen gave a speech (entitled ‘The Euro: From Crisis to Resolution? Some Reflections from Ireland on the Road Thus Far’) at Georgetown University, reported in today’s Financial Times (behind paywall). It was the first time he has spoken of the financial calamity he presided over since becoming a “private citizen”.
“Ireland’s adjustment path and return to markets can be helped by continued restructuring of the banking system. The next reform must involve a deal on the Anglo Irish Bank promissory notes.”
“The euro area policy of ‘No bank failures and no burning of senior bank creditors’ has been a constant during the crisis. And as a member of the euro area, Ireland must play by the rules.”
“Given what we now know, it is clear that serious mistakes were made in individual European countries, including in Ireland, prior to the euro crisis and these all go back to a fundamental misjudgment of risk. Mistakes were also made at an international level. . . When the crisis happened both Europe at a central level and individual countries were left floundering to try and design appropriate and adequate policy responses. Europe has to some extent attempted ever since to play catch-up, although increasingly the responses have been more significant.”
“In some respects the Euro crisis is like multiple plane crashes occurring at the same time where manufacturing design faults, exceptional conditions, pilot errors and mistakes by air traffic controllers all led to unexpected and disastrous results.”
“Whether a narrower [bank] guarantee would have staved off an implosion of the banking system at a lower cost to the state is a matter for economic historians to ruminate on. We had to deal with this crisis in real time. Our view at the time was that we would get one shot at calming the markets.”
Full text of speech here (vie Corkeconomics)