For some time now I’ve been a bit worried about the level of celebrity to which our local batch of economists have risen over the last couple of years. My main concern isn’t even that being consistently ‘right’ in economics, as opposed physics for example, seems to be a pretty difficult task. But it is the least contentious.
So here I’ll offer two examples, from two economists from our finest university, who boast a couple of thousand Twitter followers:
“Irish banks have plenty of scope to increase their mortgage lending in a housing market that looks set to remain robust, according to new research. A report by Dr Brian Lucey, a lecturer in finance at Trinity College, says that mortgage lenders will be able to grow their business activity through high-interest loans to people with poor credit records – known as “sub-prime” mortgages – loans for investment properties, 100 per cent finance for first-time buyers and equity release loans.
The report, commissioned by mortgage servicing company Homeloan Management Limited[emphasis mine] (HML), predicts that the favourable economic and demographic factors driving demand for housing will continue.
Dr Lucey said concerns that there may be a housing “bubble” would prove unfounded and that there was little risk of a catastrophic fall in house prices.
This was because growth in house prices in recent years was not out of line with historic trends, he said.” [Banks have ‘scope to grow mortgage sales’, Irish Times, 2/02/06]
“Mr Gurdgiev said the Republic would continue to slip down the ranking unless a drive to deregulate industry is undertaken.
He said industries such as retail, banking, transportation and real estate were all heavily regulated in the State [emphasis mine].” [Irish Times, 26/06/02]
And this from the newspaper that brought you ‘Economics Editor‘, Marc Coleman. In this particular article Coleman’s book…
…is promoted by Minister for Science, Technology and Innovation, Conor Lenihan. The same Conor Lenihan who, at the last minute, backed away from appearing at the book launch of this chap, who thinks evolution is an elaborate hoax.
For a fairer review of Coleman’s book try Dublin Opinion.
On a related note, a recent documentary ‘Inside Job‘ by Charles Ferguson, Chad Beck and Adam Bolt, brings you interviews with the men behind global economic collapse 2008. It’s very good, even if Matt Damon is narrating:
MEDIABITE 
Hi David (Manning – Ed, MediaBite)
Interesting post – food for thought and debate there.
To be fair to Constantin Gurdgiev and Brian Lucey, unlike many other commentators (media and political) they have put themelves out a long way to challenge the government vociferously about the lies and distortions that are being pedalled. It really isn’t true that celebrity is even remotely a consideration for them. They have also experienced the usual snarling backlash that anyone who challenges Fianna Fail will be familiar with. Their presence on twitter really doesn’t have anything to do with boasting numbers of followers – though obviously a lot of people find them interesting.
Lucey has apparently responded to this same criticism before and my understanding of what he has said is that he was not suggesting a free for all splurge of subprime lending. Rather, that what people don’t realise is that not all subprime mortgages are of the reckless and/or fraudulent variety that they have come to be synonymous with. He gives the example of people who are solvent but deemed uncreditworthy for unrelated reasons, such as an earlier conviction for a crime. Subprimes have been a means by which such people have been able to acquire their own homes eg. Whether this is the totality of the demand he was talking about in 2006 is not clear from the IT quote but I will try to find a link to where he has responded to this criticism before.
In the case of CG – his argument for light regulation is out of context in a couple of significant ways, imo: CG thinks there should be light regulation but only with rigorous enforcement, something totally lacking at the moment. Theoretically we are more regulated than many other countries in certain respects, but the regs are not enforced. This is typical Fianna Fail window dressing – to point to policies and rules etc when the EU or others want to see them, and then simply to ignore them domestically. CG is also calling for vastly improved accountability and transparency – again almost completely absent in Ireland. This would make a huge difference to corruption and maladministration, regardless of what regulatory rules were in place – and would certainly have prevented almost all of what happened during the last decade and more.
Mutiny! 🙂
I didn’t realise this report had done the rounds. According to the Irish Independent, it last appeared in early 2010 and Lucey suggested its continued resurfacing was part of a smear campaign:
http://www.independent.ie/national-news/im-a-victim-of-a-smear-campaign-says-economist-2219001.html
The fact that the Irish Times ran this piece by Harry McGee in mid 2009 suggests there might be some truth to that suggestion:
‘TCD professor admits being wrong about housing bubble’
http://www.irishtimes.com/newspaper/ireland/2009/0630/1224249782454.html
Given that the Irish Times ran reports on the original report in 2006 without any investigation, hedging or critical remarks.
I first came across the report, well, reports on the report, when researching the follow-up to ‘The Media and the Banking Bailout’, ‘Don’t Shoot the Messenger’.
http://www.mediabite.org/article_Don-t-Shoot-the-Messenger—Part-1_469407436.html
And I contacted Lucey way back in early 2009 to ask him about it. I haven’t posted that correspondence. But it generally followed the same lines as the response to Harry McGee, which I have to say is less than convincing.
The fact that the report puts front and centre stage the growth needs of the banks, as opposed the societal needs of housing for low income earners or excluded citizens suggests to me a system of priorities.
As far as CG’s response goes, the Economic Freedom of the World 2002 Annual Report makes no mention of accountability or transparency, it simply focuses on deregulation.
And we can’t be accused of relying on regulation, we’ve pointed out the inherent deficiencies of the regulatory apparatus:
http://www.mediabite.org/article_Our-new-kick-ass-financial-regulator_5822339.html
David
Watch the ageandas.