AHEARNE SAYS EURO WILL NOT BREAK UP - NUI Galway economist Alan Ahearne was special policy adviser to the late Finance Minister Brian Lenihan from March 2009 up until the last Government left office. We presume a lot of what he thought went into the creation of NAMA and framing three Lenihan budgets as well as measures to tackle our financial implosion. Prior to that he was with the Federal Reserve in Washington for seven years. He has now returned to his academic work in Galway.
Alan Ahearne says that he does not believe the euro will break up despite the ongoing crisis in the euro zone. He says there is no will for such a move, even in emergency-mode Greece. He also says a break-up of the euro would not be a good move for Germany, as the country's growth depends on exports and if Germany went back to a very expensive deutschmark its growth could be severely impacted. He says that Greece wants to stay in the euro zone, but acknowledges that it has a very difficult task ahead of it due to its huge debt levels. He predicts that more debt relief programmes will be needed, but adds there is a will around Europe to solve the Greek problems.
On Ireland, the economist says that the Government should stick to the IMF-EU plant and said that it is progressing very well. He says that despite this, things could get very rocky as growth forecasts are reduced. But he says the harder we work at the programme the more protection we will get from Europe. On the Budget, Mr Ahearne says the Government must adopt a sensible approach and it has to stop spending money it does not have.
He says that NAMA is doing what it was set up to do. It was not set up to keep property prices from falling and he says it will recover from the assets it has bought from the banks that if they were left with the financial institutions.
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MORNING BUSINESS NEWS - The Greek prime minister George Papandreou cancelled his trip to the US over the weekend to chair one of his austerity cabinet meetings in Athens. At stake is €8 billion tranche of its €110 billion loan deal to limp along and avoid default in about two week's time. The Greek Finance minister said yesterday that big strategic decisions were needed to avoid default, stabilise the situation and remain in the euro zone. The hint is at further cuts in state spending rather than trying to generate revenues, cutting public sector wages and sacking public sector workers. The Troika are sceptical that one off measures such as the property tax to be levied through the electricity bills will really suffice.
*** Swiss bank UBS has upped its estimated losses from alleged authorised trading by to $2.3 billion from $2 billion before the weekend. UBS trader Kweku Adoboli was charged with fraud and false accounting on Friday.
*** The Minister for Jobs, Enterprise and Innovation, Richard Bruton is spending the week in the southern US states of Georgia, North Carolina and Florida to try to drum up exports for Irish companies. The Enterprise Ireland mission involves 60 Irish companies in a region where Minister Bruton says Irish exports are weak.
****** Nearly half (48%) of businesses with fewer than 10 employees report that they are winding up, contracting or simply trying to survive. That is according to the latest quarterly survey from IntertradeIreland.
*** The euro, which gained in value going into the end of last week, fell 1% in overnight trade in Asia this morning to stand at $1.3667.
