Friday, 27 November 2009

Emily Bruton’s Art Exhibition in Navan

Last night Finola and I went to the opening of a  major  exhibition of our  daughter  Emily’s paintings in the Sonairte  centre’s  gallery in Navan, Co. Meath has.     It is a very big and well located  exhibition  space  and is bidding to  mount exhibitions of national as  well as  local artists
Emily’s work is  exhibited  with that of another  Meath artist, Carol O Connor. Emily focuses on  representations  of people, and  explores, through her  art , their search for identity. Her work can be seen on her  website at Emily Bruton
We were delighted that Emily’s aunt ,Caroline Ponchon  flew over from Paris especially for the exhibition. Many of our family and friends were there. It  was a great home coming for us.
The Exhibition was  opened by the  Chairman  of Meath  County Council,  Bill Carey.   Bill  has represented his locality on Meath  co Council  since  1967, a remarkable  record of   public  service
The  exhibition  will run for the next three weeks and is  open to the public.

Wednesday, 25 November 2009

Predicting the Economy.

I was in Monaco this week for a  conference  of people involved in  Alternative  Investments.
I spoke about the medium term prospects for the world economy. The OECD has recently produced projections for growth rates between 2011 and  2017. The contrasts are  quite marked.  Whereas they predict growth rates of 6.7% per year for Turkey over the period and  4% each  for Mexico and Australia,  they  expect  annual  growth rates in Portugal to be only 1.2%, Germany only 1.6% and 1.8% in France.  At that rate, some of the Turkish immigrants in Europe could be  going home to find work.
I foresee rapid growth continuing in China, India and Brazil. The consumer demands of  low to middle income people in these countries will determine  where business opportunities in future.  Their  needs will  replace the  jaded demand from  high income  consumers in the  West.  The Tato Nano economy will replace the SUV economy.

I believe taxes will tend  to increase in  western countries because Governments will find it too  difficult to reduce  wages, welfare payments and health entitlements, which is  what they would have  to do if they were to reduce  public  spending rather  than to increase taxes.

The reform of the  system of financial regulation will be a  priority, even though it is a question of  slamming the  stable  door  after the horse is gone.
 Increased  supervision of banks and other  such  entities  has a  limitation. Of its nature, It is looking at what has already  happened . Therefore I favour simply  banning some practices outright, such  as proprietary trading  by deposit taking institutions.  At the end of the day, deposit taking institutions  are guaranteed by the  taxpayer, so they should be  banned from  gambling.
I also think  that it is vital that the European  Single Market for finance be not  sacrificed. The fact  that  taxpayers in individual countries have had to bail out  their own banks for losses they incurred in other countries may  lead to  restrictions on  cross border banking in future. That must be avoided.
 We must  either  create an EU wide  deposit guarantee system,  or an accepted and  pre agreed  system  for sharing the burden   between Governments  of  winding up   banks that have failed  that were active in several EU countries .

Sunday, 22 November 2009

Visit to Brussels

Last week, I was in  Brussels for a few days. I was there on other business but my visit coincided with the meeting that selected  the new President of the European Council.  This is a job for which I had put my own name forward  for consideration by the  27 Governments  represented in the Council.
I believe Herman Van Rompuy will be a very good President. He has a  detailed grasp of economics having  written several books on the  subject.  He was Belgian  Budget Minister  during the  build up to the  launch of the  euro and  understands the dynamics  of the European Union. He also  was economical in the  spending of  public money, a characteristic that is vitally necessary if European  states are  to  survive the  twin long term challenges of  economic restructuring and  ageing.
The current economic crisis has  laid bare  certain structural weaknesses in the European economy.  Essentially we are overcommitted in  some industries, finance, construction and motor cars.  Employment will fall in those industries and  new employments will have  to be found elsewhere.  Restructurings of that  kind  do not  occur  quickly or easily.  It took Germany  ten years to  create the  export  oriented economy it has  today. It is good that  the EU’s President  is  someone that understands  economic processes.
While in Brussels, I  had a  very useful  briefing  fro  officials of the  European Commission on the large package of  reforms of the  financial system that  the  are  piloting through the  Council of Ministers and the European Parliament at the moment.  It is important that  whatever is  done in Europe be equivalent in its effects  to  the legislation being advanced by  Senator Dodd and  Chairman Frank in the United  States.  If the legislation is equivalent in the sense  that  it  achieves the  same results, even if by different means, then   financial businesses will be  able to  operate on both sides of the  Atlantic  without too much costly  duplication of  compliance  with  different sets of  rule because the authorities will mutually recognise one another’s permits.
I hope the package  will include a ban on  trading in  risky  securities by banks that take deposits from the  general public.  Deposit taking institutions are ultimately backed by the  taxpayer and they have no business  being  engaged in  gambling  with the  people’s money.  An  outright ban on  certain activities  would be  simpler and easier to  enforce than a  complex  system of supervision of  activities which  is  always, of necessity, taking place after someone has  done something.

Monday, 16 November 2009

Speech at Iona Institute in Dublin

By John Bruton

Why can we have no Treaty to curb climate change?

Tonight I am giving a speech to the Iona Institute in Dublin about how Christians should   interact with the European Union.  Some people see the European Union as secularist and unsympathetic to religion. They are mistaken in this belief. In fact the latest EU Treaty, the Lisbon Treaty specifically commits the Union to a dialogue with the churches. A full copy of the speech is separately posted on the website.
I was disappointed to read in today’s papers that President Obama said did not want the Copenhagen summit on climate change to produce a legally binding Treaty. This is because a Treaty can only be ratified by the United States with a majority of 66 out of 100 Senators, and the President does not think he can get 66 Senators to agree.
He may be right in this calculation, but is it reasonable that the world  should be prevented from having a  Treaty on this subject because of a provision in the constitution of one country, which was drafted in the eighteenth century when there was less need  for international Treaties because there was much less  globalisation?
Most other countries allow themselves to ratify international treaties by a simple 51/49 margin.
The same  66/33 requirement explains why the United States, which proposed the  setting  up of the League of Nations  in  1919, could not  join it itself in the end, because it  could not get  66 of  100 Senators to  agree. The world might have had a different and better history if the US had joined the League of Nations.
This aspect of the United States constitution should be changed. As long as it continues it is going to be a big obstacle to making the  sort of Treaties the world will need if  we are to  govern an increasingly globalised and interdependent  world, not just on climate change , but on all the  other  problems are not stopped by international  borders.

John Bruton

Saturday, 14 November 2009

Who has got it right about the economy....consumers or investors?

Stock prices have been soaring for the past eight months, so investors must be confident.  But, in America at least, consumers are saving an ever increasing share of their income aside for the rainy day.
 Who has the better sense of the long term, the consumer who is relying on intuition and instinct, or the investor who has the benefit  of years of study ,analysts reports,  surveys and company accounts?
I am afraid I believe the consumers have a better handle on reality. The consumers see that the banks problems have not disappeared. They have simply been postponed or transferred to Governments. They see that some banks have become too big for the tax bases of the Governments that feel obliged to guarantee them. They  are doubtful about whether they will have an adequate  pension or healthcare system when they come to  rely on both and feel that building up a  nest egg might be prudent. They have also had a look with new eyes at all the  things  they already have lying  around the house that  they would have to dump  to make  room for new purchases, and are  concluding that they can get by with  what they  already have a little  while longer. And, in the  United States at least, they are looking at neighbours, 11 million of them, who have lost their jobs and  over  9 million neighbours working  shorter hours  than they say they  would like to.
So how do we explain investor confidence?  A lot of the investors are not actually investing their  own money but  somebody else’s. Notwithstanding all the talk about changing the way people in the financial sector are paid, a lot of the investors are still rewarded royally for short term results but are at no personal  risk if the investments  turn out badly in the longer term. Furthermore the investors are able to  use  exceptionally cheap money provided by central banks which they  can get a  good return on  from credit starved businesses. Other parts of the economy may be downsizing but so far the  financial  sector is not.
My own sense is that the model upon which the world economy  has to  change.  Over indebted  consumers  in the  United States and a  few other countries can  no longer carry the  world economy forward.  Economies like China and Germany ,who have built their success on exporting to these  consumers , have to adjust to the  fact that their customers are going to be  saving more, and spending less. And in doing  so they will also ,incidentally and unintentionally, be reducing their carbon  footprint.
I believe we will see a return to meeting basic needs. The future economic growth will not come from jaded western consumers, but from consumers in developing countries who have not  yet  met  basic needs like  food, shelter, a refrigerator and a  small car. It will come from the elderly who will be living alone in increasing numbers and will need better means of looking after themselves. 
Every crisis is a  means of bringing about change. The change that has to be brought about by the  economic crisis of 2008 has not happened yet,

John Bruton

Tuesday, 10 November 2009

Back in Ireland...

Finola and I arrived back in Ireland last Sunday  week.
As some of you will  have read, I put my name into the ring for the  new post of President of  the  European Council. This job,created under the Lisbon Treaty,  will  give the European Council, which brings together the  Heads of Government of the  27 EU member  states, a fulltime Chairman for the first time. There are many excellent candidates whose names have been mentioned
Up to now, the Chairman (or President) of the European Council of was a  serving Head of Government,who  also still had to run the  affairs of  his/her own country. I did that job myself  for  6 months in 1996, during the Irish Presidency of that year. To prepare a  sucessful  Summit  of the then  15 EU Heads of Government, I  did a tour of the capitals of the 14 other member  states  to  get my colleagues views on  how we might forge a  compromise on the issues that were on the  agenda. This tour made all the difference in  building towards a  consensus when  we eventually met in Dublin. Consensus was  vital because the decisions of the European Council, unlike those of the  Council of Ministers where a  majority  vote is possible, have to unanimous.That will remain so  under the Lisbon Treaty.
Now that we are  27 countries in  the European Union a tour of  26  other  capitals by a serving  Prime Minister is almost impossible because of  his/her duties at home.  By appointing a  fulltime person to  do this  job , the Lisbon Treaty makes the  job  doable again.  It should greatly enhance decision making in  the European Council to have a fulltimer in the  chair. I think  it will also help with the overall  coordination of the  Union's work between the  Parliament, the Council of Ministers under a rotating Presidency, and the Commission whose job is to prepare all EU laws and supervise their implementation
The European  Council sets the  agenda  for the Union.  It also decides the really difficult questions that cannot be settled at a lower level.
I also attended a very interesting conference in London on the  global economy.
The  amount of time people are spending online  is changing consumer patterns. Time spent  on facebook is time that cannot be spent in  shops!
The recession was seen a  spur to innovation.  A disproportionate number of the Fortune  500  companies were apparently founded  during recessions.  A recession forces businesses out of their comfort  zones and fosters innovative thinking.
There was optimism about the shortterm economic prospects, but a big worry about the longer term trend in Government finances.