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Swimming without trunks

Speaking in Dublin yesterday at the sixth Mercer European Investment Forum, Professor Willem Buiter, a former member of the Bank of England monetary policy committee and professor of European political economy at the London School of Economics, said signs of economic recovery were unlikely to emerge before late 2010 or early 2011.

He argued that the recession of the real economy was only just beginning outside the United States and, because of the “tattered” state of the financial sector, it was likely to be both deep and long.

He also has some interesting commentary in relation to Ireland’s banking crisis, particularly relevant in light of yesterday’s recapitilisation of AIB and debate surrounding NAMA.

Professor Buiter said that recovery through recapitalisation of the banks and renewed lending would only be possible when the full scale of bad debts was disclosed. Professor Buiter said “by the end of the year, we will truly know who has been swimming without trunks” .

He went on to describe Ireland’s property boom as “the biggest since the pyramids” and said in relation to the banking sector “There was no supervision, no regulation and wild excess”.

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