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Page added on September 27, 2010

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Ex-BP boss to talk on banking crisis


PETER SUTHERLAND, the chairman of Goldman Sachs International and former
European commissioner, said yesterday that the Government may need to cut the
annual budget by more than 3 billion this year.

Speaking to an Institute of Directors lunch in Dublin, Mr Sutherland said the
alternative was much greater pain through higher borrowing costs if the
Government fails to act decisively to fix the States finances.

The figure of 3 billion has been postulated as the improvement to be
sought in the next budget, he said. We are told that this is all that the
political system can bear, but if all the mainstream political parties accept
that more is required although disagreeing perhaps about where to find the
3 billion and are prepared to say it, we can find a way.

Mr Sutherland argued against a slower rate of budget cuts, saying that this
simply will not fly as an option. Any weakness in one budget will be punished by
the market in a manner which we will be unable to take.

Mr Sutherland said a default on State debts would leave the Government without
the capacity to manage its affairs or raise finance. It simply is not an
option to choose, he said.

Mr Sutherland, chairman of oil giant BP until last year and former attorney
general of Ireland, warned there was no way the country could walk away
from the cost of Anglo Irish Bank.

He criticized repeated calls by the Financial Times echoed by other
commentators for the Government to let the banks losses fall on the
institutions bondholders.

The newspaper has, among others, put forward the classical market economist
case, he said, warning that removing protection for Anglo bondholders might
not be a wise course of action.

Mr Sutherland said the national debt was rising at an alarming rate due to
Government spending and this was overlooked in the public debate by the
constant and intense focus on the bank crisis.

The two issues needed to be separated, he said the country’s running costs
were still far too high and were way above the European average in the
public sector.

We have to recognize that as currency devaluation is not an option, downward
flexibility in wages and prices is essential to avoid unemployment, he said

One Comment on "Ex-BP boss to talk on banking crisis"

  1. Marcus McSpartacus on Mon, 27th Sep 2010 9:31 am 

    This is the same man, who while on the board of another Irish bank – Allied Irish Bank – was one of the men who wrote off the substantial debts owed by the former Prime Minister, Garret FitzGerald, who had previously appointed him as Attorney Gerneral.

    You might want to try tightening your own belt there, porker.

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