Published in today's Sunday Independent.

Recovery is not reform. The government's intended path to recovery is
a mixture of borrowing, pay cuts, and spending cuts. All recovery
plans treat the symptoms of a downturn. Global aggregate demand has
been buoyed by injections of capital by governments. There is evidence
the medicine is working.  Global recovery looks in sight. Reform
however, is a deeper, and more important, matter.

What kind of permanent changes to the international financial system
do we want to see to reduce the likelihood of prolonged downturns in
the future? Recovery and reform sometimes go hand in hand. At other
times reform hinders recovery.

Confidence is central to investment. Domestic and international
investment is crucial for economic recovery. Large scale reforms, for
example the imposition of tighter financial regulations, will dent the
business community's confidence in the government. Here recovery is
hindered by reform.

Reforms should be preceded by a probe of just how and why the system
failed. True reform should take time, be politically painful, and have
measurable outcomes.

Reforms of the Seanad and our electoral system have been mooted.
Neither will amount to much. The reform of the Seanad is a red
herring. Electoral reform changes the process by which TDs come to the
Dáil, not the rules they live under as TDs. This is window-dressing
rather than deep reform, because ordering and implementing a deep
probe of how and why to improve the political system is in no one's
interest once they are part of that system. So it is with our banks.

Bankers, through the Irish Banking Federation, have 'welcomed' new
regulations on their behaviour, but stress that draconian regulations
would stifle innovation in the financial markets and help keep Irish
banks (and, perforce, the Irish economy) down. Of course they would.
The recovery of our banks will not coincide with their reform.