Popular opinion in the last few comments seems to be that privately owned financial industries are run in a far better than nationalised ones.
The ability to have these opinions in a bubble apart from what has happened in the last year is just not well grounded in any of the facts.

Take a look at the not for profit financial enterprises in Ireland at the moment.

An Post and the Credit Union.

How can people think that these institutions were run less well than the banks in the last 10 years?

How can well educated people still think that terribly run banks with the profits they take out for shareholder dividends and bonuses for executives will do a substantially (30 billion euro) better job than a nationalised version?

Wake up!

Nama is a clear transfer from the prudent poor masses to the irresposible wealthy few.

The reason they will get away with it, apart from the fact they always have, is because not enough people understand and almost everyone is scared.

You are right that nationalisation is the logical outcome if you pay a certain price. However, as the Anglo model shows and indeed the blanket guarantee of almost all liabilities shows, investors conclude the obvious that its time to exit Dodge.

Morover, you and your compatriots in the “cartel of 20″ have failed to answer the key question-”is a state owned banking system an optimal solution?”

Lastly, you and your “20″ have also failed to answer the question of whether we can raise the money now to fill the hole. We may not have any option but to kick the can to the next generation & hope that inflation bails us out.

What price an unfinished hotel/leisure center in Kilternan with a reported 180 million of borrowings attached and now in liquidation.

A well run nationalisation is surely an oxymoron!!!!

@Karl

So the NTMA issues bonds to the banks to buy equity. The Banks then run to the ECB to repo the bonds. So the Irish govt ends up owning a long term asset (bank equity) financed by the ECB overdraft.

Actually, what they should really do is liqidate the NPRF to buy bank equity.
Come to think of it, if if Quantitative Easing follows through to its logical conclusion in inflation, NTMA should liqidate all its fixed income and cash and issue as many bonds as possible and buy equities, commodities and SHOUT it ….PROPERTY.

WITH ONE BOUND WE ARE FREE

No, honestly, as far as I see it, the bonds can be the same. They’re a captive in either case.

If you overpay, you issue bonds to a captive buyer-the banks & take your chances that time and inflation bails you out. You can even issue the bonds at a low coupon (floating rate) to your captive buyer.

If on the other hand, you pay the appropriate price, the banks need equity now. You then have to issue bonds, possibly at a higher coupon on the open market to an unwilling or uncertain buyer.

In both cases you have to issue bonds, but it seems to me the former strategy is an easier one to implement.

A well run nationalisation is the right response but given that a ballsed up nationalisation is a possibility then which is the least worst scenario? Bad nationalisation or no nationalisation? It’s funny that as Karl pointed out when I wrote on this before, its the one argument finance can’t make…

Then I keep thinking, is there something they’re not telling us?

This is not the first time today that the idea has come up that re-capitalisation requires “cash” while overpaying requires only “bonds”. It’s not true. You can acquire an equity stake in exchange for government bonds. Why would anyone think that this couldn’t be done.

may I add another few valid reasons why Lenny the Lion wants to over pay rather than nationalise.
1) he wants to avoid the Joe Duffy show becoming the forum for debate on the pricing and allocation of credit.
2)The Anglo debacle shows that deposits walk from a national bank because investors rightly fear the the politicisation of credit
3) He knows the gaping hole in the public finances means he cannot access the cash to recap the system now. Better to overpay & defer the bill to the next generation.
4)he looks around at other quangos & state bodies and worries that the state cannot manage anything in a competant fashion.

I’d go for a combination of 1 through 5. Nobody believes 6.

http://www.ise.ie/app/equityList.asp?type=MARKCAP

Let’s leave it at that, if you don’t mind. We can all get our facts wrong — I’ve done it here sometimes and have to come back and admit it. And Sarah is to be commended, not discouraged, for using a forum like this to get useful information.

I don’t mind journalists asking questions.

I mind when journalist write normative articles on subjects where they get there facts wrong. I have seen many do it.

Those that hold the megaphone need to use it with prudence and humility.

That’s hardly a constructive approach. If the theme of this thread is to despair at the lack of knowledge of opinion writers then the solution is to educate them. A superior and insulting tone will only drive them away. Let’s add some more points to my offering on why opinion writers seem so desperately ill-informed.

1. Asking questions risks exposure of their own ignorance. (Which given the small number of economic journalists is a fairly widespread condition)
2. They might be insulted and mocked.

Solution
- don’t ask in the first place
- ignore the issue and then hey! the whole thing will get pushed through without the public any the wiser of what is going on! Definitely one way to manufacture consent.

The source of all the problems seems to be a wide spread belief, deployed by government, that we can navigate through this mess without anyone bearing any loss. Hence, failure to nationalise, over the top deposits guarrantees, liability guarrantees (!!), tax payer purchase of assets on “mark to myth” basis etc. etc.

Of course we can’t agree, because with each and every new “policy”, we find that the losses haven’t actually gone away , but shuffled somewhere else. NAMA is just the latest.

If journo’s (like you) don’t understand the issues - and you clearly don’t judging by your articles on economic and financial issues that you seem prone to write - then don’t do it.

Your “pension company” contact seems a pretty poor one.

Pensions will not be wiped out. Total exposire to ISEQ stock is pretty small on aggregate for Irish occupational and personal (e.g. PRSA) schemes.

At an individual level there are still pockets of anachronistic strategies that hold overweight ISEQ positions, but that would be around 9% of total assets and falling rapidly as people finally accept that “buying Irish” like this was just stupid.

I really enjoyed that article you had on our zimbabwe style land reclaim we had in the thirties under DeValera. I genuinely never knew that happened.

I have to admit a small bias in that I am a huge fan of Noam Chomsky.
I think when he passes on, the planet will loose about half its capacity for critical thinking.
In a book he wrote years ago, manufacturing consent, He pointed out the many ways Journo’s end up writing in very biased ways completely innocently just because they are “led down a certain path”. He called them ‘Filters’.
However when it comes to the owners of media and the pressures exerted by PR and Advertisers it is the lack of cynisism that is deafening.

The rather public exit interview Eamonn Dunphy and Vincent Brownes article in the Times last Wednesday with regard to Denis O Brien were to my eyes candles in the dark and more journalists would do well to come into the light.

But even if they did what could they do without damaging their careers?

But on my point about hiring people with a certain ideology, I dont even think it is that cynical.
I mean if the person doing the hiring has a certain ideology arent they more likely to like someone of similar ilk?

With regard to point 4 I would suggest that the best thing for a good nights sleep is a clear conscience.

This site is doing a great job at informing journos, and as some of you know I’ve done some reaching out I have the luxury of a week to think between columns but many reporters are under enormous time pressures. The only way you’ll “convert” the guilty parties is to reach out yourselves into bilateral communications. You might feel you shouldn’t have to do that, but maybe the country needs your PR skills

And that includes NAMA. We should do the absolute minimum that we have to do, we simply don’t have the money to do anything else.