40 replies on “Sunday Independent Article on NAMA”
Karl
top class stuff. Whats depressing is that as I was reading this I was listening to RTE1 where the panel politicos were saying “well, NAMA’s very complicated, people dont really understand it”.
I think a day of protest needs to be organised outside government buildings. The only thing the “soldiers of destiny” seem to be afraid of is the international media. Perhaps that would get their attention.
@richard
No, the international media wont bother to turn up unless it was 50,000 people with full riot regalia.
As Karl says, askign ones local FF/GP/FF-genepool reps wtf they are thinking is a much much better idea.
First class article Karl.
Listening to the Marian Finucan show of RTE this morning it seemed to me that the message is slowly getting through. The majority of the panel were anti NAMA and overpayment. The presenter even suggested that the Irish are a docile lot and if this was proposed elsewhere there would be riots.
Depressingly she later opined that the taxpayer would have to pay in any event. This appears to be the core argument that is not getting across. The overpayment enthusiasts seem to be confined to the DoF and stockbrokers – the latter getting a lot of uncritical publicity for their dubious “research”.
@Brian, in my experience, the “FF/GP/FF-genepool reps” are hiding behind the “NAMA’s very complicated, people dont really understand it” excuse.
When it comes to the idea of “long-run value,” I share – probably along with most economists – Karl’s reflexive scepticism. It’s hard not to ask: If the assets are so obviously undervalued in the market, why wouldn’t “prudent, knowledgeable people” be willing to buy them.
This led me to look back at the “limits to arbitrage” literature that has been developed in particular by Andrei Shleifer and various co-authors. I think the ideas in these papers are worth debating in the context of NAMA. On the face of it, this literature provides at least some justification for the “long-run value” idea. I would be interested to hear what finance experts think.
Two papers (links below) in particular are worth looking at: Andrei Shleifer and Robert Vishny (1992), “Liquidation values and Debt Capacity: A Market Equilibrium Approach, Journal of Finance, 47(4)*; and Andrei Shleifer and Robert Vishny (1997), “The Limits of Arbitrage,” Journal of Finance, 52(1)**.
While behavioural finance ideas do figure in this literature – notably the role of “noise traders” – these two papers do not invoke deviations from full rationality.
The first of these papers sheds possible light on why industry insiders, those presumably best positioned to spot undervaluations, might not be in a position to buy.
The following passage sums up the argument:
“The principal reason for asset illiquidity – and the principal contribution of this paper – is the general equilibrium aspect of asset sales. When firms have trouble meeting their debt payments and sell assets or are liquidated, the highest valuation potential buyers of these assets are likely to be other firms in the industry. But these firms are themselves likely to have trouble meeting debt payments at the time assets are put up for sale as long as the shock that causes the seller’s distress is industry- or economy-wide. When they themselves are hurting, these industry buyers are unlikely to be able to raise funds to raise funds to buy the distressed firms’ assets. . . . Because of credit constraints and government regulation of industry buyers, assets that would have to be sold to industry outsiders who don’t know how to manage them well, face agency costs of hiring specialists to run these assets, and moreover, fear overpaying because they cannot value the assets properly. When industry buyers cannot buy the assets and industry outsiders face significant costs of acquiring and managing the assets, assets in liquidation fetch prices below value in best use, which is the value when managed by specialists.” (p. 1344)
The agency costs facing outsider investors is taken up further in the 1997 paper.
[C]ommonly, arbitrage is conducted by relatively few professionals, highly specialized investors who combine their knowledge with the resources of outsiders to take large positions. The fundamental feature of such arbitrage is that brains and resources are separated by an agency relationship. The money comes from wealthy individuals, banks, endowments, and other investors with only a limited knowledge of individual markets, and is invested by arbitrageurs with highly specialized knowledge of these markets. In this article, we examine such arbitrage and its effectiveness in achieving market efficiency.
In particular, the implications of the fact that arbitrage – whether it is ultimately risk-free or risky – generally requires capital becomes extremely important in the agency context. In models without agency problems, arbitrageurs generally become more aggressive when prices move further from fundamental values. . . . When the arbitrageur manages other people’s money, however, and these people do not know or understand exactly what he is doing, they will observe him losing money when . . . prices . . . diverge. They may therefore infer from this loss that the arbitrageur is not as competent as they previously thought, refuse to provide him with more capital, and even withdraw some of the capital – even though the expected return from the trade has increased.” (pp 36-7)
Come on guys, you gotta leave the ivory tower for a few minutes. I have an MSc in economics, taught economics at Cambridge & London Universities (admitedly 100 years ago) and I still get a headache thinking about NAMA. The reason why ordnary folk find it complicated is because it is. BL & KW have made fabulous efforts to explain the complications but we all need to try harder. And you have to get down and dirty. Just keep hammering away at the idea that overpayment is a free gift to shareholders. It’s a great soundbite that happens to be true. If you are prepared to get dirty – and playful with the truth – also imply that it is a bailout for builders. If you want to play this game you have to play by the rules, no matter how much you don’t like them. Otherwise your opposition is going to kill you.
@ Brian
My letters are in the post. Perhaps an online petition on this site would be useful also. You get over 9,000 visits a week. I could see it steam rolling if a link to the petition went viral through work emails. Just a thought.
@Richard
Well, as Philip is the site owner, such a decision would be up to him.
Take this in for a minute. There’s a value that prudent, knowledgeable people would pay for these bank assets (being prudent and knowledgeable, presumably they know the current crisis won’t last forever). And then there is some higher value that we are going to pay, based on something about things becoming ameliorated.
Perhaps a point here is that the value of these assets varies depending on who owns them and how they are mangaged. An individual investor has no or limited market power. If he buys a loan secured on a piece of development property he must accept the market price of that property. However it might be the case that NAMA will have market power. It will be able to influence the price of development land. If that is the case then these loans might be worth more to NAMA then they are to an individual investor.
Second, there seems to be a potential contradiction in what Karl writes.
He seems to support market rationality/efficient pricing when it comes to pricing development loans today. However, he accepts that the government may have to hold onto their equity stakes in the banks for a few years to get a good return. Why is the market capable of correctly pricing development loans today but incapable of correctly pricing our recapitalised banks tomorrow?
I suppose neither of these points change the fact that the government should pay as little a possible for development loans. But they might influence the assesment of probable losses from NAMA for any given % haircut.
@Christy
I’ve never claimed that the market is incapable of recapitalising banks nor do I have a strong stance on how long any state equity stake would be held. In fact, I am quite confident that, once the banks have been sorted out properly, that they would be an attractive proposition for private capital.
Also, as regards petitions and the like, I think there are a number of reasons why this website would not be a good host for such a campaign.
The following is the text of an email I sent to members of the Green Party on Friday 7th August. The silence of the Greens on NAMA is an abdication of responsibility for the wilful handover of €30 billion to speculators when it will be badly needed by the citizens of Ireland in the next 5-10 years.
From : Aidan Conlon
To: Ciaran Cuffe ,
Dan Boyle ,
Deirdre de Burca ,
Trevor Sargent ,
Eamon Ryan ,
Mary A White ,
John Gormley ,
Paul Gogarty
Date Fri, Aug 7, 2009 at 9:23 PM
Subject: NAMA and the “TINA” syndrome
mailed-bygooglemail.com
“Rather than attempting to prop up banks and insurance companies with trillions in bailouts, it would probably be better simply to let them fail, however nasty the short-term consequences, since they will fail anyway sooner or later. The sooner they are replaced with institutions that serve essential functions within a contracting economy, the better off we will all be.”
In his August 2009 Museletter at http://www.richardheinberg.com/Museletter.html Richard Heinberg addresses the question -Is this a “A Temporary Recession or the End of Growth”?. It is well worth reading before you all vote through the NAMA legislation in September or October.
This government (which includes the Green Party!) presents the resolution of the banking crisis as hingeing on the creation of NAMA – and There Is No Alternative (TINA).
Well there are alternatives, one of which I will come to later.
The upcoming vote on this proposal could bankrupt the state and beggar the citizens of Ireland for a generation.
The government should not blow away up to €30 billion in a gift to speculators when it will be badly needed in the next 5-10 years. Some of these speculators are the very same people your party have railed against in the last 10-15 years.
I did a search on your website for any reference to NAMA. “No results were found when searching for “nama” was the answer. This is not good enough. As a party of government your own views on this crucial proposal should available to all. What is your view on the NAMA bill as published? What safeguards will you demand so that the banks will not be overpayed by NAMA? Will you support the guillotine procedure when this bill gets to the DAIL or Seanad?
One proposed alternative:
(Jesper Says: August 7th, 2009 at 5:19 pm in Irisheconomy.ie)
“1. Recognise bank losses
2. Nationalise some or all banks temporarily
3. Insert equity
4. Sell banks to the highest bidder
The difference between NAMA and nationalising as above is that even though the Irish government might be stuck with losses, the sale of healthy banks should recover some of the losses the previous owners incurred.
Overpaying through NAMA is a gift of money to existing shareholders, buying an equity share in the banks or nationalising the banks is making an investment.”
The Green Party cannot hide from this momentous decision. What will it matter if the “Cut in Oireachtas CO2 emissions sets example for other places of work” or if “Boyle welcomes Fine Gael’s adoption of Green policy on tax credits” or if ” Sargent announces review of organic scheme” if the country is bankrupted by a FF inspired NAMA which is allowed a free pass by the Green Party.
Convince me with the force of your own arguments for NAMA that I’m wrong or oppose it.
The time for sitting on the fence or hiding behind the FF skirt is over.
Aidan Conlon
Hi Guys,
I’m a long time reader, first time poster. I’m a concerned citizen, in my mid-twenties.
My opinion is we are not like the French; we roll over, because the message from government has gone from ‘Why don’t they go commit suicide’ to ‘minimum wage may have to be cut’. We’ve been lied too and taken in by auction politics. We have no trust in politicians. Unless you’re a David Begg they won’t listen to you and even then they won’t listen to you.
Anyway, what ever the reasons, there’s a massive disconnect there. I think most people will agree that we the public are apathetic. What ever the reasons we’re apathetic.
This craic though!!!! This sickening idea of putting the country on the hook for generations! If this happens (as proposed out by FF), it will be un-like voting machines and decentralisation, we wont be able to laugh about this one over a pint in our local. This one will be too painful and far reaching to laugh about.
Anyway, my points are on protest. The only way to stop the FF (we’ll do it our way at all costs) machine is protest and of course getting the media on side. The media, who in my opinion should be in the dock just as much as any exAnglo pyramid scheme manager.
Obviously it’s up to Philip but I’d like to suggest that this site is a good place to bring it up a notch. It’s obvious from reading the papers that a fair few journalists have began reading the opinions offered on this site.
For the protest point of view I’d like to suggest we put a shout out to the site readers for opinions on the best approaches and sound bites:
-Site Signatures (ref. Richard)
-Site donations.
I’d like to see a fund set up. I for one would donate to a protest fund (not that I’m loaded, I’d see it as an investment in my future) for leaflets, marches etc
Time Donations
Perhaps some of the site donations could be put in to a spin of site, http://www.no2nama.ie? Where people could go to donate time (between dole queuing of course), to deliver the message to the door-step, or to organise the knitting of a massive No-to-Nama banner for the next soccer international…. non-political people, (formerly)professional people, regular people, people who care about the future of this country.
Sound bites:
– Nama is a gift to shareholders (ref. KW)
-AIB share price has increased 1000% on Nama windfall promise. (Since March price of 28cent)
JF
AIB’s overseas shareholding as a percentage of the total issue, fell from about two-thirds during the boom to 59% in 2008.
The protection of shareholders would mainly benefit foreign hedge funds, which by their nature make risky bets.
@ Michael Hennigan
Good point. Would bet the the hedge funds hold a lot more now with the recent run up in price. The majority of trading appears to be in London and appears to be just gambling. Good article by Dan White in the Sunday Independent on AIB
Great article Karl.
You pulled no punches. 🙂
I agree that this site is not the right place for organising protest as well.
However I still dont get why the trade union movement and labour an others have not yet organised a protest about this.
I think if they did they would easily get 50,000.
The Anti Iraq invasion protest got 1000,000 a few years ago (one of the biggest per capita in the world at the time.
I also think Calling the local FF /green to let them know is helpful, but considering their combined support at the moment is probobly about 20-24% I am not eve nsure this will be enough.
Am I the only one that gets the feeling that the governments hands are being tied on this by some high financial hedgefund powers either directly or through the E.U.
Hedgefunds do provide a lot of employment and make up a large part of our GDP.
Anytime I see Brian Lenihan lately I get the feeling that he is scared to tell us everything he knows.
@Eamonn M
iv set up a few questions on my own pages that one could email. This isnt the place for it.
Why do they persist? Mostly at this stage I suspect a fear of being seen to be weak if they back down.
I’m reluctant to get too political here but the current Dail arithmetic is a factor worth keeping in mind when campaigning against Nama. The following six TDs mainly vote with the government but are not on the FF or GP whip —
Behan, McDaid, Healy-Rea, Lowry and the Sligo 2. If my understanding of the numbers is correct, all of them voting against the bill would lead to it losing by two.
Karl : Jackie HR is more FF than Cowan. Take it from me…
@Eamonn Moran
“Am I the only one that gets the feeling that the governments hands are being tied on this by some high financial hedgefund powers either directly or through the E.U.”
Yes, the government certainly acts as if has been captured by big financial interests. Government ministers look positively scared in the face of this crisis. NAMA is their prayer for salvation and nothing else is heard or will be countenanced.
@ Karl – fair enough – i was putting arguments/recomendations in your mouth in that case.
I think some other commentators have suggested that nationalised banks should not not be immediately floated/sold to private equity once they have been recapitalised while simultaneously claiming/implying that bank securities are currently “correctly” priced.
On the other point, do you think there is a difference between what a development loan is worth to NAMA and what the same loan would be worth to an individual investor?
If so, should maybe long term economic value could be thought of as what the development loan is worth to NAMA, while market value is what the loan is worth to individual investors.
@KW et al
Good article Karl. Any chance you might nail a few theses to the front door of Merrion streets. maybe something catchy like “95 things wrong with NAMA”.
If Fine Gael or Labour now come out strongly against overpayment, will you and Brian sign up for the cause. FG need a good candidate for Cork SW or maybe NC-perhaps Brian might consider that. FG may need a good 2nd in South East…how about it Karl or possibly a running mate for Eamonn Gilmore in Dun Laoghaire.
“Ask not what your country can do for you ……”
The modern politician’s mantra: “when the polls change, I change my opinion”
(With apologies to Keynes)
If Ireland is to play on a level playing field, wages and property values have to be competitively priced. The gov’t is focused on saving the banks and developers to the exclusion of the population as a whole. Any efforts to artificially prop up wages or property values will simply prolong the recession to the detriment of business and labour. Ireland engaged in self defeating behaviour for over fifty years in the recent past and it appears to me the prospects of an encore are high. Adjustments are in order and tenaciously hanging on to the cronyism, cliquishness and self-dealing we are accustomed to will lead to decades of lost opportunities.
Great article Karl!
@ jll Nail them also on the foreheads of Eamon Ryan and John Gormley who have become two of the most undemocratic politicians in Leinster House. The Greens have already lost a ton of seats but if they fail to see the writing on the wall and vote for NAMA then that is the end of the Green Party! This is not a political statement, it is not a wishful thinking statement. It is a statement of fact! It is the Green Party that should be organizing and leading the protests.
How would JHR vote against FF when he ‘genuinely’ thinks that KERRY is the centre of the universe.
These guys, Gormley and Ryan have taken the Greens and everything they ever stood for hostage and if there are any Greens left standing they better mobilize while they still have any semblance of a party!
Well JL thanks for the vote of confidence. But I already have a job thanks.
As a fellow kerry man, i can of course understand why JHR thinks that…. 🙂
More on NAMA – I see over on p.ie that the GP had a “deprogramming” meeting with Alan Ahearne and Brendan McDonagh, to counterpoise the dreadful claptrap some university fellas told them. It would be interestign to see these presentations, to allow the public at large to compare and contrast. FOI anyone?
@ Brian Lucey
Why did I think you were a Corkman?
Is a university lecturer a “job”?
Why not follow George Lee, your country needs you!!!
Steady on, gents. The lather of indignation at this assembly of economically damaging tactics is impressive, but you underestimate the power of the forces that are united in their determination to give flesh to this imbecility.
You have a government that is determined, by hook or by crook, to get through the next Dail session. On this NAMA venture it has enlisted the full support of the DoF mandarins – who are the princes of the permanent government, their foot soldiers, chosen mercenaries, the financial regulator/Central Bank and, apart from a brief wobble by Dr. Somers, the NTMA. It is naive to think that expressions of economic rationality will prevail against these forces.
This is a classic “Irish solution to an Irish problem”. The Irish banks, to all intents and purposes, have been “nationalised” – apart from a name on a share certificate. In exchange for off-loading their dodgy loans, they will receive bonds with a low coupon which they can repo at the ECB for cash to buy Government bonds at a high coupon – bank profitability immediately enhanced (via transfers from taxpayers and EU largesse) and the Government’s exposure to the international bond market is reduced. The real economy (in terms of advancing credit), households facing repossession, businesses going bankrupt and current and future taxpayers can all go hang.
The dodgy loans – and the accompanying public anger at developers – will have been kicked out into the long grass where, after a while, public interest will diminish and, if it does surface from time to time, little chunks of land or property may be extracted for “socially” desirable projects to keep the masses happy.
The Government will not budge one iota from this chosen NAMA path. Even the slightest concession would convey weakness. Its ultimate, fear-inducing trump card is that international bodies and markets are aware of, and have approved its course of action (selective quotations from the IMF’s report will be trotted out, The EU Commission will be dragged in, favourable reactions to Minister Lenihan’s mini-roadshows will be highlighted, etc.). Any deviation from its course of action would deprive Ireland of the support of the international institutions and markets – and this would be fatal. It’s the Thatcherite TINA (There is No Alternative) all over again.
I suppose on the bright side it will keep many economists and economic historians gainfully occupied as they sift through the detritus of the Irish economy in the next few years.
@ Paul Hunt
“It is naive to think that expressions of economic rationality will prevail against these forces.”
While your view of the likely course coincides with my own, I do not subscribe to the inevitability of the shareholder bailout. Most of the commentators in the press are now seeing it for what it is. Even the DoF mandarins are not immune to the growing public realisation of the effect NAMA, in its present incarnation,will have on this little country.
Is it not the case that the ECB mandarins are key; everything depends on them accepting NAMA bonds for cash and continually rolling the bonds during the expected lifetime of NAMA. A changing of the guard in Germany in September could have a profound effect on the thinking of the ECB.
Or maybe I am just being naive.
podubhlain: Our best bet in stopping NAMA lies in a grassroots campaign to give an ultimatum to the TDs. If you vote for NAMA you do not get our vote. And we are going to tell our friends and family to do the same because NAMA is a rip-off to the tune of 30 billion and there are much cheaper ways to get the banks going again.
Many thanks Brian L for the oireachtas email address list on your website.
However before I develop any illusions about the impact of rational argument on the government parties, mail to all@oireachtas summarising the reasons why Nama as currently proposed is lunacy has so far simply swamped my mail box with “out of office” notices from FF and GP
All opposition parties have responded courteously and personally, albeit simply reiterating their official positions. Deathly silence from the other two.
@podubhlain,
One should never underestimate the ability of a determined government, supported by the “permanent government” and its associated agencies and mercenaries, to pursue a wrong-headed policy in the face of convincing evidence of the damage being caused.
Nor, because it is of great concern to us, should we assume that the state of affairs on “this little island” is of great concern at the high councils of the EU. Ireland is seen a a bit of a nuisance at the moment and, because it is not likely to bulk large given the scale of the ECB’s operations, maintaining the largesse may be seen as a manageable and justifiable cost to keep the pesky Paddies solvent and on board. And I suspect this stance will survive any changes of government in the major players.
Furthermore, I would not be surprised if, in advance of Lisbon II, the Government had sought commitments on these matters from the Commission and the ECB. I suspect that Minister Lenihan’s insouciance that the EU won’t let the Irish banking system fail is based on more than a wish and a prayer.
Finally, I realise that the site-owner and the listed principal contributors are probably chary of allowing this site to become a platform for a campaign against NAMA, but Karl W, in his Sindo article, has lit the fuse – and received the expected response from posters. It is a belated, but formal, recognition, that bad economic policies may be stopped or modified – and good ones advanced – only by convincing those who enact the necessary legislation.
However, apart from relatively few senior ministers, it appears that most FF/GP TDs have little understanding of NAMA. A large number realise that, electorally, they are “dead men walking”. Many realise they will not sit in the Dail again after the next election and maximising service and pensions is the name of the game. NAMA is being sold to them as a special visa in the passport through the next Dail session. After that, who knows. Some serious problems will have been kicked into the long grass and things might start to pick up.
The most likely alternative government is unlikely to be able to muster a coherent policy stance. FG and Labour are probably further apart than they have ever been. Michael Taft of SIPTU, on another thread, provides a good flavour of Labout/TU economic policy and it is difficult to see how that may be reconciled with the path FG seems to be pursuing.
FG, on its own, is unlikely to breach the 70 seat barrier. Too many single FG seats in 3-seater constituencies provides an incentive to the sitting TD to gut an upstart rather than splitting the vote and going for the 2 seats for fear of the upstart getting the seat if it transpires that there’s only one on offer.
Don’t worry. We’ll muddle through – as we did during the GUBU decade from ’77 to ’87. Unfortunately, when we finally decide to take the necessary corrective action, we may find that the international environment is not as benign as it was in the ’90s.
@ Paul Hunt,
I think you are being a bit unfair at conflating Labour with SIPTU policy. Labour policy is as yet opaque on many issues-probably for good reason. SIPTU policy for all the reasoned words of MT is soak the private sector middle classes and preserve the status quo in the public service.
Labour is struggling with its conscience at the moment. Does it adapt a pragmatic approach or stick with their own crowd?
@jl
Fair comment. I just have a horror of a repeat of the FG/Lab pantomime horse performance from ’82 to ’87 when decisive action was needed to recover from Jack Lynch, Martin O’Donoghue and CJH spending their way our of a recovery, but it wasn’t delivered. Admittedly the ’94-’97 Rainbow seemed to work, but voters rightly took umbrage at Dick Spring’s hubris in changing horses in midstream without seeking their consent.
It’s heartening that you have detected a conscience in Labour with which it is wrestling, but I’d be reluctant to bet on the outcome.
The afore-mentioned trio had just 4 years to mess things up; this lot have been in power – in some shape or form – for 12. The economic damage seems roughly proportionate. And there are far too many vested interests with their snouts in the trough and they have infected all the main political parties. An examination of the former professions/jobs of sitting TDs might provide a clue.
In any event, a pick-up in the international economy will release the emigration safety valve and the trough-guzzlers will have more scope to indulge their desires – even if the trough is smaller and shrinking.
There is enough people with enough sense in this country to stop this ridiculous idea. Getting the poor to bail out the rich there is no other way of looking at this.
I would suggest we set up a protest group People Against NAMA – just like what NAMA have done we will come up with a friendly name – PANAMA (People against NAMA) Get the media on side fast.
We need to move this forward before the Green Party have their vote. If we put enough pressure on the Greens this will bring down the Governement and NAMA will fail – is there any way we could get someone like George Lee to head it up media and political savvy ? In fact where are you George??
And while we are on about the banks, isnt it amazing that the only industry who have not had a pay cut is the baniking industry – and this includes the hundreds of Anglo Irish Bank staff who earn in excess of 100k and some in excess of 200k!!!
Kate Brennan, Ballsbridge
Folks, listen to Garo above: email/phone your local TDs. tell them that you will NEVER vote for them, their children or their party ever again if they vote for NAMA. It only takes 10 minutes. They will not commit political suicide, so if enough of us do this it will work. I have just emailed my 3 local TDs and all the green party TDs this afternoon. Hit them with a deluge folks, this is too important not to.
Here’s one the missives I sent if anyone want s to cut and paste:
Hi Batt,
I am a constituent of yours, and have always voted FF in previous elections. I am extremely worried and angry about what the Government are going to do with the NAMA bill. It seems €90bn of taxpayers money will be given to the banks in exchange for property worth a very small fraction of this value. It seems to me we should be paying a fair price for these properties, and either lending the balance of the money required by the banks, or taking a share of ownership in them. Worse again, it looks quite possible that once we’ve bailed them out, the Irish Banks may well be sold off to foreign interests, which would seem to defeat the purpose of the bailout. The only plausible reason I can see for such a giveaway, in the face of obviously better alternatives, is that the government are seeking to deliberately enrich various vested interests at the expense of Irish Citizens.
I am writing this to urge you not to vote for this. Given the slim majority the government has at present, you (or any government TD) could quite possibly hold the balance of power in such a vote, and could be in a position to make a huge difference to ordinary Irish people’s lives for generations. I would ask you to think carefully about this prior to any vote. I also want to tell you that I will not vote, ever again, for any politician who votes for this legislation. I am going to inform the other TDs in Cork North West of this also.
Yours,
Seán O Donoghue.
@ Kate Brennan
I like your idea “PANAMA” and of course you are right the government are bailing out the rich with everybody’s future incomes being diverted into sites that in many instances, don’t even have sewage, water or planning permission in place! Agricultural land is now 15,000 an acre or even much less so what is all this talk about paying billions?
Of course, we must not forget, that this is the same government that sat back as our children were being taught in pre fabs. Now, they want us to pay 65 billions for NAMA. Meantime, we are still going to be paying a rent of 60 million a year for, guess what? Pre fabs! as the government is locked into these contracts for years to come. Same as they want to lock us into NAMA for 15 to 20 years! Same as the e-voting machines have been in storage for years already nice rents there too. Skips cost less than 200 Euro and Hammond lane is still accepting scrap. So why not throw the whole lot into a skip tomorrow and save the country millions or is that to complicated?
Lunacy, of the highest order. And this IS a “developer and bank bail out” and Colm McCarthy has not nailed that one either. NAMA takes over the loans and the developers still owe NAMA….. and will be pursued by NAMA runs the myth, but what chance has NAMA of actually getting any money from developers who have been given a head start of practically twelve months? Two chances, I would say, slim and none! If Colm McCarthy thinks that these developers will be broke, as a result of NAMA he is not living in the real world. Their corporate identities and raggle, taggle raft of companies will be broke but certainly not the developers themselves! Remember, it is only the little people that go broke!
The element of surprise was completely squandered, deliberately in my view, by our government! Accounts should have been frozen last september when the government “guaranteed the banks!” Not one single person has gone to jail. Somehow, mysteriously, the country has been brought to this very dark place but we are unable to figure out who is responsible emm, interesting!
How on earth, can we have an Oireachtas inquiry when the very members of that Oireachts are the people with whom the buck should have stopped! How could anybody have any confidence in an inquiry carried out by the Oireachtas? They are certainly not going to find against themselves yet we all know they are the principle architects of the mess. At the end of the day, the Oireachtas are responsible for how the banks and financial infrastructure operated and how the regulator and central bank operated.
In short, it was the Oireachtas that designed and fueled the boom and failed to regulate it. One idea, if we are going to have such an inquiry, why not let a frugal man, who has expertise in that area chair it! His name is John O’Donoghue.
40 replies on “Sunday Independent Article on NAMA”
Karl
top class stuff. Whats depressing is that as I was reading this I was listening to RTE1 where the panel politicos were saying “well, NAMA’s very complicated, people dont really understand it”.
I think a day of protest needs to be organised outside government buildings. The only thing the “soldiers of destiny” seem to be afraid of is the international media. Perhaps that would get their attention.
@richard
No, the international media wont bother to turn up unless it was 50,000 people with full riot regalia.
As Karl says, askign ones local FF/GP/FF-genepool reps wtf they are thinking is a much much better idea.
First class article Karl.
Listening to the Marian Finucan show of RTE this morning it seemed to me that the message is slowly getting through. The majority of the panel were anti NAMA and overpayment. The presenter even suggested that the Irish are a docile lot and if this was proposed elsewhere there would be riots.
Depressingly she later opined that the taxpayer would have to pay in any event. This appears to be the core argument that is not getting across. The overpayment enthusiasts seem to be confined to the DoF and stockbrokers – the latter getting a lot of uncritical publicity for their dubious “research”.
@Brian, in my experience, the “FF/GP/FF-genepool reps” are hiding behind the “NAMA’s very complicated, people dont really understand it” excuse.
They understand potholes and funerals, because that is what they need to understand. Stephen Collins’ op-ed in yesterday’s Irish Times – http://www.irishtimes.com/newspaper/opinion/2009/0808/1224252236325.html hits on this subject.
When it comes to the idea of “long-run value,” I share – probably along with most economists – Karl’s reflexive scepticism. It’s hard not to ask: If the assets are so obviously undervalued in the market, why wouldn’t “prudent, knowledgeable people” be willing to buy them.
This led me to look back at the “limits to arbitrage” literature that has been developed in particular by Andrei Shleifer and various co-authors. I think the ideas in these papers are worth debating in the context of NAMA. On the face of it, this literature provides at least some justification for the “long-run value” idea. I would be interested to hear what finance experts think.
Two papers (links below) in particular are worth looking at: Andrei Shleifer and Robert Vishny (1992), “Liquidation values and Debt Capacity: A Market Equilibrium Approach, Journal of Finance, 47(4)*; and Andrei Shleifer and Robert Vishny (1997), “The Limits of Arbitrage,” Journal of Finance, 52(1)**.
While behavioural finance ideas do figure in this literature – notably the role of “noise traders” – these two papers do not invoke deviations from full rationality.
The first of these papers sheds possible light on why industry insiders, those presumably best positioned to spot undervaluations, might not be in a position to buy.
The following passage sums up the argument:
“The principal reason for asset illiquidity – and the principal contribution of this paper – is the general equilibrium aspect of asset sales. When firms have trouble meeting their debt payments and sell assets or are liquidated, the highest valuation potential buyers of these assets are likely to be other firms in the industry. But these firms are themselves likely to have trouble meeting debt payments at the time assets are put up for sale as long as the shock that causes the seller’s distress is industry- or economy-wide. When they themselves are hurting, these industry buyers are unlikely to be able to raise funds to raise funds to buy the distressed firms’ assets. . . . Because of credit constraints and government regulation of industry buyers, assets that would have to be sold to industry outsiders who don’t know how to manage them well, face agency costs of hiring specialists to run these assets, and moreover, fear overpaying because they cannot value the assets properly. When industry buyers cannot buy the assets and industry outsiders face significant costs of acquiring and managing the assets, assets in liquidation fetch prices below value in best use, which is the value when managed by specialists.” (p. 1344)
The agency costs facing outsider investors is taken up further in the 1997 paper.
[C]ommonly, arbitrage is conducted by relatively few professionals, highly specialized investors who combine their knowledge with the resources of outsiders to take large positions. The fundamental feature of such arbitrage is that brains and resources are separated by an agency relationship. The money comes from wealthy individuals, banks, endowments, and other investors with only a limited knowledge of individual markets, and is invested by arbitrageurs with highly specialized knowledge of these markets. In this article, we examine such arbitrage and its effectiveness in achieving market efficiency.
In particular, the implications of the fact that arbitrage – whether it is ultimately risk-free or risky – generally requires capital becomes extremely important in the agency context. In models without agency problems, arbitrageurs generally become more aggressive when prices move further from fundamental values. . . . When the arbitrageur manages other people’s money, however, and these people do not know or understand exactly what he is doing, they will observe him losing money when . . . prices . . . diverge. They may therefore infer from this loss that the arbitrageur is not as competent as they previously thought, refuse to provide him with more capital, and even withdraw some of the capital – even though the expected return from the trade has increased.” (pp 36-7)
* http://www.economics.harvard.edu/faculty/shleifer/files/liquidation.pdf
**
http://www.economics.harvard.edu/faculty/shleifer/files/LimitsOfArbitrage.pdf
Come on guys, you gotta leave the ivory tower for a few minutes. I have an MSc in economics, taught economics at Cambridge & London Universities (admitedly 100 years ago) and I still get a headache thinking about NAMA. The reason why ordnary folk find it complicated is because it is. BL & KW have made fabulous efforts to explain the complications but we all need to try harder. And you have to get down and dirty. Just keep hammering away at the idea that overpayment is a free gift to shareholders. It’s a great soundbite that happens to be true. If you are prepared to get dirty – and playful with the truth – also imply that it is a bailout for builders. If you want to play this game you have to play by the rules, no matter how much you don’t like them. Otherwise your opposition is going to kill you.
@ Brian
My letters are in the post. Perhaps an online petition on this site would be useful also. You get over 9,000 visits a week. I could see it steam rolling if a link to the petition went viral through work emails. Just a thought.
@Richard
Well, as Philip is the site owner, such a decision would be up to him.
@Richard
Or…go to http://brianmlucey.googlepages.com
tell your friends….
Playing devils advocate – a couple of points
First, Karl writes
Take this in for a minute. There’s a value that prudent, knowledgeable people would pay for these bank assets (being prudent and knowledgeable, presumably they know the current crisis won’t last forever). And then there is some higher value that we are going to pay, based on something about things becoming ameliorated.
Perhaps a point here is that the value of these assets varies depending on who owns them and how they are mangaged. An individual investor has no or limited market power. If he buys a loan secured on a piece of development property he must accept the market price of that property. However it might be the case that NAMA will have market power. It will be able to influence the price of development land. If that is the case then these loans might be worth more to NAMA then they are to an individual investor.
Second, there seems to be a potential contradiction in what Karl writes.
He seems to support market rationality/efficient pricing when it comes to pricing development loans today. However, he accepts that the government may have to hold onto their equity stakes in the banks for a few years to get a good return. Why is the market capable of correctly pricing development loans today but incapable of correctly pricing our recapitalised banks tomorrow?
I suppose neither of these points change the fact that the government should pay as little a possible for development loans. But they might influence the assesment of probable losses from NAMA for any given % haircut.
@Christy
I’ve never claimed that the market is incapable of recapitalising banks nor do I have a strong stance on how long any state equity stake would be held. In fact, I am quite confident that, once the banks have been sorted out properly, that they would be an attractive proposition for private capital.
Also, as regards petitions and the like, I think there are a number of reasons why this website would not be a good host for such a campaign.
The following is the text of an email I sent to members of the Green Party on Friday 7th August. The silence of the Greens on NAMA is an abdication of responsibility for the wilful handover of €30 billion to speculators when it will be badly needed by the citizens of Ireland in the next 5-10 years.
From : Aidan Conlon
To: Ciaran Cuffe ,
Dan Boyle ,
Deirdre de Burca ,
Trevor Sargent ,
Eamon Ryan ,
Mary A White ,
John Gormley ,
Paul Gogarty
Date Fri, Aug 7, 2009 at 9:23 PM
Subject: NAMA and the “TINA” syndrome
mailed-bygooglemail.com
“Rather than attempting to prop up banks and insurance companies with trillions in bailouts, it would probably be better simply to let them fail, however nasty the short-term consequences, since they will fail anyway sooner or later. The sooner they are replaced with institutions that serve essential functions within a contracting economy, the better off we will all be.”
In his August 2009 Museletter at http://www.richardheinberg.com/Museletter.html Richard Heinberg addresses the question -Is this a “A Temporary Recession or the End of Growth”?. It is well worth reading before you all vote through the NAMA legislation in September or October.
This government (which includes the Green Party!) presents the resolution of the banking crisis as hingeing on the creation of NAMA – and There Is No Alternative (TINA).
Well there are alternatives, one of which I will come to later.
The upcoming vote on this proposal could bankrupt the state and beggar the citizens of Ireland for a generation.
The government should not blow away up to €30 billion in a gift to speculators when it will be badly needed in the next 5-10 years. Some of these speculators are the very same people your party have railed against in the last 10-15 years.
I did a search on your website for any reference to NAMA. “No results were found when searching for “nama” was the answer. This is not good enough. As a party of government your own views on this crucial proposal should available to all. What is your view on the NAMA bill as published? What safeguards will you demand so that the banks will not be overpayed by NAMA? Will you support the guillotine procedure when this bill gets to the DAIL or Seanad?
One proposed alternative:
(Jesper Says: August 7th, 2009 at 5:19 pm in Irisheconomy.ie)
“1. Recognise bank losses
2. Nationalise some or all banks temporarily
3. Insert equity
4. Sell banks to the highest bidder
The difference between NAMA and nationalising as above is that even though the Irish government might be stuck with losses, the sale of healthy banks should recover some of the losses the previous owners incurred.
Overpaying through NAMA is a gift of money to existing shareholders, buying an equity share in the banks or nationalising the banks is making an investment.”
The Green Party cannot hide from this momentous decision. What will it matter if the “Cut in Oireachtas CO2 emissions sets example for other places of work” or if “Boyle welcomes Fine Gael’s adoption of Green policy on tax credits” or if ” Sargent announces review of organic scheme” if the country is bankrupted by a FF inspired NAMA which is allowed a free pass by the Green Party.
Convince me with the force of your own arguments for NAMA that I’m wrong or oppose it.
The time for sitting on the fence or hiding behind the FF skirt is over.
Aidan Conlon
Hi Guys,
I’m a long time reader, first time poster. I’m a concerned citizen, in my mid-twenties.
My opinion is we are not like the French; we roll over, because the message from government has gone from ‘Why don’t they go commit suicide’ to ‘minimum wage may have to be cut’. We’ve been lied too and taken in by auction politics. We have no trust in politicians. Unless you’re a David Begg they won’t listen to you and even then they won’t listen to you.
Anyway, what ever the reasons, there’s a massive disconnect there. I think most people will agree that we the public are apathetic. What ever the reasons we’re apathetic.
This craic though!!!! This sickening idea of putting the country on the hook for generations! If this happens (as proposed out by FF), it will be un-like voting machines and decentralisation, we wont be able to laugh about this one over a pint in our local. This one will be too painful and far reaching to laugh about.
Anyway, my points are on protest. The only way to stop the FF (we’ll do it our way at all costs) machine is protest and of course getting the media on side. The media, who in my opinion should be in the dock just as much as any exAnglo pyramid scheme manager.
Obviously it’s up to Philip but I’d like to suggest that this site is a good place to bring it up a notch. It’s obvious from reading the papers that a fair few journalists have began reading the opinions offered on this site.
For the protest point of view I’d like to suggest we put a shout out to the site readers for opinions on the best approaches and sound bites:
-Site Signatures (ref. Richard)
-Site donations.
I’d like to see a fund set up. I for one would donate to a protest fund (not that I’m loaded, I’d see it as an investment in my future) for leaflets, marches etc
Time Donations
Perhaps some of the site donations could be put in to a spin of site, http://www.no2nama.ie? Where people could go to donate time (between dole queuing of course), to deliver the message to the door-step, or to organise the knitting of a massive No-to-Nama banner for the next soccer international…. non-political people, (formerly)professional people, regular people, people who care about the future of this country.
Sound bites:
– Nama is a gift to shareholders (ref. KW)
-AIB share price has increased 1000% on Nama windfall promise. (Since March price of 28cent)
JF
AIB’s overseas shareholding as a percentage of the total issue, fell from about two-thirds during the boom to 59% in 2008.
The protection of shareholders would mainly benefit foreign hedge funds, which by their nature make risky bets.
@ Michael Hennigan
Good point. Would bet the the hedge funds hold a lot more now with the recent run up in price. The majority of trading appears to be in London and appears to be just gambling. Good article by Dan White in the Sunday Independent on AIB
Great article Karl.
You pulled no punches. 🙂
I agree that this site is not the right place for organising protest as well.
However I still dont get why the trade union movement and labour an others have not yet organised a protest about this.
I think if they did they would easily get 50,000.
The Anti Iraq invasion protest got 1000,000 a few years ago (one of the biggest per capita in the world at the time.
I also think Calling the local FF /green to let them know is helpful, but considering their combined support at the moment is probobly about 20-24% I am not eve nsure this will be enough.
Am I the only one that gets the feeling that the governments hands are being tied on this by some high financial hedgefund powers either directly or through the E.U.
Hedgefunds do provide a lot of employment and make up a large part of our GDP.
Anytime I see Brian Lenihan lately I get the feeling that he is scared to tell us everything he knows.
@Eamonn M
iv set up a few questions on my own pages that one could email. This isnt the place for it.
Why do they persist? Mostly at this stage I suspect a fear of being seen to be weak if they back down.
I’m reluctant to get too political here but the current Dail arithmetic is a factor worth keeping in mind when campaigning against Nama. The following six TDs mainly vote with the government but are not on the FF or GP whip —
Behan, McDaid, Healy-Rea, Lowry and the Sligo 2. If my understanding of the numbers is correct, all of them voting against the bill would lead to it losing by two.
Also, as regards campaigning websites, I was made aware of the following today.
http://notonama.blogspot.com/
Karl : Jackie HR is more FF than Cowan. Take it from me…
@Eamonn Moran
“Am I the only one that gets the feeling that the governments hands are being tied on this by some high financial hedgefund powers either directly or through the E.U.”
Yes, the government certainly acts as if has been captured by big financial interests. Government ministers look positively scared in the face of this crisis. NAMA is their prayer for salvation and nothing else is heard or will be countenanced.
@ Karl – fair enough – i was putting arguments/recomendations in your mouth in that case.
I think some other commentators have suggested that nationalised banks should not not be immediately floated/sold to private equity once they have been recapitalised while simultaneously claiming/implying that bank securities are currently “correctly” priced.
On the other point, do you think there is a difference between what a development loan is worth to NAMA and what the same loan would be worth to an individual investor?
If so, should maybe long term economic value could be thought of as what the development loan is worth to NAMA, while market value is what the loan is worth to individual investors.
@KW et al
Good article Karl. Any chance you might nail a few theses to the front door of Merrion streets. maybe something catchy like “95 things wrong with NAMA”.
If Fine Gael or Labour now come out strongly against overpayment, will you and Brian sign up for the cause. FG need a good candidate for Cork SW or maybe NC-perhaps Brian might consider that. FG may need a good 2nd in South East…how about it Karl or possibly a running mate for Eamonn Gilmore in Dun Laoghaire.
“Ask not what your country can do for you ……”
The modern politician’s mantra: “when the polls change, I change my opinion”
(With apologies to Keynes)
If Ireland is to play on a level playing field, wages and property values have to be competitively priced. The gov’t is focused on saving the banks and developers to the exclusion of the population as a whole. Any efforts to artificially prop up wages or property values will simply prolong the recession to the detriment of business and labour. Ireland engaged in self defeating behaviour for over fifty years in the recent past and it appears to me the prospects of an encore are high. Adjustments are in order and tenaciously hanging on to the cronyism, cliquishness and self-dealing we are accustomed to will lead to decades of lost opportunities.
Great article Karl!
@ jll Nail them also on the foreheads of Eamon Ryan and John Gormley who have become two of the most undemocratic politicians in Leinster House. The Greens have already lost a ton of seats but if they fail to see the writing on the wall and vote for NAMA then that is the end of the Green Party! This is not a political statement, it is not a wishful thinking statement. It is a statement of fact! It is the Green Party that should be organizing and leading the protests.
How would JHR vote against FF when he ‘genuinely’ thinks that KERRY is the centre of the universe.
These guys, Gormley and Ryan have taken the Greens and everything they ever stood for hostage and if there are any Greens left standing they better mobilize while they still have any semblance of a party!
Well JL thanks for the vote of confidence. But I already have a job thanks.
As a fellow kerry man, i can of course understand why JHR thinks that…. 🙂
More on NAMA – I see over on p.ie that the GP had a “deprogramming” meeting with Alan Ahearne and Brendan McDonagh, to counterpoise the dreadful claptrap some university fellas told them. It would be interestign to see these presentations, to allow the public at large to compare and contrast. FOI anyone?
@ Brian Lucey
Why did I think you were a Corkman?
Is a university lecturer a “job”?
Why not follow George Lee, your country needs you!!!
Steady on, gents. The lather of indignation at this assembly of economically damaging tactics is impressive, but you underestimate the power of the forces that are united in their determination to give flesh to this imbecility.
You have a government that is determined, by hook or by crook, to get through the next Dail session. On this NAMA venture it has enlisted the full support of the DoF mandarins – who are the princes of the permanent government, their foot soldiers, chosen mercenaries, the financial regulator/Central Bank and, apart from a brief wobble by Dr. Somers, the NTMA. It is naive to think that expressions of economic rationality will prevail against these forces.
This is a classic “Irish solution to an Irish problem”. The Irish banks, to all intents and purposes, have been “nationalised” – apart from a name on a share certificate. In exchange for off-loading their dodgy loans, they will receive bonds with a low coupon which they can repo at the ECB for cash to buy Government bonds at a high coupon – bank profitability immediately enhanced (via transfers from taxpayers and EU largesse) and the Government’s exposure to the international bond market is reduced. The real economy (in terms of advancing credit), households facing repossession, businesses going bankrupt and current and future taxpayers can all go hang.
The dodgy loans – and the accompanying public anger at developers – will have been kicked out into the long grass where, after a while, public interest will diminish and, if it does surface from time to time, little chunks of land or property may be extracted for “socially” desirable projects to keep the masses happy.
The Government will not budge one iota from this chosen NAMA path. Even the slightest concession would convey weakness. Its ultimate, fear-inducing trump card is that international bodies and markets are aware of, and have approved its course of action (selective quotations from the IMF’s report will be trotted out, The EU Commission will be dragged in, favourable reactions to Minister Lenihan’s mini-roadshows will be highlighted, etc.). Any deviation from its course of action would deprive Ireland of the support of the international institutions and markets – and this would be fatal. It’s the Thatcherite TINA (There is No Alternative) all over again.
I suppose on the bright side it will keep many economists and economic historians gainfully occupied as they sift through the detritus of the Irish economy in the next few years.
@ Paul Hunt
“It is naive to think that expressions of economic rationality will prevail against these forces.”
While your view of the likely course coincides with my own, I do not subscribe to the inevitability of the shareholder bailout. Most of the commentators in the press are now seeing it for what it is. Even the DoF mandarins are not immune to the growing public realisation of the effect NAMA, in its present incarnation,will have on this little country.
Is it not the case that the ECB mandarins are key; everything depends on them accepting NAMA bonds for cash and continually rolling the bonds during the expected lifetime of NAMA. A changing of the guard in Germany in September could have a profound effect on the thinking of the ECB.
Or maybe I am just being naive.
podubhlain: Our best bet in stopping NAMA lies in a grassroots campaign to give an ultimatum to the TDs. If you vote for NAMA you do not get our vote. And we are going to tell our friends and family to do the same because NAMA is a rip-off to the tune of 30 billion and there are much cheaper ways to get the banks going again.
Many thanks Brian L for the oireachtas email address list on your website.
However before I develop any illusions about the impact of rational argument on the government parties, mail to all@oireachtas summarising the reasons why Nama as currently proposed is lunacy has so far simply swamped my mail box with “out of office” notices from FF and GP
All opposition parties have responded courteously and personally, albeit simply reiterating their official positions. Deathly silence from the other two.
@podubhlain,
One should never underestimate the ability of a determined government, supported by the “permanent government” and its associated agencies and mercenaries, to pursue a wrong-headed policy in the face of convincing evidence of the damage being caused.
Nor, because it is of great concern to us, should we assume that the state of affairs on “this little island” is of great concern at the high councils of the EU. Ireland is seen a a bit of a nuisance at the moment and, because it is not likely to bulk large given the scale of the ECB’s operations, maintaining the largesse may be seen as a manageable and justifiable cost to keep the pesky Paddies solvent and on board. And I suspect this stance will survive any changes of government in the major players.
Furthermore, I would not be surprised if, in advance of Lisbon II, the Government had sought commitments on these matters from the Commission and the ECB. I suspect that Minister Lenihan’s insouciance that the EU won’t let the Irish banking system fail is based on more than a wish and a prayer.
Finally, I realise that the site-owner and the listed principal contributors are probably chary of allowing this site to become a platform for a campaign against NAMA, but Karl W, in his Sindo article, has lit the fuse – and received the expected response from posters. It is a belated, but formal, recognition, that bad economic policies may be stopped or modified – and good ones advanced – only by convincing those who enact the necessary legislation.
However, apart from relatively few senior ministers, it appears that most FF/GP TDs have little understanding of NAMA. A large number realise that, electorally, they are “dead men walking”. Many realise they will not sit in the Dail again after the next election and maximising service and pensions is the name of the game. NAMA is being sold to them as a special visa in the passport through the next Dail session. After that, who knows. Some serious problems will have been kicked into the long grass and things might start to pick up.
The most likely alternative government is unlikely to be able to muster a coherent policy stance. FG and Labour are probably further apart than they have ever been. Michael Taft of SIPTU, on another thread, provides a good flavour of Labout/TU economic policy and it is difficult to see how that may be reconciled with the path FG seems to be pursuing.
FG, on its own, is unlikely to breach the 70 seat barrier. Too many single FG seats in 3-seater constituencies provides an incentive to the sitting TD to gut an upstart rather than splitting the vote and going for the 2 seats for fear of the upstart getting the seat if it transpires that there’s only one on offer.
Don’t worry. We’ll muddle through – as we did during the GUBU decade from ’77 to ’87. Unfortunately, when we finally decide to take the necessary corrective action, we may find that the international environment is not as benign as it was in the ’90s.
@ Paul Hunt,
I think you are being a bit unfair at conflating Labour with SIPTU policy. Labour policy is as yet opaque on many issues-probably for good reason. SIPTU policy for all the reasoned words of MT is soak the private sector middle classes and preserve the status quo in the public service.
Labour is struggling with its conscience at the moment. Does it adapt a pragmatic approach or stick with their own crowd?
@jl
Fair comment. I just have a horror of a repeat of the FG/Lab pantomime horse performance from ’82 to ’87 when decisive action was needed to recover from Jack Lynch, Martin O’Donoghue and CJH spending their way our of a recovery, but it wasn’t delivered. Admittedly the ’94-’97 Rainbow seemed to work, but voters rightly took umbrage at Dick Spring’s hubris in changing horses in midstream without seeking their consent.
It’s heartening that you have detected a conscience in Labour with which it is wrestling, but I’d be reluctant to bet on the outcome.
The afore-mentioned trio had just 4 years to mess things up; this lot have been in power – in some shape or form – for 12. The economic damage seems roughly proportionate. And there are far too many vested interests with their snouts in the trough and they have infected all the main political parties. An examination of the former professions/jobs of sitting TDs might provide a clue.
In any event, a pick-up in the international economy will release the emigration safety valve and the trough-guzzlers will have more scope to indulge their desires – even if the trough is smaller and shrinking.
There is enough people with enough sense in this country to stop this ridiculous idea. Getting the poor to bail out the rich there is no other way of looking at this.
I would suggest we set up a protest group People Against NAMA – just like what NAMA have done we will come up with a friendly name – PANAMA (People against NAMA) Get the media on side fast.
We need to move this forward before the Green Party have their vote. If we put enough pressure on the Greens this will bring down the Governement and NAMA will fail – is there any way we could get someone like George Lee to head it up media and political savvy ? In fact where are you George??
And while we are on about the banks, isnt it amazing that the only industry who have not had a pay cut is the baniking industry – and this includes the hundreds of Anglo Irish Bank staff who earn in excess of 100k and some in excess of 200k!!!
Kate Brennan, Ballsbridge
Folks, listen to Garo above: email/phone your local TDs. tell them that you will NEVER vote for them, their children or their party ever again if they vote for NAMA. It only takes 10 minutes. They will not commit political suicide, so if enough of us do this it will work. I have just emailed my 3 local TDs and all the green party TDs this afternoon. Hit them with a deluge folks, this is too important not to.
Here’s one the missives I sent if anyone want s to cut and paste:
Hi Batt,
I am a constituent of yours, and have always voted FF in previous elections. I am extremely worried and angry about what the Government are going to do with the NAMA bill. It seems €90bn of taxpayers money will be given to the banks in exchange for property worth a very small fraction of this value. It seems to me we should be paying a fair price for these properties, and either lending the balance of the money required by the banks, or taking a share of ownership in them. Worse again, it looks quite possible that once we’ve bailed them out, the Irish Banks may well be sold off to foreign interests, which would seem to defeat the purpose of the bailout. The only plausible reason I can see for such a giveaway, in the face of obviously better alternatives, is that the government are seeking to deliberately enrich various vested interests at the expense of Irish Citizens.
I am writing this to urge you not to vote for this. Given the slim majority the government has at present, you (or any government TD) could quite possibly hold the balance of power in such a vote, and could be in a position to make a huge difference to ordinary Irish people’s lives for generations. I would ask you to think carefully about this prior to any vote. I also want to tell you that I will not vote, ever again, for any politician who votes for this legislation. I am going to inform the other TDs in Cork North West of this also.
Yours,
Seán O Donoghue.
@ Kate Brennan
I like your idea “PANAMA” and of course you are right the government are bailing out the rich with everybody’s future incomes being diverted into sites that in many instances, don’t even have sewage, water or planning permission in place! Agricultural land is now 15,000 an acre or even much less so what is all this talk about paying billions?
Of course, we must not forget, that this is the same government that sat back as our children were being taught in pre fabs. Now, they want us to pay 65 billions for NAMA. Meantime, we are still going to be paying a rent of 60 million a year for, guess what? Pre fabs! as the government is locked into these contracts for years to come. Same as they want to lock us into NAMA for 15 to 20 years! Same as the e-voting machines have been in storage for years already nice rents there too. Skips cost less than 200 Euro and Hammond lane is still accepting scrap. So why not throw the whole lot into a skip tomorrow and save the country millions or is that to complicated?
Lunacy, of the highest order. And this IS a “developer and bank bail out” and Colm McCarthy has not nailed that one either. NAMA takes over the loans and the developers still owe NAMA….. and will be pursued by NAMA runs the myth, but what chance has NAMA of actually getting any money from developers who have been given a head start of practically twelve months? Two chances, I would say, slim and none! If Colm McCarthy thinks that these developers will be broke, as a result of NAMA he is not living in the real world. Their corporate identities and raggle, taggle raft of companies will be broke but certainly not the developers themselves! Remember, it is only the little people that go broke!
The element of surprise was completely squandered, deliberately in my view, by our government! Accounts should have been frozen last september when the government “guaranteed the banks!” Not one single person has gone to jail. Somehow, mysteriously, the country has been brought to this very dark place but we are unable to figure out who is responsible emm, interesting!
How on earth, can we have an Oireachtas inquiry when the very members of that Oireachts are the people with whom the buck should have stopped! How could anybody have any confidence in an inquiry carried out by the Oireachtas? They are certainly not going to find against themselves yet we all know they are the principle architects of the mess. At the end of the day, the Oireachtas are responsible for how the banks and financial infrastructure operated and how the regulator and central bank operated.
In short, it was the Oireachtas that designed and fueled the boom and failed to regulate it. One idea, if we are going to have such an inquiry, why not let a frugal man, who has expertise in that area chair it! His name is John O’Donoghue.