Sean Barrett on NAMA

TCD Economist Seán Barrett  argues against NAMA in today’s Irish Times. Note that Seán was not one of the signatories of the 46 guys piece from last week.

44 replies on “Sean Barrett on NAMA”

An excellent article. It sums up everything that has been, and continues to be wrong with Irish property prices.

We need to get back to sound Banking principles. Traditionally lenders would assess borrowing levels using income multiples, which meant lending a typical 3.5 times a single salary and 2.75 times joint. A decade ago that had changed to around four times single and three times joint income.

Within the last few years it looks as though even those guidelines had been thrown out the window in the rush to sell a mortgage and collect the bonus.

Brian Lucey gave an example here the other day of a couple he knew that had recently been approved for a mortgage of 1.5 million. Yet they only had a joint income of 180,000k.

It seems that even now, no lesson has been learnt.

There is a desperate need for transparency on prices. Hiding behind data protection laws is no longer justified.

RE the 46. I do not think it would have mattered if it had been 146 and the arguement had stretched to a double page spread.

Unfortunately, it seems to be policy by many democratic governments today to drip feed scantily clad proposed policy into the public domain, let speculation run riot, then make mockery of serious comments or charges made against said policy.

I noted this in the article – “Almost all of Ireland’s banks have been taken over by the government,”.


Apologies – I was talking about the safehaven article on Spain in PD’s posting, not Sean Barrett’s article on NAMA.

Nice article, should resonate with a lot of people. Agree with jms that it’s a bit weak on the specifics of nama, but it does present a strong moral argument against nama.
I was also happy to see someone call the government on how ridiculous it is for them to suggest that they and only they know the future of house prices. That’s one thing they certainly didn’t know a couple years ago so I’d love to know how they know now.


They do not know. But they cant say that can they? They have to give the appearance of being on top of the problem.

It is all just bluster and fancy talk.

Take the comments made on Monday….the developers who caused the problem will not be allowed re enter the market….

This from a barrister, senior counsel and former Justice minister. Pathetic.

@ Michael Harvey

Agreed, it’s depressing at times. As a recent graduate emigrating to England very soon I’m not sure I could stomach returning to Ireland in some years only to have to help pick up the bill for FF’s incompetence/dishonesty (most days I can’t tell which it is).

Thought Sean Barretts article was a good one but like jms
I was puzzled by his comment ‘Nama pays off the builders at a bit less than bubble prices, builders pay off the unreformed banks’

Not my understanding of how it will work.

That aside, I cant but agreee with the thrust of the article. Particularly liked this…..

” The proponents of Nama describe the sale at market prices of impaired assets as a fire sale. The description is, of course, wrong. A fire sale involves assets harmed by the fire and the damage is incorporated in the price. The sale of empty houses, shops, hotels and land bought at inflated prices arises from the economic incompetence of the builders and bankers concerned and not because of any fire damage “

The section about a firesale meaning the goods are damaged by fire is bizarre – I almost thought it was a joke

Sorry to be off topic, but just listened to Newtalk lunchtime Garrett Fitzgerald renew his totally-off-the-point attack on the 46 article by harping on about the GGD and the Senior Bondholders.

Karl held up his own, but it is sad, really sad, to have to listen to a former Taoiseach mischeviously infect airtime and abuse his status as economic commentator and former leader in order to deflect from the fundamental issue and quibble about relatively unimportant details.

What a wasted opportunity that 26 min segment was to discuss the fundamental issue, that Irish taxpayers are being sidled with heaps of debt we can ill afford in order to bail out private interests!

It’s painful and depressing.

@ Graham
I thought Eammon Keane ran down every cull de sac possible
Radio interviewers are not serving the country well


Having followed Dr Fitzgerald’s columns in the IT for most of my adult life, I would like to believe that you are right in saying this, but I have my doubts.

Garrett knows, as well as Karl, that the deficit situation in Ireland is completely unsustainable and perilous – whatever accountancy definition one chooses to employ. He knows too that bond markets do not care a feather about the spats that go on on the opinion pages of the IT.

As a seasoned politician, he also knows that 99% of Newstalk listeners will not appreciate the distinction and therefore will just be left with the impression that – ah, sure, it’s all too complicated for me to figure out, so let the experts decide.

He knows that you can only make general points on the radio sound byte forum, so these finer distinctions are lost on the target audience.

Given he knows all these things, mischief is the least horrible of motives I could attribute to him.

Yeah, I listened to that and have to say it was a pointless distraction.

I gave up trying to figure out Fitzgerald’s point, because it seemed a waste of time. I cant categorically say whats what but I suspect those making decisions on buying and offering debt deal with much more nuanced information than the lines in the article which GF objected to.

I don’t think GF actually argued on figures just exactly what shade of red they should be. The comment on our ‘investment’ in Anglo was surreal, to me the article gives a more accurate picture of our situation by including such ‘investments’

that said, one of Karl Whelans comment in the interview is now being headlined on newstalk as economists hitting back…. the media will make of comments as they see fit. but its on the wrong battle…

If only everything in NAMA was being debated so thoroughly.

How can Keane let GFitz distract from the point so much. He just seemed to switch arguments every time Karl responded. Here’s my take:

1. Karl used the “wrong” measure for debt – given the anglo “investment”, it seems Karl’s choice was apt. The article wasn’t about EU accounting practices.

2. It was irresponsible not to specify which bondholders – rubbish, anyone who cares even slightly should have a grasp of this by now.

3. He’ll scare international investors – laughable and even sad if he believes it.

Eammon Keane wasted a chance to have a nama debate there and instead entertained some misguided tangential rambling.

Sorry guys, but people here seem to be alluding to some ulterior motive that Dr F might have for issuing his current comments. Could someone enlighten me on what this motive may be. I cant see where the gain for him comes from. Unless he’s just bored, weathers not so good, cant get our for a stroll???


Perfect summary of that Newstalk piece. Keane either didn’t have the intellectual acumen to adjudicate that debate, in which case he ought to have at least recognised the stakes are too high for him to try, or else he is complicit in the fish farming of red herrings.

Slightly off topic but relevant: It’s been mentioned several times on this blog and elsewhere that the DoF, Central Bank, FF and the rest of the establishment coalesced around a ‘no devaluation’ policy in 1992/93. Collectively they embarked on a media campaign to assert (not argue) that devaluation would be followed by premanent nuclear economic winter. They also engaged the apparatus of the State to denigrate anyone critical of their policies. I seem to recall that every single mainstream politician of that time, inclludung the great Dr G, vehemently supported the no devaluation policy. It got very nasty. The lonely few who suggested that a deval might be a good idea were ostratcised in all sorts of ways. But no one ever engaged with the arguments. Sound familiar?
And, of course, the Irish economy began to grow the day they devalued.

Dr F is still a politician when all is said and done. I cant figure his stance either. Is it ego?

Keane was pretty dire. We need more Dunphy like presenters…minus the bottle of course.

Anybody out there ever wondered what happens to all the wacky baccy that the gards seize…Is it stored in leinster house?

i’m an admirer of this site and many on it, but when you are reduced to conjecture of conspiracy on Garret Fitzgerald it gets a little sad, and frankly, it makes the opposition of NAMA message sound desperate.

the one thing you can rely on this blog for is genuine and inquisitive debate, if you don’t like the radio take on it then go on the radio yourself and put it to rights. saying you don’t get GF’s point isn’t an indictment on him, its an indictment of your own intellect.

To be fair to all, GF outlined his stall in Sundays Irish Tribune

Reluctant to paraphrase but heres a quote which I think sums it up

He said he was “concerned” the government might fail to get through the Oireachtas by early December either or both of its budgetary proposals and measures to deal with the banking crisis. “This could undermine our capacity to borrow the huge sums we need to keep going.”

Not 100% sure what his point is, maybe he thinks the situation is so desperate, that any delay in action will result in economic collapse and IMF in slashing away? Or maybe he thinks NAMA as proposed is ‘good’ or ‘good enough’ or ‘as good as it gets’, no idea….

@ Karl

Your addressing your remarks to the subs bench of this forum, myself included, although that doesnt need stating. This hardly reflects on the forum.

Also you conclude somehow that “it makes the opposition of NAMA message sound desperate. ” For this to be valid, each of the commentators above would need to be opposers of NAMA.

Things are probably not that simple?
Unless it needs to be for you?

Ps, speaking of indictments, it was GF who first indicted the 46?

@Karl Deeter,

If you follow the thread a little more carefully, you might realise that it was the pro-Nama posters who introduced the conjecture on conspiracy.

Those critical of Dr Fitzgeralds Newstalk contribution did so on the basis of what he actually said, and the forum in which he said it. As I have already posted, his motives are not really the issue. The issue is what he stated and how it represents a mischevious attempt to steer the Nama debate away from substance and towards confusing accountancy definitions.

Mr Barrett seems to have got his wires crossed – “NAMA will pay off the builders etc etc …. ” Is that how NAMA works ???

Agree that the conspiracy theories raised about Garret Fitzgerald seem to me like people who have not got the confidence in their own solutions. I think that Garret is thinking Macro Economics and a lot here are working in Micro Economics. What’s the good of getting NAMA scrutinised down to the last builders nail and the country’s economy going into freefall whilst you debate the detail. Was it the sign during Clinton’s Presidential campaign which said “its the economy stupid”. Maybe if people were struggling to keep their businesses afloat they might understand the problem from a different perspective.


“What’s the good of getting NAMA scrutinised down to the last builders nail and the country’s economy going into freefall whilst you debate the detail.”

Absurd statements like this are worrying. Are you really saying we should just shut up and let the govt get on with anything they like?

Time is running out and we may be in danger of being left with NAMA (as currently proposed) as the default option to resolve the banking crisis.

I can’t say that I’ve been overly impressed in the past few weeks with the opposition’s lack of coherent action and the missing, joined-up, no brainer alternative to NAMA that should have been flung at their PR machine and had the public baying for it instead of NAMA by now. It makes you wonder if they would make any better a job of running the country than the current shower.

There are only two weeks to go until the debate. The opposition should get together and appoint an economic ‘architect’ to pull all the disparate strands together (let’s nominate Karl or Brian!!) so that they can finally stand up and say: “I have a cunning plan my lord.”

It’s almost the 11th hour. It’s time for the opposition (and I don’t just mean FG) to put up or shut up.

Karl, and I, and others have commented at length on alternatives to nama+overpayment. That the political classes have ignored us (until we get up their noses) is not surprising.
We have richard bruton and joan burton as opposition spokespeople on things economic. They are the people to get their heads together and come up with a plan (with Arthur Morgan if he will come on board). However, they are playing politics as usual.
Im not sure we need a baldrick here – it seems to me that there are enough in the cabinet, along with a few Lord Percys and a host of (economic) General Melcherts.

BL says that the opposition spokesmen are playing politics as usual.
So a political response is required.

@Brian Lucey
You misunderstand the politics.

FG has a policy. It is not playing politics – we seriously believe that we have the best policy. I know you think our time has passed, but we still think there is a window to get the least cost solution for the taxpayer.

LP dont really have a policy – they are just using reflex an ideology. Nationalisation and running the banks as a going concern involves compensating shareholders and being nice to subies. The LP avoid the issue, the media let them off the hook but that is the truth of their position.

FF is trying to seduce the LP, its partner of choice after the next election, because when you come down to it there is little to choose between them on NAMA. Joan Burton spoke warmly about Brian Lenihan’s charm – she understands what is happening, but she still finds it irresistable.

Only a GE will save us from NAMA and that depends on people in the GP who don’t see the world in the same way as we do, who believe they can save the planet while our country is crucified.

@Brian Lucey

I did forget to add that there is a tad too much ‘realpolitiks’ going on and that’s screwing things up. Would you want to take over right now and have to deliver the next budget? 😉

“Would you want to take over right now and have to deliver the next budget?”
yes. Why not? 😉

Just to put the opposite view to Barrett’s article, the Minister has said:

1. That NAMA will help us get to the bottom of the market because it will be in position to be much more aggressive in taking property off delinquent borrowers. If the banks were left as zombies this could be a very drawn out process.

2. That NAMA will help to break up the monopoly of a small number of developers of Dublin land banks. This will help stimulate orderly development and should mitigate against a recurrence of bubble conditions.

“That NAMA will help us get to the bottom of the market because it will be in position to be much more aggressive in taking property off delinquent borrowers”

Don’t they actually have to sell the property to do that. If they pay this future market value, they can’t sell it until the future market value is reached. Transferring from a developer to Nama doesn’t improve liquidity unless the assets are sold.

Yes, they have to sell some. You cannot establish a floor to the market without establishing a finctioning market.

However, one of the points of NAMA is that it is not like liquidating a company where all of a borrower’s have to be sold as distressed assets straight away. NAMA can enforce securities against individual assets one at a time as it chooses.

They say they have already been approached by private equity and they plan to sell in bundles so they don’t get left with the dross.

Obviously the plan is to sell in an orderly fashion and to resist bids which assume distress. I think the idea is to get the market going but to minimise the overshoot donwards.


An orderly fashion?
Isnt it clear that NAMA is in the way of a market resumption?
Cant you see the galway tent emptying to form a queue to buy,
each of them puffed up with civic pride that they will help the country by accepting these ‘bundles’ at knock down prices ‘to get things going”!



If we assume corruption and mala fides at every step then perhaps the only solution is Bolshevikism with those we don’t like to be shot or sent to the Gulag without trial?

Effectively Nama becomes a new state monopoly fixing prices in the property market. You have to buy from us at our price.

Will that not lead to continued inflated property prices – one of our curses. At least a side effect of all this recession is property could become affordable again. My experience is the retail sector. No individual can afford to open a shop in Dublin anyway – rents are too high. All the new shopping centres and retail parks attracted the very few Irish multiples or foreign retailers. If Nama targets a market price close to the 2007 peak nothing is going to change.

Perhaps the current market price is the real LTEV. Then those that buy from Nama will become the new distressed borrowers. It all looks a bit circular.

PS I have come across deals in the retail sector where new entrants are being given fabulous initial deals – rent free for a year etc. The problem with these is when the rent becomes payable the business better be flying.

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