If we listen to hacks like O’Toole we’d be in real trouble before long.”

“We can’t solve problems by using the same kind of thinking we used when we created them.” Einstein

They should organise the march and promote to stop nama & all the other corrupt payments to politicians, bankers & builders.

“I seem to remember Fintan O’ Toole coming out with some garbage about pensions a couple of months ago?”

This came out of nowhere with no supporting arguments. As it happens I can remember one issue regarding pensions which Fintan talked about on radio and in his column. That was regarding AVCs and their usefulness in helping highly paid individuals to avoid paying income tax/PRSi.

As it happens FOT was quite correct about this - but at the time he was attacked for suggesting it by Moore Mcdowell - who - correct me if I am wrong - is an economist. He went on air - I can’t remember which program - and said that this was not a means of avoiding tax - it was just deferring the tax.

The “economist” is expected to know better but what Mcdowell said was nonsense. Of course AVCs are used as instruments for avoiding tax. They have no other real value.

Sometimes common sense is more valuable than any qualification in economics - and that is also what separates the good ones from the bad.

And hence the original sinin including Anglo and INBS in the guarantee scheme. Anglo was made systemically important only because of the guarantee. Agreed?

Veronica replied:

No, not agreed. I think it was more complex that you’re making out. Further, I suspect that we don’t know the full story of that fateful night, nor are we likely to for some time, if ever.

What are the reasons for your disagreement with Garo’s statement?

Simply saying “not agreed” without giving reasons isn’t much of an argument.

On your second question, the concern I would have is that a state-owned National Recovery Bank would be under a lot of political pressure to make bad loans, extend overdrafts to customers who shouldn’t have such facilities and provide some ropey business ideas with start-up funds. Maybe not on the scale of the banks making loans to developers who were in above their heads during the boom; but with potential to create a new ’small enterprise’ or ’smart enterprise’ bubble before too many years had passed.

And before you start quoting the French experience to me, we’re not France, and what works within the French political and business culture will not necessarily apply in its Irish counterparts. There are lots of things I respect and admire about our political culture and about our business culture too, but they also have their limitations, as we are all only too well aware by now. But I’m open to persuasion because I like the idea of a National Recovery Agency, in principle anyway.

IF Fintan O’ Toole decides to run for the Dail in the next general election, which hopefully, is not very far away, you will see how much of a “gallery player” he is. He would follow George Lee into the Dail with a huge vote!

Mr. O Toole represents the views of hundreds of thousands of people on the island who intuitively understand crony capitalism having been exposed to it from the cradle to where we are now in 2009.

And how is 4 going to get us back into the situation we are trying to get out of? I would have thought that giving money to bankers and builders created the problem in the first place.

Mr. O’Toole’s argument may be summarised as follows:

1. Anglo is not, and never has been, systemic to the Irish banking system or the economy.
2. Anglo should be allowed to go to the wall
3. The Greens should pull out of Government rather than allow Nama to take over Anglo’s toxic loans
4. A national recovery bank should be set up to give money to SMEs and ‘smart economy’ business start-ups

There was a very extensive debate on what should happen with Anglo when the Bill to nationalise it was going through the Dail several months ago, including on this website, focusing in particular on points 1 & 2 above. As I understand it from that debate, it is an unfortunate fact that, short of the State defaulting on substantial sovereign debt, the costs of letting Anglo go to the wall might be of the order of tens of billions, most of which would be immediately payable. Therefore, Anglo is systemic to the economy. Plus, we can’t afford to dump it in the nearest black hole, however much we might wish to. We’re all entitled to be angry about having to provide life-support for the likes of Anglo, but anger does not justify wilfully ignoring established facts.

The third point is political, which is fair enough – Green support for the Nama Bill is far from a done deal anyway. But the argument on which they are urged to withdraw their support is not valid.

As for a national recovery bank to lend to SMEs, farmers and new businesses, the idea is superficially attractive. But unless we want to get right back into the situation we’re trying to get out of, there’d be a lot of very disappointed would-be loan customers of such an institution.

“Providence never intended to make the management of public affairs a mystery to be comprehended by a few persons of sublime genius” Jonathan Swift

I agree! The problem with capitalism is not that it creates wealth but that those who have that wealth get so attached to it that mercantilism, cronyism, replaces capitalism. Instead of allowing the matter to resolve itself, pdq, the worthies have sunk the taxpayer by corrupt connections, in an attempt to retain malinvestments that will inevitably unwind. What is a matter of choice is who else share the grief and how long it goes on for!
Ireland has to suffer far more for Nama!

September 22nd, 2009 at 10:23 pm

“So the ignorant are now as qualified as the educated.”

Leaving aside the patronising tone of the remark, yes all citizens/taxpayers are qualified/entitled to express their views on NAMA.

The banks and developers were very happy to take all the profits in the good years and we were told the fundamentals were sound (quite often by bank economists). Now they want bailouts and tell us that it is to save the country. Forgive the ignorant for smelling a rat.

“I seem to remember Fintan O’ Toole coming out with some garbage about pensions a couple of months ago?”

I seem to remember that also.

Can’t remember exactly what garbage that was.

I know this.

There is no pension fund. Promises have been made by all parties that cannot be delivered.

If you know where the money is coming from share the secret, we’ll both make a fortune.

Because if we find it before Willie O’Dea we can front run the game.

“You can’t be serious ? As John Mc Enroe used to say on court. So the ignorant are now as qualified as the educated. Dunphyand O’Toole et al are just gallery players and Mr Kenny last night on the TV brought us to a new low on the NAMA debate.”

Ray,

Not sure what you’re getting at here. After all there’s something like €100Bn about to be added to the National Debt.

I think every citizen is entitled to a view.

So,

If “Dunphyand O’Toole” have provide a new low in the NAMA debate, what is your “high” in the debate.

It’s your money Ray.

Why are you happy that your money is being used to pay off the creditors of Anglo Irish Bank?

Aidan,

Agreed, and I would go further, it is also about morality.

If (political) economy has lost its link to moral philosophy then economics no longer has value for society. It becomes another specialism that can be bought and sold.

Oh, come down off your high horse.

Fintan O’Toole, Eamon Dunphy, Gene Kerrigan and many other non-economists are just as qualified (if not more so) than many of the economist captured by the finance and stockbroker firms to comment on NAMA.

The government’s NAMA proposal is highly debateable. And the debate isn’t just about figures or percentages. It’s also about fairness, transparency,mistrust of the financial players, deveopers and the present government and many other non-economic issues.

As Mary Robinson suggested recently “the problems facing Ireland are too important to be left to economists.” I agree.

“Oh, dear God!”

“he is a complete ignoramousm and I say this without any disrespect intended.”

Isn’t that what is known as an ad hominem attack, or in sporting parlance, playing the man not the ball.

Is there anything specific in O’Toole’s opinion piece that you specifically disagree with?

How can you call someone a complete ignoramus and not intend disrespect?

What I read today in the Irish Times was a political rant directed at motivating the Greens to vote against Nama. That’s grand as an op-ed position. But why is it taken seriously on this site?

Fintan O’ Toole opinionating on the arts might be stimulating. On the economy - or the environment as I’ve witnessed prevously - he is a complete ignoramousm and I say this without any disrespect intended.

I watched him last night on the ‘TV answer to Joe Duffy’s Show’, the Frontline Programme, and while he contributed greatly to the heat, along with Eamon Dunphy, another economics scholar no doubt, he did little to elucidate any facts or shed any light on the subject at issue. Arrogance, bullying and ignorance all combined for the most ephemeral of effects - a clap of rolling applause from the audience. Like the roll of thunder itself, it was ten miles off the point.

I seem to remember Fintan O’ Toole coming out with some garbage about pensions a couple of months ago?

“The low interest rates attaching to the NAMA bonds should mean that the banks would get a greater return on the bonds by repo’ing them and lending out the cash at a higher interest rate rather than just taking the interest on the bonds.”

A few things on the NAMA coupon, which I have no doubt you have already considered,

Although the Minister (and others) keep emphasising the “lowness” of the coupon these are floating rate notes (in so far as the Minister has told us anything at all about the NAMA bonds)

By highlighting the “lowness” of the coupon it makes clear, yet again, that the banks are getting another gift from the citizen/taxpayer.

I know you are only repeating Lenihan and that you do not necessarily agree.
(1) Systemic is an assertion - there is no evidence that Anglo Irish bank is systemic to the productive part of the Irish economy. It was systemic to the bubble, the builders and the developers but that is hardly the same thing.
(2) and (3) are temporary problems thrown in to frighten the children.
Does he really mean us to understand that the state would have folded if we decided to close Anglo?

The UK faced a similar problem with Bradford and Bingley in September 2008 but they did their homework after the collapse of Northern Rock. The retail savings were sold to Santander and loan book was kept by the state to be worked out gradually. You wont find the UK authorities loaning Bill Carroll another 68 million to build a new HQ for B&B.

The EU authorities approved the plan in 24 hours.

This was all completed a few days BEFORE the September 29th/30 th guarantee.

Even in January, the government could have followed this approach.
FG proposed it in December before Lenihan decided to invest €1,500,000,000.00 in preference shares in Anglo.
But no.

We continue to invest in Anglo.

“On the TV last night I notice that Mr O’Toole went very quiet when he was taken to task by Brian Lenihan on various issues including Anglo. In the first half he was gung ho along with his pal but then they were not being challenged as the TV show had been set up that way. I would have to assume that Brian Lenihan is more conversant with the fallout of letting Anglo go to the wall than the Arts editor of the Irish Times .”

TRP,

“Mr O’Toole went very quiet when he was taken to task by Brian Lenihan”

Did you see the same program as I.

Fintan O’Toole’s second question (yes, towards the end of the program, at around 58 minutes, and no opportunity to counter) was;

“Can I ask you the question that Niall Fitzgerald of Unilever…he was a director of Bank Of Ireland, (asked of other former banking directors) …

“….You were either incompetent, in that you didn’t know what was going on, or, you were complicit in that you knew what was going on and you did nothing about it….

Which were you Minister and which were Fianna Fail”?

The thing is TRP, the Minister did not answer the question.

Is that the same as “being taken to task”?

TRP,

You say,

“I would have to assume that Brian Lenihan is more conversant with the fallout of letting Anglo go to the wall than the Arts editor of the Irish Times .”

Can you provide any evidence to substantiate that assumption?

“This fella [Fintan O'Toole] as far as I know writes about the Arts etc and how he (and his pal Dunphy on TV) can now be seen as knowing anything about Finance and that some people here think they do is just is so perplexing.”

Indeed.

We don’t need know-it-all journalists. We need to put our trust in those with a depth of hands-on experience - bankers, economists, senior civil servants, the Taoiseach and his Ministers, entrepreneurs, people of substance with real track records.

If we listen to hacks like O’Toole we’d be in real trouble before long.

I don’t think anyone has said this and I think that anybody who makes that assumption is making a huge error. We have been around the houses on this before on this site.

Attacking the fact that €56b into banks does not mean €56b into lending is attacking something that nobody has ever said. A bit Kafka-esque, no? Is FOT exposing his own misunderstanding as false?

The Minister for Finance answered FOT on TV last night when he said [I am paraphrasing here] that (i) Anglo was guaranteed because it was systemic and (ii) was kept as a going concern to prevent an immediate liability of €60 billion, and (iii) that it has to repay the emergency funding to the ECB.

FOT’s article today ignores the Minister’s reply (presumably because it was written before the Minister spoke to him on TV) and confuses the issues rather than explaingint them IMHO.

@zhou

“You mentioned none of the Anglo money will make it out. Others have argued little of AIB or BOI will make it out. It will repair balance sheets so they can attract investment so we can lend one day maybe, some time, hopefully…..”

Stuart,

Should NAMA succeed in making AIB & BOI attractive to the international market the very first thing they will do is raise €3.5Bn each and pay off the preference shares.

If they can achieve this before the fifth anniversary of the issue of the preference shares the warrants expire (we don’t get our 25%) and they save a combined penalty of €1.75Bn.

The warrants are designed to ensure, in so far as that is possible, that the citizen/taxpayer never gets a cent of ordinary equity.

So, the first €7Bn in Tier 1 raised by these banks will not be used to expand their balance sheets and increase lending it will be used to undermine the real interests of the citizen/taxpayer.

You mentioned none of the Anglo money will make it out. Others have argued little of AIB or BOI will make it out. It will repair balance sheets so they can attract investment so we can lend one day maybe, some time, hopefully…..

“Did I hear the word IMF ?”

What makes you think they’re not coming once the bond holders have been bailed out?

I don’t think the IMF have enough money to help us.

The low interest rates attaching to the NAMA bonds should mean that the banks would get a greater return on the bonds by repo’ing them and lending out the cash at a higher interest rate rather than just taking the interest on the bonds. That is not a fiscal stimulus. Also, whereas it is the intention it is not a guarantee of additional lending to business.

Once Lenihan declared he was going to rung Anglo as a going concern and the Dail passed the nationalisation of Anglo Irish Bank without the special resolution regime measures which the UK used on Bradford and Bingley.

A seriously expensive mistake.
They had about 6 billion in subordinated bonds all either undated or with maturity outside the guarantee period who should have lost everything.
Who benefited?
Certainly not the Irish state or taxpayer.
But one retired gentleman popularly known as Seanie was/is a subordinated bondholder.

BTW, does anyone know how to sell Anglo shares on the grey market?