Morgan has a piece in today’s Irish Times, which you can read here.
Month: September 2009
The Irish Times has the details of the Green Party preferendum.
1) Nama with strong Green Party policy conditions and only current market values being paid for transferred loans: 23 per cent;
2) The “Swedish solution” with each institution forced to write down its loan book to current market values and the possibility of separate asset management companies for individual banks: 20-21 per cent;
3) A free-market, laissez-faire approach, with banks left to fend for themselves: 14-15 per cent;
4) The Nama legislation in its present form: 13 per cent;
5) Partial nationalisation, with a “good bank” to assist small and medium enterprises: 12-13 per cent;
6) Full nationalisation: 12 per cent.
One can only imagine what subsequent ownership structure was envisaged by the Green Party faithful who voted for (1) and (2).
Rumour has it, the menu for dinner in Athlone was:
1) Chicken
2) Cod
3) Haddock
4) Sea Bass
5) Salmon
6) Fish
Hardly anybody picked option 6.
With only a couple of days to go before the key details are announced, it seems to me that confusion over the role of the ECB has now become a central feature of most journalistic discussions of NAMA (I’ll pass on speculating as to why this is the case). Take this paragraph from an op-ed on the Greens in today’s Irish Times by Deaglan de Breadun:
A key point was that the European Central Bank is prepared to provide €60 billion on favourable terms to assist the Nama process. Moreover, the more pragmatic element in the party is reluctant to look this particular gift-horse in the mouth, especially since it will not be coming from the taxpayer’s pocket.
Is the fact that NAMA is being paid for by the issuance of Irish government bonds really so hard to understand? Even the role that the ECB is playing in the process—which I discussed here—isn’t really so complicated.
Moreover, doesn’t anyone find it strange that the same people who worry night and day about the government budget deficit—the issuance of €400 million in IOUs per week—and tell us that large cuts are necessary because of it, then regularly tell us that we don’t need to worry about the costs of NAMA because it just involves printing IOUs?
One might as well say that deficit financing spending is a fantastic idea (a gift-horse from the bond market!) because it doesn’t come from the taxpayer’s pocket.
Agri-Aware, a body set up by organisations in the farm and food industries to improve the image and understanding of agriculture and the food sector in Ireland, has just issued a report The Agriculture and Food Industry – Bigger, Brighter, Tougher prepared by Jim Power of Friends First. The report examines data on the employment performance of the food industry during the past twelve months as well as surveying the opinions of industry managers on the main challenges they face over the next 12 months as well as their views on prospects for the coming 5 years.
Unfortunately, the main finding that the report itself highlights – that one in seven jobs in Ireland are dependent on the agriculture and food industries – appears to be based on a flawed analysis of the survey data. No one would deny that the agri-food sector has a hugely important role to play in helping to turn the real economy round, and there is no doubt that it faces real challenges, as usefully documented in this report. But the attempt to puff the industry up into playing a bigger role than it actually does is simply part of the special interest pleading we see so much of in the run-up to the next budget.
I have spent a lot of time arguing that, among the set of options available to us to put the Irish banking system back on track, the current NAMA proposals represent an approach that is unacceptably costly to the taxpayer. The sense I get back from those who defend these proposals is that, yes this may be risky for the taxpayer but that the risk is worth it because NAMA is going to “get credit flowing in the economy again.”
Forgetting for a minute the questions of cost or fairness, I would argue that there is little reason to think that the current NAMA proposals will achieve this goal over the next few years.