NAMA Bill Passes

The NAMA Bill has passed all stages of the Dail and is on its way to the President. Worth marking with a thread, I think.

What do you think of the final bill? The draft bill was released in August to allow for debate and suggested improvements. Did this process work well? Is the final bill much better than the original draft bill? Will the passage of the bill stabilise the banking system? Will it get credit flowing?

95 replies on “NAMA Bill Passes”

By the government’s own ridiculously conservative estimates, they are deliberately overpaying by €7 bn — and this does not include the frictional costs of all the experts and valuers that have to be paid and the other costs associated with the state micromanaging fields and houses scattered around the country.

Developers will have their debts forgiven, or at least put on the very long finger, to the tune of billions.

Bank bondholders will be made whole.

Bank shareholders will retain their equity stakes and not be wiped out.

So, anyone involved who’s in any way rich will do fine out of this €7 bn-and-counting gift from the Irish taxpayer.

In other news, those evil parasitical public sector workers, some of whom earn as much as €50,000 a year, will get what’s coming to them in the form of punitive levies, wage cuts, pension adjustments, and layoffs. The state needs to cut €4 bn from somewhere, you know, and if you’ve got some better idea as to where the state could avoid needlessly spending billions of Euro we’d like to hear it.

@ Ben

Good comments. But I think you might be a bit optimistic with the govt. overpaying by 7 billion. These loans are of the most toxic ever given. It is my belief that real property values, that is those properties that have a live tenant have fallen in value by 50% with probably another 20% to go.
So how about they overpayed by 25 billion.

They would not do that, would they? Surely these geniuses are cleverer than that.

Or maybe we are the stupid ones for letting them look after bond holders rather than tax payers.

Absolutely right. NAMA makes the establishment morally insolvent. But senior public servants could have blown the whistle on this.
Many senior people currently in the Depts of the Taoiseach and Finance and in the regulators are a disgrace to the public service. Vastly bigger than anything shown in the McCarthy report.

The truth will only emerge after the next election.
FF will lose the election after that too, with or without NAMA, unless the opposition are hopeless.
So are they really thinking that ten years from now with new leaders – maybe even Lenihan – NAMA losses will not be a big issue.
So why not bail out their backers now if they won’t return to power for 10 years anyway? Too cynical?

Finally, the NAMA spin machine cannot be overemphasised.
Let us suppose Lenihan’s head valuer sticks with his 50% fall from peak valuation. We will lose €13.5 billion minimum. Lenihan now has parliamentary approval to transfer this vast sum to financial, developer and professional interests from the public.
This would not have been possible without the ruthless, relentless, all media campaign led by him. If he gets the budget through this will be the year of Lenihan. Lisbon, NAMA, budget: he was decisive in all of them, red light sabre striking down all critics.
The PDs are dead? If there are no income tax increases in the budget on the superrich then FF have completely turned into them.
New slogan: The Crony Capitalist Party.

I think it is deeply disappointing and the chances of being a success are very limited.

I had hoped the government would be genuinely willing to accept changes to NAMA. But as far as I aware nothing meaningful has changed.

The minimal element of risk sharing now seems to have shrunk further from what I thought at outset.
With the generous coupon is it even worth €1bn now?

The business plan is nonsense. How they are projecting €74bn repayments from assets that are optimistically expected to be worth €51bn is beyond me.

Not sure what to make of the SPV. It could be a very innocent addition just to get the debt “off balance sheet” but going on their track record so far I am suspicious.

I now believe that the government is trying to do the right thing but they are in way over their heads. And because of that there plan is all wrong.
The banks are going to be a black hole for the next decade or so.

If, in 10 or 15 year’s time, an elder statesman/woman of the current government attempts to suggest that the taxpayer got good value for money because, say €54bn in borrowing became over the long run €60bn in asset disposals, don’t believe a word of it.

While it’s eminently reasonable to doubt whether even the nominal €54bn will be recouped even over the long run, the net present value of €60bn is far less, deflated by the benchmark long-term interest rate.

Practically, think what could be achieved by the same outlays on infrastructure, IT, broadband networks, hi-tech education, green technologies, etc. That’s the potential that is being foregone by a huge transfer of wealth from the poor to the rich.

Why not allow the banks to keep all this on their books, marked under LTEV, and let them enjoy the supposed upside? The taxpayer isn’t greedy. We didn’t work for this. Let them have it.

Forgive me, guys (I am assuming you are all guys) if I sound a bit naive, but I really think we need a reality check on what this site is trying to do. I can understand completely the anger and frustration that people feel over the state of the economy, but my view is that this site is not the place to pour out invective and off-the-top-of-the-head opinions on NAMA or any other issue.

What the site is trying to encourage is informed debate on economic issues. Karl asked a series of questions. To repeat:
* Did this process [of seeking to improve the Bill through parliamentary debate] work well?
* Is the final bill much better than the original draft bill?
* Will the passage of the bill stabilise the banking system?
* Will it get credit flowing?

If people have something to offer in response on these questions, then please feel free to comment. I, for one, would be interested in hearing views on these questions. But if your contribution is simply to slag off the Minister, his advisors or the world in general, perhaps you might consider expressing your views elsewhere.

I don’t mean to pick specifically on the writers of the previous posts on this thread, as generally over the past couple of months the quality of comments, in terms of factual content and attempting to encourage a rational debate on the enormity of the problems we face, has deteriorated.

So, guys (and the few gals who contribute), lets try to stick to the issues and tone down the rhetoric. That way this site can return to making the contribution it was intended to do. I make clear that this is a personal view and I am not writing on behalf of the promoters of the blog.

@ Alan Matthews

So the site is meant to be an academic perusal of all things economic. NAMA, Global recession, Banking crisis etc.

Problem is, nobody is listening. You can debate all you want but the fact is, it is not economic academia that is making the decisions, it is political players.

Wrong I know but fact none the less. There is no point in debating our current woes if your intention is come up with a correct point of view for no other reason than to say I told you so in 5 years time.

I think the time has come for academia to get political with its point of view.

@ Alan Matthews

I agree KW asked four specific questions which require some consideration.

My immediate response is NO to all four.

I will come up with reason.

What’s your response to the questions?

I have lost track of it at this stage with work pressures. I think I will wait for the Act and the Explanatory Memorandum to be published before making my mind up.

Apart from that, I think the process of legislative iteration did not strengthen this bill.

It introduced mission creep with social dividends, it robbed the plan of its coherency, it delayed the process so we missed the golden window for bringing private capital into the banks, it left us with a mass of uncertainties as to how NAMA will work and will be administered, it exposed the DoF as out of their depth, it did not achieve a level of transparency that could be endorsed by the oppostion to help the public buy into the plan, it prolonged and exasperated uncertainty in the banks.

There has been no major concession to opposition proposals to make it look like a somewhat collaborative effort which may have been supported by the people.

If the DoF had been able to come up with a proper plan with acceptable levels of accountability and transparency then we would have been better off if it had been guillotined on day one. Even if their plan was flawed we might have got the proper ECB and Commission input earlier. The Government always said this was all about timing and I reckon the DoF failed when it mattered. Major reform of the Department is needed if this country is going to weather this lengthy storm.


[The next thing I am going to read is Maurice McMahon’s new book about his time as a school teacher in St. Benildus College. Maurice (son of the late Bryan McMahon), was an inspirational teacher for many. I am hoping that will put some perspective in things!]

I think that is my least constructive post to date!

@ M.B.

“I think the time has come for academia to get political with its point of view.”

If you can’t beat ’em, join ’em? Not the most convincing argument i’ve ever heard…

As a virgin to this website, I posted my first two comments today in Karl Whelans section on NAMA. I am delighted to get a bit of advice from Alan on the direction for future comments. However, I feel that all the previous speakers might be a little annoyed with being told what to do. Maybe the site should set guidelines for commentary, so that it is focused on the commentary and answers the questions asked.

1. I think Parliamentary debate, while long and exhaustive, it provided vital input to the passing of the legislation. However, it did create great doubt and confusion over it possible success. While I beleive that it is the only game in town and i would compliment Brian Lenihan on its delivery, there is little confidence in its possible success.
2. I think the Bill had to change to incorporate some further insurance that the lending institutions would be compelled to lend money back to the sectors that require it most.
3. the passage of this Bill has to stabalise the banking sector. Altjough it is only the first step and further recapitilisation is a certainty. we are only heading to first base and we are a long way from a home run.
4. Although I am a complete optimist, I fear for business in 2010. I believe that the local banking institutions will continue to firm up their own balance sheets and that the SME sectors will have considerably less ability to raise finance in the next 12 months. I believe that the banks will continue to capitalise their business to raise confidence from the foreign markets and ensure that their ability to raise capital in future years is sustainable. This may be prudent practice but the carnage that will occur within the SME sector, as they run out of cash will take a long time to return.

I could pose another question. The Govt will not submit its plan to Brussels to pay 54billion for assets worth 45billion by its own valuation. However ,the govt has as yet performed no forensic evaluation of the loan books to verify security, valuations etc. Will Brussels accept these numbers on the nod?
Moreover, how will Brussels view the quantum of state aid and will it order the two main banks to pay back state aid in a medium term timeframe.

@ Alan Matthews

Also, if you think that this excellent blog is being is being polluted by “views”, particularly those of non-economists, perhaps you could suggest to the moderators a password system whereby only economists be allowed post comment and while doing so should keep their non-economic views to themselves.

Economics was born of political economy was it not?

All economic policy is political whether it originates from the interests of the State, the Community or the Individual.

Alan, this blog is well moderated. If on occasion a commentator takes a swipe at a political figure that is beyond the pale it will not be posted and if missed can always be deleted.

In the case of NAMA I personally believe that a certain licence is necessary given the enormity of the political and economic decisions being taken.

If you wish this blog to stick to a dry exchange of views of pure macroeconomics it will be the worse for it.

Just a view. But then I’m not an economist, much less a macroeconomist.

@ Eoin

Unfortunately Eoin, if you dont take the opportunity to join them and make your point face to face you are nothing more than a talking shop with no other reason for existing than sniggering in the background at their stupidity.

If Alan only wants to recieve comment from like minds then rather than have a forum like this maybe a tuesday night among fellow economists in Doheny and Nessbitts would be a more suitable meeting place.

@ MB

im fairly sure his point was that “pour(ing) out invective and off-the-top-of-the-head opinions on NAMA” and “slag(ging) off the Minister, his advisors or the world in general” is already well covered by the good people over at the likes of, and that this site was supposed to be offering something different to that.

But im sure your right that anyone not involving themsevles in the politics of the matter is in fact doing the equivalent of sniggering in the background. Great comparison.

@ Greg

c’mon man, thats twisting things upside down. Anyone can comment on the economy or economics, they dont have to be economist to do this. Likewise you dont have to be a socialist to have an opinion on socialism. His point was that a site devoted to economics shouldn’t be at times filled up with political or other random rhetoric. It seems like a pretty fair assertion.

@ Alan Mathews
“If people have something to offer in response on [Karl Whelan’s] questions, then please feel free to comment.” Otherwise, presumably, shut the hell up, and “perhaps you might consider expressing your views elsewhere”.

Early today (yesterday), as it happens, in the course of my reading, I came upon the stoutly stated opinions of a prominent academic economist (and no, it wasn’t Mr Lucey) – just prior to the economic collapse. Some niggling problems, it seemed, but everything was fine with the Celtic Tiger.

I will spare his blushes . What matters is that when it mattered the experts’ views were of no more value than the views of the average taxi driver.

There is a somewhat tetchy tone to some of the responses from the more learned amongst us. So be it.

Over the past few months I assumed that one of the benefits of this site was that we ignorant-but-concerned folk might learn from the insights of the experts. And they might learn from our more mundane concerns. And that allowances would be made for our undisciplined responses.

Apparently not. Fair enough. It’s a big world. Bye.

As another regular reader, rare poster, I kind of agree with Alan Matthews – there are enough places on the web to vent about Fianna Failed.

However I would hope that bearing that in mind would not result in ‘dry’ exchanges. The Professor Nutt affair in England shows us that it is proper for those who have the knowledge to have their assertions and opinions heard and respected and, whats more, valued over those of career politicians.

If we now live in a time where the learned are able to form their opinions with cold detachment, but the interweb thingy enables them to present themselves with a passion and fervour in the interest of the greater good, then this is a good time.

Peter you do realise that you’re just arguing by anecdote? One guy called it wrong, ergo no academic economist’s views are of value? Is that what you are trying to say? I know a doctor who drinks, smokes and is quite overweight. I’m still pretty sure the next time I’m sick I won’t shun my GP for a faith healer.

Goodbye to even the semblance of democracy in Ireland unless the President sends this abomination to the Supreme Court which she must do and which I certainly have exhorted her to do. By now, she will be aware of the amorphous mass that is NAMA mutating daily, weekly into new unpredictable forms.

Any sensible person would ask themselves what am I signing here? Is this constitutional? On the other hand, how on earth could something which is morphing into different forms, not be highly suspect to say the least. Nobody knows what is next to be discovered about NAMA. It is inherently unstable and regardless of what the FF handlers or the Lenihan camp are spouting she must pass this bill to the Supreme Court for clarification as to its legality.

@ dealga Says
Unfortunately, this is not the time, with the country on the brink of self imposed stagnation and self imposed financial zombiefication, much greater than what we already have, to impose omerta on oneself.

NAMA has been examined on it’s merits and it has been found to have major structural and mathematical flaws. NAMA is a political “plan” which takes scant regard of economic realities. On this site it has been analysed, dissected and corrected an nauseam all to no avail.

I think Alan Matthews is right. The quality of the comments, particularly on NAMA (whose market share here must be 90%) is often low: lots of heat,little light. This is not about economists vs. others. There have been some fascinating contributions by people who are not economists.
Having conducted a highly detailed econometric analysis of the blog I infer:
That as the number of comments on a particular post rises the quality falls & at an increasing rate. If you see more than about 25 comments forget it.
Blogs attract cranks.
Blogs turn otherwise sensible people into cranks.
For example Zhou En Lai just to be a perfectly normal Chinese apparatchik, complicit in the suppression of millions but thankfully dead. Now look!

Now if a blog is just to allow random people to sound off without having to go to the pub or become a taxi-driver, thats fine. But I think the idea is that it is more than that. And for those who wish to, say, dismiss the views of NAMA critics, the ranting is playing into their hands.
Alan also touches on an interesting point, the absence of female contributors. A female colleague who also observed this, had an interesting explanation for this: they don’t have the time.

Heres my take. The world and its dog knows the opinions of myself which are aligned in (as far as I can see) near unanimity with those of the independent commentators.
So, we can point out that we analysed and dissected. That the political apparatus is not capable/willing/able to a greater or lesser extent to take on these criticisims in the spirit they were offered, which was and is non party political and designed to highlight what we saw as the greater good, well that says a lot re our politics. And that btw applies as much to the opposition as to the government.
As to Karls questions
What do you think of the final bill? : not much more than I thought of the original
The draft bill was released in August to allow for debate and suggested improvements. Did this process work well? : no, the government has, as they do, pretty much ignored most substantive comments and driven on regardless.
Is the final bill much better than the original draft bill? : no.
Will the passage of the bill stabilise the banking system?; if by stablise we mean varnish-the-zombies, yes.
Will it get credit flowing? : think of the response to the question “did we get a reciept”….

@Kevin Denny
Yes, blogs do display power law decay when quality is plotted versus response time.
However, on the issue of NAMA taking 90% of the airspace – thats supply driven. If people who can initiate new threads wish to initiate new threads they should so do. Also, the fact is that the emergence of the blog here has coincided with the emergence of a massive economic downturn, a massive economic gamble by the government and comes at a time when the public is blog-conscious and economy-conscious. That it hasnt devolved into ranting madness more often than it has is a tribute to self-organization and collective sense.

@ Alan Matthews,

Of course you are right and many people who do fundamentally respect the ethos of this site have allowed themselves too many liberties in expressing their disappointment with the political process – myself included.

Our only defence is that the scale of the political snowjob and its economic ramnifications for the country are unprecedented and have shocked even those familiar with the Irish political process. At some point, the nature of political spin, half-truths and outright lies became so abhorrent that it was impossible to separate the rational economic debate from the dirty, dirty politics of the operation.

To answer Karl’s questions, I think it is a resounding NO on all scores.

Did the legislative process work?
I am afraid there is no detailed answer that can be given to this question which will not violate the ‘political free’ constraints which Alan rightly requests.

Will it stablise the banking system?
That depends what you mean by stabilise the banking system. Banking systems exist because they support the credit needs of a real economy. Ireland’s real economy is in real trouble, primarily due to a loss of international competitiveness. This, in turn, is largely due to exorbitant land prices.

But Nama’s sole intention is to support these artifically high land prices, thereby impairing competitiveness and condemning the Irish real economy to a lost decade. We are in the process of turning a cyclical downturn into a structurally broken economy. There may be a BoI and an AIB in five years time, but they won’t have much of a productive base to service.

Will it get credit flowing again?
The best way to get credit flowing in a small euro zone economy with open financial markets is to reestablish competitiveness. This will create sustainable demand conditions for new investment and hence lending which any responsible eurozone banks can and will supply.

But if the Irish economy is crippled during a lost decade, no Dail amendments to Nama, however well intended, will encourage money to flow into Irelands SMEs. The money being taken from the taxpayer and given to vested interests will just wash up on continental Europe’s shores.

Ciaran Cuffe is looking for parliamentary questions on Nama’s operation in the future. Any suggestions? I’d be most concerned about transparency issues…Anyone want to suggest questions? I will pass them on to him or you can do it yourself. Might be handy to have one public list though so we don’t duplicate.

Did the legislative process work? Yes it did. To their shame the Government set out to pass the bill regardless of external opinions that contradicted or questioned their original thinking. They steamrolled this into legislation through bluff, media manipulation and a determination not to answer questions validly raised by others or by releasing statistics that might show their decision making to be founded on sand.

Is it better than the original draft? No.

Will it stabilise the banking system? Yes. It buys the banking system time to reorganise entirely at the expense of the taxpayer without risk being shared in any real with with the shareholders of the banks.

Will it get credit flowing? No. This is the real shame. This is what was stated as the real goal. Anglo has no relevant future and will still continue to get more substantial capital injections. Goodness knows why. AIB and Bank of Ireland can only survive in the long term if they revert to traditional fractional reserving. This means they must now hoard which they will do. Having not been nationalised they can do what they want. This is the greatest shame of all when considering the money to be spent = wasted.

I think the announcement of the decision by Dr. Somers to retire as the NAMA Bill proceeds to the Third House of the Oireachtas is an eloquent response to the questions Karl has raised. Obviously it would be unwise to read too much into this. (Presumably there are personal reasons. Dr Somers has provided sterling service and he is at an age when many of his peers are enjoying much less well deserved leisure.) But, none the less, I believe it is significant. Karl has previously commented (can’t find link) on Section 51 of the original draft of the bill, “The though shalt not do a Michael Somers” section, which prevents NAMA board members and senior officials from publicly criticising the Minister or policy in relation to NAMA.

Although the President is empowered to refer this bill via the Council of State to the Supreme Court, I accept this is unlikely. NAMA is an “Irish soultion to an Irish problem”. While not deliberately seeking to provoke the ire of Alan Matthews I think we need to accept that Ireland is a deeply conservative country. Centre-right parties have dominated parliament and government since the foundation of the state. And Irish people seem to be remarkably forgiving of “their own” who engineer spectacular economic, financial or commercial failures.

NAMA is a means of providing some limited absolution to the bankers and developers who created this financial mess. It has little to do with the important questions Karl has raised. The various alternatives to NAMA that have been advanced would, in most instances, have led to significiant external ownership and control of the domestic banking and property sectors. Dsepite the popular revulsion at the limited absolution being granted to the bankers and developers, I suspect extensive external ownership and control would have aroused a more widespread and deeper-seated popular opposition.

However, the challenge remains to enhance democratic scrutiny and accountability in the design and implementation of policy and to de-link consideration of medium to long term economic policy issues from the electoral cycle.

“I can understand completely the anger and frustration that people feel over the state of the economy, but my view is that this site is not the place to pour out invective and off-the-top-of-the-head opinions on NAMA or any other issue.”

I think that your comment is unfair. There has been about 50 threads about Nama and, assuming 50 comments/thread, about 2500 comments. A small proprotion may have been “heat of the moment” but the balance were IMHO “fair comment” even if not always couched in academic terms.

What do you think of the final bill? The draft bill was released in August to allow for debate and suggested improvements. Did this process work well? Is the final bill much better than the original draft bill? Will the passage of the bill stabilise the banking system? Will it get credit flowing?

“I can understand completely the anger and frustration that people feel over the state of the economy, but my view is that this site is not the place to pour out invective and off-the-top-of-the-head opinions on NAMA or any other issue.”

I think that your comment is unfair. There has been about 50 threads about Nama and, assuming 50 comments/thread, about 2500 comments. A small proprotion may have been “heat of the moment” but the balance were IMHO “fair comment” even if not always couched in academic terms.

What do you think of the final bill? Too complicated and lots of wriggle room with serious problems emerging down the line.

Did this process work well? No, as the MforF stuck to his guns and only accepted changes that suited him.

Is the final bill much better than the original draft bill? Obviously, in terms of what the MforF was trying to achieve.

Will the passage of the bill stabilise the banking system? No, as the banks will have to be (effectively) nationalised to address this.

Will it get credit flowing? No more likely in Ireland’s case than in any other country.

Interesting exchanges as usual. NANA is a pig with lipstick! Its the math that is the giveaway (no pun intended!). As for lending: ?how repay? No one has yet answered this nitty question.

In any bureaucratic/political structure the person in authority and with the power to make decisions is the one who dictates to all others – and any attempt at complaint or objection is dismissed with an ad hominem -‘what’s YOUR problem, then?’. This is the low level of meaningful intellectual engagement that some of you are referring to. The initial reaction of dismissed persons is to complain or object somewhat harder, only to be confronted by the next ad hominem – ‘you REALLY DO have a problem, don’t you!’. This begets a furious response ie, anger. [But we MUST NOT show anger – yeah?] So, you have a choice, shut up and clear off, or be branded as a troublemaker. Some choice! You lose: you lose.

The bureaucratic, political and financial elites have erected a defensive barrier between themselves and the citizens. The elites will demand that the citizens pay taxes to ensure the elites can remain secure behind their protection. But, the citizens do not have an inexhaustible supply of money to pay the taxes, and consume, and pay their necessaries: then what? The math says this Reckoning Day ain’t too far distant.

Please keep the comments going, its one of several places that I can expect to get meaningful explanations.

B Peter

In response to Kevin Denny’s comment…

In my mind I am not a crank. I try to measure my comments and to stick to the facts at hand. When people criticise me I often think that I would not risk the reputation of this online persona by making the comments that they make using their real names (I don’t include Kevin Denny in that group).

Zhou Enlai did play a major role in the oppression of millions. I wonder whether it is, perhaps, just to visit the sins of the historical figure on the pseudonym-user 🙂 .

@ margaret

On the transparency issue Ciaran could ask that considering most of our property players were investment syndicates what provisions are there in the bill that no member or group of members are allowed to purchase assets they previously owned at a lower price.

A suggestion would to be to preclude any individual with an involvement in properties or investments that end up in NAMA from having any involvement in property investment for a period of 10 years.

I think that the legislative process in respect of NAMA illustrates a more general failing in the political system, namely the weakness of the legislative branch of government viz a viz the executive branch. The executive branch was not required to provide any real detail on how NAMA is to operate, the famous figures of 77bn face value, 54bn acquisition price etc. are simply estimates and in no way binding on the executive. The concept of the SPV was only introduced at the eleventh hour. The business plan does not provide an adequate explanation as to how NAMA intends to proceed, and, in particular, the circumstances in which (i) it will seek to enforce against defaulting borrowers, and, more importantly (ii) it might release land foreclosed against onto the market. I appreciate that NAMA is acquiring loans not land in the first instance, but we have little information as to the extent to which it thinks that it will have to seize the security underlying some of the loans. All of these matters have, in effect, been left over now to the Minister, NAMA and/or the SPV with very little ongoing parliamentary supervision.

Finally one thing which has always puzzled me is as to how the “good” loans can subsidise the “bad” ones. If each loan is valued individually, surely the value which NAMA will pay for a “good” loan will not involve much of a haircut as a loan which is performing and likely to be repaid in full will have a high LTEV? Similarly, the argument that the fact that approximately 1/3 of the loans are backed by property assets abroad in less distressed property markets will increase the likelihood of NAMA breaking even overlooks the fact that NAMA will have to pay a high price for these “foreign” loans because same will have a high LTEV.

@Karl Whelan
Well done to you for your persistent questioning of the whole NAMA plan on this site, on radio and TV from the beginning.

Of course there were many others who questioned the wisdom of a state run asset management agency paying over the odds to pay for the reckless gambling of bankers. And yes, Alan Matthews, the FF/PD governments were cheerleaders for this crazy debt driven economic “miracle”.

The passing of the Bill in the face of so much legitimate concerns is more a reflection of the way bills are passed in the Dail than on the actual merits of the case.

Well done again on your contribution to this critical public debate on NAMA.


I agree strongly with Alan Matthews.

I think is potentially a very rich resource for students, economists, journalists and anyone else interested in the debate on the Irish economy. While there are advantages to having it as an open forum, the weight of gibberish which has appeared since the summer is hard to get through. I also sense that serious academic comment has declined as a direct result – a sort of greshams law for blogs.

I think that the future of the site would best be served purely as a place for comment from the academic economists listed in the column on the right, even if this means that many genuine, non-academic posters such as myself get cut off. There are other fora for the rest of us. The comparative advantage of is in academic comment, so the site should focus on that.

Was there any mention of IT or information systems expertise for NAMA? I would have thought that it would be important for NAMA to be able to tap into the Banks’ IT systems to access records relating to NAMA loans while they are being managed by the banks and to extract and collate the relevant information.

Simon Carswell does a NAMA summary PDF in the IT:

As an academic (and not an economist) I have to disagree strongly with Alan Matthews and Ronnie O’Toole. A blog is a blog. If you don’t want a free expression of opinions, don’t allow comments. If you do allow comments, do not censor anything that is not abusive or threatening.

Well done Karl for keeping the NAMA issue alive, day after day, in the face of so much opposition and criticism from the PTB.

Agree fully with Ronnie O Toole ; the current openess of access has no doubt dragged down the level of analysis and debate.
Re NAMA debate just one observation on Banks and availabilty of Credit; Was’nt it the “too ready to lend” culture that led to current crisis in Banking so would hope and expect that there will be better scrutiny of Business cases before purse strings are opened—-unless Gov plans to guarantee any new loans .


I do not think that the NAMA conept or bill was improved by the Dail.
My answer is No to all questions.

The only comment I make is to post this extract from Sean Barrett’s article in the Irish Times on Fri 26th June last

“The success of Irish aviation in international markets over the last 20 years contrasts with much of the subsidy-guzzling quango-based waffle that passes for industrial policy here.

The Irish parliamentary revolt of June 27th, 1984, was essential to ending the cartel domination of international aviation and is admired internationally. The change in parliamentary opinion in Ireland in one afternoon contrasts with several years of congressional hearings in the United States as presidents Ford and Carter, Senator Edward Kennedy and Professor Alfred Kahn took on the incumbent protected airlines.

Ireland needs more parliamentary revolts. Secret deals with bankers, builders and religious orders should be no more acceptable now than deals with cartel airlines then. There should be less parliamentary whipping of divergent opinions in our rigid party system.

A proud tradition of parliamentary oratory from Grattan, Flood, O’Connell and Parnell was revived briefly on June 27th, 1984. We hear it seldom today.

As Ireland returns to rates of unemployment, tax and public debt of the 1980s, a reformed parliament might again lead the way out of our crisis.

The best way to celebrate the 25th anniversary of a remarkable day in parliamentary democracy is to have a lot more of them.”

It seems to me that Sean’s phrase “subsidy-guzzling quango-based waffle that passes for industrial policy here” is an apt comment on NAMA, once slightly edited.

On your other points regarding the content/motivation of postings/posters, the site is called Irish ECONOMY (ie. not economics as a profession or as practised in academies). IMO, it is political economy and thus can be party political.

Surely you have enough faith in the readers of this site to make their own judgement on the quality and content of postings?

This site is contributing to rational debate, in the ways intended by the promoters along with unintended consequences. C’est la vie!

It is an example of freedom of expression, about which Rosa Luxembourg made some pertinent points when talking of the Russian Revolution.

I think her comments apply to all forms of autocracy, whether authoritarianism is based on ideology, religion, power, money, position, race, control of mass media, knowledge etc.

@Ronnie O’Toole,

In principle, I agree with your proposal. Like you, I would not resent being excluded. However, much valuable comment and insight is provided by informed posters using pseudonyms – and this is frequently and gratefully acknowledged by the academic commentators. Some filter or mechanism might be required not to exclude this valuable input.

In addition, the root causes of much of the current economic and financial crisis in Ireland may be found in the nature of the political structure and process. Even the most informed and insightful critique or exchange of economic ideas appears to have no impact on this process. I accept that the principal contributors on this blog may take the view that it is not the purpose of this site to seek to alter the political structure and process so that the economic policy analysis and critiques debated here gain more traction in this process. But there is a clear disjunction between the quality of the resources deployed here and the lack of transparency, scrutiny and, it seems, economic rigour that attends the design and presentation of economic policy. This is starkly highlighted by the quality, breadth and depth of the critiques of NAMA presented on this site and the legislation that is close to being fully enacted.

This may be a bridge too far, but, in my view, it is one that needs to be secured – either here or via some alternative.

@ zhou_enlai, re your initial post on this topic above – it is disheartening, to say the least, to hear what will be the FF spin from the inception of the NAMA operation to its end – one, NAMA did not work because it was required to undergo due parliamentary process, (“mission creep” “delay” etc.) and two, because of the inherent failings of the Department of Finance. Whether or not you intend to speak for FF on this, you already are. Regardless of the legislative process, regardless of the weakness of the DoF, the overwhelming blame (and it will be blame) for NAMA must, and will be, placed at the feet of this Government. The NAMA concept, by its very nature, was destined to fail – nothing could have substantially weakened it more than the fact of its original conception.

As discussion of Alan Matthew’s comments seems to be a co-equal part of this thread I will make some brief observations:

@Kevin Denny
“The quality of the comments, particularly on NAMA (whose market share here must be 90%) is often low: lots of heat,little light”.

You are quite right about the comments. But of the last 24 posts on this blog only 5 have been about NAMA. There was a sequence of 12 posts in a row not about NAMA. If 90% of comments are about NAMA that just reflects reader interest.

@Ronnie O’Toole
“There are other fora for the rest of us”.
You would be surprised at how effective the NAMA spin machine has been in subverting other forums such as This blog is an oasis of honesty about NAMA.

This may sound partisan but my impression is that NAMA supporters or the few NAMA agnostics are much more offended by the debate on NAMA on here than NAMA opponents.
Are you sure you are not letting your favourable view of NAMA distort your opinion on allowing comments on this blog because the majority of the comments are strongly hostile?

@All those who commented on my suggestion on comments

There was nothing in my comment above to suggest that this site should only be restricted to economists, and I would not support Ronnie’s suggestion that only named economists should be allowed to post comments. I think getting the involvement of a wider public in debating our economic challenges is potentially a great strength of the blog.

But for it to serve this purpose, we need to encourage contributors to debate the issues and to contribute ideas, evidence, questions and experiences from whatever background they come from. If too high a proportion of the comments have zero information content and just allow somone to sound off, then the value of the site is undermined.

I agree it might be useful to give some guidance for comments on the front page of the site, in addition to the earlier standards agreed to avoide abusive and personalised posts.

@Alan Matthews
Like other commenters I have commented on the deep conservatism of Irish society. What damage did this culture of deference do in the past? I’d rather not bring up some of the terrible consequences. Now we think we are terribly modern and we mock the conservatism of previous generations. In reality though we are still as far behind open societies like America as we ever were. We congratulate ourselves on moving forward while not realising that we have not closed the gap.
I will continue to criticise Brian Lenihan.
For the reasons for my views on this man just check out the posts below relating to him. Don’t read the comments, just the posts.

I will also continue to blame our senior civil service, our government, our bankers and our developers for the scandals of our financial system’s collapse and our budgetary collapse.
They are responsible and so deserve to be blamed, as I am sure you would agree.
But I understand why you may find my doing so unseemly or even ungentlemanly. Fair enough. I have to warn you though that you are beginning to seem very old fashioned in your views.
There are no gentlemen among our government, many of our senior civil service, our senior bankers, many of our stockbrokers or many of our developers.

Guys, can I suggest that we lighten up a little? If people don’t like the comments from the great unwashed, there’s nobody compelling you to hit the comments button. Similarly, it seems that some people really didn’t like what Alan wrote but it was intended as constructive criticism.

The reality is the following: Posters can turn off the comments feature if they want (though I suspect most don’t know how to do it.) Nobody has done so yet to my knowledge. But I don’t think there’s any way, with the current software we’re using to only allow comments from people considered genetically superior. So absent some major effort to switch blog software — not my job — things will remain as they are, which is either good or bad depending on your point of view.


I’m still trying to figure out whether Kevin’s “suppression of millions” comment counts as an example of playing the man and not the ball!

I’m sure Zhou was just following orders!


@Alan Mathews

For support for my views on Brian Lenihan just read this.

Now Morgan Kelly is undoubtedly a male. But, leaving this aside, I am sure you would agree he is not the sort to just “pour out invective and off-the-top-of-the-head opinions on NAMA or any other issue”.

“WHILE MOST economists by now simply dismiss Brian Lenihan’s utterances on the economy as “not even wrong”, this is to miss the Minister’s almost eerie ability to predict exactly the opposite of what is going to happen”.

“Who else, as Irish bank shares plunged 13 months ago, could conclude: “Our banks uniquely have weathered this storm . . . We are in a zone of financial stability in a very troubled financial world.”? Two weeks later, having been panicked into his catastrophic bank liability guarantee, the Minister assured us that we had “the cheapest bailout in the world so far”, and six weeks later averred that: “It is not the function of the Government to fund or bail out the banks.”

“The effortless miscalculations, the assured non sequiturs, the lofty indifference to facts”.

Morgan describes Brian Lenihan as a master of misleading nonsense.
Steaming misleading nonsense.

“The Nama legislation, as expected, piles up this material on an Augean scale.”

“To subject these almost poetic flights of ministerial imagination to any sort of rational analysis will seem to many like vandalism, but that is what God made economists for”.

“At a quarter of national income, Nama would dwarf the cost of previous bank bailouts, which varied from about 3 per cent of GDP in Sweden to 14 per cent in Finland and Japan”.

“Brian Lenihan assures us that Fianna Fáil’s monument to a decade of waste, corruption, and ultimate ruin will not be wasteful, corrupt, and ultimately ruinous.

Let us hope that, for once, he is not wrong”.

Now Mr Mathews, if Morgan Kelly expresses similar sentiments on this site would you criticise him? Or would it be ok because he is an economist?

I just hope you didn’t read his article about the serial incompetence of Brian Lenihan and the inevitable disaster of NAMA and the only reaction you had was, “nothing justifies the use of a rude word by an economist in a national newspaper”!

It’s a bit rich to complain that the comments on here have generated ‘more heat than light.’

This has been almost the only place to generate any light at all.

I’m still trying to get over the government’s argument that the money borrowed for NAMA will be an IOU rather than a debt.

Anyone else think that the reactions to Alan Mathews comments have done nothing but re-inforce his original point?


I am a bit rattled to see my posts characterised as worse than the real Zhou’s suppression of millions. Now I know how Jedward feel when the crowds boo.

The real Zhou Enlai was on my mind when I first posted on another site some years ago. I didn’t put much thought into the name although I do not regret it. He was an amazing man who had some serious flaws. Question marks as to his his respect for human dignity, his courage and whether helped the people as much as he could have will always surround him.

@ E20Bn plus interest

Usually a dire crisis is necessary to effect change in a society.

In Ireland, sadly it appears that the comfortable have escaped the grim existence and the pervasive fear that is the lot of people who are unlucky to be out of work in the modern money economy.

What was striking about the NAMA debate, was how little had changed in the old conservative ways of doing things.

The Opposition had nothing of novelty to say and blather pours forth on competitiveness, but is the State helpless as the biggest purchaser of goods and services in the economy.

So NAMA, provides for almost €2.5bn in fees for professional services, and the same old system of Victorian secrecy protecting the insiders, prevails.

The comfortable with their guaranteed pensions haven’t much to worry about.

In the US in the early 1930s, the International Apple Shippers Association, faced with a surplus of apples, decided to sell them on credit to jobless men for resale at a nickel each. Overnight there were shivering apple sellers everywhere.

Asked about them, President Hoover replied: “Many people have left their jobs for the more profitable one of selling apples.”

Life is more humane these days but in conservative Ireland, the lack of interest in reform and change is deeply dispiriting.

What does it require if not something resembling the echo of the rumble of the tumbrils, on the cobblestones of Paris’ Place de Grève.

Alan, if all this sounds too subversive, maybe you should come down from the ivory tower!!

@Green Energy

I haven’t heard any FFer express the views I have expressed in the last few days. I don’t speak for FF as I have no authority to do so.

@ Margaret E. Ward

“Ciaran Cuffe is looking for parliamentary questions on Nama’s operation in the future.”

Shouldn’t he and his party not have thought that through before voting NAMA into existence (twice)?


In the comments on a previous post on NAMA not borrowing from the ECB Karl W made the following observation:

“There’s an interesting counter intuitive thing happening here. Often with economics, there is some complex thing going on and politicians misinterpret things by simplifying them. In this case, however, what’s really going on with the plan is quite simple and could be understood by anyone but pretty much everyone has been convinced that something else, something more complicated, is going on.

And, of course, this can only happen if there’s a concerted campaign to mislead people.”

I think many of the comments reflect a, perhaps, understandable frustration that the considerable efforts made on this site (and linked to it in the wider media) to advance alternatives to, critique aspects of, highlight implications of and propose modifications to NAMA have had a negiligible impact on the official campaign of obfuscation.

Expressing this frustration may generate more heat than light – and may not be to the liking of all readers – but it will pass. What one hopes will remain is a resolve not to be fooled again – and an even stronger resolve to promote the changes that will restrict the potential for future deception.

@Margaret Ward

“Ciaran Cuffe is looking for parliamentary questions on Nama’s operation in the future.”

Several come to mind but this will do for starters:

Why has Nama written down its loan portfolio by 40% ?

@ Ronnie O’Toole

As a non-academic economist, it’s rather strange that you would propose that people like yourself should be prevented from commenting.

A small number of contributors go off the rails at times, but in my opinion, the value of the site has hasn’t been impacted.

Haven’t we enough balkanisation and resultant ignorance, in Irish society?

Part of the reason for the increasing bad-temper on the site is the preponderance of NAMA-related threads. While these are important, and I wouldn’t want to suppress them, although I rarely contribute to them, threads relating to the wider economy are much less frequent now than in the early days of the site. For example, this week alone there have been lots of important data published on the wider economy. The latest industrial production figures were published on Tuesday, the latest inflation figures were published on Thursday, and the latest retail sales figures were published today. All of them support the more optimistic view of the economy that a few of us have. In the early days of the site, threads would probably have been opened on all these. But, this week, nothing. There is now very little debate on the site about how the wider economy is actually faring and how soon the recession will end. For the record, I think its allready over, but this isn’t the thread to say why I think that.

I entirely agree about our establishment. It is remarkable that after their collossal failure (sorry Alan) the leadership of the country should be telling us to stop being irresponsible and just bail them out and allow them to fix the country in the way that suits them. They have a Herculean arrogance. It is even more remarkable that people should think it ungentlemanly to point this out.

I do have to point out that you are the biggest pro-NAMA poster on the site and on one of the earliest exchanges I had with you you said the following.

“the McWilliams “we should leave the Euro” piece was the biggest ego-trip in the short history of our new set of economentariat (economic commentators? geddit?). It probably cost this state a couple of hundred million in long term permanently higher bond yields.

Also, Morgan Kelly, per his “house prices will fall 80%” line reckons the average house is gonna cost €62k by the end of this crisis. Anyone else actually expect this to happen?”

Dragging the tone down a little, no? I cited them as supporting NAMA so you decided to attack them. Remember too they are not politicians.

You also said the following on the thread below:
“there’s ladies following the action on this blog? Seriously?”

Why do pro-NAMA campaigners hate men? It seems to be becoming a new talking point.

@Alan Matthews
“I agree it might be useful to give some guidance for comments on the front page of the site”.
I suggest that an article by our most respected economist, Morgan Kelly, in our most respected national newspaper, The Irish Times, provides the acceptable standard for NAMA and for Brian Lenihan and the rest of our establishment. I recommend it for inclusion on the front page of the site as guidance for comments.
If you or any of the blog promoters disagree please be honest enough to outline what specific comments of his you feel inappropriate.

Finally, please remember this too.
If you wish to make a pro-NAMA post, and I think you might, we commenters will treat you with every courtesy.
And we welcome your posts on any other topics.
And I sincerely advise you to stop taking offence on Brian Lenihan or our elite’s behalf – they’re not worth it.
And never, ever, allow corrupt elites to tell you to shut up and teach.

Of the last 24 threads my quick count found only 5 about NAMA.
Given that the legislation on the €54 Bn gamble has been finalised this week one would expect a lot of threads on NAMA. But only 5 of the last 12 have been. There were 12 threads in a row not about NAMA this month.
To refer to the “preponderance of NAMA-related threads” is simply misleading. I have seen this argument advanced on this site before always by NAMA supporters.
I can’t help feeling it is a symptom of a resentment widely felt among NAMA backers I have described before.
“And we would have gotten away with it (much more easily), if it hadn’t have been for those pesky academic economists”.
Well done to all the 46.

“threads relating to the wider economy are much less frequent now than in the early days of the site”.
Since Nov 9:

Pre-Budget Outlook
Australia experience – lessons for ourselves I assume.
Fiscal policy in the 30s – relevant to today.
Macroeconomics and Finance
Public Sector Pay
Public Private Pay Differential
Tax Strategy Group
Martin Wolf on Irish Economy

All of these relate to the wider economy, since Nov 9. These are academics doing this voluntarily not galley slaves! They can’t comment on everything. By all means let’s have a good news thread. After NAMA we need it.

@John the Optimist

I’ve pointed out before that, as best I can recall, there has never been a post on this site about industrial production figures.

As for the other releases, I guess you view -6.6% deflation as consistent with “an optimistic view of the economy” on the grounds that falling prices boost real spending. Others will view it as a sign of an incredibly depressed economy.


None of the ones you mention relate to how the Irish economy is actually performing. None are about the economic data published in the past week.
One is about Australia, one is about the 1930s. Some are for theoretical discussions. All very rivetting, no doubt, but the meat and drink for a website on the Irish economy should be the latest economic data. After all, if you read the FT or WSJ, the centrepiece of the analyses is usually whatever economic data is published that day (although they have other things as well, quite rightly).

@Karl Whelan

Maybe there should have been threads about industrial production figures. Then, readers of the site might have had a more balanced view of how the economy is performing. A 4% increase in manufacturing output in Q3 is not to be sneezed at. As for today’s retail sales figures, I’d have thought the fact that, for the first time since 2007, q-o-q core retail sales figures showed an increase might have been of some interest to readers of the site. It is something of a turning-point when consumer spending stops falling and starts rising again, and it may well signpost that the recession ended in Q3 (although that’s not certain, of course). As for the inflation figures, they clearly indicate that Ireland is in the middle of a massive improvement in competitiveness, which may be one of the reasons why almost all forecasts for GDP growth in 2009 and 2010 are turning out to be wildly overpessimistic (including Brian Lenihan’s, I might add).


On industrial production figures, would you go AWOL in a bad month?

Monthly: Down 16% in August; up 11.2% in September.
Annual: Down 12.9% in August; Down 0.7% in September

Batch chemical production can be puzzling!

Wonder how much added value materialises?

No big changes in employment or reports of new facilities with all that added output in 2009.

@Karl Whelan
If I was the pro-NAMA camp I’d certainly be doing my best to discourage continued critical scrutiny, especially during the period when the loans are being valued, but for the next few years after that.
Let a few years elapse, let the occasional article appear coinciding with NAMA’s reports.
Initally deny that NAMA will make a loss.
Then say that a small loss is worth it for a banking system.
Then say a larger loss is still worth it.
Then say it is time we all looked forward not backward.
We are where we are.

They have the script written and have already performed it once with great success. Next time they will perform it even more slickly.

It is vital too to the pro-NAMA camp to ensure their view of history prevails:
“Only game in town. No better alternative. Scale of losses could not have been foreseen”.
Vital at least that they generate sufficient confusion on this matter to escape much of the blame they deserve.

You know what will be really sickening.
These people are responsibility phobic.
Eventually FF/The Crony Capitalists will blame the opposition and the rest of the anti-NAMA side for not stopping them.
They have already started on Wait for it to appear here.
The NAMA Spin Machine will be with us for many years to come.

@Karl Whelan
Did this process work well? No – for a decision of such magnitude the quality of discourse was inadequate – the inability of the political opposition to think and promote a strong alternative did not help.
Is the final bill much better than the original draft bill? In key areas of substance – No – and in some ways worse as SPV enters the cute hoor lexicon on governance shuffles and international reputation takes another hit.
Will the passage of the bill stabilise the banking system? I do not know. Gut states probably but without any significant change to the nature of the system that got all into this quagmire..
Will it get credit flowing? I do not know – but without it productive value creating activity will dry up ………. probably an error of massive proportions not to nationalise the lot of them in September 2008.

@protectionists and genuflectionists
Minor point: economics is not the sole preserve of economists – welcome to the public sphere!

@ johntheoptimist

The end of recession is nigh? You really are of the glass is half full brigade.

Comptitiveness is improving because we in business in the private sector have done what our Govt has failed to do. We shed jobs, cut out waste and slashed prices. This lightening quick reaction is now starting to feed into the wider economy.

But still our Govt delays and performs a dance of death with public sector unions. We will get a budget in December that even with a whiff of what might be in it has caused a strike of public sector workers.

Strikes will undo all of the good work done in the private sector while a Govt cave in to the vested interests will prolong recession.

There might be hints of a slowdown in the decline of our economy but the public sector has not recieved its share of the pain yet.

And the signs are not good as to how they intend to deal with it.

I had suggested earlier that it might be usefull to give some guidelines to on the front page of the site. I might be a novice contributor to the site but should there not be an option to return to a home page. It just seems a little confined once your are in one debate.
I am really impressed by the standard of commentary on the site and while I hope to add to this content over time, I am also here to learn from those that are more knowledgeable in these area. Although I know karl and Alan are economists, I would like to know, who is an economist before I read the commentary. I think it might help.
Tommy C

@ John the Optimist,

As I look there are 30 posts appearing on the front page of the blog. 24 of these are about the Irish economy (and one more links to an important paper by an Irish economist about fiscal policy in the Great Depression). 4 of the 24 are about NAMA.

This confirms my own impression that the NAMA-fatigue mentioned by Karl Whelan has probably extended to this site (very much including this reader!).


I think it’s an almost universal law of the internet that as a comments thread approaches and surpasses 100 comments it becomes increasingly less likely to be worth reading. Almost no threads here go that far, but for sure many comments are a bit pointless and many commenters could definitely do with thinking twice and asking themselves whether one more angry, tendentious, sarcastic etc. comment is really going to improve the world (or the thread) before hitting “submit”.

But on the whole I still think this blog is a great resource and am very grateful to those who keep it going. It is if anything a symptom of its success that one now has to sort the wheat from the chaff in the comments.

@ Margaret E. Ward

“Ciaran Cuffe is looking for parliamentary questions on Nama’s operation in the future.”

God give me strength.

Do you really believe that I, and I can only speak for myself here, would give that piece of self satisfied and deliberate ignorance the benefit of idea?

Alan Matthews might think that this, not being macroeconomics, should be deleted. Frankly I don’t give a damn. I’ll just chalk it down to experience.

Here’s some words for Ciaran Cuffe to think about while he sold his country out.

“Now I have nothing, so God give me strength,
cause I’m weak in his way,
and if I’m strong, I might still break.
And I don’t have anything to share
That I won’t throw away into the air.
That song is sung out.
This bell is rung out.”

Why should any Citizen give any member of the Green Party the time of day?

They voted twice for NAMA.

At least Fianna Fail only voted once.


Any Minister charged with responsibility to devise a scheme to stabilise the banking system faced huge political risks to their own reputation and to the survival of their administration. Thus from the outset, politics had level pegging with any economic rationale. The process of getting NAMA from proposal to fully fledged legislation must be viewed in that context.

It’s very unusual, here or anywhere else in the EU, to have a public debate of the kind that took place about NAMA. Even more unusual, to find such a debate encouraged by the Minister sponsoring a financial proposal of this kind. If the political strategy was to draw all strands of opinion, particularly those opposed to the entire concept, into the public arena, and then pick them off, one by one, it worked like a charm. The Minister and his team could cherrypick good ideas from wherever they were coming, digest them and then include them in the legislative package without being accused of that most damning of political charges, the ‘u-turn’. As for their diehard opponents, all they had to do was wait for the mistakes.

Arguably, the Fine Gael leader blew his own party’s ‘good bank’ proposal by announcing it prematurely and then demonstrating on the national airwaves that he didn’t really understand it very well himself. The Labour Party’s ideologically inspired and populist demand for pre-emptive nationalisation; first for all the guaranteed financial institutions but later whittled down to just the two main banks, was also easily blown out of the water on grounds of costs. Even the challenge on the specifics of the NAMA proposal from the academic economists foundered on the unfortunate ‘46’ letter.

NAMA might not be popular, but neither FG’s ‘good bank’ nor Labour’s pre-emptive nationalisation plan were presented with sufficient coherence or authority to inspire any public confidence that they would be any more likely to work. The plain truth is that the general public resent the idea of any form of bank-bailout, but however angry they may have been, they could still recognise that something had to be done. Once it became obvious that NAMA would go through, the media lost interest and so did the public.

Along the way, good and bad ideas have become incorporated in the actual legislation. But the final Bill is arguably much better than the original draft. Despite some dubious new provisions, like the SPV accountancy trick, several significant amendments have also been included that will improve oversight of NAMA’s operations.

If the highlight of the parliamentary process was the Minister’s appearance before the Oireacthas Committee on Finance; the low point was the extended Dail debate on the Bill itself. One might reasonably argue that the political debate on NAMA ended following the first day of Second Stage in the Dail. For much of the rest of it, there were frequently less than a dozen deputies in the chamber for the debate. Moving the Committee Stage to the Dail Chamber turned into a fiasco.

A lot of parliamentary time was wasted on trivialities and repeating the same points ad nauseum. Our legislators appeared focused on the substance of the Bill for only about 20% of the many long hours that went into debating its nuts and bolts. For instance, in the final debate before Thursday’s vote about one and a half hours was wasted in discussion on a minor technical amendment; a tedious interlude in which the usual conspiracy theories about NAMA were trotted out amidst irrelevant references to photographs in hotels and bank accounts in Switzerland, Bermuda and the Isle of Man. It was poor stuff indeed.

Will NAMA stabilise the banking system? Possibly. As an ordinary citizen, I certainly hope it does, whatever its flaws. Will it get credit flowing again? Maybe, though there will be a lot of complaints that the banks aren’t lending or they’re being too tight about business overdrafts and so on. There are still plenty of people out there who have not recognised that the world has changed and that banks will not lend money as freely again as they did in the boom years. There are others who may believe that political lobbying should allow them to secure loans that might otherwise be sensibly rejected by any financial institution. One thing is sure, there’ll be lots more drama about NAMA in the months and years to come.

@ E20bn (insert whitty tagline)

1. McWilliams’ behaviour over the last few weeks has shown him to be nothing more than a self-publising egomaniac. Im not bringing the tone down by pointing this out. Its because he’s clearly clever, insightful and influential that i complain when he’s not being responsible. Lots of other people on this site seem more than happy to just call him a hack journalist. I’m not. He’s even apologisied (and fair play to him) for betraying the trust of our Minister for Finance, something you seemed to have no issue with (somehow Lenihan stabbed him in the back per your logic).

2. The Morgan Kelly line was fairly basic – do you think average house prices are going to fall to €62k? Answers on a postcard please, unless you think that would drag down the tone…

3. The women comment? Seriously? Do you really have no sense of humour, at all? In case you didnt get it, the joke was that the only commenters on this site were nerdy men like me and women wouldn’t have any interest in them. I’ve since found out that my girlfriend is actually entralled when i talk about economics, but she’s a bit mad, so i wouldn’t use her as a benchmark.

4. I have been subject to more personal attacks than most on this site (my name for instance, fortunately i have an amazing sense of humour), but i dont really have an issue with that. I think people should be able to give as good as they get on here, but i agree with Alan’s main point that a lot of the clearly politicised points do nothing more than distract from the core economic issues that we’re supposed to be talking about.

By the by, can i just point out that JohnTheOptimist is a true beacon of light in an otherwise negativity-filled forum, and its because of people like him that we can actually think about better days in the not-so-distant future. Not everything is all doom and gloom in this country, and people need to start at least considering that maybe things are starting to stabilise or are even turning around. What was it that Kevin Costner says in that heinous act of filmography, the Postman, “things are getting better”?

@ All

by the by (again), while there might be a lot of posts about different topics on this site, there is a clear correlation between ‘comments’ and NAMA threads. Also, many commenters would appear to only be interested in talking about NAMA and have no interaction with the other posts. I think that was what some people on this post were trying to suggest.

@Bond. Eoin Bond,

You are probably right to highlight the “NAMA obsession”, but I think, for many commenters, it brings together in one package the symptoms, key features and failings of economic policy during the last decade. Now that it seems to be a “done deal”, the focus has to be on the extent to which it will act as a drag on future economic performance. My fear, and I suspect this is shared by others, is that it will delay the necessary adjustments in the banking and property sectors and, thereby, slow the economy’s return to its potential output. The thread on the hotel sector highlights its likely detrimental impact on the speed of capacity adjustment in just one sector; other sectors are also likely to be affected similarly.

Dr Garret FitzGerald ( attempts to paint a slightly rosier scenario for the economy by drawing on John FitzGerald’s paper to the DEW at Kemare (discussed here previously, but not at great length –, but I’m not sure to what extent this potential “NAMA drag” is factored into the HERMES modelling conducted – or, indeed, to what extent it might be possible to do so.

Similarly, I’m not sure to what extent the drag on economic performance resulting from rent capture and inefficiencies in the sheltered and semi-state sectors is factored in.

Frequently these issues are considered in terms of equity and fairness (Stephen Collins – – is encouraging the MoF to tackle the fees of wealthy professionals to make other cutbacks more palatable politcially), but my focus on these areas is purely in terms of economic efficiency. A perception of equity and fairness should be an outcome not an objective.

Without going down the road fully with JohnTheOptimist, I believe the economy has considerable resilience and an ability to bounce back rapidly. My focus is on the factors that might retard recovery.

@ M.B.

“The end of recession is nigh? You really are of the glass is half full brigade.”

I never said that the end of the recession is nigh. I said that it most likely is allready over. However, I must clarify, as the media tend to make fun of such statements. The end of the recession does not mean that everything is back to normal again. It simply means that it is the first quarter in which the economy stops contracting and starts growing again. Thus, Germany, France, the US and a few others are allready out of recession, but GDP is still well below its pre-recession peak in all of them. If you compare a recession with a bad does of swine flu. Then, the ‘end of the recession’ would correspond to the first day in which your condition stops getting worse and starts to improve, not the day on which you are restored to full health.

Regarding your other points. You say that the private sector has cut costs but the government hasn’t, at least not to any great extent yet. I would probably agree, and I would tend to support the cuts the government is proposing for 2010. However, as Garret Fitzgerald wrote in the Irish Times this morning, there is a likelihood (not a certainty) of the economy growing rapidly from 2011 on and, if this happens, (he says) there will be less need to have further cuts after the ones proposed for this year. Bear in mind, also, that most countries haven’t cut costs at all, either in the private sector or the public sector. As far as I know, Ireland is the only country in the EU in which the fall in employment is greater than the fall in output, and our HICP inflation rate is now 4% to 5% below the EU average.

I’d also be less worried than you about a one-day strike by the public sector. I’m sure that, if Kieran Allen leads the UCD Department of Sociology out on a one-day strike, we can survive. Talking of which, a thought has just occurred to me. Will the academic lecturers who run this site be supporting the strike? Stranger things have happened.


I like the way you summed it all up – even though your analysis of NAMA showed that there is little opportunity of funding being available to the SME sector, you did it in a positive way – Well written

@Veronica -“NAMA might not be popular, but neither FG’s ‘good bank’ nor Labour’s pre-emptive nationalisation plan were presented with sufficient coherence or authority to inspire any public confidence that they would be any more likely to work.”

I enjoyed your contribution. I believe we have what we have today (i.e. NAMA being the way it is) because of weak political opposition (with one or two individual exceptions). I blogged about this back in August

The following is an extract:

Fine Gael and Labour have put forward some ideas but both seem to be lacking any real detail and, given that they may well end up forming the next government, they don’t appear to be creating a joint alternative that will bring their combined vote together to back a proposal they both agree on. Labour favour some form of temporary nationalisation of institutions covered by the bank guarantee. Fine Gael say they do not favour nationalisation but prefer the idea of a State-run National Recovery Bank to drive new bank lending for investment and job creation.

Additionally, some of our best academic economists such as Professors Karl Whelan, Brian Lucey and Patrick Honohan have been subjecting the legislation to forensic analysis and making interesting suggestions for alternative approaches.

But where’s the coherent, joined-up solution and plan? Where is the viable alternative that is a no-brainer choice over NAMA? Surely it is part of the job description for opposition parties to come up with detailed alternative proposals if they want to be taken seriously?

The opposition need to come together and choose an “architect” who has sufficient economic knowledge and the requisite stakeholder management skills to bring disparate parties together and create an agreed, credible and realistic alternative to NAMA (ANAMA – the Alternative National Asset Management Agency). It needs to be thrashed out in detail and ‘stress tested’ by qualified professionals. They then need to spell it out to the public to ensure that there is a reasonable level of popular support before the debate in the Dail begins.

If all they do instead is just stand there on 16th September whining, sniping, picking a few holes in the 136 pages of draft legislation, moaning that we might be overpaying and stating the obvious in that it exposes the country to an as yet un-quantified risk then they are playing right into the government’s hands.


@ Joseph & Veronia

as one of the most vocal pro-NAMA supporters on this site, i would like to remind people that one of the main reasons behind my support, which i frequently mentioned here, was the lack of a viable political alternative put forward by the Oppositon, as opposed to a theorethical alternative suggested on this site. A potentially great idea with no chance of becoming a political reality is, unfortunately, just an idea and not a plan.

@Joseph, Eoin, Veronica

I’m afraid I don’t agree at all with the idea that there was no viable alternative. There was a whole range of them. At a minimum, one could start with the detailed NAMA bill and work backwards making substantive changes, e.g. removal of LTEV clause.

Perhaps Eoin is saying that the opposition couldn’t agree on an alternative. But suppose they had. Does anyone actually think that the Brians would have changed their minds and adopted that plan? I certainly don’t.

@ Karl

FG had an idea (which changed a lot over time), and Labour had another idea (which amounted to nationalising first and asking questions later). Neither were remotely close to each other. I always said the lack of a “politically viable alternative” (ie something which could actually be enacted) was a major issue for me, in that i felt something HAD to be done to stabilise the perception of the economy.

This issue goes even further – if we had an election tomorrow the likelihood is that we’d end up with a FG/Labour coalition. Does anyone think that the two of them are going to be able to agree on any substantive changes to our economic policy? This is another reason why i said we needed FF to stay in government for the moment and wait to boot them out until next year sometime – at least they’re actually willing and able to cut government expenditure this year. FG (per George Lee this week) are unwilling to even cut child benefit on someone with a million Euro mortgage and a relatively large income.

Who says there are no women posters on this site,
TINA keeps turning up everywhere!
Sorry Alan but I’d like to see less of her!

@ johntheoptimist

I agree that the economy has stopped falling and is starting to bottom out but my worry is that public sector disruption might hinder any recovery.

I believe that Britain has also taken measures to cut public sector jobs and freeze pay and as our nearest and biggest trading partner as well as the only country in Europe with whom we have a land border it is the country against whom we should benchmark out rates of pay and our cost competitiveness.

This leads me to another question and it is probably one already asked and answered on this site but if the economists on site would please indulge.

Having a different currency to our neighbours is not an ideal situation. My business deals a lot with the British market and to say we are considered an expensive market to trade with is an understatement. I know that currency fluctuation is a big issue especially at the moment but was entry into the single currency without the Brits a good idea or has it contributed to our woes.

I remember when I started my business I straddled the punt and the euro and found by the time I was trading with the euro some costs had jumped by as much as 25% in a 6 month period.The 3 months before entry seeing the biggest increase.

@Veronica “the unfortunate 4 letter”. What, pray tell, was unfortunate about it? That I drafted it? That others improved it? That many signed it? That it reflects a widely held view amongst independent commentators? That the IT published it? Or is it that Garrett the Good decided ,for reasons that passeth all understanding, to take umbrage at the idea that we might head for a deficit towards 30b (which we are)? Or was it that we dared to show our heads in public?
Do please elaborate…..

I think a lot of the pro-NAMA posters are now just teasing.
If they can slip in a few talking points and try to propagate their TINA myth for posterity all the better.

@Bian Lucey,

Brian, I will be happy to elaborate on the ’46 letter’ and related points. Today, however, I have to work for a living so I will have to leave it over until tomorrow when I will have more time. I hope you will excuse the delay, but there’s not much I can do about it since ‘putting bread on the table’ must take priority, alas, for the moment anyway.

Would it be possible to have sepearte comments sections within each post?

The first section could show comments from contributors to the site while the second section could show comments from the general public.

This would allow general participation while at the same time allowing less patient readers to skip straight to what are typically more informed and more on the point comments.

To give thanks to the govt for actualli publishing a bill months before it is enacted is preposterous: it is becoming extremeli rare for example for the UK govt to enact an bill which has not had a formal consultation process/green papers/white papers etc. Veronica – ur post is equall preposterous as is the idea that commenting on this site should be better controlled (as distinct from making posts). I actualli onl read posts with lots of comments – I trust in the market and i’m not even an economist.

@Eoin Bond (whos v informative posts on this site which I have read r a perfect argument against confining comment to certain classes of people) et other ‘no alternative brigades’:

I mite have some simpathi for the argument that as other political parties did not promote a coherent alternative 2 nama if 4 instance we had found out about the spv thing when nama was first anounced bi lenihan.

NAMAs birth and subsequent growth from the ding embers of the now sadli resuscitated investment banking fraterniti advising our govt has all the hall marks itself of being a back of the envelope creation.

So how is it fair to cuss nama opponents incluidng political parties for lack of detail?


Any public affairs consultant worth their salt will tell you that most policy announcements are initially greeted with apathy by the general public and largely go unchallenged except by vocal groups with a strong vested interest. Apathy only transforms into general public concern when risks and costs (social, environmental, health or economic) contingent on the policy are identified by authoritative sources. In most cases, the risks are exaggerated for campaigning purposes. The media play along, and exaggerate further to increase the dramatic potential of the story. What they’re after is ‘David and Goliath’, ‘heroes and villains’ type conflict scenarios because that’s how we tell our stories to one another. Players who get bumped to the sideline during this process lose credibility. If you no longer have any influence on how events will play out, the media reduce your status in the public debate accordingly. The final stage is that the policy is either accepted or rejected. However passionately they may have espoused either side of the argument whilst the outcome was uncertain the media and the public then quickly lose interest and move on to something else.

I described the 46 economists’ letter as ‘unfortunate’ because, in my professional opinion, irrespective of whether or not the facts were on your side, it was misdirected and tactically wrong in a political sense and made it all too easy for the policy formers to take you out.

This is just my opinion, however, and no disrespect is intended to two brave professors who did a lot to highlight the risks relating to NAMA and promote public understanding of the issues, for which we all owe you a debt of gratitude.

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