No Connection Between Bank Bailouts and Budget Crisis?

Writing in today’s Irish Times about the upcoming budget, Pat McArdle states

the first thing to do is to try to disentangle the two crises that confront us, namely, the bailout of the banking system and the budget. The two are inextricably but incorrectly linked in the public mind.

He is highly critical of people who suggest there is any such link and the piece includes the now-standard McArdle swipe at academics who “should know better.”

McArdle’s principle objection is to those who see any link between the €4 billion injected into Anglo Irish Bank this year (and perhaps a similar amount next year) and the €4 billion in tax and spending adjustments scheduled for the upcoming budget.

Pat argues that there is no connection between these two sums because, while the money injected into Anglo is part of the Exchequer Borrowing Requirement (EBR), he doesn’t like the EBR. Instead, he prefers to focus on the General Government Deficit (GGD). And the GGD won’t count the money injected into Anglo:

If the exchequer were to inject another €4 billion capital into Anglo Irish Bank in the morning, this would increase the EBR by an equivalent amount but would have no impact whatsoever on the GGD.

This is because the international rules treat such capitalisation as a “below the line” transaction, i.e. investment in a commercial State body which is outside the government sector, rather than current expenditure which affects the deficit.

So there you go: The Anglo money shouldn’t count as debt because it’s being used to fund “an investment.”

I disagree with McArdle’s position on this issue for a number of reasons.

First, it is well known that Anglo is no longer a commercial operation and that the government will get back none of the €4 billion that was put in this year, nor is likely to get back what it will put in next year. To state that the €4 billion invested in Anglo shouldn’t count as debt because there is a corresponding asset being acquired is to engage in exactly the type of disingenuous argument that McArdle accuses others of.

Second, McArdle believes that GGD is the “critical measure” of the stance of fiscal policy which is the “ultimate focus” of government policy because it is used by the EU to monitor compliance with the Stability Growth Pact. I do not agree with this. 

The Irish fiscal situation has deteriorated to the point where upsetting our EU partners by failing to comply with their latest interpretation of the SGP will be the least of our problems. The task for the Irish government now is to convince international financial markets (not the EU) that it can set the public finances back on a path towards long-run solvency. If it cannot do that, funding from international markets will be cut off and then we’ll see what a crisis really looks like.

And this is where the cost of the banking bailout comes in. Every euro of debt obligations issued in the name of the Irish taxpayer pushes us closer to the point where international financial markets start to question our long run solvency. And sovereign bond markets are well aware of the costs to the Irish taxpayer of the banking bailouts, irrespective of whether some statistician includes them in the GGD or not. These costs are substantial. Beyond the huge amount of funds being plugged into Anglo, we will have to see how much is ever returned from the €7 billion injected into AIB and BOI or whether NAMA breaks even.

The fact is that the banking crisis has substantially narrowed the options for the Irish government on the fiscal front. With serious international concerns about our ability to pay back the debts associated with both ongoing deficits and the banking crisis, the government has no choice other than to start making major inroads into the deficit.

Third, I would note that even by the official definition of what is counted in the GGD and what isn’t, the call that the money that has gone into Anglo shouldn’t count as part of the GGD seems to be a dubious one. Here’s a link to the ESA95 documentation on this issue. Now go to page 58 of the PDF file. It’s the first page of the section discussing the appropriate accounting treatment for capital injections in public corporations. The section distinguishes between financial transactions, which should not count against the deficit, and non-financial transactions, which should count against the deficit. Non-financial transactions are described as follows:

Acting this way, the government expects nothing in return in terms of dividends (most of the time the enterprise receiving such transfers does not pay dividends), nothing else than an improvement of the corporation’s wealth and the meeting of some social needs

I would argue that this describes the Anglo capital injections pretty well and so they should count against the GGD. It will be interesting to see if, after the NAMA transfers, the government can continue to claim that Anglo capital injections don’t count against the GGD.

The bottom line here is that substantial amounts of public money are going into the banks at the same time as taxes are being raised and public expenditure is being cut. The public may not understand ESA95 but they know what they are seeing with their own eyes.

It is, of course, clear that the deficit would need to be cut even if there was no money going into the banks but McArdle’s claims that there is no connection between the bank bailouts and the severity of the fiscal crisis are, to my mind, extremely odd.

126 replies on “No Connection Between Bank Bailouts and Budget Crisis?”

An additional point to consider is the likely loss to the exchequer of other taxes that would normally be expected as a result of repayment of the ‘investments’. Corporation tax is likely to be lower from the banks. From the looks of the NAMA bill, NAMA will not pay VAT or any other taxes. This is a loss to the exchequer that, for example, a firesale of properties by the banks would not entail (as VAT and other taxes would still accrue on the firesale price).

The government is lending to Peter so Paul doesn’t have to pay tax to him.

There are lots of people in the banking world today who think like Mr. McCardle, in that they seem to have this idea that the banking industry operates in a parallel universe to the normal economy.

Probably the main reason for this is that over the past few years our bankers have operated, what has become known as ‘the shadow banking system’ which has played an increasingly critical role in many banks operations.
These operations are labelled ‘shadow’ because they have existed without any regulation and oversight and have consequently played a large part in bankrupting the financial system.

Naturally Mr. McCardle and his fellow travellers would now like to impose a similar operating norm in relation to the country’s finances, as this would allow the bankers to absolve themselves from the catastrophic mess they have inflicted on the economy.

It’s therefore understandable to see why they would like to argue that there is ‘No Connection Between Bank Bailouts and Budget Crisis.’

This is breathtaking stuff when one considers that practically the entire Irish banking system would have gone into bankruptcy in September of last year if it were not for the largess of the Irish taxpayers.
It’s a little bit like the argument the bankers put forward for justifying huge salaries to attract the ‘best talent,’ totally ignoring the fact that the previous highly paid ‘best talent’ destroyed the wealth of some of the most valuable firms in the country.

Earth to McArdle: They are linked. Tax money going to the banks is money that could be used elsewhere e.g. day-to-day running of the country. How is that financed? Borrowing. If we take bank bailout money and apply it to “normal” government spending, we won’t have to borrow as much.

Pat McArdle IMHO did not assert that there’s no connection at all between the budget and banking crises. The key point – which surely is not controversial for most contributors to this site – is that contrary to the suggestions of some media commentators the budget problem would not go away if there was no capital injection into Anglo or other one-time measures (e.g. NPRF) were taken. But I think this is an argument best made in stock-flow terms rather than with the arcane acronyms of budgetary accounting.

If you take the view that the public finance problems stem from an unhealthy reliance on transaction and income taxes fuelled by a property bubble and also take the view that the insolvency of Irish banks arises from the same source (that is the property bubble), then you can for sure link the two.

The banks were key agents of provision in the property bubble, playing both sides of the game – funding developers (asset providers) and funding purchasers. It was in the banks’ interests to lend the maximum amount to a borrower as they often had equity stakes in the developments – either personally or institutionally. Some of the banks lobbied for a move to net income ‘affordability’ criteria rather than gross income multipliers. Some of them lobbied for 100% mortgages with attached top-up loans. Some of them lobbied for 40 year mortgages. Some of them set up sub-prime operations (as if their current lending wasn’t sub-prime enough).

Out of each an every loan that was given, the government got its slice – CGT, stamp. Out of every house built, the government got VAT, PRSI, income and corporation taxes. And government facilitated all of this – interest relief for investors, FTBs, and owner-occupiers. No stamp duty on new houses. No stamp duty for FTBs. Vast reductions in stamp duty. Self-administered pension schemes permitted to leverage themselves. Rent relief. And the biggest lie of all, light-touch regulation. Anything possible to keep the number of transaction high and the gap between incomes and debt as high as possible.

The more that comes out, the more trapezoidal it becomes.

As a former spokesperson for the pyrimid scheme sellers Mr Mc Ardle is a little too close to the mistakes to be objective about the solutions.

There are others still working in our Banks that suffer from the same problems. Hence the inadequate response to our fiscal dilemma.

Hiding 4 billion+ off balance sheet does not fool international lenders especially when you make a point of telling them first.

But our geniuses would prefer to pretend that this money although borrowed does not really exist and will never have to be repaid.

What I call the Paul Daniels school of economics. Now thats magic.


I agree with every word of your post. Of course the banks were major players in getting into the current mess. The point raised in today’s IT is forward-looking: i.e. the unavoidability of significant medium-term fiscal adjustment, regardless of what is done with the banks (though as many have observed what is done with the banks may make the fiscal position a lot worse over the long haul).

I have an image of Pat McArdle inside a little booth, furiously turning the cranks of a great machine, while a voice booms down on Irish Times readers –


Toto, the little dog who just pulled back the curtain, is ACC Bank….

Yep, fair enough.

There is, though, the point that continuing to rescue the banks will result in a crowding out of available funding for rescuing the economy. Rather than bread and circuses, we are being as to choose. It appears that the government have chosen circuses… send in the clowns!

@ Graham Stull


Toto, the little dog who just pulled back the curtain, is ACC Bank….


As you well know the correct expression is,


Brian Lenihan: An Apology.

From a speech by the minister in Oct 08:

“But the banking sector must also play its part. The Government, on behalf of the community at large, has performed a major service for the banking community. The onus is now on the boards and senior executives of the banks to meet the legitimate expectation that now exists that they will see as their first priority the goal of ensuring that the flow of finance is channelled appropriately to support and underpin sustainable economic activities on the necessary prudent, responsible basis that is clearly in the interest of both the bank, the borrower and the wider economy”.

From an Irish Times story in Dec 08.

“It has emerged that the Government increased the size of its planned investment in Anglo by half in the final hours of talks. Mr Lenihan was offering €1 billion up to lunchtime on Sunday but raised the offer to €1.5 billion in the face of tough negotiation by the bank””.

Mr Lenihan, I wish to withdraw my description of you as a Vader type character. Since Oct 08 you have been trying to get the banks to lend.
You guaranteed their liabilities. Now you are buying their toxic assets at an official premium of €7 Bn – in reality much larger. Yesterday after all you have given them and are going to give them they publicly declared that they are already lending enough and will not lend more after NAMA. One year and one month on from your speech it is clear that you are only Vader when it comes to PR. In reality, the banks have exposed you as their harmless, ineffectual sugardaddy. Shovelling tens of billions to them while leaving their managements intact.
When it comes to the banks, you are the gift that keeps on giving and expects nothing in return.

Whatever about the lack of change in the banks’ management, it does nobody any good if the banks lend money to unviable enterprises – that’s how I’d understand what Eugene Sheehy said

Much – but not all – Dublin financial and economic commentary exists in a parallel universe characterised by sloth, indolence and a desire to be the next Alan Ahearne.

It’s all about vested interests: few people in the media seem willing or able to take the analytical high ground and call it the way it is. There’s always an angle, always an agenda. Or just laziness.

These kind of pieces about the money going into Anglo serve an agenda that seeks to divert attention from the simple questions: why are we doing this and wouldn’t the resources be better devoted elsewhere? I know the answer to the latter but have no clue as to the former.

Fully agree.
. I was surprised at Richard Bruton yesterday bemoaning that he felt there were still some SMEs being refused new loans; of course there is and will be refusals if the Busioness Cases dont stand up to scrutiny. Otherwise Banks would be just continuing to dig in the holes they are in.

The original purpose of the taxpayers banking guarantee and the government’s adoption of the NAMA model was to stabilise the financial markets and get credit flowing to businesses and consumers.

Mr. Boucher of BOI and Mr. Sheehy of AIB appeared before an Oireachtas Committee yesterday. AIB and BOI have each got about €3.5 billion from the government and they get to transfer about €15 billion each of bad loans to NAMA.

Mr. Sheehy of AIB said “if people think that credit will begin flowing freely again after NAMA, that is not going to happen. The bank’s balance sheets will be stronger and that will allow them to finance their long term funding cheaper and there will be a ‘trickle’ down effect.”
So there will be no perceptible difference at AIB branches in terms of lending to customers.
Mr Sheehy also said AIB would like to keep its Polish bank BZ WBK.

BOI chairman Pat Molloy said that €2.1 billion has been drawn down by small and medium sized businesses in the first nine months of the year. Then Fine Gael finance spokesman Richard Bruton said it was not credible to suggest that every business needing credit was getting it. Mr Molloy then acknowledged that there was a mismatch between what politicians hear from their constituents and what the banks say.
Was Mr. Molloy indicating that he was lying, or that Mr. Bruton was?

There was another rather odd exchange yesterday; asked what the bank will do with the bonds it was receiving from NAMA, Mr Sheehy said AIB would use the bonds to improve its overall funding position.
Previously the banks were very sure that the ECB was going to accept these as collateral for additional finance. I wonder has this situation changed, because if it has where does that leave NAMA. The banks seem ready to simply dump their bad loans into NAMA, with the emphasis on bad.

The current situation seems to be that the banks are getting their funding and they will next be allowed to park their bad debts with NAMA and then they will very likely become active in other more lucrative markets than Ireland.
But the taxpayers who provided the guarantees and capital for all this are going to end up with very little.

One wonders where the Finance Minister Mr. Lenihan stands in all this.
Well there was a clue to that in an address he gave to the American Chamber of Commerce today in which he said; “hostility to bankers and media attention is what held up recruitment of executives at AIB.”
The whole country knows the real reason was that AIB defied the minister on the question of appointing an insider.

The whole thing is not looking very good.

The ability to be taken for a dupe is directly related to your intelligence, (or so I am informed). Plain vanilla folks are not taken in or confused by snake-oil salespersons. But the ‘intelligent’ are. Funny that!

B Peter

I too read McArdle’s piece with astonishment, but we’ve heard this spoofing from others as well. I notice that McArdle is described as a former economist with Ulster bank, this didn’t used to be under his articles. Have the Irish Times realised that his economic analysis is hopelessly compromised.

Fair play to Karl Whelan for pointing the link between the bank guarantee, the re-capitalisations and the fiscal crisis. The past 12 months have seen some amazing examples of the use of the “big lie” theory of propaganda in this country. KW has just exploded the latest here. Any hope of a rebuttal to McArdle’s nonsense in the Irish Times?

Interesting extract from the ECB Sptember bulletin re Eurostat and off-balance sheet AMCs:

“Beyond its immediate impact, the financial crisis and the severe economic downturn may also affect public finances with a delay. This further pressure derives from three major risks. First, considerable risks associated with the bank rescue operations still affect both the asset and the liability sides of the government balance sheet. On the one hand, loans may not be (fully) repaid or acquired bank assets may have to be sold at a loss in the future and, on the other hand, state guarantees provided to the financial sector are contingent liabilities that may ultimately be called. Second, the true fiscal costs of the financial rescue packages are still subject to considerable uncertainty. In particular, on 15 July Eurostat published a decision which implies that certain public interventions to support financial institutions and markets during the financial crisis will not – at least in the first instance – be statistically recorded in general government accounts. However, irrespective of their inclusion in the general government accounts and the timing thereof, the risks for public finances related to these operations need to be closely monitored in a transparent manner. For this reason, Eurostat also announced its intention to publish, as from October 2009, supplementary tables related to the activities undertaken to support financial institutions (e.g. government guarantees, special purpose vehicles and temporary liquidity schemes). Third, the current sharp contraction in economic activity may be followed by a prolonged period of subdued economic growth, which would result in a lower structural level of tax receipts. To avoid a further rise in deficits, governments therefore need to adjust their expenditures appropriately to the new macroeconomic conditions and, in particular, reverse the sharp rises in government expenditure ratios as soon as possible.”

[Repeating my post from 10 November 2009]

@ Cearbhall O Dalaigh

Well said.

I don’t think this is getting emphasised enough.

The banks have frequently abused the trust of the Citizens and now they seem intent on going back on their (or was it the Ministers) word.

They’re going to take the NAMA money and tell us all to go whistle dixie.

It’s disgusting.

And not a peep out of Brain Lenihan.


Am I alone in finding too much “play the man and not the ball” on this website?

The fact that Pat McArdle used work for Ulster Bank doesn’t affect the validity / non-validity of his views. I happen to disagree with McArdle on much of what he says, but I have worked for a bank too. I thought McArdle’s comments to Morgan Kelly down in Kenmare were quite mistaken.

But I think that his views can be dissected without him being defamed.

References to a “parallel unverse”, “Earth to McArdle”, “spokesman for pyramid scheme sellers”, “Pat McArdle in a booth” don’t assist clear debate … they muddy it and are a discredit to this site.

@ cearbhall

All you say is true.

But did anybody believe that NAMA was a mechanism to get Banks lending again.

This whole country was ridiculously over borrowed. Only a fool would lend to us.

NAMA is a bailout plain and simple. Every decision taken at the moment is an effort in self preservation. It will not work but it will have cost us and the next generation before it is twigged.

As for Mr. Molloys statement on lending to small businesses I can tell you as a small business owner what the Banks are doing at the moment is restructuring the debt and rolling up numerous loans into one loan over extended periods.

This offers some respite for the business owner and goes on to the Banks books as a new loan.

And then the job is oxo as they say. All a big lie but looks good on paper.

I think the issue is that people are mad as hell ,but alas will continue to take it anymore.
Back in June I suggested that given the fiscal situation pouring money into anglo was immoral, and reargued this again (note: money, so long as there was shareholdr/subbie money in the game). Patsy has more or less said that Frank Fahey is right – sure this is free money from the ECB and isnt “real” borrowing at all at all at all. the 46 signatories piece state in middle august “Thus, by overpaying, the State will wind up transferring to private individuals a sum close to the entire tax take across all tax heads.
In a period of fiscal collapse this is surely not a decision that should be taken lightly, if at all”. It has been stated time and again, to general politica derision, that NAMA would not, could not, release credit. Now the bankers are telling us that tis is the case.
One wonders if ever we will see one of hte handful of prominent NAMA-philes saying “we were wrong”. What would it take? What will it take?

@Cormac L
This debate long since gave up playing by the rules. Playing the man becomes fair game if he persists in niggling and irritating little fouls long after the ref has left the pitch (or simply failed to turn up).
Brian Lucey hints at an acid test of a fair debate: has anyone on the pro-NAMA side come even close to acknowledging the ever increasing amount of evidence that renders their position faintly ridiculous? Loyalty to the home side is often a virtue, especially when you are 6-0 down. But you do look silly.

Bank resolutions are invariably expensive, so the trick is to minimize the damage. As has been persuasively argued by many on this site, NAMA will instead entail an excessive worsening in the government’s balance sheet. But even if a magic wand were to reduce the cost of sorting the banks to zero, there would be still be a large structural fiscal deficit needing to be fixed.

@Cormac Lucey – I agree with your comment on playing the man not the ball.

One of the reasons why the good guys lost the NAMA debate was their decision to stick to prissy little rules while the full apparatus of the state propaganda machine, including the fellow travellers who camped out on this site, eviscerated them, man and ball.

@ M.B

“But did anybody believe that NAMA was a mechanism to get Banks lending again. …..

It will not work but it will have cost us and the next generation before it is twigged.”

I think MB that is has been “twigged” by the many here and elsewhere. The fact that this and other records state the fact is just that, a matter of record.

Yes there is opinion some of it unfounded. You know, just a hunch here or there. I am guilty of it. But then I and others had a hunch that the object of NAMA was the clean up the bank balance sheets in order that they could lend to SMEs stressed by a lack of credit was just a gigantic piece of PR.

It is on the record prior to the banks admitting it.

It is disgraceful that Brian Lenihan has not made a statement.

Your anecdotal evidence that the banks are consolidating loans into new term loans and calling them “new” seems further evidence to me.

I do hope you didn’t give the bloodsuckers any more security.

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

A debtors’ revolt is not out of the question.

@ Greg: That last line … … ?

I suppose the Harry Limes (or was it Lyme?) that inhabit our contemporary financials and legislature are content enough to watch us flailing around on this blog instead of hurling petrol-bombs through their windows. Sure, they are safe from us – but there are others who may not be so restrained.

If you really want to damage these creatures – hit them where it hurts – in their crotch. That’s what John Healy recommended. Never fails to get someone’s attention – a crotch kick, that is.

A little thought will identify the correct location.

B Peter


It is unfortunate that one item in Pat McArdle’s Irish Times piece (his dubious assertion that the government’s injection of €4 billion capital into Anglo Irish should be treated akin to a capital investment) should overshadow another point which I think is worth discussing. Pat makes the point that all the focus is on the EBR not least because the government publishes monthly exchequer figures and it is the focus of the annual budget presentation, whereas what really counts is the GGD, the general government deficit.

One of the lessons of this crisis is that we need to seriously overhaul the mechanism of economic policy-making in this state. One step in this reform agenda should be to overhaul the archaic system of budgetary accounting inherited from the British so that it becomes a more inclusive measure such as the GGD.

it is not an argument against this proposal that the GGD concept can be manipulated. This has been true also of the EBR, where it has long been the practice to either delay or bring forward payments so as to present the figures in the way most suited to the government.


I agree with you that some regular commentators on this site think it is awfully clever to lambast the man rather than the ball, though when I made this point recently on another thread I was roundly condemned for being an academic elitist. I wish you better luck in your campaign. To show that it is perfectly possible to express a contrary point of view in a manner which is courteous to the person holding the other view people could do worse than refer to the interventions of Michael Burke and Michael Taft. I intend to return to the substantive point they make on another occasion.

@ Greg

To your last question No. Thank God they dont quite have me over a barrel.

But on the broader point of NAMA. Can somebody please tell me how an economy can surrvive without credit.

What is the point in recapitalising Banks if their customers are never going to meet the new more stringent credit checks.

What are they going to do, sit on the money for 20 years while we slowly repay our super duper mortgages. This is really a catch 22 situation. They need money but they also need people and businesses to lend to. One does not work without the other.

Surely a debt forgiveness package across the board has to be considered or we will never get liquidity in the economy again.

Does anyone really think that pouring money into Anglo is an investment in any real economic sense? As in will return more than its cost ? Right, then it should NOT be treated as such, an should be treated as a government expenditure. Its the same as the NAMA borrowings – statistical trickery allows us to say that its not really government borrowing, but nobody anywhere believes that.

One core principle : cash rules. We have poured cash into the banks, cash we could have used for other things. To pretend otherwise is frankly wrong, imho. We can debate the alternative uses but not, i feel, the reality.

Alan, i think the coments on the other thread were for your perceived support for a suggested closing of the open nature of the blog. We can no longer pretend that we

as i was saying, we can no longer pretend an-emotive status. Its perfectly fine to be coldly analytical but its also fine to get mad at the utter demented “black knight” nature of some of the nama-philes.

@ MB
“What are they going to do, sit on the money for 20 years while we slowly repay our super duper mortgages.”…….what, like Japan? Surely not. I mean, we have NAMA…

@Alan M
that’s because it is academic elitism. And its academic since you have utterly lost the debate. But courteiusly of course.


Thanks, if that was the implication some people took from my earlier comments, I am glad of the opportunity to reiterate my view that of course this should be an open blog. And the point of an open blog is to have a debate. My point is simply that you are not going to get people to join a debate if your opening gambit is to slander their objectivity. I am in favour of passion, not vitriol.

@ Brian

Exactly. Do they really think that the general population are not going to come to the same realisation as the vast majority of contributors to this site.

And what will happen then? What will happen when the mob find out they have been hoodwinked?

Is there anybody in Leinster House really thinking this thing through?

Do you have a view on the EBR/GGD issue – would it improve economic policy-making to have a more modern and relevant presentation of the budget?

Chris Johns Says:

“One of the reasons why the good guys lost the NAMA debate was their decision to stick to prissy little rules while the full apparatus of the state propaganda machine, including the fellow travellers who camped out on this site, eviscerated them, man and ball.”

There were I suppose many reasons why the cowboys lost the NAMA debate, not least because, imo, they expressed their views in overly political terms, but more importantly they plucked some of their figures out of the air and thereby made it so very easy for the Indians to run rings around them.

In the end, whether NAMA works out as planned or not, only time will tell, but for sure without a viable, credible alternative that ticked all the boxes, the anti NAMA’s were always going to lose the argument.

Whether we had to fund the banks or not, we would still have to cut 4 billion from the budget. McArdle is right in that linking the bank funding and the 4 billion cut will certainly not help the public to accept the reasoning behind the necessary budget decisions.

“Can somebody please tell me how an economy can surrvive without credit.”
When that economy is not dependent for employment/exchange on companies that look to domestic credit providers. Name me a MNC in Ireland that relies on an Irish credit institution for credit? Name me a major Irish retailer that is irreplacable? (because it couldn’t get commercial paper for stock).

Now, if you are asking how an economy can survive without a banking system, that is a different question. I doubt that it could. But that is a plain retail banking system. It doesn’t have to be Irish. There is no reason why Ireland could not become an adjunct of another euro clearing system. Already there is no charge for transferring money between an Irish euro account and an account in a different bank in a different euro country. With most transactions electronic, the only issue would be keeping the cash machines filled (a function of a security company) and providing a single point branch service (I’m sure An Post would be delighted with the business).

So ask not what the state can do for the banks, but what the banks do for the state? (i.e. the people of the state).

Having read the McArdle piece I see it as Eurostat 101.

It is not so much a propaganda piece as a lesson for the slower among Fianna Fail and the Green Party who, slow as they are, know they are going to have to defend the €70bn + that NAMA will misallocate in the coming years. I include Brian Cowen among the slow learners in this respect.

Of course Eurostat approve of NAMA and agree it should not count as part of GGD. It could not be otherwise.

“They provisionally concluded that Nama would not be part of the government sector which is why recorded gross debt will not rise when Nama becomes operational”

Well woop dee do. NAMA is not included in GGD. Maybe McArdle should send his Eurostat 101 to Ftich. They don’t get it. Maybe they’re very slow learners.

It’s still a gigantic misallocation of borrowing ability which will create a dysfunctional (at best) property market for the next decade and cost the Citizen/Taxpayer €25bn+.

While NAMA will not be counted as GGD it surely restricts the government in its options. Were the government not borrowing €70bn for NAMA they might have the ability to borrow €25bn for capital projects (not current spending).

Interesting that McArdle’s former bank is considering putting €7bn of bad loans into NAMA.


While the exact classification and treatment of Anglo’s recapitalisation (as either general Government spending or a financial investment) and its impact on the deficit is uncertain, there is no doubt that the interest costs on the extra borrowing used to finance the recap will be counted as government spending and will worsen the deficit next year (probably by about €200m in 2010 for the €4 billion recap earlier this year and add to that the interest costs of additional debt taken on to finance the next recap). This is an additional factor that Pat has ignored in his analysis.



Indeed! And given that it looks unlikely that it will be paid back (anyone remember the “Anglo needs another 5.7 bn” headlines? And this before the NAMA recapitalisation? So we are probably looking at putting 4+5.7+5.5 = 15 bn in total in?

At it’s pomp there were 749.5 million shares in issue, I believe. These were worth about 17 euro (?) which must now be considered a gross bubble price, but even so, the total worth of Anglo at its peak was around 13 bn euro. It will likely be worth a fraction of that once it is cleaned up. Perhaps 2-3 bn? So at best, it will cost 10 bn to the state. Which will have to not only pay interest on, but pay back at some stage.

Unfortunately, I don’t see the Germans, or indeed the French agreeing to a cheapening of the euro through inflation, so we are talking about this still being real money in 5 years time (we are unable to borrow on a ten year timeframe it appears). Say sayonara to recovery and moshi, moshi to ushinawareta jūnen…

@ Cormac

as i suggested and had confirmed to me on this site, the opinions of anyone, and i mean literally anyone, who was in the even remote recent past (lets says 5 yrs or so) involved with either of the following – the government, someone who worked for the government, an Irish retail or commerical bank, an international investment bank, a stockbroker, a consultancy that has had a government contract, any ex FF/PD politician or even remotely FF/PD-leaning commentator – has an opinion that should at best be treated with massive suspicion or more likely disregarded with almost immediate effect. Indeed many of these people have now been labelled as “government spokespeople” on account of their opinions. Always wonderful to have such open and broad-based debates…

@All commenters
Of all the places to try to incite a violent revolution this site is probably the worst. You’d have more luck knocking door to door in Glenageary. The focus of the site is to throw light on economic issues even if it embarrasses/annoys the government. Talk of revolution is not only wrong in an open democracy it also hinders the site’s invaluable work. That’s the last thing any of us want. If you want to talk in these terms please go to (no offence – it’s a very good but lively site).

@Alan Mathews
The tenor of my comments on Brian Lenihan are in large measure due to 1. his attack dog PR tactics, including against your fellow academics.
2. the dishonest way that the pro-NAMA side conducted the debate. As the team leader of the pro-NAMA side I hold him accountable for this.
3. he is a politician. We are allowed to be mean about politicians surely?
Morgan Kelly was VERY mean about him.

I would urge all commenters to try to avoid attacking economists personally. Again I have done this myself at times. But we are guests on this site and it puts them in an awkward position if we attack their fellow economists. Criticise their arguments not them personally.

@All again
If NAMA is not going to get the banks to lend any more should we not stop the entire project? All the businesses I know say they are desperately short of credit. We have given Brian Lenihan a year and two months to get credit flowing. He produced a plan. We were told many times that NAMA would get credit flowing. Some even compared it to quantitative easing.
Now the banks themselves have rubbished this. Now, unless I get a legal commitment, in writing, available for inspection and irrevocable I will not believe Lenihan on this. Getting the banks to issue a wishy washy statement or verbal commitments or loose legislation are not enough.
Lenihan’s credibility is in tatters.

To opponents he’s Vader.
To banks, their shareholders and bondholders, he’s St Francis.

I agree with the commentators who have the view that fire needs to be fought with fire. My god. The first shoe would be swiftly followed by a deluge. Is it still possible to understand what is going on around us as attempts to save an economy? I don’t think it is.

I think that McArdle’s motivation is a tragic delusion that if he can stop everyone in Ireland talking about NAMA’s borrowing as government borrowing international analysts won’t treat it as such. I gather that he talked in similar terms at this Kenmare conference last summer about referring to the banks as insolvent. But they are. The international analysts have treated them like this since last winter! Why pretend?

International analysts have already downgraded our debt because of NAMA. As the scale of NAMA’s losses becomes clearer they will downgrade it further. Why pretend?

I am all for the power of positive thinking but McArdle severly overestimates it. The pro-NAMA side think their critics, current prices in the property market and the international financial markets are all wrong and only they see things correctly. They are living in a bubble of their own but the country will suffer terrible costs from their self-deception.

Miriam Lord had an excellent article today.
She compares what the bankers said in July 08 to what actually happened.
“Richie Boucher, before his big promotion, was present back in July of 2008. “Unequivocally,” he declared, “we do not believe there is a Northern Rock lurking in Ireland.” (Correct. There was a whole shed load of them.)”

If Boucher knew the truth why did he say this to the Oireachtas?
TO OUR ELECTED REPRESENTATIVES. If he didn’t know the truth why is he now leading BOI??? Only in Ireland. He must have been another believer in the amazing power of positive thinking – and positive talking. Morgan Kelly would use a ruder word.

@ yoganmahew

“moshi, moshi to ushinawareta jūnen”

The who? The wha?

Is moshi involved in this as well?

And jūnen too?

Things are a lot worse than I thought.


@ Bond. Eoin Bond

You sound a little peeved Bond. Are you shaken or stirred?

“Earth to McArdle: They are linked.”

Is that ad hominem? I don’t think it is. I think it is humour. “Earth to…” is a common phrase. It just means that the person using the phrase perceives the object of the phrase as being “on a different planet”. It is not a personal attack on the object of the phrase.

“I have an image of Pat McArdle inside a little booth”

This also is humour.

“I too read McArdle’s piece with astonishment, but we’ve heard this spoofing from others as well.”

A declaration of astonishment is not an ad hominem position.

A declaration that an individual believes that someone else is “spoofing” is not ad hominem. It is merely a statement that the one making the assertion of “spoof” does not personally trust the manner in which the argument is presented. PR spin is another way to look at it.

“Any hope of a rebuttal to McArdle’s nonsense in the Irish Times?”

This also is no ad hominem. The person writing simply believes that McArdle has spoken nonsense. It is of course open to response (by you should you chose or by McArdle himself, he knows this blog exists). The person writing it asks the question (given that they believe it is spoof & nonsense) whether the Irish Times (the paper of record) will allow rebuttal. Not unreasonable.

With €70bn at stake Bond we need either a sense of humour/satire or a little latitude in the discussion.

Nobody has assaulted the character of McArdle in this thread. Nobody has attacked his person.

I personally believe the McArdle piece is a pre-emptive strike against a NAMA argument when the budget makes the poor take the pain. He not doubt would disagree. Which is fine. He has the Irish Times as a platform. Personally I can’t be bothered writing a strongly worded letter to the Irish Times. I only read (bits of) it because it’s free on the internet.

I do not attack his character. I do not undermine his opinion piece by attacking his character.

But you must understand Bond. McArdle wrote an opinion piece. The Irish Times allows him do so. It is called freedom of expression.

When you’ve finished that Martini shake yourself another one. You might even appreciate that satire and humour are essential methods to understanding complex issues.

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

A debtors’ revolt is not out of the question.

McArdles article reminds me of Garret Fitzgerald’s spat re the deflict.

I thought the biggest story of the day was this… From the BBC
Dubai’s financial health has come under scrutiny after a major, government-owned investment company asked for a six-month delay on repaying its debts.

And the obvious question is ……

Note the headline; the markets aren’t concerned with accountancy rules… they are saying WTF is going on in Dubai.

I recognize the need to correctly compartmentalize things but there is also the need to have the overall picture…

Thats something that is missing in finance which facilitated the frauds that have caused this crisis, rubbish was packaged and missold but was always entered in the right ledger… You can see how easily fraud can be facilitated by reading the article. One would think the money going to Anglo was an investment which the nation could expect a handsome return. Whereas the reality is much more sordid.

@ Garry


But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel,
to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most
glamorous and creative emirate will pay the price of its decision for a long time to come.

Next year, the emirate needs to repay $13bn-$17bn to banks and bond holders.
“Dubai can’t keep pouring money into the sand,” said one banker.

I think Dubai decided to take the piss out of Mr Bond.

Gold @ €1190. Something’s afoot. Reserve currency losing credibility?

We live in interesting times.

What are bonds now?

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

A debtors’ revolt is not out of the question.

@ Garry

“Thats something that is missing in finance which facilitated the frauds that have caused this crisis”

Enron, Worldcom, AIG, Anglo Irish?

On one level it’s probably correct to say that “whether we had to fund the banks or not, we would still have to cut €4 billion from the budget,” as the €4 billion is to reduce government expenditure, which could be seen as an altogether different task than bailing out our bankrupt bankers.

But on another level the two issues are linked and this is the main reason why there is so much anger developing in the country at present. Close to half a million Irish people currently have to exist on €204 a week social welfare payments. The majority of these people are in the unemployment lines through no fault of their own, they are more than willing to work and all through the past decade they showed that they are excellent workers.

They now see the government talking about cutting their meager €204 per week on the one hand and that same government giving reckless bankers, who ran their companies into the ground, €50 billion and watching those same senior bank executives retire with millions in bonuses and gold plated pensions.

To those half a million Irish people existing on €204 per week, there is no difference between the €4 billion and the €50 billion because it’s all being paid for by the Irish people and for those of you who think the views of that half a million don’t have to be taken into account, because maybe they don’t understand economics, I say to you WAKE UP, because those people won’t remain docile forever and the day may not be too far off when you will be forced to take their views into account.

It’s well documented in Shane Ross’s book the role the bankers played in bringing about this dreadful situation and those people standing in dole queues around the country may have no work and no money but they are smart clever people and they know all about the role the bankers gambling debts have played in the demise of the Irish economy.

Let me then deal with statements like; “There were I suppose many reasons why the cowboys lost the NAMA debate, … but for sure without a viable, credible alternative that ticked all the boxes, the anti NAMA’s were always going to lose the argument.”
The only reason ‘the cowboys’ lost the NAMA debate was because the Green Party ‘sold their souls for penny rolls and lumps of hairy bacon.’
From the very beginning Brian Cowen was not going to be swayed by reasoned argument in relation to what should be done about the banks which had been run into the ground and he made that perfectly clear when he announced “I’ll write whatever cheques are necessary for the bankers.”

There were many workable alternatives put forward by people like Dermot Desmond and Richard Bruton, but they were never even considered and the reason they weren’t was that Brian Cowen and Brian Lenihan had a voting majority in the Dail and that was the only reason.

All this talk about “the cowboys lost the NAMA debate because they plucked some of their figures out of the air and thereby made it so very easy for the Indians to run rings around them” is propaganda which is being swallowed by an ever smaller group of delusional people in this country.

Then there was the repetitive mantra “there is no alternative to NAMA.” Sheik Mohammed had no problem telling his bondholders yesterday that they could wait for their money until Dubai was good and ready to give it to them. Unfortunately there are no men of steel like that in our government.
No, all that’s required in this country is for the bankers to take some of our politicians down to the K Club for a feed of porter and the job is OXO.

The true state of affairs in relation to NAMA is becoming clearer by the day and the appearance of Mr. Sheehy and Mr. Boucher before the Oireachtas Committee yesterday was very illuminating in that regard. Only a fool would now be in any doubt as regards the intentions of the bankers who are hoping to dump their gambling debts on the Irish people and then head off to explore new pastures.

But, there is still time to stop them, the government has not yet made the Irish people legally responsible for these gambling debts and there is still time to pull back from the abyss. There are many alternatives to NAMA, but time is running out.

Fianna Fail has done a lot of good for Ireland since the foundation of the State, but all of those good works will now be washed away and forgotten if Mr. Cowen and Mr. Lenihan are allowed to drive our children into penury.

Next, let me deal with all this clap trap about ‘playing the man and not the ball’; if Mr. McArdle has a problem with criticism I am damn sure he is more than capable of looking after himself and he doesn’t need anybody else to fight his corner for him. But if he can’t stand the heat he should get out of the kitchen and stop writing silly articles in newspapers.

Anyway, Karl is absolutely correct in identifying the kernel of this whole issue in saying;
“The bottom line here is that substantial amounts of public money are going into the banks at the same time as taxes are being raised and public expenditure is being cut. The public may not understand ESA95 but they know what they are seeing with their own eyes.”

@Alan M
‘Do you have a view on the EBR/GGD issue – would it improve economic policy-making to have a more modern and relevant presentation of the budget?’

I do have views, but we need to remind ourselves that we are talking accountancy here. And as we know, when we descend into debates over accounting standards we often obscure some fundamental principles. Accountancy debates serve those who wish to confuse and obfuscate.

We are debating whenther the money going into Anglo is an investment or an expense. Most rational people would asume it is an expense. It cannot be classified as an investment since we will probably never get our money back. We might: it depends on how much we put in. Enron could have been turned into a viable entity if the US government had put sufficient moeny into it. Trouble is, ‘sufficient’ is infeasibly large.

The accountancy debate obscures the proper question: why are we doing this? There might be a credible answer to this. I haven’t heard one.

On academic elitism: I was wrong to agree with this description. Some academics clearly believe that it is more important to have a polite debate about NAMA than to win the debate. They also don’t seem to realise they have lost the debate. Or they don’t mind, since they have been courteous. That’s academic conceit, not elitism.

I am well aware that we lost the debate – I felt that we we had lost sometime back in August. So why persist, in a courteous manner? Two reasons
a) I at least can look people in the eye and say “you were told”.
b) Civil discourse is always preferable to otherwise.

The problem here is that the role of public intellectual discourse is to inform and educate – the role of politicians is to transform public debate into policy, if needs be by dirty fighting. While one person can in theory be both its not easy especially in a very party political arena. Here as in so much else we have been let down by our political class. FG and Labour had a choice to make : did they want to be doctrinally , party sectarian, correct (as they were) or did they want to stop NAMA by getting behind a single pragmatic alternative (of which there were a few).

We also need to ask ourselves if we could have done more – there are many senior economists (to note just the present group) in academia who decided to “sit the war out”. Im presently rereading Jenkins magisterial biography of churchill, and its very interesting. Many powerful people in the middle and late 30’s were very dubious of emergent european trends. However, a combination of mistrust of the leaders of the opposite view, a feeling that they were not in europe so not their fight, a dash of fear of the opponent and some feeling that the fight was lost so why stick ones neck out better to be on what was to be the winning side, all these conspired to make the task facing churchill much much harder. We are not churchills an this is not an existential crisis (yet) but I suspect all these and more acted to keep people off the pitch.

This is not to forget the vast lobby fodder of the backbenches one of whom stated to me (on another issue) “sure I know theyre wrong but I have to vote the party. I will never vote against the party regardless”. Thats the level of abrogation of national and individual responsibility we are dealing with there.

this island will keep going if we keep our reputation, the whole game was, is, and will be about keeping international markets impressed. We are a good country in a boat load of trouble but we still have a decent reputation, and thus NAMA is ultimately a good thing (albeit the rip off it was meant to be) but anglo cash injections are a sham, the only ‘capital’ anything anglo needs at this stage is ‘capital punishment’.


I read a lot in the comments these days about how the academics who opposed the government’s plan “lost the debate.” I don’t view it that way.

I think that our arguments convinced a lot of people. Certainly, they had more substance to them than the “only game in town” rubbish that most of the pro-NAMA politicians and many lazy journalists ended up peddling. My guess is that if put to referendum (I’m not saying it should have been!) the NAMA bill would have been heavily defeated.

But life is not the L&H or the Hist—in a parliamentary democracy, you don’t necessarily get your way even if you convince a majority of people you were right. At the end of the day, a government with a majority that is steadfastly determined to push through a piece of legislation can do so.

That was the reality of what happened. Anyone who thinks the legislation passed because the government won some sort of debate or because some academics weren’t tough enough (or because some particular number in a particular column was open to question) is, in my opinion, losing sight of how democracy works in practice. Academics can give advice. Governments don’t have to take it.

You make good points. Apologies if I have veered off and become shrill. I sometimes get frustrated by people who seem to think that the rules of the game are more important than the game itself. That’s fine for a golf club or a senior common room. But the stakes of this particular game are just too high to get this one wrong. The first casualty of war isn’t truth (that’s the second thing to go) it’s diplomacy.
You are absolutely right to condemn those who, rather than debate (politely or otherwise) chose to sit it out. Good men doing nothing and all that.

“The true state of affairs in relation to NAMA is becoming clearer by the day and the appearance of Mr. Sheehy and Mr. Boucher before the Oireachtas Committee yesterday was very illuminating in that regard. Only a fool would now be in any doubt as regards the intentions of the bankers who are hoping to dump their gambling debts on the Irish people and then head off to explore new pastures.”

So true.

This leads me to say to you that we may have lost a battle but the war is stll to play for.

@Karl: couldn’t agree more.

And whatever about that hypothetical referendum result of a couple of months ago, public opinion is bound to swing in the months ahead when it becomes clear that NAMA is not going to lead to a surge in lending, since the bottom line is that our banks have to move from lending out a multiple of deposits towards once again lending out only a fraction.

@ B P Woods

Its Harry Lime.

Tried posting a youtube link but it didn’t get through.

Type “The Third Man Theme” into youtube.

Definitely in my Top 10.

@Karl W
Yes, ‘losing the debate’ is rather lazy use of language. ‘Lost the battle’ is more accurate. But if truth and justice is on the side of the losers, they must be prepared to ask: did we use the right tactics? Or at least think about about how truth and justice will be deployed during the next battle.

@ Brian.

Thanks for your, always interesting, observations. But I disagree with you on NAMA. I’m not a NAMAphile but the alternatives don’t convince me at all. Essentially they are:

1. let banks go bust – we saw the impact that has on lending rates for international banks in the wake of Lehman’s failure. Could/should an Irish government take the risk of a similar event here risking funding for the remaining Irish banks to evaporate? Note, even with NAMA, funding for Irish banks is highly problematic as evidenced by current CDS swap rate premia (of about 2.5%) and by Irish Nationwide advertising withdraw on demand deposit rates of 3.75% while ECB rates are just 1%.

2. have the State underwrite bank lending (the approach advocated by Dermot Desmond) – this would still risk a race by banks to liquidate weak property loans ahead of their competitors. A precipitous race to the bottom could ensue. Debt-deflation would be the result. Note, even with NAMA, steep commercial property price falls have already happened and continue.

3. engineer a debt/equity swap at our banks (the approach advocated by Morgan Kelly) – but why would any bank swap low-risk debt now guaranteed by the Irish State for a bank equity position of uncertain value?

4. establish good banks / bad banks in each major financial institution (the FG approach) or essentially create a mini-NAMA (bad bank) for each financial institution – this adds a layer of individual bank accountability to the NAMA project but seems otherwise similar and given that all bank shares and managements have been wholly devalued already, I’m not sure what, other than complication, this would actually add.

So I support NAMA for the same reason I support democracy. I’m not a devout admirer but both seem a lot better than any alternatives.

I hear your argument about the immorality of NAMA. And you’re right. The sector that started the fire is the first sector to be rescued by the State. And it will probably be the only sector to enjoy a full rescue.

And I hear your arguments about the premium NAMA will pay to acquire loans from the banks. I think that that is a mistaken attempt to (a) ward off possible legal challenges from the banks and (b) give the banks a capital increase.

But view matters from the government’s position: a functioning banking system is a pre-requisite for a functioning modern economy. Even with NAMA, the functioning of our banking system is at risk. Consider the following:

a. Brian Lenihan has admitted (based on his own very optimistic figures) that NAMA will pay €7bn more for property loans than it thinks they are now worth.
b. AIB and BoI will contribute 52% of the loans going into NAMA.
c. Assuming proportionality, AIB and BoI might therefore be getting a gift of circa €3-4bn from the State.
d. The combined market values of AIB and BoI right now (Friday 9.30am) are just €3.1bn.

Implication I: ex the effects of the NAMA gift, the market is attributing a NIL value to the main Irish banks.

Implication II: it will be very difficult for Irish banks to raise equity from the market.

Implication III: the banks will probably have to resort to the State for fresh equity pushing them into majority State ownership.

* McArdle is wrong. If the State devotes resources to bail out the banks, it will have fewer resources for other purposes.
* IMHO, NAMA is the least bad policy option (although there are elements with how it’s being done with which I disagree).
* The banking system here is in a much weaker state than most wish to admit.
* No policy prescription listed here addresses the issue of the mismatch between Irish banks’ deposits and loans. Irish banks need to reduce their lending by over €130bn (or about 30% of total lending) to restore the relationship between (a) loans and (b) capital plus deposits which existed in 2002. Implication: even if NAMA works in saving our banks, the supply of new loans will be extremely limited.
* No policy prescription listed here addresses the EMU interest rate swing that will cause EMU interest rates to be too high for our needs over the coming years. Taking a Taylor Rule approach shows that EMU interest rates were too low for us for the decade 1997-2007 because our inflation was higher than the Eurozone average while our spare capacity was lower. Now our inflation is lower than the Eurozone average while our spare capacity is higher. Implication: we have moved from a period where EMU interest rates were structurally too low to one where they will be structurally too high.

We face a decade of deleveraging, sub-par economic growth and economic pain.

ah, tactics….let me shill for myself here :
there is a symposium on the role of public intellectuals today in the RIA. For some reason (dont ask me why) i am there. Perhaps as “and then of course there is this….” example…
Anyhow, it on the role of PI’s (i think of magnum…) in the crisis. I have some words to say.
I think its full but in any case its here

Chris – the war isnt over. This is dunkirk, not Yorktown.

Elequent as usual. I think that what irks me most is that we will, probably, end up with effectivly nationalised banks that are semizombies. We could have at least revived them if we had taken the clean route of writedown, recap and restructure back in feb/march. And that was an option that Karl, Constantin and I suggested time and again, congruent with economic principles and feasible, as well as morallly the right thing to do (skin the subbies/equity).
There is I suggest no policy that can or should address the deleveraging issue- that has to and will happen, but what we can and should expect is honesty. AIB has given us some, belatedly, and now we await some from Merrion St.

Anyone who had the inclination to read up on the destructive force of banking and its wider effects on economic and social life would have concluded Nama would not get credit flowing again. The bankers have confirmed the bleeding obvious. The maket for loans is knackered at least on the terms commercial banking now says it should safely grant credit. The pendulum has swung from hyper recklessness to hyper prudence

The missing piece in the debate was not the economic argument but the voice of civil society, largely sidetracked by a cleverly engineered public v private civial war – ordinary people know of the captivity of Goverment by institutional and private group interests.

Voluntary forebearance on homeowner secured debt is akin to pouring sand on a landmine and pretending it has been decommissioned. The impact of household unnaffordable indebtedness (secured and unsecured) on the banking sector has yet to be realised. Along with its adverse impact on consumption, business activity and tax revenue.

@Cormac Lucey
Our banks told the Oireachtas that they are lending out all that they wish to do already. If making them strong has no benefit leave them weak.
They are not going to go bust while we guarantee their additional borrowing. Why is a massive reduction in property prices and rents so bad?
If we don’t deflate them it’s a slow, long grinding reduction of wage and other costs through mass unemployment. Is this preferable?

“3. engineer a debt/equity swap at our banks (the approach advocated by Morgan Kelly) – but why would any bank swap low-risk debt now guaranteed by the Irish State for a bank equity position of uncertain value?”

My suggestion: repeal the guarantee. It’s legislation. Repeal it. Anglo and Nationwide were deposit taking property developers and AIB and BOI were hugely exposed to one of the world’s longest lasting property bubbles. Pass a constitutional amendment to indemnify us against any law suits if necessary. Guarantee only the banks borrowings after the guarantee.

NAMA is a €54 Billion cost (likely loss now €40 Billion) that by stopping the benefits of reduced rent and property prices will damage our economy. It will also save the corrupt elite who did this to us. Keeping them around is another huge cost to the economy.

There are striking parallels between FF’s treatment of the Catholic church
and their treatment of the banks. FF’s guarantee to the Church was going to cost us €1 Bn, until public pressure after an investigation reported forced the church (not the government) to repudiate it.
FF’s guarantee/NAMA to the banks is going to lose €40 Bn. No wonder they are only investigating one of the banks, Anglo, and are doing that very slowly. They have learned from the outcry after the comprehensive church investigation that if the public learn the full truth they will rebel.

Funny, isn’t it?

When the banks were at death’s door, supporters of their rescue never tired of reminding us of the inextricable link between banks, the rest of the economy and the national finances. (And in fairness, they had a point.)

But when the banks (including the utterly unnecessary ones) ARE saved, at least one or two of those same supporters now rush to tell us all about the great distinction between (1) the cost of their rescue and (2) the overall question of state expenditure and the state’s budget constraint.

This ability to see simple economic linkages in one instance, but not the other, is striking.

As for losing the debate, no, the “gang of 46” and other critics of NAMA were steamrollered by a savvy, energetic PR campaign directed out of Merrion Street. That campaign only occasionally engaged in substantive debate, nevermind winning it. That noted, I think it would be a mistake for academic economists to adopt a less formal, more forthrightly political critique of government policy. It’s up to others to do that. And while us political critics will use all the ammunition we can get, it carries a greater punch if it comes from commentators who have no apparent axe to grind. Certainly, many defenders and spinners of NAMA were intent on painting the “gang of 46” as political partisans who were simply out to get the government.

I agree largely with Cormac Lucey’s conclusions (ecept NAMA being the least bad alternative) but his list of alternatives leaves a lot to be desired. Point 3 in particular is very very weak. If the government announces tomorrow that they are not going to extend the guarantee after 2010, you’ll see a line of debtors willing to do a swap. in fact, you don’t even need to make an explicit announcement, just drop hints. The problem is that this government has consistently undermined its own negotiating position from day one as it lurched from mini-crisis to mini-crisis, lie to lie. They were always putting out yesterday’s fire and creating conditions for a bigger one in the process.

If they had not given a blanket guarantee, or even just guaranteed BoI and AIB as systemic things would have been a lot lot better. The guarantee was the original sin that nobody seems to talk about today and even Cormac Lucey is taking as a given.

I agree. A lot of NAMA supporters say, “well, whether good or bad the guarantee is in place”. They should be honest and say the guarantee of all the bank’s liabilities was an unqualified disaster for taxpayers. Those who perpetrated this disaster have now devised NAMA. We need to shout stop and repeal the guarantee legislation and scrap NAMA. Guarantee only borrowings since then.

I went a bit too far in the censorship direction went talking about comments. Pat McArdle is after Brian Lenihan and Frank Fahey probably the most vocal of the NAMA lobby’s spokesmen. He is a former employee of Ulster Bank which may well put loans into NAMA. Also, I heard him say that if not for the credit crunch the economy would have had the soft landing he predicted. How? We would have had the only huge property bubble in world history that ended gently? Loan auctioneer economists and financial auctioneer economists can not be treated as independent most especially on NAMA. They should not be commenting on it at all.

@Paul McDonnell
I think it is the case that because people in the US get less from government they demand more justice against people who commit financial crimes and cheat on tax than European social democracies do.
Ireland’s justice system of course never jails politicians, bankers or tax cheats. In this one we are not even Berlin. We’re Moscow.

Sorry – posted last comment on wrong thread.
While I’m here if Brian Lenihan is to continue to claim that credit will flow as a result of NAMA but was talking about it as a long-term result of healthier banks then he was being completely misleading.
How much permanent extra lending are we getting for our €40 Billion NAMA loss?

@Alan Matthews – Yellow Card
Pat McArdle is the third most prominent Nama lobby spokesman. His whole article was a technical justification for not treating transfers of wealth from taxpayers to Anglo shareholders and bondholders as borrowing because it literally “technically” isn’t, even though as you acknowledged yourself it actually is! As well as being wrong the MAIN THEME of this article was clearly banks/NAMA and not a technical discussion. This is the second time that you intervened on a thread on NAMA to complain about the tenor of the discussion. I asked you last time to give your own position on NAMA. I now have two additional questions:
Did you ever complain about the behaviour of pro-NAMA commenters on this site? Many of them were highly critical about fellow academics.
Did you ever complain publicly about the NAMA lobby’s attacks on fellow academics?

In the mean time, please review your playing the man not the ball comments in light of the blog entry below.

@ Karl

“The fact is that the banking crisis has substantially narrowed the options for the Irish government on the fiscal front.”

The flip side of this is, of course, that if we hadn’t been running an 8%+ structural deficit, then we probably could’ve been more agressive with the banks in terms of not having to worry as much about what potential buyers of Irish government debt would think. As such, the ballooning budget deficit crisis also substantially narrowed the options for the Irish government on the banking/bondholder front.

The point, as i think Pat McArdle was trying to say, is that the budget deficit and the banking crisis are intertwined for many reasons, but very few of them are being admitted to by the Unions, public sector, PAYE workers etc (and no im not saying they caused the banking crisis). Like everything, its far more complicated than a snappy tagline about bankers causing the PS cuts.

How is this for logic
1. Government income shot up due to the property bubble and income from Stamp Duty, VAT and the like.
2. This happened in part because the banks forgot the rules of lending and started handing out cash to anyone with half a property plan. I don’t know if Pat McArdle has admitted at any time banks were involved in reckless lending.
3. The government increased public expenditure on the back of this.
4. Bubble bursts and banks effectively collapsed as did government income.

We are now in the mess we’re in exasperrated by a world recession.

So the reckless lending boosted government income which in turn led the government to increase expenditure and leaves us where we are.

I see a connection and while I blame the government also, the banks cannot claim they haven’t played a part in bringing us to the abyss. Meanwhile a tiny minority of them have paid the price – Pat McArdle not being one of them. What is the role of a bank’s economist anyway? Is he supposed to warn them of dangers ahead? Economics is meant to be the dismal science. Did he try to stop them?

E43Bn lost and no extra lending Says:

“How much permanent extra lending are we getting for our €40 Billion NAMA loss?”

When did this happen?

That’s with property in Newbridge in the Dublin commuter belt down by two thirds already. Almost everyone agrees the market has further to fall. Development land and property outside Dublin is predicted even by many NAMA supporters to be down even more.
Morgan Kelly predicts losses of up to €42 Bn plus interest (plus economic costs).
Illustration: I have been told of someone trying to sell a €1 million plus holiday home in West Cork. He wants to sell but so do many of his neighbours. None of them can advertise at a price anyone is likely to buy at because if they do the others will never forgive them.

So we haven’t lost anything as yet and still won’t know if we will or not for ten years or so.

Thank God for that, I thought something had happened while I was having my dinner.

I’ve been told lots of things, but I don’t believe the half of them.

The connection between the bailouts and the fiscal collapse is clearly the FF/Green government.

Their economic illiteracy is so clear that there are other motives for their actions. On the fiscal side it was to buy votes and to ensure a boom. The second reason also links into their relationship with the banks. As has been said it is only a few at the top who know wht is going on. They are not telling anyone else. This is a fair but not complete definition of a corrupt motive. A private arrangement. Using public funds.

Follow the money as George W Bush said to Bernstein et al.

Just do not expect the trail to be easy as it is tracable only through …… the banks. Look up BCCI!

Revolution is unlikely. Social unrest will increase, but the destruction of a generation will be the result. All due to the few at the top. There is no freedom of information. There never was. There is therefore, no accountability. Not until things change.

To those who believe that those in power should be trusted, look to their methods. Not just in Ireland. They always are sidetracked and thereby pave the way to hell with their erstwhile good intentions. They have power only temporarily whereas those with the gold make the rules. Life will become much cheaper for the next decades. Be careful what you say as it is being recorded. The web lies on the net and the US defence dept created the net. Ireland has no role to play except as a tax avoidance haven for those MNCs that are favoured with contracts by those with the gold. Banking is essential for money laundering and enforcement is by men in black.

Think globally act locally. The consequences are only starting to be obvious.

We have already conservatively lost €40 Billion with Newbridge prices.
The FF led elite will probably gerrymander the property market to keep down NAMA’s direct losses. That will cause further probably larger economic costs. No country that I know of has ever attempted to prop up its property market after a huge property bubble. The direct and indirect costs are certain to be enormous.

As you’re happy to come to conclusions about a 51.3 billion project on the basis of a sell off of a block of apartments in Newbridge, I really have nothing to say to that and I’ll leave you to it.

Are you aware of apartment blocs that have only fallen by the government NAMA assumptions?


I presume you’re talking about NAMA.

Can you explain where you get €51.3bn for the “project”.

I haven’t seen that figure anywhere.

How much do you think NAMA will “lose”?

I am aware that the only figure we have from NAMA is both an estimate and an average. I am aware that house prices are down from peak by an average of 25 to 30%.

I am also aware, as you are, that NAMA hasn’t bought anything yet.

Claims at this stage for a 40 billion loss by NAMA are based on predisposition and nothing else.

Its not just that the house prices are probably down by a lot more ; take for example the DDDA site (irish glass bottle) that is down 85%. There are dozens of examples of property portfolios that are down 50% plus. If you truly think that NAMA will make a profit , great. I have a bridge in brooklyn I need to sell…..


That’s all very well JMS.

I want to know where you get the figure of €51.3bn from.

Do you have an answer?

Given the hobbling of the risk-sharing, and the huge oversupply in a property market that has not stopped dropping, the paying of an LTEV is simply gambling €7 Bn on a really long shot. I wish that Minister Lenihan had delivered on his multiple promises to be open to amendments:
“The minister is directed to enter a casino in Monte Carlo wearing a white tuxedo and to put €7 Bn on red.”

It is disturbing to see how many people in the NAMA lobby – most recently Brian Cowen – believe that our economic difficulties can be solved by positive thinking and a ban on negative expert commentary. They still see falling property prices as a temporary misfortune soon to be reversed.

Once our government squandered billions trying to prop up the currency.
Now they squander it propping up property prices. Will our elite never learn?

If anyone can provide answers to the following, after the thread has run its course, I would be grateful:
From an excellent report by DKM referenced by Mr Lane, Sept 09.

“The concept of NAMA was born out of a report by Dr.
Peter Bacon, an economist turned property developer.”
I and many people believed this too. But from the report below it looks like Mr. Bacon was told to come up with risk insurance or a bad bank.
Just wondering who made the initial decision that the options were risk insurance or a bad bank rather than say preprivatisation?
Also, was there an appointments process for Dr Bacon?
On 20 May 09 Vincent Browne wrote about Michael Sommer’s evidence:
It is clear from this that the minister selected Brendan McDonagh, the interim head of NAMA.
Was there an appointments process?
Will there be one?
On what basis did the minister direct the hiring of Merrill Lynch?
Was there an appointments process?
“He also revealed he had had very serious reservations about Anglo Irish Bank as far back as 2007. Such was his alarm about this bank that he did not want to deposit any NTMA cash with that bank, although he was under considerable pressure to do so”.

I have problems with the Oireachtas website so I can’t open Sommer’s evidence. Did he clarify:
Who was putting him under pressure?
Who did he tell about his serious reservations?
What did they reply?

The minister directed the NPRF to pour €7 BN of the nation’s pension fund into AIB and BOI. After doing so, why did he leave the boards of AIB and BOI virtually intact and allow the appointment of insiders as chief executive, especially to AIB? Is this being careful with the nation’s money?

Also, I talked before about the acutely incestuous process relating to government bank director and Anglo chief executive appointments.
How does the appointments procedure work for directors who are watching our huge “investments” in Anglo, AIB and BOI?

“If you truly think that NAMA will make a profit , great. I have a bridge in brooklyn I need to sell…..”

It will take a good deal more than smart arse remarks to sustain the claim of a 40 billion loss for NAMA.


Do you have a bridge in brooklyn you are trying to sell?

“I want to know where you get the figure of €51.3bn from.

Do you have an answer?”

@ E43Bn lost and no extra lending

I admire your tenacity and perseverance.

It is not you that I have questioned it is JMS.

So I will ask the same question again until JMS answers.


“I want to know where you get the figure of €51.3bn from.

Do you have an answer?”

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

A debtors’ revolt is not out of the question.


here are the rules of the game: if you are anti-NAMA you can make wild predictions and have them solidified as fact on the basis of nothing more than a strongly held opinion. If you are pro-NAMA you actually need to have empirical evidence after the fact (ie in 2020) to even be able to suggest a particular point of view. If you have ever worked for a bank, stockbroker, the government or some entity dealing with the previous, well, we may not even believe you then…

@ Stuart

You tell the truth the whole way. However, here is how a lot of people have edited your truth:

1. Government income shot up
3. The government increased public expenditure on the back of this.
4. Bubble bursts and banks effectively collapsed as did government income.

5. public sector strikes….eh?

The banks have of course a massive responsibility for the current crisis, but the facts are that our current budgetary (dis)position requires huge adjustment regardless of the banks, not because of the banks. The banks are an easy enemey to blame the bugdet cuts on, but they’re only part of the problem. We based a huge amount of our expenditure on one-off boom-cycle transaction taxes, and they have disappeared off the map for the next decade or two. To ask for PAYE taxes to fill the gap is dishonest, immoral and borderline theivery from the public sector unions.

@ Bond. Eoin Bond

I know you said you work in a bank. I hope you don’t find doing sums to hard.

1, 3, 4, 5.

That should be 1, 2, 3, 4.

Happy to help.


Property prices have fallen 25-30%.

Where are you posting from Melbourne. This is an Irish site and property prices here have fallen 50-80%.

The estate agents who turned developer in this country may still be advertising 25-30% reductions as great value, and bargain basement but nobody is buying unless the reduction is at least 50% and then only in places they would like to live or know the would get a rent.

In fact an accountant relative of mine recently valued 24 holiday home development with 16 finished houses at zero. Nothing. Nada.

Notice how close the word NADA is to NAMA.

Truth, the missing 2.

2. 2 has no has no place in pro NAMA land, 2 is for the exclusive use of the anti NAMA truth, as in 2 + 2 = whatever you’re having yourself and there’ll be no questions asked.


“I want to know where you get the figure of €51.3bn from.

Do you have an answer?”

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

A debtors’ revolt is not out of the question.

M.B Says:

“Property prices have fallen 25-30%.

Where are you posting from Melbourne. This is an Irish site and property prices here have fallen 50-80%.”

1. The 25-30% off peak refers to house prices not general “property” prices.

3. This information comes from the ESRI report, is based on actual transactions, but makes no allowance for accountants, relative or otherwise, acting as valuers of as yet unfinished holiday home developments.

4. I post from Ireland.


The ESRI figure are not up to date figures. My information is not just anecdotal.

I am a small business owner actively involved in my local chamber. I am talking to estate agents everyday.

The reports they are giving would make your toes curl. All property in this country has taken an enormous reduction.

50-80% is the norm. Rents are plummeting and at the moment in my town there are 16 empty units all of which were occupied 2 years ago.

The esri are dealing in figures presented by Banks and large estate agents. Right now I would trust the church with babysitting services and Bertie with my cash before I would trust either of the other two to tell the truth.


The Permanenttsb/ESRI house price data is based on mortgage transactions handled by the bank and the volume is way down compared with the boom.

The index does not reflect the price falls of higher value property, which would generally have been funded by other bigger banks.

It’s interesting that the CSO does not provide house price data and when it produces data on agricultural land prices, it separates data on what would be considered “development land” and does not publish it – – this has suited both the IFA and the construction sector.

@ Brian Lucey I have been of the view that NAMA is the only game in town. NAMA-phile? Admit I have been wrong? – absolutely no? I have consistently argued that NAMA is not a silver bullet. Lenny was a bit rash in giving the impression it would be.

What I ask the NAMA-phobes is do they really think we would be better off today if we had never given a bank guarantee, never recapitalised, never came up with a plan to detox the banking system?

@Brian Woods:
Your assertions are wrong. It is not a binary either/or situation. To be specific:
1. We would have been better off if only BoI and AIB had been included in the guarantee plan.
2. We would have been better off if we had recapitalized but asked for a bigger share of the banks. At the moment, we have zero equity in AIB or BOI only preferreds and warrants.
3. We would have been better off if we had say adapted a more sensible plan such as Honohan 2.0 to detoxify the banking system and removed all the senior executives who caused the problem in the first place.

So there, your arguments are incorrect.

@Brian Woods 2
I now believe that the government guarantee of existing bank subordinate and senior bondholders was to bail out well connected bank investors and to protect well connected property developers from the wrath of same.
There was no reason to make this decision. The problem at the time was the banks obtaining additional funding and depositors withdrawing their money. The story of the dramatic late night meeting with AIB and BOI chiefs and the cabinet members giving permission by telephone is simply incredible. I have never heard any of the bankers saying they demanded this comprehensive guarantee. Why was there no cabinet meeting first? They could have had ministers there in twenty minutes, Gormley twenty five because he would have cycled. This was a four hundred billion euro decision and they discussed it once, late at night, on the telephone, with individual cabinet members. Where did this idea come from?
We should have an immediate independent public inquiry reporting within two months with a foreign chairman who has a record of fearlessness when investigating the powerful.

@Brian Woods II
Too easy: NAMA is nothing to do with the guarantee or recapitalisation. Irish banks do not have ‘toxic’ debts, in the sense that that term is conventionally used. They have bad property loans, something quite different. NAMA critics always demanded cleansed balance sheets and taxpayers money to be used. They mostly asked, as well, that tax payers not be ripped off, that they should not be ranked behind shareholders and bondholders, as decreed by NAMA.
We would be better off today with a NAMA-like plan that simply did it right.
‘The only game in town’ is intellectually lazy, politically dishonest and the ultimate rip-off of the taxpayer. It won’t deliver what itis supposed to.
This, I think, is the simplified version of the alternatives laid out by the good guys on this site. Remember this when NAMA fails to deliver on your promises.

@ Greg

i was referencing Stuart’s original points, in particular his first, third and, yes you guessed it, fourth. Its not rocket science.

Those questions on NAMA:

Who made the initial decision that the options were risk insurance or a bad bank? Can we see evidence of their analysis of the options?
Also, was there an appointments process for Dr Bacon?
Was there an appointments process for the interim head of NAMA?
Will there be one if he is confirmed?
On what basis did the minister direct the hiring of Merrill Lynch?
Was there a tender process?
Who was putting Michael Sommers under pressure to put money on deposit with Anglo?
Who did he tell about his serious reservations about Anglo?
What did they reply?
The minister directed the NPRF to pour €7 BN of the nation’s pension fund into AIB and BOI. After doing so, why did he leave the boards of AIB and BOI virtually intact and allow the appointment of insiders as chief executive, especially to AIB?
Also, I talked before about the acutely incestuous process relating to government bank director and Anglo chief executive appointments.
How does the appointments procedure work for directors who are watching our huge “investments” in Anglo, AIB and BOI?

Further example from Shane Ross involving the current chairman of a bank which we wholly control NOW:

Ross, who is rapidly becoming the Van Helsing of the Irish banking horror story, also had two other excellent articles.

@ Bond. Eoin Bond

Damn. Thought I had you there.

Fifth, I’ll just have to sign the NAMA song.

After all they might as well have been singing this on the night they decided to guarantee that pile of stinking manure known as Anglo Irish Bank.

Maybe they were, sure isn’t Brian Cowen always up for a sing song.

I was simply answering Brian Lucey who seems to think that now that we are told that credit will not freely flow and that we will not live happily ever after, that NAMA supporters should commit suicide.

Without NAMA or its equivalent we would have zombie (or actually dead) banks totally incapable of seeing us through and out of this crisis. But we still have a crisis, a chronic government imbalance, a totally wrong currency, a steeply declining economy, a far too generous social welfare and public pay platform, a hugely indebted populace. NAMA is the best chance to solve one of our problems, a collapsed banking system, but it is not a panacea.

@ Brian Woods II

“Without NAMA or its equivalent”

What equivalent? Brian Cowen and Brian Lenihan decided that NAMA (as is) was the only show in town. Both continually said that NAMA was then only way to get credit flowing to SMEs. Now the banks have told them, and us, where to go.

I’m still waiting for a statement from either on this disgraceful state of affairs. They went to the casino. They played with our money and they lost.

@ Brian Woods II

Banks that dont lend to an economy ARE zombie Banks.

And they will not be able to see us through our current crisis. They are zombie Banks soon to be dead Banks walking.

There is no way our Banks will be able to withstand the level of Mortgage default coming down the tracks.

These Banks will fail or be taken into state care. How much they will have cost us in the meantime because of the self preservation that is going on at the moment is our next big worry.

@34 billion

Gormley would have taken a lot longer than 25 mins. I heard that he is still waiting on the rape seed oil powered vehicle he had dispatched from our embassy in Cape town

@Brian Woods 2
“What I ask the NAMA-phobes is do they really think we would be better off today if we had never given a bank guarantee…”

Will you concede that the government guarantee of existing bank subordinate and senior bondholders was unnecessary, vastly costly, demanded by no one and of benefit only to well-connected bank investors and the well-connected developers they would otherwise now be hunting through the swampy development land of Ireland like the Predator?
Fox Mulder believed in aliens but even he wouldn’t have believed in the blanket bank guarantee.

Will NAMA get credit flowing, so much of it that it will be like quantitative easing? Here is another ominous sign.

“Despite reports from banks that they are lending to businesses, the Tanaiste said she was ‘‘inundated with people telling me that the lending was not real’’.

Coughlan said she was taking steps to ensure that the figures supplied by banks were accurate. She has instructed the state advisory board, Forfas, to work with the Department of Finance and the banks ‘‘to get to the bottom of it’’, and has also discussed the issue with Patrick Honohan, the new governor of the Central Bank.

‘‘This department needs to know precisely, warts and all, what lending is taking place,” said Coughlan.”

This raises lot of questions. Brian Lenihan told us in Oct 08 he was watching
the banks lending. As he put €7 Bn into AIB and BOI he told us this would result in extra lending. Now, suddenly, responsibility has shifted to Mary Coughlan. Furthermore, the government are saying that a year and two months after the guarantee they still don’t know what the position is.
What has Lenihan been doing since Oct 08? Coughlan is already in charge of managing the employment crisis (she set up an unemployment taskforce that only met once). More huge responsibility, for HER?
I say responsibility but it’s clear that for some reason she is not doing this through her department but through Forfas. That sounds like she is insulating herself from responsibility.

This government responded to the crisis at a glacial pace. When they eventually responded it was with the easy option of tax increases only.
Then they lurched to spending cuts only. Now they are lurching drunkenly between the two.

Finally, I didn’t see much talk about abolishing all tax breaks and clamping down on non-residency. I wonder what scale of crisis it would take for that to happen?

@Brian Woods II
As someone who has had a close (blood) relative commit suicide, thats a blow as low as i have ever had directed at me. And I wont take it from you or anyone else. So back right off now.
Apart from the hideous insult to anyone who has suffered from suicide, its a gross and mischevious misrepresentation of my position. And please, if you have a shred of honour or decency, dont email me privately to apologise, do it here.

@ E43Bn lost and no extra lending

Good link. Drepressing to see the government floundering around. But good link.

The banks have their riding instructions from the ECB.

Shrink your balance sheets.

@Brian Lucey
This phrase is another thing we have to thank Bertie for. Economists tend to quote it when pointing out the official response those who questioned the boom faced. Although it is a brilliant illustration of this I don’t think they should quote it directly. The poster was wrong to paraphrase it. I assume he did it innocently so I don’t see why he should not gracefully withdraw it.

Although the above article is sceptical I believe that BOI may be right. I think we should see Boucher’s comments as a further refutation of the spin that NAMA’s valuers are taking a much tougher line than anyone thought.

From Coughlan’s comments (see comment above) on lending it sounds like BOI have been much more cooperative than AIB. If AIB are shocked by the valuations it is because they are like an evil Jedward. AIB’s evaluation of themselves is entirely different to everyone else’s.

If negative thinking and negative talking are damaging our economy appointing insiders to our banks is doing huge harm. If BOI is the protestant bank AIB are the bank of the catholic hierarchy.

Just wondering…
Are our banks deliberately not lending for mortgages? There have been some recent reports suggesting this. The less lending they do the more they can say that the market just isn’t functioning. Also, the huge number of businesses which depend directly or indirectly on property transactions are left desperate for NAMA, which they have been promised will solve this problem. A problem the banks would not have been evil enough to create, would they?

“Upward-only rent reviews will be banned in new commercial leases negotiated from early next year, The Sunday Business Post has learned.

Justice minister Dermot Ahern will sign a commencement order this week banning the upward-only reviews, which have been the subject of battles between landlords and retailers all over the country since the economic downturn took hold”.

Good. But why not break existing leases.
“However, the ban cannot be applied retrospectively, according to advice from the attorney general”.
I think that should be published. Will it be?

You will all be surprised by the following:
“The cabinet gave lengthy consideration to concerns raised over the impact of a ban on the valuation of assets taken over by the National Asset Management Agency (Nama)”.

I’ll bet they did. They never do any governing. Bank lending and unemployment are no concern. Colm McCarthy and the tax commission prepared their policies. The smart economy money was used to reduce unemployment figures. The public sector paycut is to divert blame and distract from NAMA. So what do they spend their time doing?

The FF ministers spend all their time on the great issue facing our country:
how to save developers from their losses.

@Brian Woods II
“NAMA or its equivalent”?????

As a fully paid-up member of the ‘There is no alternative’ and ‘The only game in town’ clubs you should elaborate.

@ Brian Lucey and E43Bn

E43Bn, you are of course totally correct, it was a take off of Bertie, thanks for your input, as coming directly from me it would possibly not convince.

I am utterly unaware of any of BL’s personal background other than he is a professor at UCD (I think).

Let the remark be withdrawn, for sure, and I apologise for any hurt to BL. But to apologise for making the comment in innocence, no that would be unwarranted and disingenuous.

I have read BL’s comments again for the 4th or 5th time – it did take me aback, I must say.

I can understand the personal reasons for his reaction but if a repeat of a Bertieism is construed as “Gross & Mischievous” I fear this site has rather lost its sense of humour.

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