Pat McArdle’s review of the economic year contained the following description of the banking crisis:
Nama is the other great issue convulsing the nation. There is grudging acceptance that it is the best or “least worst” option available. Looking back now, it is hard to believe that anybody, apart from the ideologically motivated, could suggest nationalising the entire banking system.
The other strange thing about the Nama debate was the way the Government’s estimates for loans and values were seized upon as “reality”. How many times did we hear the mantra that the Government is going to overpay for the assets transferred?
Claims by Government that there would be a transparent valuation process – and by others that this would be overseen by the EU – were largely ignored. Now, at last, it is becoming clear that the valuation process will be rigorous and that Nama will only pay 15 per cent over the current market value. Moreover, the indications are that the valuations are coming in below earlier estimates for a variety of reasons, which means that the payment will be less than the €54 billion usually bandied about.
The consequence is that the extent of Government recapitalisation and ultimate public ownership of bank equity will be greater. This is as it should be – the taxpayer should benefit from the bailout, something that did not happen in the case of the ICI debacle a quarter of a century ago.
Recent falls in bank share prices are a belated recognition that the Government will not overpay for assets transferred to Nama.
Note the transition from “How many times did we hear the Government would overpay?” to the observation that government will indeed “pay 15 per cent over the current market value” to “the Government will not overpay for assets.”
It strikes me that only in the world of Irish banking alumni can one make the transition from the second statement above (15% overpayment) to the third (no overpayment) without any apparent concerns about internal consistency. The Government will not overpay sounds like something we’d like to be true, so let’s just assert that this is the case.
Continuing in the black is white vein, McArdle also says about the banks:
With a few exceptions, most of the top bankers have been booted out; the second-liners are on the way out; the shareholders have taken massive hits and the unfortunate staff are either losing their jobs or taking pay and pension cuts that would make a public servant blanch.
Pay cuts that would make a public servant blanch? Well McArdle can’t be referring to Bank of Ireland, whose staff received a 3.5% pay rise in February. And it can’t be AIB, whose staff who received a 3% pay rise in October (see here and here.) No, it must be some other bank where staff are taking double digit pay cuts.
On the issue of nationalising the entire banking system, I’m not sure who ever proposed that but I have suggested a temporary nationalisation of AIB and Bank of Ireland, so I’m guessing McArdle reckons I’m one of these “ideologically motivated” people (presumably driven by a desire to seize control of the commanding heights of the economy for the people).
I’ve noticed, however, that I also get accused of being a right-wing ideologue when I say there are limited gains from taxing the rich, when I oppose the introduction of a third higher tax rate and suggest the budget should focus on spending cuts and when I’m critical of ICTU’s plans.
I guess what I’ve learned from this is that it is the most ideologically-motivated individuals who are the quickest to assert that anyone who disagrees with them is an ideologue.