Author: Karl Whelan

Writing in today’s Irish Times, property consultant Bill Nowlan writes:

Nama’s prime job is to get back the €54bn given to the banks to enable it to repay the ECB.

I don’t want to pick on Bill Nowlan because this kind of comment appears regularly in all our media outlets from commentators who are attempting to explain NAMA to the public. However, I do think it is worth pointing out that NAMA is not borrowing money from the ECB.

What I find odd about this is that a plan that really isn’t very complicated—the Irish government issues bonds to the banks in return for property-backed loans—has been described so often by government sources as a complicated operation involving the ECB that pretty much everyone now believes that this is the case. But really, it’s not.

I’m really not sure what I can say about this other than it’s pretty sad that a program involving spending €54 billion of public money is so poorly understood.

Just heard on RTE’s The Frontline from Minister Mary Hanafin (seconds before a very angry man got up to shout at Pat Kenny):

First of all, we’re not borrowing to pay NAMA, em to pay the banks. What we’re doing basically is giving a bond or an IOU and we’ll be getting €77 billion worth of assets in return.

By the same logic, we’re not borrowing to fund the budget deficit either. We’re just issuing bonds, or IOUs if you like, to people in international financial markets and we’re getting cash in return. Sort of makes you wonder what all the fuss is about. Still, it’s good to know that the NAMA bonds are buying us €77 billion worth of assets.