Wolfgang Münchau outlines one possible scenario in today’s FT: a crisis-driven leap towards eurobonds, in the most toxic political circumstances possible.
I have a column today over at Eurointelligence which uses Dani Rodrik’s political trilemma as a framework within which to discuss the political economy of EMU and the EU more generally.
NAMA Chairman Frank Daly gave a speech this morning and the following excerpt is going to get a lot of attention.
NAMA is currently exploring ways in which it could further facilitate the provision of liquidity into the market by providing staple finance for commercial deals and also by exploring options on the residential front. Following the PCAR2 exercise we would, for example, be interested in talking with the two Pillar banks to see how we could work together to move things along in this area. At a time like this, it is imperative that NAMA is creative in terms of identifying solutions to get the market moving.
I’m obviously completely missing something here. Why does this need “exploration”? Why does it have to involve the Pillar banks which are supposed to be shrinking their property loan portfolios, not adding to them?
Here’s a two step guide to selling a NAMA property without needing banks to provide finance:
1. Have a competitive auction.
2. The winner gets offered the option of either paying in full in cash or getting term finance from NAMA, i.e. they pay back the amount they bid (less cash put down) over time including interest.
What have I missed? And why didn’t NAMA operate like this from the start?
In the first of its new Economics Letters series, a team of central bank economists write on this topic: the publication is here.
The FT provides a detailed analysis of the state of the German banking system here.