October 12, 2009

Nama is highway robbery

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Last Wednesday night at the Historical Society in Trinity College Dublin – the Hist, as it’s known – Professor Joe Stiglitz, winner of the Nobel Prize in economics and former chief economist of the World Bank, gave a stirring speech about the impact of globalisation on the poor.

Sitting in the debating room where Douglas Hyde, Oscar Wilde and many other brilliant Irish and international orators have held forth, I thought to myself that this setting was a far cry from the first time I met Stiglitz. Then he was a mere professor of economics and known only to the economics world for the elegance of his mathematical models.

Back in 1991, Stiglitz was invited by the Irish Economics Association to give a talk in Carrickmacross. His interest in Ireland was heightened by the fact that his daughter chose to go to Trinity. After the talk, Stiglitz, dressed in jeans and runners, said that he would like to visit the North.

So we drove to Crossmaglen, where the Columbia professor downed a few pints in a bar just off the main square, chatting away to the publican who would probably not have seen a more incongruous visitor in his bar since Robert Nairac walked through the door.

Stiglitz has come a long way since the smiling New Yorker raised his glass in Crossmaglen. The conversation was then drowned out by the constant clatter of Chinook helicopters hovering around the British Army base right above the metal IRA sculpture of the Republican phoenix on the main square.

Today Ireland has changed, though the professor hasn’t changed that much. He is still forthright but charming and, during an interview after the speech, he spoke to me at length about current Irish economic policy.

When asked whether he would implement a Nama-style bailout for the banks, he responded: ‘‘No, this is the kind of highway robbery which we see happening all over the world, with guns pointing at the heads of the political leaders and the bankers claiming the sky will fall down and the economy will be devastated unless they get this money.”

He went on to compare the employment of mass fear as the single justification for bank bailouts with the same weapon of mass fear that was deployed by President George W Bush after 9/11.

‘‘It was invoked to justify anything the president wanted to do, such as the Iraq invasion,” Stiglitz said. ‘‘Well, the bankers now use 15/9 [September 15, 2008 was the day Lehman Bros went bankrupt] as the new weapon of choice to force politicians into the huge bailouts, which will bring us enormous debts on our balance sheets with no real assets on the other side. But the bankers will be saved. When we gave them the money, the bankers said ‘don’t worry, you will get your money back’, but no one believes that now.”

When asked if letting the banks go would be the end of the world, which is the default position of Ireland’s current government and banking and economic establishment, Stiglitz laughed.

‘‘This is nonsense,” he said. ‘‘Countries which allow banks to go under by following the ordinary rules of capitalism have done fine. The US has let 100 banks go this year alone, as did Sweden and Norway in their crises. In the US, it’s just the big, politically-powerful banks that have not been allowed to go down, for political reasons.

‘‘The important thing to remember about financial markets is that they are forward-looking, but what they do remember is the size of your national debt.

If you spend money in bailing out banks without taking all the equity, you will end up having a huge national debt, a liability with no assets to show for it. Now that will scare off investors in the future.

“[In Ireland], this bank bailout is a simple transfer from taxpayers to bondholders, and it will saddle generations to come. The only thing that might give you solace is that, as chief economist of the World Bank, we see this type of thing happening in banana republics all over the world. Whenever a banking crisis happens, the financial sector uses the turmoil as a mechanism to transfer wealth from the general population to themselves. I’ve been very disappointed to see that it has happened, not only in banana republics, but in advanced industrialised countries.”

Digest these words and their implication for us. Here we have a Nobel prize winner for economics, a former chief economist of the World Bank, the head of former US president Bill Clinton’s Council of Economic Advisers who presided over the US’s sustainable boom of the 1990s – when it grew while, at the same time, paying off its debts.

He is comparing Nama and what is happening in Ireland – a country with which he is very familiar – to a smash and grab banana republic exercise.

The extent of this robbery can be seen if we look at the real cost of our bank bailout.

When you borrow for your house, the mortgage you pay off is much greater than the principal because you pay compound interest.

So for your house to be worth the investment after you pay everything off, it just doesn’t have to be worth what you paid for it in principal, but it has to be worth what you paid for it in its entirety, including interest. The cost to you of buying that house is also the ‘opportunity cost’ of what else you could have done with all the money.

With these basic economic principles in mind, let’s look at the likely cost of Nama and the opportunity cost of Nama, given what else we could do with the money we are about to borrow to buy land that nobody wants.

We need to get an idea of the likely costs over a ten-year cycle. At the moment, interest rates are historically low, but that will not always be the case. So let’s look at market interest rates and the current rate of inflation as real figures.

On Irish interest rates, the latest long term bond issue was a 15-year €7 billion bond. The press release last Tuesday, October 6, gives the yield at 5.472 per cent.

So, the €54 billion we are throwing into the banks, if invested at that rate would earn €38 billion over ten years. Therefore, not counting inflation, the opportunity cost of Nama is €38 billion. If we had loaned to our own government, we the people would get back €38 billion and gain a social dividend from the roads, schools and technology invested. Not with Nama.

But, of course, we don’t have €54 billion to invest; we have to borrow it all. In any calculation, we should also look at the rate of inflation, to try to get an idea of the ‘real’ cost. At the moment, the Consumer Price Index (CPI) is falling and, without some inflation coming along soon, we will be in big trouble.

The current CPI, which was announced last Thursday, is minus 6.5 per cent. Prices and wages are falling, which drives up the cost of borrowing, because you have to take more of your income to pay off the debts. So the ‘real’ cost (the interest rate minus the rate of inflation) of a 5.472 per cent interest rate is actually a jaw dropping 11.972 per cent.

If the figures were to be repeated for the next 12 months, property would have to increase in value by nearly 12 per cent just to keep the real cost of Nama neutral. The idea of property prices rising while inflation is falling is something even Brian Lenihan, our Minister for Finance – who dismissed Professor Stiglitz during the week – would find hard to sell.

I don’t know about you, but I’m with Professor Stiglitz on this one.


  1. jandal

    Ireland is in the crapper, being run by a shower of incompetent cowboys who legitimated cronyism and by some collective psychosis got repeatedly re-elected. The Greens have sold out. The opposition is a joke. Come on David – don’t just blow the whistle of impending doom, tell us what we can do to avert this disaster that will hold the country back for decades to come.

    For a country brimming with educated, articulate people I just don’t know how we ended up with a Noddy government, no attractive alternative, and up to our necks in it.

    What can we do David?

    • Deco

      Jandal – point of correction – the GP did not sell out – the GP wanted this all along. Dan Boyle told the nation after the Dell closure that the banks were more important than the factories, and that the government was going to bail out D4, and screw everybody else. The GP never changed policy. All they did was change the spin.

      There is an element in FG who are telling us that they can deal with the problem (Baby Brute, Lee, Varadkar, Hogan). There is also an element in FG that would lose the plot if they got ministerial positions(Creighton, Mitchel, Deasy etc..). The ILP are completely clueless-making all sorts of ridiculous promises to fix everything for everyone, like Ahern did.

      Our best hope is a FF revolt to raise the competency level off the floor, and get rid of Martin, Dempsey, Cullen, Clowen, etc….Then FG will have to raise the bar even further, and the ILP will get rid of the lost (the plot) generation.

    • roc

      “For a country brimming with educated, articulate people I just don’t know how we ended up with a Noddy government, no attractive alternative, and up to our necks in it.”

      Obviously, not educated or articulate enough. Or, not educated and articulate in the right way. Or, perhaps it is the inability to separate the political phenomena of self-interest and genuine conviction about what constitutes the common good (and democratic development of opinion towards same). We have a lot of problems. Though what really brought home the extent of our problems to me recently, was the audience on the late late show when Bertie Ahern was on, giggling away at his arseholery. That more than anything has convinced me we’re going all the way to the bottom on this one.

      • Re: Late Late Show – I went between anger and despair at the audience reaction to Bertie Ahern’s(deliberate) tom-foolery – I have to believe (hope) that the audience were mainly the drumcondra mafia – if not, we are sunk,sunk,sunk .. AND did you hear the discussion regarding the cost of project mismanagement ??
        Can you imagine the money that would be saved if they just got project management right ??

      • phealy

        Have to agree. The spectacle of the audience guffawing along with Ahearn was truly depressing. Through a cocktail of largesse, jobbery and jaw dropping incompetence he and his cronies succeeded in destroying the only real wealth this country has ever created. Educated and articulate? Yes, we have some talented and high calibre people who could do this country a great service if ever they got access to public life. But listening to the Late Late audience, and knowing too that JO’D will be returned at the next election with a landslide, convinces me that half the country are indeed still peasants and gombeens who are impressed by people like Bertie Ahearn, Beverly Flynn and Michael Lowry. Nuclear fallout would not shift these guys. I read Morgan Kelly’s superb comment on NAMA in the Irish Times. Now that was impressive …and terrifying.

  2. Wills says :’ Resistance will prove itself a far greater force for victory in the long term’.
    I admire his optism however the French resistance fighters only became lucky after the Allied Invasion. We have an Anglo American EU Alliance wanting the NAMA to be successful.What does resistance do then?I think this site has become voiceless finally .The above article is good but what can we do with that knowledge now?Unless we have a realistic objective our ‘talking shop’ is over.And our Time should then be spent doing hard manual labour.

  3. Lius

    I’m with yourself and Professor Stiglitz on this one also.
    However I would love to see a detailed explination of exactly where the €54 billion we are throwing into the banks went to. i.e that money was borrowed to pay the cost of development projects. A small portion went on construction labour and materials which were consumed, but the bulk went on land which is “INERT” i.e. did not absorb the money, so where is the money that was paid for land lying now? Who has it, can we get any of it back?

  4. Deco

    Excellent article. Prof. Stigliz is telling it exactly as it is.

    Gordon Brown is trying to raise 18 Million Euro by selling UK state assets – and it is abig thing. But coughing up 70 Billion Euro for useless bankers is seen as almost discretionary if you are listening to government ministers. We are completely off the scale in terms of the delusions that sit in the minds of the senior government ministers.

    Tim – you and Joe Behan are our only hope.

    Time to start hassling your local FF TD or councillor concerning NAMA. It will have the added benefit of completely embarrassing the GP leadership and the FF leadership :)))

    And we also need to drop bin Anglo Irish Bank. We are already 4 billion into an adventure that will cost 40 billion, and acheive nothing except provide Seanie Fitzpatrick’s pension.

  5. econarchist

    Joseph Stiglitz is looking at the Irish economy from a wider perspective and he’s also independent of vested interests, unlike many (or most?) Irish economists who work for financial institutions. It is these same people who predicted ever-increasing property prices in the past who are now predicting significant increases over the next ten years (making NAMA a success) and who are also spreading panic about how a few bankers might react if NAMA is not implemented.

    Brian Lenihan’s dismissal of Stiglitz is pathetic and an insult to the intelligence of anyone who has been following the financial crisis for the past year. He is basically comparing NAMA to the US bank rescue package:
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aJQ9g9SazEog
    “I simply do not accept his analysis,” Lenihan said. “As far as Professor Stiglitz is concerned, he made the same criticism of the U.S. bank package, which is now proved to be a tremendous success.”

    Economists, bankers, speculators, politicians, all part of the same cosy club.

    • Deco

      Yet again Minister Lenihan is refuting allegations from an economist, concerning a subject about which Minister Lenihan, on the basis of track record over the last 18 months, knows nothing about.

      Lenihan has been telling us one fairytale after another about the Irish banking system. He really is living in his own illusionary world.

      And even more ridiculously, Lenihan now professes to know that Geithners infusion of US tax money to prop up Wall Street is a “tremendous success”. I bet that is great news for the Americans.

      Maybe we should broadcast Lenihan’s message to ordinary Americans to see if they are cheered up by Lenihan’s assessment of their banking system ???

      http://www.thesun.co.uk/sol/homepage/features/2651937/The-people-living-in-drains-below-Las-Vegas.html

      Minister Lenihan is Ireland’s answer to Comical Ali at this stage !!

    • Irish Pancake

      Lenihan is a clever Barrister and he probably knows that not a lot of his Irish audience would bother to check the veracity of his comments about Prof Joe.

      Of course, this has been borne out by the GP delegates this weekend.

      But those who have been following the melt-down for the past year would be very well aware that NAMA = TARP as broadly originally proposed, and subsequently modified by the Obama Administration.

      The original TARP scheme gifted money to the major American Banks, in return for their Toxic Assets, ostensibly to allow them to resume lending into the Economy. Of course, they simply kept the money, cleaned up their Balance Sheets, and sat there, courtesy of the Taxpayer.

      TARP only became successful when they ditched the original model, = NAMA, and introduced a new model based on taking Equity Shares in the covered Banks, allowing future upside for the Taxpayer providing the funds.

      “Tremendous success”, possibly.

      • Hi,

        I agree with ‘Irish Pancake’ above,
        I’ve a minor concerned citizen blog at http://www.colmbrazel.wordpress.com and point out: ‘You think spending is out of control now, wait till NAMA gets going and the real blood letting of the Irish tax payer begins.

        Hank Poulson, US Treasury Secretary, 2006 — 2009, on 14th October, 2008 announced that the US to restore confidence in their financial system, would ‘purchase equity stakes in a wide variety of banks and thrifts’ using diverted money previously earmarked for the purchase of toxic assets.

        This followed the example alongside the bank guarantee scheme set by Gordon Browne,UK Prime Minister and Alistair Darling, Chancellor, in their response to the financial crisis.

        These models have averted financial melt down and we should follow them even if it means in certain cases equity stakes that will lead to nationalisation of some banks.

        For both UK and US tax payers there is some hope at the end of the tunnel their investment will be rewarded.

        This is a successful model that has restored confidence that has avoided meltdown. It will also allow these governments to proactively regulate the banking system to avoid the mistakes of the past.

        Both the US and the UK have corrected the mistakes embodied in the previous TARP approach, NAMA sets out to repeat them! .”

        Americans and UK ditched TARP in favour of a better UK model of equity in return for investment .

        Its a minor consolation to know Lenihan’s career will be levied with NAMA (Not Another Mess Again) failure!

        NAMA turns Ireland INC into a Banana Republic transferring taxpayers’ funds, the new poor, into the coffers of the rich, bankers, developers. This is criminal!

        Maybe Lenihan and Cowan should call Poulson to get a new briefing. Poulson:
        “Brian C and Brian L, forgot to tell you guys, we actually don’t follow a NAMA TARP model anymore, NAMA TARP will sink you! Goodbye”

    • Dilly

      Aren’t the Irish experts the same people who predicted in 2006 that the economy would grow for another 15 years, which in turn lead to businesses taking out massive loans in order to expand. Now these businesses are all facing ruin over the coming years. So, Lenny is still listening to these people, and ignoring the advice of independent experts who are not in anyones pocket. We are truly screwed.

  6. AndrewGMooney

    DMcW’s recent articles have tried to maintain balance between ‘tell-it-like-it-is’ admonisments and ‘we are we we are’ practical pragmatism about baby steps forward out of the abyss, ie: networking the diaspora tribe. But that balance is going to become ever more difficult to maintain if events unfold as I expect.

    There’s an elephant in the room that periodically roars: “Euro!”
    The NAMA proposal to bind current and future generations to these colossal debts is terrifying because those debts are denominated in a world reserve currency. A currency that could assume increasing reserve status, given the demise of both the American Dollar and the British Pound continues apace. This will mean Irelands’ indigenous exporters will face an Heruclean task in maintaining, never mind expanding, market share in those two primary territories.

    Unless there is going to be some miraculous expansion of trade with other Euro denominated states, I do not not see how these debts can ever be paid. The deflation required to turn Ireland from the highest-cost location in the Eurozone to one that has costs to support export-trade on the scale required may well tear Irish society apart. Instead of the ‘boomtown’ scenario of builders building houses to house more builders buiding houses to build, with NAMA there is a very real prospect of mass emigration of those with the talents and tenacity to make a fresh start elsewhere. This will just further deflate the asset base of land and housing until the banks capsize again. As well as effectively asset stripping Ireland of a whole generation of intellectual and social capital.

    Until NAMA I though any ideas about Ireland leaving the Euro were fanciful, but now I think trying to pay these debts in Euro under the cosh of NAMA is so dangerous that it has to be considered seriously.

    Is ‘disguised bankruptcy under NAMA’ any better than actual bankruptcy by leaving the Euro? If so, why? Cui Bono?

    As my Dad used to say, “You can’t get blood out of a stone”. Or as Iggy Pop famously sang: “Show me a bill that they can make me pay. Ha!!”

    I had hoped that the debt crisis in Eastern Europe, Spain and the Baltics would have brought key ECB states to their senses, making them realise these debts cannot be paid in full and another approach will have to be formulated. But with NAMA, Ireland is running out of time.

    If all that mattes to the corrupt elites is to ensure their own survival by rendering Ireland a devastated aircraft carrier for American economic penetration of Euorzone markets, then so be it. But that will be the legacy these ‘soldiers of destiny’ will leave for posterity. However, when the full implications hit home to the ordinary citizens, that they have surrendered not only their currency but their sovereignty: Expect a revolution.

  7. MK1

    Hi David,

    Of course I and many others agree with you and Stiglitz on Nama and what you write is correct.

    But what can be done about it? Is Nama, plus the public sector deficit going to lead this country into ruin, or are the current controllers (FF+GP) aiming for these to be an equivalent of a ‘soft landing’ ?

    Its very hard to second guess the thinking behind these problems as they just do not make economic sense!

    We still need to get back to jobs. And how many jobs could 4b (given to Anglo) provide if used in a stimulating, entrepreneurial job creating way ?!? The so-called Smart Economy needs to become very smart very quickly and have major supports if Ireland is to “reflate” itself as it sinks into a debt quagmire, where private debt is transfered to public debt.

    As AndrewG writes, the situation can and will lead to emmigration and I wouldnt blame anyone for taking that option. I dont expect a revolution anytime soon, do you????

    MK1

  8. gquinn

    I have said it before and I will say it again. It is so obvious that Ireland is bankrupt, the country is finished.

    As soon as I get a valid sell signal on AIB, I’m going short of the stock, I know and it is so obvios that AIB, BOI have to much debt and they need to raise massive amounts of money, I’m talking about half a trillion euros each.

    Remember personal debt in Ireland is bigger than the mortgage market.

    • paddythepig

      GQuinn,

      Half a trillion Euro each? Could you break down the logic of how you have come to this figure?

      You seem to be saying that even post-NAMA, the banks are a serious shorting opportunity? Am I interpreting you correctly? I’m not saying you’re wrong, but am interested in seeing your point of view fleshed out some more.

      Paddy

  9. G

    It seems hard to know.

    NAMA does seem like a Turkey, created by vested interests for vested interests.

    Stiglitz was part of the Clinton administration, which revoked the Glass-Steagall act, something that played a massive role in leading us to where we are today, not aware of his role, maybe he objected, I’d like to hear his side of things.

    He was also a leading member of the World bank, which according to many commentators has played an enormous role in impoverishing developing countries….again would like to see Stiglitz respond to that, but these questions never seem to be asked, instiutions are just listed off like we’re supposed to be impressed…….

    Does anyone come to the table with clean hands or agenda free?

    I have a healthy scepticism when it comes to ‘experts’ – as proven recently, the so called ‘experts’ knew jack s**t!

  10. adamabyss

    subscribe.

  11. Mojo

    Forgive my ingorance, and my somewhat dissenting voice, but there is a fundamental issue that I do not believe has clearly beenaddressed by those who reject the NAMA concept.

    Essentially as i understand it, the single fundamental issue around NAMA is whether it is worthwhile keeping the Irish banking system afloat. End of.

    All other arguments appear to me to be secondary to this fundamental issue.

    For example, the debate over paying current market value, or hope value is somewhat pointless, as if NAMA pays current market value, then the State will end up coughing up the rest of the capital required for the banks to stay solvent in the form of equity. Either way, the State is going to pay what ever it takes to keep the banks solvent – either through NAMA, or through Equity.

    The Nationalisation debate also seems somewhat misguided, as this would transfer all loan risk onto the State. So we wouldnt pay up front for the risk, but we would carry it nonetheless. Also, does anyone who has been a customer of the HSE, Irish Rail, FAS or Dublin Bus honestly welcome the idea of the State running our banks.

    As for the view that this is a massive transfer of wealth to bond and shareholders – there is an alternate way of looking at this. I would argue that it is effect a transfer of wealth from taxpayers pockets to taxpayers pensions. I strongly suspect that almost every pension plan in Ireland (public and private) has an investment in the equity or bonds of the Irish banks. So we lose in our pockets, but gain in the value of our pensions!

    Coming back to my original point, the crux of the issue is could we survive if we let all the banks go to the wall. I dont really buy Prof. Stiglitz’s view on this, but i dont think there has been enough of a rational discussion on this aspect. And at the end of the day, this is what it is all about.

    • Malcolm McClure

      Mojo: As you say: “the crux of the issue is could we survive if we let all the banks go to the wall”.
      Let’s assume for a moment that we had followed Iceland’s example and renaged on our debts.
      They now have 9% unemployment whereas ours is much higher. With cheap geothermal electricity and good broadband comms with the outside, they are attracting large IT server farms, which these days can be anywhere.
      And the people still enjoy the third highest standard of living anywhere and are hap-hap-hap-hap happy. See:
      http://www.spiegel.de/international/europe/0,1518,654311,00.html

    • econarchist

      Hi Mojo,
      Does it really matter if all Irish banks go the wall, if other banks can move in and either take swallow them up or take their place? As long as they don’t collapse suddenly – as was the danger this time last year – then “keeping the Irish banking system afloat” and to “let all the banks go to the wall” are not the same thing as you suggest.

      The Irish banks have profit-making loans as well as non-performing ones for toxic assets. If the good loans are taken over by someone else, then the banking system can continue, as long as it’s done in an orderly manner.

      That’s my understanding of it, I’m no expert on banking or economics, so anyone feel free to correct me if I’m wrong.

      As for the scary idea of the State running our banks, can it really do a worse job than the crowd running them at the moment? The boss of AIB is still the same as before the crisis.
      Anyway, nationalisation only needs to be temporary until the mess is sorted out.

    • paddythepig

      Good rational post Mojo. The one group you didn’t mention was depositors, they are also being bailed out in my opinion. And I can see the rationale of this action from a societal point of view ; what would be the consequence of old Mrs Murphys savings going down the jacks, because when all is said and done, in a bankruptcy scenario, how much of the depositor base could be covered by the assets of these institutions? That’s even if you said ‘go swing’ to some of the bondholders.

      One other point. Lenihan said on the Frontline that the banking system could not be allowed default on it’s debts, as this would have and I quote ‘disasterous consequences for the funding of the state’. In other words, the budget deficit position is not helping. It’s the equivalent of not being able to tell a moneylender ‘go swing’ for lending you to buy the beemer and the flatscreen TV, because you are also dependent on the same lender to buy the groceries.

      Paddy

    • wills

      The crux of the issue is this, the banks deliberately over leveraged credit and induced a property bubble, knowingly, and stood back and waited for bubble to burst and then called in the taxpayer to pay for the cost, while the banks got all the profits all through out the bubble and this is criminal negligence and immoral.

    • Mojo

      I take on board the comments to my original post – some i agree with, some I dont.

      Firstly, Iceland’s unemployment level may be lower than ours, but that may be partially due to the structure of the labour force in a very small economy. Also, i think that capital markets and FDI investors will harbour a dim view of Iceland much longer than they will of Ireland.

      Nevertheless, i too wonder if we should have let some (but not all) of the banks go to the wall. The sinking of Anglo or Nationwide may have had a severe short term effect, but might have been optimal in the long term. Impossible to really know though.

      Unfortunately, i do not agree with Wills’ post, i dont buy that the banks knew they would crash the economy in confidence that they would be bailed out. Rather i think they all believed their own hype that things could only go up, that they had unique competitive advantages, and that this time things would be different. I would classify it as arrogance and ignorance rather than criminal negligence.

      Finally, i just dont believe we can do ‘temporary nationalisation’ in this country. Yes when Stiglizt outlined the alternative, it makes sense, but in practice once the State takes over, and the unions get a foothold, history has told us that the State is very slow to relinquish control.

  12. gquinn

    Hi Mojo,

    Replace the word “State” to “us” or “The ordinary people of Ireland”.

    “For example, the debate over paying current market value, or hope value is somewhat pointless, as if NAMA pays current market value, then the State will end up coughing up the rest of the capital required for the banks to stay solvent in the form of equity. Either way, the State is going to pay what ever it takes to keep the banks solvent — either through NAMA, or through Equity. ” -: The state is going to raise the extra revenue through either an increase in income tax or creating new taxes. What this does is that it contracts the actual Irish economy further because there is a lack of money supply flowing through the system. Consumers drive the market not the other way around.

    How would you feel if you had to pay an income tax of 60% to fund the money shortfall that the banks need.

    “I would argue that it is effect a transfer of wealth from taxpayers pockets to taxpayers pensions.” -: This is incorrect as all the banks currently have a pensions deficet and all the banks have more debt than they do assets or cash. Basically we are using good money to buy a bad asset. The best thing to do is to preserve cash in this country and the best way to do that is let the banks fail and use the good cash to create a proper bank that will purchase the debt of the insolvent banks for little or nothing and to go forward with it. The message that you then send is that if your screw your banking business model up then you will fail.

    What the country is doing on a national scale is equivalent to this. They are buying AIB and BoI and other banks stock ar €20 a share even though the market is saying that the stock is currently at €3 a share because the government is putting in a long term value of the bad assets that they own. What happens if the share price is only at €5 in 20 – 30 years time that means that the taxpayers pension is way underwater when you factor in inflation which will be big in the coming years because of the massive capital expansion that has taken place this year.

    • Mojo

      gquinn, I agree to a point with your comment, it makes much sense. We are going to have to pay for NAMA in the short to medium term through increased tax revenue, with will further drag economic activity. However, NAMA or no NAMA, current tax levels cannot meet current public spending even before capital injections for the banks. So taxes are going up anyway, NAMA will only exacerbate it.

      I tentatively suggest you may have misunderstood my comment about pensions. I was not referring to the pension plan’s of Bank staff.

      What i meant was that everyone in the country who has a pension (through their employer, or direct with a pension provider) will have their contributions invested in a fund or set of funds. These funds invest in equities and bonds. In my experience, most of these funds have invested to some extent in the irish banks.

      Therefore, NAMA has boosted the share price of bank equities and protected bond holders – both of which ultimately benefit the funds who invested in the shares and bonds. Therefore, our pensions (private, occupational and State) have avoided a hit and have increased in value due to the creation of NAMA.

      In the economy, everything is connected.

      • Colin_in_exile

        Mojo,

        Welcome to the discussion.

        “So taxes are going up anyway” – Correct
        “In the economy, everything is connected.” – Correct, but you still have choices. You can choose not to have a pension, I don’t have one, I don’t see the attraction and I know they are unsustainable due to demographic trends. I intend to work into old age, I like my career, I don’t like golf, so why would I want to retire and sit around the house annoying my wife? You need to think radically because these are radical times.

        Best advice is to keep fit and healthy, find something you enjoy doing and can earn money from, don’t trust anyone with money except yourself, don’t expect the state to look after you because they view you with contempt, don’t buy property since you can’t take it with you to the next life and avoid paying insurance as much as you possibly can.

      • liam

        Mojo, A welcome from me too.

        The banks generate shareholder value (especially of long-term investments like pension funds) by creating sustainable profitable businesses, something the Irish banks have not much experience of judging by performance for the last ten years. In fact, there is some empirical evidence to suggest that they are actively and severely de-risking their new business, meaning decreased returns in the future. They have no motivation to act any differently as the State (read:you) is bailing them out. They can sit back on a nice little earner that guarantees their pay cheques, secure in the knowledge that they will have no competition from those pesky foreign entrants to the market, since the State’s plan relies on them being (barely) profitable and is not likely to grant licences to the competition. If I had to chose a bank to invest in, It sure as hell would not be an Irish one since they have absolutely zero motivation to increase shareholder value. Why would a pension fund manager think any differently?

        You make some interesting points, but I think your argument is circular. So you propose that the state invests in the banks, and the banks increase shareholder value as a result, therefore the State is really investing in Irish pensions and investments. But the State has to hobble the economy and development in order to do this, and the banks have no strong motivation to compete since they are protected. Worse, independent banks that have not been bailed out and survive examinership will be strongly motivated to have a healthy spread of risks in its portfolio, a bailed out bank has no such motivation and (especially in a recession) will invest only in that which is almost guaranteed to return a profit. So where is the sustainable return to the shareholder coming from?

        We are going to have to pay for NAMA in the short to medium term..

        Simply untrue. Well, only true if NAMA is actually implemented, which I admit seems pretty likely. I mean that NAMA is necessary, is a lie.

        There are several alternatives, which are elucidated clearly many times on this site and elsewhere, the idea that NAMA is necessary and required immediately, and the only way out are the only issue at hand, not whether or not the banks should be saved, which is not worth arguing about.

        If the banks need to be recapitalised when everything come put of the wash, then the State does so for its own share of the equity. In the worst case, there are still huge costs involved (this seems inescapable, not just from recap, but also from the spending cuts which will become necessary), but the State gets back some of the upside. NAMA as it stands produces zero return on investment for the exchequer.

        One can do the sums whatever way one wants to demonstrate an outcome that suits any arbitrary argument since the truth is nobody can say for sure what the outcome of this mess will be ten years down the road (but we can make some pretty good guesses as to what is probable). The psychology and motivation is what counts. Maybe all that counts.

  13. Stiglitz makes a fair point, and maybe we would have been better to let one or more of the banks go to the wall.

  14. Malcolm McClure

    Hey, there’s another D McWilliams on the block. No kin?
    “McWilliams describes as ‘the fiscal policy lever pulled right back while the monetary lever is fast forward.’ He expects deep cuts in public spending and tax rises, combined with more monetary easing and very low interest rates.”
    http://www.forbes.com/feeds/afx/2009/10/12/afx6990354.html

  15. Philip

    FG and Lab are and have been utterly useless. Their opposition activity has been nothing short of damp. You’d swear there was nothing worth opposing or they were on dope. Dozy is the word. Maybe they are dozy and playing it a bit too safe. Maybe the Greens are not the only ones selling out.

    Our only hope (and I never thought I would find myself saying this) is grassroots FF. What is happening is the beginning of the end of this republic and this people’s sovereignty. We are facilitating a failing European Experiment which is based on the political equivalent of papering over the cracks in our euro wide economy. The end result has been very well articulated in earlier comments.

    We have career politicians looking for their next jobs as EU lord protectors of the fiefdom of southern Hibernia and to hell with the rest of us.

  16. wills

    David, brilliant.

    Bringing Stiglitz in on the NAMA bank job to call it for what it is, brilliant.

    Keeping with it, hammering home the truth about NAMA, brilliant.

    NAMA is a big fat stinking LIE.

    The ‘brains’ behind NAMA know that NAMA it is a big fat stinking LIE.

    The instigators of NAMA know that NAMA is a big fat stinking LIE.

    They know NAMA is a SCAM. An inside job.

    The bankers are robbing using the banking system to pull a dick turpin on the money printing presses.

    They know that the NAMA bank job is so blatant, so in the taxpayers face, so contemptuous are they of the lower downer taxpayers and so high and intoxicated on the omnipotent fumes of their own inflated ego’s the banking gangster bank robbers are laughing their heads off at what they are attempting too pull off.

    And as Stiglitz asserted, these out of control banking white collar criminals are at it globally. This is the central banking system showing it’s true colours. They are so convinced of the all consuming control they now yield that they don’t now give a flying fcuk who see’s the dell boy scams they now spend their day’s in the office hatching.

    Restore the money creation power back to government and SHUT THEM DOWN.

    Bravo david, keep at it.

  17. Alan42

    NAMA is not highway robbery . With highway robbery it is over in a few minutes , Stand and deliver . Your cash is gone . At least you know how much you were robbed of and you proceed on down the road . When somebody robs you with a pen it is a whole different ball game . NAMA will be slow and painful .
    Has anybody noticed that they now keep on linking recovery with ‘ a recovery in house prices ‘ ? I think that they have just given up on the wider economy and are now just focusing on house prices . Maybe hanging around with a one issue party ( The Greens ) has rubbed off on them .
    There is no government or central bank anywhere in the world that wants higher house prices as it is the biggest demand on wages thus driving up costs .
    They cannot be this stupid and I don’t think that Willies moustache has complete freedom in setting policy , well at least not yet .
    And when you have every independent economists and economists like Prof Stiglitz telling you that you are wrong and indeed acting in a criminal way . You must be hiding something . Either the banks bad debts are much bigger than anybody is admitting and remember we own Anglo or they are involved in some criminal way with the banks or both .And they are trying to buy their way out of the problem .
    David thinks they have a look of disbelief over the bubble bursting and while he may actual face to face meetings with them it may be the case . But whenever I see then on TV they look nervous .
    Besides the mantra of ‘ The only show in town ? we also get ‘ Well you can’t set up a bank overnight ‘
    What about 1 year ? We are one year into this and we could have set up a new country let alone a good bank . Something is not right .
    I don’t think we are a ‘ Banana Republic ‘ Banana Republics have leaders in uniform and democratically elected leaders in prison . We are more of a ‘ Not a serious country ‘ Our government wear suits even if they are badly tailored and our opposition leaders are free to hold the government to account . They just choose not to . Have you ever seen anything as meek as Enda Kenny ?
    If some uber rich Irish American walked into Lenihans office tomorrow and handed him a suitcase with 100 Billion in it as gift to the country FF would do the very same thing over again .
    The sad thing is and its another sign that we are not a serious country is that they don’t think that they did anything wrong . They are of the firm belief that if Lehman Brothers had not have gone to the wall then everything would have been fine .
    Not only did we have one government in charge of a boom to bust cycle for 12 years we had the same leader . What was he doing this weekend with 12 % unemployment , 300,000 in negitive equity , collapsing tax revenues ? He’s in a book shop in the city centre signing copies of his autobiography after going on national TV telling everybody he wants to be President . This is not normal . The guy should be in hiding . In a Banana republic when everything goes belly up the leaders flee . In a ‘ Not a seious country ‘ the ex leader does book signings !!!
    I read somewhere once that it takes a country about 7 generations to completly get over colonial rule . I am not blaming the Brirish but really it is time we grew up as a people . We jsut can’t carry on like this .
    More people will emigrate yet again and in 30 years time there will be more TV programmes about the forgotton Irish while those left at home will suffer under this lots children .

  18. Tim

    Alan42, I agree.

    Let’s keep at it!

  19. Alan42

    If you want to see what a country looks like after it has been ransacked . Go to Russia . Its an amazing place in that there is poor people and very rich people . You don’t actually get to see the rich people as they are in blacked out Merc’s . You do get to see a lot of poor people . After a while you realise that there is not a lot of middle class people . In Moscow I picked up an English language newspaper and it had the most amazing article . 4 out of 5 parents did not want a better future for their kids than they had as it meant that for their kids to achieve a better future than their parents it would mean that they would be corrupt . I spent 2 months travelling from Moscow to Mongolia and everywhere I went it was appallng . The infastructure is in bits , apartment blocks are falling down . Young people want communism back as their parents have told them it was a fairer system . I even seen a protest with the Hammer and Sickle flag demanding a return to communism .
    Its an oil and gas rich country . But where is all the wealth ? Its in the UK buying football clubs .
    Russians have been robbed of their natural rescources and whats more they know it . Thats why they have a thinly disguised dictator in charge .

    • adamabyss

      Two excellent posts Alan42. Let’s keep at it as Tim says although what ‘it’ is I don’t know as despite all the good comments and objections on this site, no one in the so-called ‘government’ has listened up to now.

      • Alan42

        Thanks Tim and Adam . Adam I think the ‘ IT ‘ is awareness . A demand for a government that actually has the best interests of its people at heart . Some kind of sense that we employ them and want accoutability . In Ireland you have to read the articles and books of an independent economist ( no offence David ) for some kind of idea of how things could be and should be .
        With NAMA you have to go to K Whealan , M Kelly and David here for constructive criticism as the opposition have no idea of what’s happening .

  20. Tim

    Folks, “The Emergency”, on Newstalk 106-108 is bang-on. (I recommend you listen to it)

    But it is “bang-on” in more ways than you think.

    It mimics (for comedy purposes) Dev’s voice, always, addresses the “People of Ireland”.

    http://www.theemergency.ie/

    We need to address “the People of Ireland” now. The problem is that we do not seem to have a free Media, in order to do that.

    I firmly believe, that if we had a free media, “the People of Ireland” would respond, positively. People, given the TRUTH, will make good decisions.

    The problem is, in recent elections, etc., etc., the “people” have not been given the “truth”.

    The “people” have been voting on LIES.

    That is what turns the “people” into “sheople” – the lies.

    When we suspect that the Govt. is lying to us, we turn to the media for the truth; the problem then arises that the Govt controlls the media by dint of advertising revenue.

    So, the media are bought; they are in on it.

    What hope?

    I truly believe that, if we can find a true leader in Ireland, we will follow that person; If we find someone who will tell the truth and admit the truth that the last 6-or-so governments have been shafting “The people of Ireland” (maybe all of them have, since the foundation of the state, a la Yeats, September 1916), we might be able to become a mature country, instead of the obvious infant that we are.

    • Colin_in_exile

      Tim,

      “I firmly believe, that if we had a free media, “the People of Ireland” would respond, positively.” – I disagree, first of all, there are so much media choices available these days, especially online, you can access more and more information freely, and thus form your own opinion. In the print media, newspapers often house opposing columnists, e.g. Sindo (Kerrigan v Harris, Coleman v Ross), Television offers viewers choices (Primetime v Vincent Browne), Radio offers different slants (Hook v Drivetime) and there more internet blogs than you can shake a stick at.

      The problem is first and foremost with the mentality of most Irish people. Peer pressure is enormous, it should be dealt with at secondary school but the points race takes precedence. One-upmanship is lauded and cunning is often richly rewarding (just ask our friend Bart Ahern). People need to break free of the herd, think for themselves and face consequences of their actions, something which the heads of banks still can’t achieve.

      • Deco

        Colin, I was reading your post and the Bruce Springsteen number
        “57 channels, and there’s nothing on” started to play in the back of my mind.

        Without Vincent Browne, Gene Kerrigan, Shane Ross, and the Right Hook, we would be lost. But they are in mainstream, but do not represent mainstream.

        Concerning the internet blogs – some of them – like this one are very good. But an awful lot of them constitute pointless rambling, and expression of dismay, rather than analysis of how to resolve it.

        Problem is that there is a large proportion of the population that just wants to be kept in a state of illusion that everything is fine, that the authorities are in control of matters, and that nonsense is what the news should be based upon. And this section of the population think that RTE are there to tell you the truth, and not a politicised institution answering to it’s master.

        Apart from that Tony O’Reilly was biased in favour of Ahern for years. Denis O’Brien is a close pal of Ahern but has always been FG. And the Irish Times is an establishment organization that prefers to back the IBEC/ISEQ crooks in it’s postive bias economic coverage, and endorsing the ILP in it’s political coverage. (Let us not forget that the IT had Dan McLaughlin writing articles about the Irish economy, once per week, for the entire duration of the boom).

        The greatest source of information of all is the rumour mill.

      • Dilly

        Tim,

        When I was in school you would get into trouble for asking “why”. By the time people left school they were condition to not ask questions. We have many media outlets, available to get real information, but, most people are conditioned to follow the herd and not question anything.

        • Colin_in_exile

          Dilly,

          Yes, most teachers at my school didn’t like to have to work harder by answering inquisitive questions, but we can’t lay the blame for this at Tim’s door. The culture in my school was that if you didn’t understand something, you asked the guy next to you in a whisper. That was acceptable. When you asked the teacher a question, you were afraid that first of all, others will think it was a silly question and laugh at you, or if it proved to be a very articulate question, the others would think you were showing off or looking for attention.

          The attitude is carried into 3rd level too. I remember I was in a final year lecture, the lecturer touched on global warming, and I asked to raise a point, and spoke about how we’ve had global warming about 2000 years ago when Romans were occupying Britain and growing vineyards in Kent, some people looked to me with disbelief akin to an attack on their green credo, but the lecturer acknowledged my point, and commented that many top scientists still remain unconvinced about man made global warming in these times. We don’t get to hear about these scientists very much because their views are almost deemed heretical by the mainstream.

          • Tim

            Colin_in_exile, you are correct on a number of levels:

            1) Teaching/teachers are very different from when I was at school (I was there when corporal punishment was acceptable and I witnessed the change when it was outlawed – I actually felt sorry for some of my own teachers when they could no longer use violence to control their class).

            2) Teaching/Teachers are VERY different, now, than the memory that most people over 40 years of age have of their own experience.

            3) I met my school classmates three weeks ago for a 25-year reunion of my Leaving Cert class of 1984 (we started 1st year in 1979, so 30 years in a sense). Some have had much hardship in the last 25 years (Divorce, financial difficulties, some are dead, one had to bury his 4 year old son); some are “developers”,(struggling) some are engineers and still doing well. But one of them said to me “I felt really threatened by you on our third day in first year, because you said something to Mr. D. our English teacher, and you used the word “co-incindence” and I thought, uh-oh…. this guy is a threat to me.”

            We laughed. Immaturity has poor perspective.

  21. Tim

    O secind thoughts, maybe I should have said”Yeats, “September 1913″;

    Of course, 1916 was the apology (and it was Easter).

    Ooops!

  22. Ruairi

    David,

    what happened to Leinster? left me with a big Munster face on me!!

  23. Tull McAdoo

    “Old Moores Almanac” that’s all ye need to consult,or so the Bull Donoghue told me last week ,when he came into my pub.”When I saw the dry spell coming up,and was sure of getting home the last of the turf,I gave Gilmore the nod to ask His question” he said…. “We’ll be seeing more of ya round the Kingdom then Bull”…. Kate Ann is delighted ,Her poor hands were destroyed carrying in turf every evening,with me away on official buisness. “How about this Nama Bull” I asked. ” there’ll be nothing left to chance this time Seaneen.I was in the Dept. of Finance last week and the place is full of catalogues of new cement mixers,shovels,wheelbarrows and the like” “we have changed our main suppliers to ECB from them feckin Lehman brothers,jaaz them feckers nearly closed us the last time”. Cowen asked Me to check “the almanac” for a good dry spell in the new year.I told him leave it till after paddies day,when all the crew comes back from abroad.Anyway I told him ” you know how contrary the boys get when Coughlan is’nt making the tae”.There ye have it straight from the Bull’s mouth.

  24. Philosophically speaking when did it all start ……..that got us to here .Was it any of the following:
    Eucharistic Congress
    Second Vatican Council
    Women at Work
    Free Education
    End of Corporal Punishment
    Pop Music
    Mini Skirts
    TV
    Pope John Paul
    Ryanair
    Bankers
    Ml O’ Leary
    Mobile Phones
    More Bankers
    Prancing Ml. O Leary
    Lots More Bankers
    Bankers/Gangsters
    Bankers/ Gangsters with Mobile Phones
    Gangsters who thought they were Bankers with Mobile Phones

    Who/What is the next morph?

  25. liam

    http://www.ft.com/cms/s/0/6f4d1236-b51a-11de-8b17-00144feab49a.html

    A debt for equity swap with a property developer, for a property portfolio not covered by the NAMA legislation… in a nationalised bank (it seems somebody is listening).

    Note that Pat Gunne is a shareholder in Tysan Investments, an ANIB nominee company (in theory it holds the shares of the bank’s shareholders, but its practically a phantom: its has no employees, just two directors, who are also on the boards of other ANIB companies, a secretary and a list of 11 shareholders), is also MD of Green Investments, to whom this portfolio was sold. Draw your own conclusions. Just in case, you forgot, all of this is going on in a company YOU own.

  26. Tim

    Liam, absolutely spot-on! (I was just about to post those links; saw your contribution on gavinsblog ;-)

    I hope that people will read those links and see the connections. “Nama is highway robbery”, but it appears the robbery has been going on for a long time; I wonder what the revenue commissioners think of it all, or if they have been instructed to ignore it?

    This is relevant to my ealier post, about the Irish people being unable to make good decisions without knowing the facts. There is and has been alot of hoodwinking going on (hoodwinking is the “mask” , Dick Turpin would use today, wills). Members of government are Irish people too; I wonder how much of this Lenihan really knew about in September ’08? Was the government hoodwinked by these people?

    We are all being hoodwinked now, anyway, by the banks and the govt.

    Take a look at Michael Taft’s review of today’s ESRI report:

    http://www.progressive-economy.ie/2009/10/deficit-rising.html

    Basically, it could be interpreted to mean than all of the cuts in spending have, simply, made matters worse and that the government’s plan has failed.

    Many of us have been shouting “Stop!” for a long time and it is not working. The ESRI report spin in mainstream media is that the govt strategy is the right one.

    What are we all doing wrong, including DMcW and the 46 academic economists, that the banging of our collective drum is not being heard?

  27. Deco

    http://www.examiner.com/x-6012-State-of-the-World-Examiner~y2009m10d12-Banks-brace-for-Latvias-collapse?cid=examiner-email

    Not this is ‘educational’. Basically Sweden’s finance minister is saying “Houston we have a problem” and the problem is that Latvia is about to default on it’s loans and leave the Swedish banking system picking up the pieces. So the Swedish government is basically saying that the Latvian government is letting Sweden down, by not making the Latvian taxpayer pay for the mistakes of Latvian banks and Swedish banks.

    And I am wondering – isn’t Lenehin the type of Minister for Finance that the Swedes would love to have running the Latvian Finance Ministry ??

    Any thoughts on the similarities ?

    • AndrewGMooney

      Compare and contrast:

      Britain & Iceland: ‘free’ floating currencies determined by ‘the market [in Britain's case: LOL!]

      Iceland was expendable, an example to the rest of the world. Now finally resisting the descent into debt bondage.

      The Brits, if pushed, would just go fc-uk you! to the World. Renege on the debts. Just read David Cameron’s conference speech. WW1 Debt still outstanding.*rollseyes*

      Ireland: Has to be kept afloat as it’s key to American strategic interests viz: EU/Eurozone trade. FDI will continue at a corporatocratic level but don’t expect too many jobs. Germany and the rest of the balanced budget fanatics will crucify Ireland via NAMA. Again, like Iceland: A small country which can be ‘made an example of’.

      Having been shafted by ‘The Brits’ for centuries, it looks to me as if Paddy is now about to be ‘shot by both sides’ from it’s old friend America which will have to ‘do something’ about ex-pat corporate tax havens, and Germany has shown it’s cards about what it really envisages for ‘Europa’.
      Spit-roasted. Toast. Unless NAMA is stopped in its’ tracks.
      Regards
      ‘Mad’ ‘Paddy’: From Brum
      20:12 20/12 2012
      lyrical-satirical-surrealist-art-terrorist-memeticist-cultural engineer, etc, etc.
      Latvia: Strangulated by the Lat which is pegged to the Euro in the same way as a vampire is pegged to the coffin floor by a sharp wooden stake.

  28. MaxKeiser

    John O’D speech today is really just proof (if proof were needed) of the utterly weak & out of touch leadership Cowen provides.

    There’s just no way that man should have been allowed to grandstand today (after being fired).

    The fact he was allowed to, just evidences a total lack of respect for the Irish People.

    It was another distraction play on the whole Expenses issue — where the real issue is:

    There are simply far too many TDs

  29. Malcolm McClure

    According to the FT today, the ESRI says that even after €4 billions of savings proposed for November’s budget, the government still will have a deficit of 12.9% of GDP.
    http://www.ft.com/cms/s/0/4ea26132-b7ca-11de-8ca9-00144feab49a.html
    That is more than 4 times what is allowed under ECB rules.
    How far can Lenihan bend the rules of this game of Liar Poker before they tell him to put up or shut up.

  30. Colin_in_exile

    Some people were wondering where Brian Lucey has been recently, well, it seems like he paid a visit to planet Bertie.

    His response to FO’T today is “I am sorry Fintan, but for no other reason but common sense I support an amended version of NAMA. ”

    http://www.irishtimes.com/newspaper/opinion/2009/1013/1224256508922.html

    • Alan42

      Colin , read the piece again .

      • Colin_in_exile

        I see Alan, he was quoting Gogarty, the IT blog is confusing, with two lines of text, then a gap with profile info on left, then main body of text.

        I’m relieved…..phew…..thought he was selling out, hope he keeps at “it”.

        Greens will have 0 seats in next election after their shenanigans at the weekend. I’ll put my money where my mouth is on this one. Gogarty is ……i’m trying hard to keep this civil, he’s just a gombeen.

        • Alan42

          I like B Lucey and K Whealan . I don’t know much about them and don’t really know what they are talking about most of the time . But they have full time jobs and are not journalists . Yet they just seem to get attacked and dismissed all of the time just for speaking out on something they think is wrong .
          Its just mad the Greens debating economics with 2 Professors of economics and finance .
          I told you the Greens like to meet up . Look at Gormley taking the ferry to Holyhead just so he would look good at a climate change conference . Bet he did not mention the limo . We expect these guys to save the economy ?

          • Tim

            Alan42, you are right to like them. Just look at the like of “Independent economist, with Friends First” (Jim Power), who gets rolled-out in the media all the time: he bats for the financial sector (of course he does; they pay him, just like all the guys who lied between 2006 and Sept. 2008 telling us “The Fundamentals are Sound”).

            How can the media introduce an economist/commentator as “independent” when their large salary is paid by the banking/insurance industry?

            Duplicity, lies and spin.

            See Alan Ahearne’s flip-flop on NAMA, since Brian Lenihan Hired him?

            Deco, have you formulated an answer to that old question of mine, yet? I would love to read your thoughts on the matter.

  31. Alan42

    David , Maybe some kind of article on how you see the Irish economy in 5 or 10 years time ?

  32. Tim

    Folks, some posters have been asking gquinn about numbers: the corporate (non-banking) debt in Ireland is over €1.67 Trillion.

    No-one is talking about it.

    gquinn is correct.

    • paddythepig

      Tim,

      I was hoping for a more comprehensive proof than this. Merely citing a figure like this is not enough. It needs to be broken down further, institution by institution, loan category by loan category, to give an idea of what potential bad debts could arise, and to whom they will apply.

      If anyone can throw light on the original assertion by gquinn, please post the evidence.

      As you say, let’s talk about it.

      Paddy

  33. Tim

    David, you know that the Chinese will never close-down on the USA debt. The Rich Chinese will screw their own 1.5 billion people so that they can remain rich – just like Ireland.

    Time to call “a spade a spade”?

    One “coup d’etate” happened last September.

    It is time for another one.

  34. Tim

    Folks, so…. we are back (one year later) to Philip’s suggestion of supporting our communities.

    “Grow your own vegetables” – forget the economic forces. They are defunct; they have failed.

    Survive.

    • Josey

      seems as much Tim.

      Just occured to be but seeing as NAMA is a given….so anyone ( joe soap that is ) who’s in debt to these banks should stop paying repayments as soon as NAMA goes through.

      And if your bank manager gets frisky for the mula back just say “oh I paid you last month via NAMA”

      Hey it could be good if it worked.

      Is this just me being niave?

  35. oe1

    My guess is that without NAMA the ECB would have told Ireland to sling its hook. Either devalue or get out of the Euro. Joachin Almunia of the ECB was more or less giving the message last week. The EU would devalue the farm payments as a penalty. I dont think the Multinationals would be happy dealing with this kind of carry on, but who knows, as they are a law unto themselves.

    I think the greens are using NAMA to push through banking reform and Ryan is more in favour of the smaller enterprise than the rest of them who come from established meritocracies. At least he can feel peoples pain. If they can reform the banks I wonder can they get rid of the incompetant hierarchy and penalise their pensions based on their record of loan impairments. Then there might be some sort of justice. Also public servants who have been in collusion on the property scam or even profited should have their wages penalised too.

    Am an engineer and can be optimistic to my own detriment but believe there is plenty of work to be done if we only had the money. I wouldnt alienate the one good bank that we have, i.e. ECB, who recently provided money for the interconnector for no obvious alternative. Unless Tom Roche in NTR would step in again that is.

  36. Tull McAdoo

    Just won a tenner off one of the o’malley’s tonight. I bet “the bull” would’nt make it back from Dublin by official closing time, now that He’s under his own steam so to speak, for his usual 2pints and a half-one.
    Bloomberg Donovan was in tonight. He got that name since He got the Sattelite dish, and now spends his time watching Bloomberg in between the horse racing. “how is things on Wall St.” one of the Clancy’s asked, just to rise Him, knowing well Donovan worked as an illegal for years as a sweeper on Wall St.(that’s where he got the money for the biteen of land). “ the fundamentals are not sound he say’s but the recovery in stocks are being led by what they call the technicals”….”just to explain that to ye gobshites he say’s, it’s a bit like this”. It’s a bit like building one of them timber- framed houses, when the frame arrives on the site before you have the foundation dug out. Now from a distance people can see the frame standing there, plain as daylight on the landscape, and think great progress is being made, but the truth is the frame is in the way of the diggers getting ready for the foundation. What it all means is the frame will have to be shifted , causing more expense. To put that in Bloomberg speak “ we could get a double dip recession”….” What eejit put the frame there ,asked Clancy just to keep it going” ….” That would have been the Chinese” say’s Donovan, without batting an eyelid, finished His pint and left.
    Hang onn there I here a knock on the window, jaaz I bet ye that’s “the bull” , jaaz He’s still well able to shift that Merc on bad roads. I may go and let Him in. L8R as the young ones say’s.

  37. Ladies and Gentlemen,
    Dear David,

    Good evening. First, allow me to express gratitude for the work and efforts put into the program aired currently, Addicted to Money, of which I just finished to see the second part. I am somewhat amazed that RTE is broadcasting it to be honest, I would not have been astonished to have it served with a gag order instead.

    Second, allow me to freely brainstorm for a second.

    We live in times where 250 people sign for a cash networth of 1,547 Trillion USD. This is certainly more than the combined GDP of the 40 poorest countries on the planet, representing how many people?

    These 1,547 Trillion is a figure extracted from the wellknown Forbes list, I just ran the numbers through a spreadsheet for the first 250 people in the worlds richest.

    Yes, Prof. Stiglitz has always been known to call a spade a spade, and he has not lost this drive so far, fortunately.

    We live with the potlicial reality of a government, whereby the party of the Minister for Health is not existing anymore, The Greens were slaughtered in local elections, but nevertheless they are responsible for the decision on NAMA. Opposition is weak, if existing at all, hence, I intend to call this a 1-Tier political system.

    Regardless who I spoke with throughout Europe, the overwhelming majority of people expressed hope that Ireland votes NO again. We did not.

    I witnessed the construction of the IT bubble and predicted its bursting as far back as 1996. Except a handfull of well educated colleagues, only a few agreed that this engine will go up in smoke in no time at all.

    The irish economy and political system is nothing unique, but rather funny to observe. Funny because in other countries people are trying to hide corruption and cronyism, not so here, and it usually takes a lot for someone to take responsibility and resign, a helluva lot!

    The CEO of FAS threatened legal action against the government, and to avoid this, our Donegal Lady in charge saw fit to sign juicy deal instead, how convinient.

    We witness the tips of many icebergs, and they are indicators for the cronyism and dysfunctional political system underneath.

    At the same time we allow the very people that have caused this economical millenium disaster to stay in power and tell us to tighten our belts, and more, we expect them to steer us into less turbulent waters and clear of the depression at hand.

    I usually can see humor in nearly every situation, but not here anymore. This is insane in my understanding.

    The very people who now claim to not have seen it coming, who really believes them theses days? I have seen it coming, as so many others, and it was totally avoidable.

    They throw up one smoke screen after the next and bombard us with distraction after distraction, a political game well known.

    In the meantime tracks are covered. Do you remember the PR stunt of police raiding the offices of Ango Irish? More than 12 weeks after the collaps they pulled that stunt, giving them all the time to dstroy ecvidence, cover tracks and so on. But well, they were raided and documents as well as computers confiscated. This was in February 2009, and eight months later, absolut nada has been published. Talk about a gag order!

    The german manager magazine, a somewhat very conservative publication, just nailed it in my view, when they called this financial crisis “The Biggest Heist In History”, and they were dead right on that.

    NAMA is the continuation of this Heist on irish soil, and I would propose a referendum on this issue to be put foward to the irish people to decide on, and not to allow this to be the decisioon of a handfull of greens that would not surrvive a general election if it were to take place tomorrow. Not a single green would keep his/her seat, this much I am certain of.

    But, all this, and so much more, has to be taken with a big shovel of salt, and I am somewhat confident that David’s third part with exactly adress that. The real challanges to come, and they are not far away from our door are much more daunting, this financial crisis may well appear like kindergarden compared to what we have to deal with.

    I am sure, they did not see coming either. Only, that we have this published in excellent detials since 29 years, the year 1980, when Gerald O. Barney directed the GLOBAL 2000 report comissiond by the Carter Administration.

    Then again, how could we really assume that the people we elected to represent us would know about such, they did not see the financial melt down coming, although they participated in it for more than a decade.

    NAMA as such is a deeply unethical proposal, more than likely forced upon us against the will of the clear majority of the people of Ireland as far as I can see.

    The cover up of Anglo irish speaks volumes about the governments intentions for our and our childrens future, a future that lasts for them only until 2012, if they will be allowed to stay in power that long. Undoubtedly, after 2012 a lot of them will “resign”, and in deed I would suggest this to become the word of the year 2009. – Resign -

    What the gentlemen “above me” (Josey) me stated about stopping repayments. Well, while I would not suggest the same, there is some truth in it for sure.

    We are taught to be powerless and used to eat what is dished up, but we are not. Civil Courage may be needed more than ever to stand up against what is unjust. This is about the future of our children and generations to come, if you are my age that is, and one day in the not so far future, I can hear them asking….”Why did you not do anything about it?”, and they would be right to ask this in deed.

    David is right to say that when the wall broke down in Germany, that this was the start of the fall of capitalism as we know it as well, on that very day I was in Berlin at a management meeting, I remember it like yesterday, and it was exactly what I saw coming. A poltical right wing shift throughout Europe, and a last “let’s cream it now” of predator capitalists.

    Thanks for the investigation David, I am sure you would have loved to dig much deeper, then again, anyone with a head screwed on can paint the full picture with the fast facts at hand.

    It is a crips night in Donegal and I can smell the turf fires outside. Somehwere in Ireland today, another family got a letter about their house being in danger to be repossessed if they do not cough up now.

    It is a disgrace beyond comprehension.

    Stay safe!
    Peace!

    “^..^”
    Bear

  38. Bear in Mind :

    We are ALL – Lepracauns

  39. Malcolm McClure

    I’ve posted repeatedly to the Farming blog but nothing appears. What’s up?

    • Malcolm McClure

      Useful information: It seems that the site blocked my post to the farming blog because I had linked to the GIEF forum report via an RTE news link. When I linked directly to the foreign affairs website the piece loaded with no problem.
      Ergo: the site doesn’t like RTE news links for some reason.

  40. ….same happened to me in another thread, I posted something and it never appeared. This is porbably down to the wordpress installation/service provided for the blog.

  41. I am with the professor on this on here is my probably simplistic thinking on NAMA – If a house was worth 500,000 at the peak of the boom and is now worth 300 how much has it fallen in price by = 40% If it grows in value by 40% what will it be worth = 420,000, to get back to its original worth it has to grow by 66%. So why do the Government think that property prices are actually going to grow stronger than they did in the boom time — answer — they won’t! Although Far Eastern equity markets have done this, and I think a lot of the growth has come from speculation and cash investment.
    Is the Irish property market going to enjoy the same level of investor confidence as say Far Eastern stock markets to fuel this kind of growth again. There is only one answer to this question. If the Government had borrowed 54 billion and invested it in China I would be happier!

    Here is another issue we are told our banks are going to be more responsible and lend more cautiously So here is a simple scenario boom time breakfast roll man earned 50K, he borrowed 300 (yes six times his salary) to buy a modest 3 bedroom semi in Navan, 50k of this loan went on stamp duty, solicitors fees and furniture (ie down the plughole), his house is now worth 150k and his mate on the building site now wants to buy next door at this bargain basement price, but he is only earning 30k now (in fact they both are as they are on short time and being laid off one week and working alternate weeks). The bank being prudent will now only lend this guy 1 and half times his salary like in the good old days, so he simply cannot afford the house even at this “bargain basement” price.

    The guy two doors down works in the public sector but on 50k a year and with public sector pay freezes and potential cuts and more pension levies he can now only borrow 75K although the bank may lend him twice his salary as his job is much more secure than Breakfast roll man, so tops he can now borrow 100k. Still not enough to buy even at the new prices.

    So, in a world of wages going down or at best being frozen, stupid irresponsible loans no longer on the agenda, and a deflationary economy where oh where are these imaginary property price increases coming from? Search me? I just don’t gettit.

  42. jkforde

    Why are they smugly and confidently getting away with this? Why aren’t we out on the streets revolting!?

    Because the same drugs that got us into this are preventing us from seeing the scam and revolting against it, a truly amazing arms-free coup against a totally subdued mass… stupefied by oil and it’s financial and media tentacles.

    Television, drug of the nation, breeding ignorance and feeding radiation.

    Inaction is a weapon of mass destruction.

    WAAAKE UUUUUP, WAAAKE UUUUUP, WAAAKE UUUUUP, WAAAKE UUUUUP, WAKE UP!

    Oh, some other recommended watching…
    The Corporation (on DVD and YT)

  43. jkforde

    How about a new ‘Comhar Party’ based on the economic principles of Feasta and Comhar with Richard Douthwaite as Finance Minister; let’s stick it to Colm McCarthy and his neoliberalist cohort who are frustratingly and ignorantly out of touch and step.

    BUT we as Irish patriotic individuals have to stand up and be counted in regard to resisting dishonest or unsustainable or corrupt practices in this country.

    Our regard and national respect for the ‘cute hoor’, for the fella who skives off work, or just general intellectual laziness is sad and immature. Populism will not save us.

    In essence it’s time for us as a people to grow up and to start to value moral values and not just the ‘cost’ of everything.

    Sadly, this badly needed maturation won’t be voluntary as we reap what we and previous generations have sown….

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