Last year I remember watching the ‘Who Do You Think You Are?’ programme on RTE featuring the eminently likeable Simon Delaney. The unfolding story of his grandfather in the First World War was extraordinary. Using records from the Guinness brewery, an odd mention of the British Legion in a newspaper and British military records, Delaney pieced together the drama of a young Dublin man caught up in the madness of the western front.

Using records from the Guinness brewery, an odd mention of the British Legion in a newspaper and British military records, Delaney pieced together the drama of a young Dublin man caught up in the madness of the western front.

Delaney’s family story is similar to that of thousands of other families whose grandfathers fought in the Great War only to be ostracised when they came home. It was therefore right that President McAleese paid homage to the fallen Irish dead at Gallipoli in Turkey last week.

However, the thing that captured my imagination in Delaney’s story was not the greater significance of history being written and rewritten, but the small details. Small details such as the fact that in four years of war, and after millions had been slaughtered, Delaney’s grandfather found himself in 1918 more or less where he had started in 1914. This pathetic return for so much carnage reinforces again just how appalling the tactics of the generals were.

The wonderfully vivid but tragic expression attributed to the German high command during the war that the British generals were “donkeys commanding lions” certainly rings true when you look at the military record. Now I’m no expert on wars and military strategy (I will leave it to my colleague Kevin Myers), but it seems that the Germans were full of admiration for the bravery and tenacity of the average British and Irish soldier, but were thankful that the higher up you went in the British army, the more stupid the people became. “Asses” was how a German general described the British top brass.

But it appears that history is full of these examples and it is often noted that generals have a tendency to “fight the last war”. I suppose that this is only natural: after all, most of us are only the sum of our experiences, so we learn life-lessons from old scraps and skirmishes and we apply them to the next challenge. But sometimes we are faced with a totally new situation where the old rules don’t apply and simply sticking to what might have worked in the past only makes things worse.

For example, in the First World War, the generals’ game plan had not kept up with their own technology and they committed millions of men to trench warfare which led to mass slaughter. As soon as the armies got bogged down, advanced artillery meant that they got stuck, each negating the other. The generals’ response to this was to feed more and more lives into the grinder. Rather than change tactics, they presided over mass, senseless murder.

Here is a great example of where “fighting the last war” caused enormous damage to an entire generation.

But the phenomenon of those with responsibility and power fighting outdated wars extends into the world of business, finance and economics. The mundane world is full of examples where pride, vanity and an unwillingness to see that the ground has shifted leave once powerful companies and countries languishing, while new competitors seize the opportunities. We see many examples where ideology and dogma dictate the response to a crisis and the authority of a hugely powerful institution evaporates because it is unwilling to change in the face of new challenges.

The Catholic Church in Ireland is a good example of this. The cardinals and bishops, like the First World War generals, thought they could do what they have always done and the problems would go away. But the world had changed.

So it is easy to see how entrenched ideology and an unwillingness to reassess the problem you are dealing with affects both your starting and, ultimately, your finishing point. Now, with that in mind, consider NAMA.

On Monday, on ‘The Last Word’ radio programme I suggested the alternative to NAMA which is to simply get the creditors of the banks in a room and tell them we can’t pay all the money back and even if we could, we shouldn’t because the game has changed and keeping the banks afloat will not get Ireland out of recession.

Unlike the First World War generals, we need to admit that the old rules don’t apply any more and thus, we need a totally new game plan, not an intensified version of the old plan, which will only cause more unnecessary misery.

The presenter Matt Cooper responded by asking me the very logical question: “Do you think that there is so much political capital sunk into the NAMA project that they will not change it now, even if other plans might be better?” Fair question, until you think of the idea “political capital”. Political capital is all about prestige, vanity and sunk costs. It is a meaningless concept, but one which causes the establishment to “fight the last war”.

Political capital is therefore not an asset, but a liability that weighs us down and prevents us from changing. Like the soldiers in the trenches, we the taxpayers are being asked to go over the top based on blind faith in an establishment that tells us there is no alternative — when there patently is.

The alternative is the old fashioned rules of capitalism, which reward success and punish failure. So when a business fails like AIB is failing, the assets are sold and the thing is closed down. The creditors take whatever they are given. In the case of bank failures, the state guarantees depositors’ funds under a deposit insurance scheme and we start again.

Sure, Irish prestige is dented and our status is affected because some might say, “advanced countries don’t behave like this”. But the damage is already done — not by what we do now but by what we did over the past few years.

Now think of the Government’s latest hare-brained move announced last night, which will see us owning the banks, which are the problem not the solution. It is difficult not to see that NAMA has become an article of faith and ideology. It is the “last war” scenario.

We know that the facts on the ground have changed dramatically. When NAMA was announced, the idea that we the taxpayers might cough up a bridging loan for the banks’ property portfolio was based on the notion that the property portfolio was damaged but still worth something.

That’s when we were reassured that the cost to us would be capped by discounts of 30pc. Now, with yesterday’s announcement, we know the cost will soar as the “assets” are discounted by 50pc. And there is worse to come because, according to NAMA, 43pc of the loans to be transferred to it are ‘land’ (ie green fields and land less than 30pc developed) yet only 23pc of yesterday’s figures are ‘land’ — meaning the news on this front will get worse. Based on the estimates we will shovel billions of euro into the banks to keep them open.

We have also been informed that €8.3bn will be transferred to Anglo now. Additional support will be required to the tune of €10bn. So that is an extra €18.3bn for Anglo alone. AIB will need another €7.4bn to keep it open. Irish Nationwide will need another €2.6bn and Bank of Ireland will receive €2.7bn from us, the taxpayer. But these figures have been calculated by people who have constantly underestimated the scale of the problem, so why trust them now?

NAMA and throwing money at our banking system is the financial equivalent of trench warfare, billions will be wasted and we will be left with the bizarre situation where even the winner loses.