December 22, 2010
Tonight I am heading to see ‘Scrooge’ at the Grand Canal Theatre. I have to reveal an interest and not a little bit of fatherly pride as my daughter plays one of the children.
She has been excited all month by this and of course, the whole family now know all the words and all the chorus lines.
The whole thing prompted me to re-read Dickens’ ‘A Christmas Carol’.
“Marley was dead: to begin with. There is no doubt whatever about that. The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner. Scrooge signed it: and Scrooge’s name was good upon ‘Change, for anything he chose to put his hand to. Old Marley was as dead as a door-nail.”
While watching moral bankruptcy unfold on Monday’s ‘Prime Time’, I considered that Dickens’ opener could be changed to suit our situation.
“Morality was dead: to begin with. There is no doubt whatever about that. The register of its death was signed by the developer, the solicitor, the banker and the regulator. Cowen signed it himself. Old Morality was dead as a door-nail.”
Moral bankruptcy is not something that can be measured by an accountant. It is not something that can be decided by a court. It can be measured by holding a mirror up to the actions of the people who caused the financial crisis and asking two simple questions. Is this right? And — is this fair?
The obvious answer to both questions is no, and this reflects the moral bankruptcy of our legislature, who would rather cut blind people’s pensions and carers’ allowances, than see their friends in trouble.
Let’s consider NAMA.
NAMA was introduced to prevent the losses in the property market being realised by the banks although they deserve to carry these losses as a result of their reckless lending. The underlying logic of this disgrace was that the government wanted to keep the banks in private hands. Therefore, the losses had to be shouldered by the people so that the banks could be recapitalised by private investors. So moral bankruptcy is the very foundation stone of NAMA because NAMA was constructed to give the people the bill for the banks’ property fiasco, in order to give all the upside to private investors.
However, as predicted by this column, this has not worked and the private investors, conscious of the huge losses in the banks and the likelihood of more property and housing defaults, have run a mile from the likes of AIB.
So AIB, along with Anglo and INBS, are nationalised. But if the banks are nationalised, the (morally bankrupt) raison d’etre for NAMA disappears because nationalised banks don’t need to pretend that they are privately viable anymore because the losses are on the balance sheet. We don’t need another layer of bureaucracy, when you have just nationalised banks. So why not wind down NAMA? Or at least the part of NAMA that pertains to AIB, Anglo and INBS.
This is not an insubstantial figure. NAMA figures as of end September by bank are available in the following publication: (http://bit.ly/d5e7oL).
On page 19 we see the breakdown of NAMA subsidy to the delinquent banks. The AIB total is â‚¬23bn, Anglo’s is â‚¬36bn and INBS’s is â‚¬9bn. To that you can add about another â‚¬8bn to AIB as yesterday’s NAMA statement included an extra â‚¬16bn from AIB and BOI, but refused to give a breakdown.
But the reason NAMA won’t be closed down has less to do with economics and finance and more to do with the fact that when you unravel NAMA, you see it for what it is: a rescue scheme for the professional classes. There are over â‚¬2bn set aside for professional fees in NAMA. There are over 70 firms of solicitors on the payroll of NAMA — and you are paying for all this.
So a small clique of insiders is benefiting from this and you, the “outsider”, pays for it. Indeed, so certain of their position are they, that they don’t care about even offering the slightest semblance of morality. Like the banks, which have lied and lied and lied again, the professional insiders are giving the two fingers to us — the people who pay their wages.
Take the case of Foy solicitors which was raised in the ‘Prime Time’ programme. Foy is one of the many solicitors that have been contracted by NAMA for the provision of legal services in relation to the acquisition of bank assets by NAMA. But as we learned on Monday night, they are also helping developers move assets out of the reach of NAMA. All of this is, of course, completely legal but, it must be asked, how it can be allowed to happen.
Of course, the moral bankruptcy extends way beyond all this. Yesterday, the European Commission approved the latest bailout of Anglo, Irish Nationwide and AIB. (See press release here: http://bit.ly/hNouMa). The bigwigs in Brussels have decided that it is acceptable for the Irish taxpayer to continue to pour money into the black hole on St Stephen’s Green. In case you missed it, this line from the statement means we are giving further guarantees to Anglo: “Anglo Irish Bank will furthermore receive a guarantee covering certain off-balance sheet liabilities (derivatives, clearing transactions and transactional arrangements) that will ensure that Anglo Irish Bank can continue its daily activities as a going concern.”
Note 16 of Anglo’s 2010 interim report puts the notional value of that bank’s derivative positions at â‚¬184.77bn.
While it is highly unlikely that the derivative bill from Anglo will be close to that figure, the fact that we are now going to guarantee Anglo’s off-balance sheet items is madness in the extreme.
The Irish guarantee is incredible already. What was a last-gasp bluff over two years ago, allowing us the space to sort out our banks, has now become a debt-sentence — and it didn’t have to be like this.
This latest addition is insane.
Not so long ago a government minister accused me of suggesting that the government’s behaviour was treason. Maybe her description is now accurate. To go along with an EU-devised scheme to foist the debt of the trading book of Anglo on the people is treasonous.
To do it now, when they are in their last days in power and with a poll support rate of just above 10pc is pathetic.
Whatever new government comes in should rip up this deal because, the second part of the sentence from the commission is even more infuriating. It is talking about keeping Anglo going as ‘a going concern’. Do these people have any grasp of reality at all? Anglo only opens its doors in the morning because of the billions of taxpayers’ money pumped into it.
To call it ‘a going concern’ is a complete mis-statement of facts.
The problem for Ireland, caused by the moral bankruptcy of the insiders, is that very soon, our country may no longer be able to continue as ‘a going concern’.