Last Thursday, the share price of Bank of Ireland rose by 10 per cent following the announcement by the Green Party that it had secured amendments to the Nama bill, which might allow the party to support it.
The shares rose again by 9per cent last Friday. What other evidence do we need that this travesty will result in a direct transfer of wealth from the taxpayers of Ireland to the shareholders of the Bank of Ireland?
The financial markets are telling us exactly what is happening. The taxpayer will bail out the shareholders of our big banks who would have been wiped out if it weren’t for Nama. Why should a democratic government broker a deal which bails out stockholders and unsecured bond holders, both of whom have no right to be treated with such generosity?
Your guess is as good as mine. The markets realise that Nama is going to pay over the odds for the loans and then through a rather clumsy use of the ECB’s discount window, the banks get financed.
My fear is not what has already been said about the transfer of wealth from us to them, but the extent of it.
Now that the banks realise that they don’t have to worry about the bad loans they made in their relentless pursuit of profit, where will they stop? What is to stop them putting every bad loan into Nama?
In fact, how can we be sure that, in future, the banks will not use Nama as a large skip for their bad loans, from today’s developer loans to defaults on mortgages, car loans, credit cards and kitchen extension loans? Why wouldn’t they?
Every time they repackage and roll up their ‘‘across the board’’ defaults into one large digestible block, they will simply drop it into Nama and – guess what? – their share price will rise again. Because the new bank bosses, like the old bank bosses, will be paid bonuses related to the share price of their companies, they will have a personal and institutional incentive to continue hurling their rubbish into the skip.
So the banks have engineered yet another one-way bet. In the boom, there was the ‘‘property can only go up’’ bet. They borrowed all they could from other European banks, safe in the knowledge that they were becoming ‘‘too big to fail’’ but were assured that they would never be ‘‘too big to bail’’. The reason they were assured of this is that is how Ireland works.
We use our bond market not as an innovative way to finance development, but as a tip where we hide the mistakes of the present and lumber the next generation with the bill. This is what we are now doing and it is despicable.
And who will be the real beneficiaries of all this? Some Canadian bank or other foreign bank? Foreign banks will come in and buy our banking system when the Irish taxpayer has absorbed all of the mistakes of the past five years. They will get banks in a first world country at third world prices, with the added insurance that all the debts have been taken off their books by a pliant and shell-shocked population.
And do you know who will make sure this happens? The very investment banks which are advising the government now. The investment banks make their fees on arranging deals and they will lead the government up the Nama garden path with both eyes firmly on their exit strategy of a sale to some other investment bank.
Then what will happen is the old banks will charge way over the odds for banking in Ireland, so that they can pay the state back the levy the state imposes on them at the end. But who pays the banking levy?
We do – the poor bloody customers. So we will get taxed twice. We will get taxed on the proportion of the Nama rubbish which is tossed onto the national debt and we’ll be taxed again to pay for the levy. That’s if we get that far before a public debt crisis in Ireland.
The Carroll decision in the High Court last week will be important because the Dutch farmers’ bank that owns ACC may yet decide to opt for a fire sale of some assets in Ireland. The reason they will do this is (a) to get out of Ireland as quickly as possible and (b) to preserve their AAA status and not risk contamination from their association with Ireland.
Any sale will prove that the mantra ‘‘there is no market’’ is a lie. There is a market; it is just a very cheap one. This will give us an idea of the extent of the overpayment and, by the unforgiving logic of finance, the extent of our wealth transfer to shareholders.
You couldn’t make this stuff up. A much cleaner and fairer idea would be to wind down the banks now. Before we do this, we’d have to go to the ECB and argue that Nama is the wrong way of going about things. We value the ECB’s liquidity and believe there is amore productive way of using it.
When the guarantee goes next October, or when we announce that we will not continue it, the foreign banks that have provided liquidity to our domestic banking system will run for the door. To prevent the system seizing up, we need liquidity from somewhere else.
So why not say to the ECB: forget the Nama bonds, just replace the short-term liquidity that will flee the country. This way we can negotiate with the bank creditors in an orderly fashion and create a new banking system out of the old one. The shareholders, unsecured, and senior bond holders would take the hit.
The ECB injects liquidity into the system so that the system doesn’t freeze up and, in return, it is off the hook from the nonsense that is the Nama bonds. We institute a deposits guarantee and begin to wind up our banks.
It is at this stage that we go to the foreign banks and ask them would they like to be partners in a new bank. The government is therefore a broker in the deal, rather than a principal.
We sell the banks’ branch network and some other assets. The creditors get this cash. Then we start again. The developers are declared bankrupt and off we go.
No Nama, no old banks, no debts, no problem. By the way, it’s not radical, it’s called capitalism.
So it looks like we will over pay for the loans . Lets say it works and the banks are back in business . FF are going to control the largest property portfolio in the world . To turn a profit they are going to do everything in their power to boost the price of property over the next 10 years to try and break even with NAMA . Everyone moans about estate agents talking up property . But that is there job . They are sales people . Basically the government are going into the sales business . If… Read more »
Hi David, Your call to wind down our ill banks is a correct one. As you say, its called capitalism. We (the government on our behalf) are short on money as it is and all we’ve done since the credit bubble burst over a year ago has been to pour billions (directly and indirectly due to basis point spread). Your call to LANCE THE BOIL is correct although a year late! > Then what will happen is the old banks will charge way over the odds for banking in Ireland, so that they can pay the state back the levy… Read more »
Spot on David. Capitalism is the solution, otherwise we will have anarchy!
Banks used to be about savings. Thus we had the Post Office Savings Bank, the Trustee Savings Bank and even a Piggy Bank for our childhood pennies. That entire rationale is now defunct. To prevent deflation, the government now wants us all to go out and spend, spend, spend, to boost production and employment. Thus they have gone into conveyancing money that is being printed on a large scale for the ECB. The US and UK are at exactly the same game, in unison, so that their exchange rates stay in perfect harmony, all to delude the taxpayer that we… Read more »
David, Great article as per usual. However, I think you are p1ssing against the wind. Both Fianna Fail and the me feiners (owners of property) want house prices to remain as high as possible for as long as possible. They don’t care about the consequences (as long as they don’t lose their jobs, they’re fine) resulting in lack of competitiveness, leding to job losses etc…. Ireland has unfortunately become a nation of “I’m alright Jack” types. Very few care about the greater good, as can be concluded by the poor turnout last saturday for the anti NAMA march. We now… Read more »
“you could not make it up” Indeed David , spot on as usual,but they always killed the prophets-even in biblical times. Yes it is going to happen before our very eyes and we citizens are powerless to stop it. Some of us older contributors may not be alive to see the full injustice of it all during the coming decades.The Greens will probably go down in history for their brief consort with the Soldiers of Destiny. Day of infamy. Their decimation at the hands of the electorate (5 votes from my own family)during the next election is not open to… Read more »
“Never have so many owed so much to so few!”
We may have to face the fact that the Irish are still some distance away from loosing faith in the “old” way. Last weekend was beautiful – all was right wth the world and doomsayers of any sort are just pains in the Ar$Â£. That is psychology faced by this country and until it gets properly battered by unassailable fact, nothing much will change. Since the 60s, 70s and 80s the Irish are a set of generations where the only change has been genrally positive for most of us with little effort. Where morals were bent slightly and white lies… Read more »
There are two “Irelands” as many of you will know from recent newspaper articles. one of them is located on the periphery of western Europe.The other is somewhere in the arabian sea (in the kingdom of Dubai!) What have they both got in common? well let us see..both were owned by irish developers; both are on their way to becoming a waste land; both are bankrupt; and it is more than a probability that both will be ruled over for the coming years by the Soldiers Of Destiny. Perhaps Brian Lenehan their generalissimo, will off the shores of Dubai, there… Read more »
All of us singing from the same spread sheet here :-) There are thousands of properties on sale out there and thousands of would be buyers but the sellers are still have make believe prices on their minds. The government should be stimulating the frozen market by using Nama to reset the values of property and land in Ireland at sustainable affordable levels by taking the bad debts off the banks at a price that guarantees Namas success. Nama will fail, banks will go on, FF will always act in their own interest, and the average person will be burdened… Read more »
David, cool clinical dissection of a criminal syndicate seizing control of our society and its resources. BRAVO
wills, it is a deception on a mega scale.
MK1, I think that the article may be a year late, as you say, yet I think it is not too late to Lance the Boil – assuming we can stop the freight-train that is NAMA. As I suggested yesterday, let arch-capitalists deal with this problem of capitalism run-riot. The government should not be meddling with a broken system that would, left to its own devices, fix itself for the time being, by allowing the gamblers to suffer their own losses.
It is cronyism at its very worst.
Not since the days of Sir Edward Charles Trevelyan, have the Irish people had suffering and hardship of this order, brought down onto them by so few.
As for David’s most recent article, I fully agree with him… This notion that we can or even should change the rules so that failure, regardless of the scale, results not just in rescue, but also in reward, and the taxpayer pays for this, is sheer and utter insanity in my view.
Failure must mean failure, all capitalism depends upon it…
How do you square the optimism of Farmleigh with the reality in which you live? I think its great that you do, but I remain amazed. Is there any chance a few of the more influential guests there will pull the Brians to one side and explain to them the error of their reasoning?
What is being Irish today for all of us ? Has it changed so much that we act carelessly and irresponsibly.Have we lost the will to govern and to be governed among urselves ? Can we not feel our own blood vessels carry the life we once shared anymore?
If our intentions to be a great nation again are gone then this act is more dangerous …..before NAMA ….before Lisbon 2 can ever be resolved.
Then there is only one last choice left to redeem us all – Join The Seniors Party ( over 70’s )
I fail to see how NAMA will get off the ground even it is passed in the legislation. Unless tax take can be increased without damaging the economic fabric any further, NAMA will simply not work. We are simply killing off current business by overpriced public services. And let’s not get started on enforced brain leakage out of the country. The Tax take vs Spend gap is huge. Even a 100% increase in tax take will not work.
Tim and Gang sad to read on Sunday how few had turned out on Saturday but it again confirms to me how far Ireland has to go, when you consider on The No To NAMA face book they had over 8,000 signed up , so how come the Media put the attendance at under 500 ?, these figures like every thing else in Ireland don’t add up. This weekend I had the pleasure of playing a round of golf with one of Earnest and Young’s gang ( Anglo’s auditor ! ) and to his credit admitted the whole lot stinks… Read more »
Agree with you here David , hope you can get this across before you guys hit the all Ireland Football Final
Darragh D. – East India Company is a good comparison to todays events .It was during this period that one of the worlds greatest famines occured (and almost unreported ) in India due to various local conflicts and many many millions starved and died.Following that Queen Vic invited the Sigh leader Duleep Singh to acquire Elveden Hall ( now owned by Guinness family ) to quell the infighting then .
I am wondering if Cowen is our modern day Travelyan.
David, I’d be very grateful if you could please strongly express the Irish peoples opposition to NAMA to the Government this weekend. I, and many other Irish people are completely disillusioned with what is going out. The reason few people turned out for the NAMA protest is that we do not feel there is any point protesting. The opposition parties ideas and credentials are so poor. It’s really a horrible horrible time for many Irish people watching a train crash in slow motion. Please do your best and use this weekends opportunity at the Global Irish Forum to have powerful… Read more »
I think the key point in the article is to try to persuade the ECB to allow us liquidity on an interim basis until the banks can be sorted out,. Would his mean breaking their rules and lending us the cash without the need for collateral (which is the role the Nama bonds would play)? Most here are agreed that Nama is crazy As to why it’s being foisted on us is a matter for specuilation. Lenihan certainly seems genuinely convinced that the b*nks have a special importance. His justification for overpayment for the toxic waste in an earlier interview… Read more »
There seems to be a typo in this otherwise excellent piece. Surely it was meant to be called ‘TIME TO WIND DOWN THE GOVERNMENT’? The ‘shared interests’ of the banks and government have become so entwined that we need Ann Pettifor to declare an official fatwah declaring Ireland a ‘bank-owned state’. http://debtonation.org/2009/04/america-the-bank-owned-state/ This transfer of wealth from taxpayers to corrupt oligarchs /bankster klepto-corporatocracies is happening all over the world. DMcW. Q: ‘Why should a democratic government broker a deal which bails out stockholders and unsecured bond holders, both of whom have no right to be treated with such generosity?’ A:… Read more »
Bravo, bravo, David, call it as it is, the Barons of money are carving up the peasants of Ireland and the bankers are their agents. Where is the democratically elected government in this picture? Selling out the people, pure and simple.
NAMA by its very nature is capitalism at work. The principle involved could only exist in an utterly capitalistic society. NAMA is still the only viable option in town and virtually all of DMcW’s wishes will eventually come to pass but in an ordered time frame. This will allow Ireland Inc to address each unfolding mess as it occurs. We do not want the Iceland scenario which will undoubtedly occur if we go the “big bang” route being purported by virtually all contributors to this site. Have a look at almost every post on NAMA to date and you will… Read more »
So far, 32 posts, all of which in bullet proof agreement with davids central point.
We do need to start looking at the farmers I think and take a leaf from their book when it comes to holding a protest. They are consistently the only sector of society that are rattling the government…
I am here in Salzburg Austria on holidays and I have already described the unbelievable low prices in the local Alid/Lidl/Pennymarkt supermarket chains. i have checked out real estate stuff here today and although Salzburg has the reputation of a very fashionable and desireable location for high flyers to own property, the price range for good size apartments (60-120 sq metres) . One two and three bedroom apts ranges from 60,000 to 190,000 Euros at the top for a really nice 3 bedroom apartment with garage space etc. Ireland has left the real world and despite the NAMA scam will… Read more »
I am just reading that article “time to wind down the banks”.. I was fascinated too when I heard the Canadian Banks were circling our banks. The article I read stated they were only interested once the “Bad Bank” had been set up and all the bad loans/assets had been taken off the books.. It made me laugh, it read as if this was a positive for Ireland. It’s been three weeks since that article broke and this is the first time I have heard anyone in the media highlight how wrong this would be.. ( I get a strong… Read more »
My brother works as a cameraman for RTE and has just leaked me the following, fairly unsurprising video footage, live from the Fianna Fail “think-in” from the Hudson Bay Hotel in Athlone….
I know this article is about NAMA and the banks but I hope no-one minds me talking of Government waste Now that Ceann Comhairle has justified his 500,000 expenses over the past 5 years it got me thinking about the present Government (1997 – present) and, in particlular, the manner in which they routinely waste our money as if it’s growing on trees in the Phoenix Park. On day 1 (26 June 1997) of the Ahern Era (**shudders**) it was apparent what we were in for when Bertie decided that 11 out of the Government Departments of state should undergo… Read more »
May I suggest to you the recent Vanity Fair article by Bartlett and Steele “Good Billions after Bad.
You can also find it on video.
You have mostly been on the ‘money’ and I know you have your eye on “The Perfect Crash” the clouds of which are gathering just over the hill, just when we think it is business as usual. But it wont take as long as your Pope’s People Prediction took!
Why don’t we see you on tv anymore David?
In my lay mans opinion this republic is finished,if the sheep follow their masters they will vote in lisbon 2 and from then on we will be governed by europe,our dail will be as much use as our county councils etc are now.
What,s the point talking about it,if we’d any sense we’d get the hell out of here,htis country is totaly corrupt from the top down,we are currently governed by a shower of tramps who are hardly worth the bullet that would shoot them
Here is a clip RTE should have shown last week http://www.youtube.com/watch?v=KKqEeiMn6FI&feature=related
Been chatting to a Green today who even thinks they got their pensions last October when i questioned her as to why they were waiting till then to vote on NAMA , they simply don’t have a clue what is going on …
So now were getting there eventually.We have 2 High Court Judges and 1 from the Supreme Court telling Us that Liam Carroll and His property Buisness are insolvent and dont appear to have a future,inspite of the submissions from His valuers and some of His main Creditors etc.etc. Now I know Liam Carroll was a cute enough bloke who bought a lot of property around Dublin and generated alot of Money for His buisness down through the years,but the Judges dont see any “long term Economic value” in what He now holds.Given that were talking about a Developer who was… Read more »
So what of the Banks in all of this?. Well we know their holding out for whatever deal is proposed on Wednesday via the NAMA announcement etc.etc. But how do they value their own property loans?,what value of security do they hold with regard to these loans?,what loan to values are they relying on now?.What sort of due digilience did they carry out when giving out these loans? Well come with Me to the sunny south East for a brief glimpse at how property deals were financed by what David calls the “fanatics”.I give you exhibit A at the following… Read more »
For those of ye who could’nt be ar.ed to read all the above Judgement I will summarise in long hand so dont quote Me…..Some people bought land in Wexford and owed some 2 million to our auld buddies in Anglo,they decided to Develope and re-finance with AIB.(change Bankers)…Valuation on property now given as over 3 million plus,no problem, give Anglo their 2 million and off ye go…3 mill transfered to clients (AIB took the valuers word for it) but but but the Client decided to use the 2million (that should have paid off Anglo) to buy into a 20 million… Read more »
After World War II, Germany went through a de-Nazification process.
By far the biggest problem that they faced in doing this was not the hardened Nazis as you might expect.
What proved the to be the most difficult task were the ” MitlÃ¤ufer”. Literally translated as people who would “Run Along” (with the Nazis).
Ireland now faces this very same problem.
Fianna FÃ¡il are (literally) spent.
But it is their “MitlÃ¤ufer” present our most difficult task ~ ie the Green Party, NAMA, Banks, Developers, Vested Interests & Unions, market riggers, cartels & oligopolies, et al.
De-Bertie-fication is what’s needed – only problem – it’ll never happen – the people of Ireland are too THICK, GREEDY and IGNORANT – bend over and pick up the soap fickle sheeple – and good luck to you all, you reap what you sow, and you deserve what you are going to get – I for one will be watching the impending catastrophe with absolute glee from afar (where I worked my poor ass off to get and retained my modesty all the while – until these words – I admit) ; any of my dear friends and casual acquaintances… Read more »
Tim, the ‘Lance The Boil’ equivalent call by David may be a year later than mine, but its still not too late as more and more people come to realise what has gone on and is going on. But persuading people is difficult. There is a lack of knowledge out there and mantras such as “NAMA is the only game in town” are readily absorbed. The anti-NAMA march turnout was very poor. If 100,000 marchers against the Iraq war and the landing of US troops at Shannon cant “force” our government to even obey our own laws and allow Gardai/Our… Read more »
Just found this comment from Jan 09 Luckily for the rulers of Europe, they have pooled their resources into the most fearsome, oppressive, undemocratic structure on earth: the EU. Democracy is all but finished here, unlike the USA, where State power is still strong (though declining) and many citizens bear arms. EU subjects may rail all they like against their supposed rulers, but the real power is centred in Brussels. National laws, national law enforcement, are increasingly subordinated to EU diktat. So what if the French got rid of Sarkozy? Whoever took his place would simply replace him on the… Read more »
The world of the ‘government criminal syndicates’ one of which is running the affairs of Ireland and pushing NAMA down the taxpayers throat is brilliantly explained
at this link by MAX KEISER, i urge all to have a look.
I won’t apologize for my ignorance, I guess my user name says it all, am just a long term resident trying to keep afloat what is happening in my country of choice, please help me understand… My common sense agrees with what David is suggesting here, why would we be bailing out the ill-ran banks, so they can continue their bad practices…. But how would this suggestion really work: “We sell the banks’ branch network and some other assets. The creditors get this cash.” So all creditors would get all their cash, what’s that amount, where exactly would the money… Read more »
Folks, this article on NAMA, from Morgan Kelly:
How can the pro NAMA people ignore this man, who has a proven track record for accuracy?
From ThrashTheNews: “There is some complicated structuring and management of the assets over time( Do we have the people to do this??? Also when the Swedes set up a Bad Bank in the 90s they had 450 people working on it. I have heard that 45 will be looking after NAMA??” The bulk of the people who are going to look after the NAMA loans are bank employees. So all the banks will transfer a number of their staff to look after NAMA. ” Are they also taking on derivatives and risky commercial loans?” You bet they are! Every toxic… Read more »
Rte1 six news,. cowen “ireland will be a dark place for years to come without NAMA”,,… and between that and j ‘ o ‘ dononghue red faced hiding behind his mate at the races in kerry to – day on rte1 ducking out of reporters question on expenses orgy, one really must consider the fact that these guys have lost their marbles.
Olivia Newton John might have warned us about Ceann Comhairle in Grease: As for you, O’Donahue, I know what you wanna do You got your crust, now the banks are bust, Just keep your cool, the public’s no fool Keep your filthy paws off our pension drawers. (Or something like that.) The Clancy Brothers also had something to say about The Bold O’Donahue: Here I am from Paddy’s land, a land of high renown I broke the hearts of all TDs from miles of Dublin town And if they hear that I’m away’ they raise a hullabaloo When they talk… Read more »
Folks, things are not looking too good in the US; if our boyos are hoping for that economy to refloat ours, they have another thing coming:
well we find out the madness of the cost of NAMA tomorrow, I feel fustrated and helpless about the whole damn thing, I was at the march last Sat12th and I was gutted to see how few showed up. Its not that I think we have the power in this “democracy” to change the madness of Fina Fail/green decisions, but I just had to be able to say in the years to come that I tried along with a few others to make a differance, I will be out again next sat19th. I wonder how far Irish people will allow… Read more »
“Believe it or not: Dublin City Council launched its new bicycle hire scheme in mid September 2009. There has been much speculation as to how the robust unisex bicycles will fare in the face of vandalism and theft. Since a similar public bike hire scheme was launched in Paris in 2007, 16,000 bikes have been vandalised and 8,000 stolen. As Dublin has probably the worst cycle lane facilities (often sharing with taxi & bus lanes) of any european capital prospective customers of the new scheme would be well advised to wear sturdy body armour and enhance their life assurance,and personal… Read more »