IT is hard not to feel like you are watching a Bond movie or a hostage drama when looking at how NAMA is playing out. Hostage dramas are compelling, which is why they make such good television.
The big questions are fascinating. How stable are the kidnappers? Will they get away with it? What price will the good guys put on the hostage? If they pay the kidnappers now, will they just do it again? Can’t the good guys just storm the kidnappers or maybe call their bluff?
The NAMA saga is easier to understand if it is watched through the lens of a hostage drama. The bankers, the creditors, the Government, and the old establishment who got us into this mess, are the kidnappers. They ruined the banks, but now they realise that the banks are their last chance. So they have taken hostage the shell that is the Irish banking system. They have a gun to the banks’ head and are claiming that if we don’t bail them out, the hostage will be killed. So they demand the cash or else they threaten to bring down the whole economy.
It’s a bit like watching the North Koreans with their bankrupt country and their pathetic ideology threatening all and sundry with ramshackle nuclear weapons, which might just devastate their neighbours. The reason anyone takes these creeps seriously is that they have a hostage called South Korea. So we have the bizarre spectacle of the USA indulging a country that starves its own people. As long as North Korea has South Korea and has a gun to its head, the world has to pay some attention. And the more bankrupt North Korea becomes, the more likely it is to do something mad.
The reason we take the banks seriously is that they have convinced us that without them the economy can’t recover. So the Government is both the kidnapper and the negotiator on our behalf. This is because the Government has already bought a stake in the banks and letting them go would mean that that stake is now worthless. So to keep its stake alive, it hangs on to the charade that it can neither let the banks go nor nationalise them.
So we are left with the hostage situation. We are the people who will pay the banks.
Like all hostage situations, there are two questions. First: if we settle and pay up, how do we know that the kidnapper was ever prepared to kill the hostage? And second: if we pay now, how do we know that the kidnapper won’t strike again? After all, the kidnapper has just been rewarded for bad behaviour.
In the NAMA case, the equivalent of this conundrum is that we must assess whether or not letting the banks go — and in the process saving us from handing over to them what could be up to €40bn — is a risk. If you believe that letting the banks go in an orderly fashion would not kill the economy, then there is absolutely no reason to pay a cent to NAMA.
International evidence here is interesting. There is no evidence from the world of finance and banking which says that a winding up of the banking system in a country and replacing it with a new banking system has any lasting effect on the economic performance of the country. In the US this year alone 300 banks and finance houses have gone to the wall and, according to the latest data, the US economy is tentatively recovering. Sweden wound up its worst banks without adverse effect. In France, banks are rarely called banks due to the frequency of bank collapses in the past and France is not a basket case — it recovered and constructed new banks.
Banks are like any other business: new ones replace old ones, and if we install a national deposit guarantee rather than a blanket guarantee, which can be allowed to lapse, we can prevent chaos.
The second question is: if we pay now and reward the kidnappers for bad behaviour, will they not just conclude that there is a blank cheque which will be signed to bail out every problem, thus encouraging them to repeat this bad behaviour again? So, instead of changing behaviour and saving the system, we risk encouraging bad behaviour.
There is also the problem of image. If we are seen as the sort of place that pays kidnappers, what is to stop them kidnapping again for an even bigger ransom? What is to stop bankers rolling up their other bad debts and dropping them into a NAMA mkII?
It is easy to imagine a constitutional challenge to NAMA by an average citizen who is about to be evicted.
This citizen might argue why his debts are being foreclosed on when the much greater debts of huge developers are being given a 10-year timeframe to be sorted out? Such a constitutional challenge could see the entire structure collapsing. On balance it would seem more logical to negotiate with the kidnappers rather than succumb to all their demands. This would mean suggesting that we might not extend the guarantee. This would send equity in the banks plummeting and would upset and unnerve the kidnappers. We might also suggest that we don’t think the hostage is worth the price. Sure, this might cause the share prices to drop back to cents but this is what we should want as it is the people who are going to foot the bill.
The share price is an indication of the confidence of the kidnappers. At the moment it is rising because they think they are going to get top dollar for their hostage and, in the process, they are going to escape jail. It is time now to recalibrate the balance of fear so that the kidnappers have to think twice about their next move.
This could be done by the Green Party pulling out of government, leading to a general election which will allow alternatives to blatant hostage-taking to be put back on Ireland’s agenda.
you are right
this is a hostage situation
and the kidnappers do feel and expect to get away scott free thanks to this sleazy government
yes the Greens should do the only honorable thing and resign and call an election as the price the ocunrty will pay if not will be horrific! but sadly probably their pockets are lined with the same sleaze of the Government as we are dealing with Billion euro players – who are playing extreme hard ball tactics- beware Irish democracy is seriously under attack !!
Our politicians are overpaid, and will therefore look after their own short term interests rather than the long term interests of the country. This is demonstrated by how all parties are not calling for John O’Donoghue to resign, but merely apologise for his lavish lifestyle at our expense. If John O’Donoghue goes, then the floodgates will open, so they must all stick together. John Gormley will not pull out of government. NAMA will go ahead, and the kidnappers will get a pardon. Current & future generations will remain hostages to the ransom amount.
http://www.youtube.com/watch?v=fFl3pWbfVX8
Hi David, I dont know if the hostage analogy works perfectly, but you are right, we could let our banks go (those that are bust without government support) and new banking would emerge. I’ve been saying this for over a year now. But there is a hostage situation in a different way. The majority of people may be against NAMA, but because of our “democratic” system, we (joe voter public) dont have a say. We had to vote in 2007 for people that would decide on our behalf. We are thus hostage to a system which has a democratic deficiency.… Read more »
The greens pull out? After they cut off their own head just to get in?
FG and Labour would have to put allot on the table for that to happen and right now they are playing their own games.
Yes tha analogy is superb and spot on. Only 13% of Green grass roots supported whats coming down. Does not matter.Gormley has betrayed his own followers, and the nation.
If NAMA goes through, Gormley´s Greens wil achieve true notoriety.We expect nothing better fromthe Soldiers of Destiny,but the greens are the real traitors.
Gormley will go down in history as the Judas who sold out for a short lived respite for his lost soul , to the Fianna Fail “High Priests” of the bankers and property developers.
David you are in danger of becoming an unemployable maverick, you need to straddle the line between criticism and recommendation a bit more, that way you will be given a role. If you bang the drum loud enough they might offer you a position on the National Consumer Agency or head up the sequel, like some kind of George Lucas-economist – Nama II: Feel the Pain or NAMA ll: Attack of the Elite! Better to have you in the tent pi**ing out…….you could also be brought in to do an analysis of Dail expenses, with recommendations on how to improve/streamline… Read more »
Another month to go before the beginning of interminable court battles with Nama to challenge valuation. Already, Sean Fleming FF suggests kicking the task to judges, and we can see how effective they have been with the Zoe merrygo- round through High and Supreme and High and Supreme courts to avoid bankruptcy. Judges avoid like the plague politicized decisions but the legal profession once again will find itself reluctantly making the case, ultimately at the cost to the tax payer indirectly, on behalf of asset owners. As long a money is flowing, a very doubtful and temporary proposition as the… Read more »
David, 6 months ago or more, did you not suggest a solution similar to NAMA? What is the difference of what is being proposed by the government to what is you were suggesting, or has the whole scale of the situation changed since then?
After 12 years of watching these morons wreck our country’s one great opportunity to climb out of the shite my heart and will is broken. I laugh at the irony, David, of the Global Irish Economic Forum. What NAMA is going to do to this country there will be no economy – you’re all wasting your time. I grudingly left this country in the early 90’s to start my career. I am now planning on leaving again for Asia except this time I will have no regrets, I will not be back and I will be happier for it. Who… Read more »
David, we need a modern day St Patrick to drive these snakes from our midst. In my book, you would be the ideal candidate for the post but you would have an almost impossible task to perform. It sounds oxymoronic but for some reason the Irish don’t seem to be able to see reason. It has been the case for far too long, that to name and shame (at horrendous financial cost to the state) anyone in authority…Bertie Ahern, Charlie Haughey et al, only brings them a sort of “cheeky scamp” celebrity status. Nobody ever gets charged with wrongdoing, nobody… Read more »
Hi Niall, Yes you are right, 9 months ago around last November, way before Mr Bacon was employed, I proposed a bad bank idea that would exclude the taxpayer from the bill. The bad bank would be the skip into which all the banks threw their bad debt – probably Anglo. This would then be funded by government backed “bad bank” bonds which the remaining banks would pay the interest on from their profits so no dividends for shareholders for ten years. The banks would pay the bad bank a fee for liquidating assets and that fee would be paid… Read more »
David, i think it’s fair too assert at this stage that Ireland lives and breathes under tyranny. The tyranny of a ‘gombeen cute hoor elite’ who run the gov, the banking sector, the law, accountancy, big business and the meeja. This tyrannical gombeen elite cute hoorism mindset very visible with o’donahoe and FAS last coupla days and if we pulled the rock back further me thinks its not looking good. This tyranny must be under some type of threat to it’s continued existence, judging by the stench of desperation and bald faced black propaganda and scaremongering underway. Now desperate these… Read more »
Michael O’Flynn was on Marianne Finucane saying that there was no property market in Ireland and that’s why we need NAMA. There is a market but people with the money know better than to catch a falling knife.Maybe people just don’t want to pay €375K for a one bed starter home in his Elysian building that has 39 penthouses. NAMA is the Governments way of telling people that if they are not willing to buy property off their developer buddies at crazy prices then the government will buy it on your behalf with your Grandkids tax money . Its a… Read more »
They cant come after future generations as we will all be living in the UK or Australia when all these debts are called in. The people giving out will be ex FF ministers sitting on chat shows with big pensions……….the greens will be extinct just like the PD goons. It will take 5/10 years for this to work its way through the system. Unfortunately we`ll have had at least 10 annual budgets & maybe another 3/4 supplementary budgets in this period. They will keep coming back to the taxpayers to cover national debt interest & public service wages ( don`t… Read more »
NAMA is an attempt to engineer a soft landing, the same soft landing that Bart Ahern & co dreamed of a few years ago.
Does anyone know if Finian McGrath is gonna support the government on NAMA? He’s unusually quiet considering he was previously very high profile. Will McDaid vote for it? There’s a chance it might not go through yet.
DAIL, wed 3pm – 8pm, sept 16th, 2009, NAMA legislation debate commences. Brian Lenihan sets the ball rolling by outlining the main details on the legislation including how much the taxpayers will pay for the banks loan books. The taxpayer will pay for NAMA through the gov borrowing from the future earnings of taxpayers using the bond issuance facility available to gov for the common good. (news just in, a double decker bus and luas train collide in centre of dublin city………. apt) THe party leaders will speak on NAMA with 20 minutes each alloted on sep 17th. The gov… Read more »
Subscribe.
sep 16, 16.20, Dail. lenihan on his feet reading through the NAMA bill.
His intro is all about the bad men saying NAMA is no good. Asserts his gov is been brave doing this. It’s all about seizing the high ground and scaremongering about the bogeyman under the bed if NAMA not done.
I wonder what John ALLEN will make of this? Luas/DubBus smashup, OECD anticipating we’ll go over 15% unemployment in 2010 and the equinox next Wednesday – the tides tend to have the biggest swings between now and mid October – so even in non-metaphysical terms there’ll be a strong Moon and Sun pull. Basically lads, it’s getting dark out there in every sense of the word.
My guess…I think the next few days will indicate just how easy or not it will be to kick Paddy around the place.
So the figure is in and around 55 – 60 Billion.
The biggest IOU in the history of the state.
The share- and bondholders of the banks will be toasting the Irish taxpayer tonight.
Bloody hell.
Anglo & INBS – 36,000,000,000 or if you earn €50,000pa – enough to pay you for 720,000 years.
Now what should we do with its directors ?
Correct let them resign & give them a nice little pension
So, gov are indicating: original value of properties bought by loans: 100b loans moved to NAMA: 77b (matches the 77% LTV) current market value of those properties: 47b (“Peak” to now: 53%) amount paid to banks for loans: 58b => haircut of 25% => banks lose (have to write down 19b) Future value/return of those loans: ??? Direct costs to Taxpayer: 58b -47b +- long term value Indirect costs to Taxpayer: ???? (billions!) (due to property values not reaching a true market value, plus banking requirements to extract profits (pounds of flesh) elsewhere. Who wins: Banks + Developers get less… Read more »
Folks, End November 09, the Greens will have been 2.5 years in government, thus entitling them to ministerial pensions for life.
Watch this space.
Ah Lads , sure it could be worse!!! ,…it’s only 58 billion , sure it could have been a 100 billion , the Dept of Finance has done a great job !….let’s put this into perspective. The last I heard the average industrial wage was 34 grand a year divide that into 58 billion this works out at how many wage packets …1,705,882 This is Madness when you think it’s not even all their loans HOW MUCH OF THIS is for over seas loans ?, as figures don’t add up. I called for a Revolution last year ,…now we Really… Read more »
I am just back from a day cycling down the Mozart radweg.Thanks Wills for the informative commentary on Dail proceedings. To reiterate: Apartments here in Salzburg range from one to three bedroom and the price range is between 60 thousand and 190 thousand Euros for a top 3 bed apt well located with garage space etc close to the centre of one of Europe´s finest cities.. Ireland, Fianna Fail, and property prices there, may as well be on another planet. All the manipulation and scheming in the world by Mr Lenehan (a decent enough guy for a Fianna Failer) will… Read more »
Obfuscation due to opinion. Twenty years ago, a person would be Told to shut the phuck up, where opinions are confused with facts. 1)Today, the bolloxticians can each assert their opinions and expect a following. On Lisbon and national economic matters. 2) Due respect to Mr. Mc, but most of our economists seems to be swayed easily enough from their initial opinions/ assertions – leading one to doubt their competence as well. 3) Mr Lucey may be right or maybe wrong. But he was clearly cut to bits on matters of simple English interpretation. Meaning, that his co-signers were not… Read more »
Folks, this, from Joe Higgins: No to NAMA — Join the protest! Print Print PostDateIcon September 16th, 2009 | PostAuthorIcon Author: Joe Higgins Today the government has outlined it’s plans for the National Asset Managment Agency — a digusting bailing out of the banks. Here Joe Higgins restates his fundamental opposition to NAMA, and calls on working people to turn out on Saturday’s demonstration against this obscene bail-out. NAMA Demo posterThe banks now being bailed out for their reckless lending to greedy speculators and developers are the same banks who show precious little consideration to ordinary householders who fall behind… Read more »
Well you have to hand it to RTE – Their media coverage of today’s proceedings wouldn’t have looked out of place in Zimbabwe. Straight after Lenihan had finished speaking, the opposition (which is supposed to be part of a functioning democracy) stood up to speak in the form of Richard Bruton. RTE then cut their television broadcast. Did you hear of O’Donoghue’s apology for his expenses on RTE? Well you might have if you’d stayed tuned to 9.32 PM – at the “and finally” part of the news. Still you could’ve sat down to watch a detailed debate after the… Read more »
Folks, two tweets below sent to “The Right Hook” (yet again!) this evening – ignored, as usual I’m afraid.
@ghook WRONG Emmet! If a capitalist bank goes bust, it goes! So what? We already have a GOOD bank with branches everywhere: An Post Bank.
@ghook, let govt. give 57 billion for An Post to loan out to SMEs and that will give liquidity back to the country. #NAMA is a bailout-lie!
jedi knights, check out ‘ol kunstler piece, new one, all centered on REality fighting back. Replace USA for POnzi Rep (Ireland). Check it out…………full of gem counter – intel too the bankster network take over……………….
http://kunstler.com/blog/2009/09/reality-receding.html
What’s NAMA ‘s subterfuge…?????????????????????????
How about………………………… NAMA is a wedge on the deployment of accumulated wealth for productive purposes in the service of continuing civilization in order to preserve and consolidate elite control.
Another point ;
I am here in central Europe and I have tried to get some of what went on in the Dail today on the RTE website,and all i can find is a few ten seconds snippets of the verbal exchanges.
is there a site where I can watch all of todays historic and histrionic Dail proceedings which will affect my childrens children, or is our “democracy” reduced to a ten second snippet from RTE.?
Goebellesque, Unprecedented,Bizzare, Unreal.
Clearly RTE has judged that today’s NAMA plan from the government isn’t particularly vital to the future of the country. Presumably they’ve taken some sort of sounding. Otherwise they’d have suspended all schedules & acted as if this was a national emergency. Saving or rescuing the Irish banks can really only mean enabling the mandarins to stay in place. If the government meant to save the banking institutions, they’d have cleared out sufficient personnel to restore trust. This is about keeping the powerful in power. Pure politics. We all know that the clique that runs this government has only one… Read more »
He He He Bond movie indeed ! While all the bitchin be goin on…the developers and bankers will take off on a nice long vacation and will come back when all is calm again……and get back to what they know best…………..Stroking
“Apathy may well be the end of Ireland”
All the Triumvirate of Govt, Builder and Banks that are collectively responsible for the Property Charade are all still in Place. We have to live in a Country where having created an economic catastrophe that affects us all , we now must watch the exact same entities saddle any amount of money they like on our head so as to preserve their own vested interests and it seems that there is nothing we can do. Its hardly a democracy at all really.
Folks, now there’s a thing I don’t understand:
We (taxpayers) own NAMA;
We (taxpayers) own ANGLO;
Why do we have to pay for what we already own?
Is this like the Eircom fiasco? Remember, when the govt privatised it and sold it to the people, even though we already owned it, and loads of people lost alot of money, buting their own company?
For simplicity:
Why would NAMA buy anything from ANGLO? Both have the same owner, right?
Ireland is split between those who’ll do anything for their house prices to go back to bubble prices (A) and the rest (B). A are ready and able to sacrifice B if necessary to make this happen.
Civil war looms………………………………………………………………………….
I got a notification that one of my comments (about an email to Brian Cowen and some links I got from Mark Little about what the international media is saying about NAMA Ireland)
…is…..
“Tim | 16 Sep 2009 10:45 pm Your comment is awaiting moderation.”
I wonder why?
Irish society is splitting down the middle to – day between those who are prepared to do anything to re boot bubble prices for their house (property nuts) and the rest (regular joe). two observations on PROPERTY NUTS to keep an eye out on; 1) when a psychotic person is confronted with info that directly and definitely squashes their delusion, then they often react with a ‘psychotic break’, becoming disorganized and violent. 2) no people will ever willingly sacrifice what they beleive to be their ordained way of life. This i believe is the fanatical mindset thrusting NAMA down irelands… Read more »
Nope…. that is awaiting moderation, too; So here is the email to Cowen, with the link allowing you to send a message, too: Tim | 16 Sep 2009 10:45 pm Your comment is awaiting moderation. Folks, email sent to FF HQ for Brian Cowen this evening: Dear Brian, A Thaoisaigh, Please, please, take Kenny up on his offer of a “sit-down” to work out a better way for our country than NAMA? If you can agree on something that we can all support, the people and the party will be happy. If you cannot agree on any other solution, you… Read more »
Posting links seperately on international views of NAMA:
(Courtesy of Mark Little)
(NYT)
http://bit.ly/zw7J0
(WSJ) http://bit.ly/11GIom
Let’s be generous and assume that Lenihan can sell 10 year bonds at 5% interest rate. Let’s also assume that he can sell half the €54 B toxic assets at cost after 5 years and the rest after 10 years realizing his €7 B profit. €27 B at 5% for 5 years rolls up to €34.46 B €27 B @ 5% for 10 years rolls up to € 43.98 B Olé!!: Lenihan (ie: us) proposes to pay €78.44 B for assets optimistically worth €47 B So he realizes €54 B after ten years and says NAMA was a triumph of… Read more »
(Guardian) http://bit.ly/Uo5JW
Also tonight, the text of the new bank guarantee scheme http://bit.ly/4EUCNV (via http://www.irisheconomy.ie)
bANker attacking outspoken working class woman on vincent brown undrway, true colors revealed.
Karl Whelan on the long and the short of the NAMA Haircut http://bit.ly/2czqbi (also says AIB shares up 26% in late trading in New York)
“On the verge or insolvency” (the banks), says IT man……..
….. eh, they ARE insolvent, not “on the verge”.
Do an “MK1”:
“Lance the BOIL! (… and it IS a BOIL… festering for 12 months – rotten to the core, now…….. puss no longer yellow, but green….)
People in USA speaking out even on wall street
http://www.youtube.com/watch?v=3eyuNLyDCLU&feature=player_embedded#t=152