Ireland:Scrap NAMA and set up National Recovery Bank to drive new lending and job creation - Bruton

FG is opposed both the Government's creation of the National Asset Management Agency (NAMA) and Labour's temporary nationalisation plans for Irish banks.
Richard Bruton argues correctly that:

"Under Labour's proposal the taxpayer will become fully responsible for all the unknown, but potentially massive, banking losses that will materialise over the coming years"

He further argues that:

Under both NAMA and nationalisation, loan losses will only be shared between ordinary shareholders and taxpayers, while other providers of long-term capital and funding walk away scot free.

He criticizes proposals to waste taxpayers' money by propping up dodgy developer debt and bailing out international bond markets. He suggests that the Government should invest scarce taxpayers' money in clean banks with healthy balance sheets and an appetite to lend to struggling Irish businesses.

FG proposals to tackle Ireland's Banking Crisis:

Speaking during the Oireachtas debate on the banking crisis, Fine Gael Deputy Leader & Finance Spokesman Richard Bruton TD called for the establishment of a new State-run National Recovery Bank to drive new bank lending for investment and job creation, instead of the Government’s misguided National Asset Management Agency.“Eight months into the crisis, the Government has failed to get banks lending again. Thousands of jobs continue to be lost every month as credit facilities are withdrawn from viable businesses and financing remains scarce for new investment.“Fine Gael is deeply disturbed that the Government has rushed headlong into the NAMA scheme whereby the taxpayer will shoulder the responsibility for working out the losses on the massive €90 billion pot of loans on development lands and unsold or partially-built properties. This is an undertaking of Napoleonic proportions.“At a time of huge uncertainty when Governments the world over are cautiously groping towards solutions, this is not the time for a small country with a deep problem in the public finances to plunge into a project on a scale never before attempted. A similar, though more modest, approach adopted by the French Government in 1995 following the Credit Lyonnais crisis ended up costing taxpayers there €18 billion.“It is especially foolish to do this on the basis of a flimsy recommendation without any detailed evaluation of the potential hazards along the way. Huge concerns have been raised by many independent commentators about:

• The difficulty of pricing the loans to be purchased and the risk of taxpayers left shouldering huge losses;• The risk of long court battles with developers;

• The moral hazard of bailing out bondholders and other professional investors who created a banking bubble;

• The difficulty of managing an agency on this gigantic scale;

• The politicisation of loan recovery and write off.

“None of the many legitimate questions are being answered. Yet we learn that already a Chief Executive and an interim board is about to put this grand experiment into action.

“I can well understand why many favour nationalisation over this extraordinary gamble proposed by the Fianna Fáil Government. However we must also tread carefully regarding the option of nationalisation. It may not require the immediate injection of cash up front, but it does force the taxpayer to shoulder all of the problems created by the banks. It risks the taxpayer having to pay too much for the shares. It allows professional investors who funded highly risky activity by the banks to walk away scot free. And it politicises new lending decisions by the banks which in other countries have seen big powerful companies win out over smaller businesses.

“Fine Gael favours a different approach. The first step is to establish a National Recovery Bank. This would be a wholesale bank funded by the ECB which would stand ready to provide the necessary liquidity to the covered banks to get credit flowing. It would be willing to buy at a fair market price the small business lending books or the mortgage books of any bank. The key features of the National Recovery Bank would be as follows:

• The necessary capital would be provided by the State, and could initially be in the range of €2 billion;

• It would be set up under well-established Irish Asset Covered Security (ACS) legislation, allowing it to efficiently raise additional funding of €30-€40 billion, initially from the European Central Bank and over time from private markets when they re-open;

• It could be established and operational within four to six weeks, and inject new lending into the economy without delay.“The advantages of this proposal over the other options are several:

• It immediately gets credit flowing – a straight fusion into the blood stream of small business;

• It helps banks to strengthen their balance sheet by swapping parts of their loan book for cash;

• It creates a solid spine to underpin present and future banking for the economy at a time when existing banks are intent on shrinking their own balance sheets to protect their independence;

• It allows existing relationships between businesses with their banks to continue, but in a new prudent framework dictated by the State bank;

• It leaves toxic property-related loans in the hands of the private banks who made them, and who have better skills and incentives than any State agency to recover as much as possible from those loans;

• It allows the banks to refocus on restructuring their operations and on working out the losses that they have incurred in an orderly way.

“Fine Gael recognises that the establishment of this National Recovery Bank is just a first step. The problem of unwinding non-performing loans remains. However, it would be foolish for the taxpayer to rush into undertaking this huge responsibility, either through NAMA or through nationalisation, without a proper assessment of the landscape ahead and a system for sharing out the losses equitably. The taxpayer simply can’t save everyone in this situation. Other countries are also coming to recognise this and are developing ways in which professional investors share in the cost of adjustment. Ireland would be foolish to rush in to solutions that close off new thinking.”

Ireland:15,000 Old Age Pensioners Demonstrate Outside the Dail

15,000 Irish Old Age pensioners demonstrate outside the Dail to condemn the FF/Green/PD Government's decision to end universal entitlement to the Medical Card for over 70s. The decision of the Government to backtrack on its original proposal and to exclude 5% of the pensioners from entitlement, has failed to mollify the pensioners who fear that the breach of universality is the thin edge of the wedge to erode other entitlements.

Ireland-Government rocked by groundswell of opposition to medical card proposals forced to backtrack

No sooner had Minister for Finance Brian Lenihan completed his budget speech than Government deputies from FF, Greens and PDs broke out in thunderous applause. However opposition deputies on the FG and Labour benches had already spotted serious flaws in some of the proposed health and education cutbacks.

The Government's decision to end universal medical card provision for people over 70 lit the fuse. The opposition in the Dail was apoplectic with rage. Enda Kenny and Eamon Gilmore spearheaded the attack. Yet Brian Cowen, Mary Harney and Mary Coughlan strongly defended the proposal. Government TDs were slow to react.

Grey voters vented their spleen with a display of ferocity seldom seen in Irish politics. Many elderly people have been stunned and frightened by the proposals. All organs of the media were utilized. Now many backbench FF, Green and Independent TDs supporting the government have begun to rebel. Independents such as Michael Lowry and Finian McGrath have come out strongly in opposition
Today Wicklow TD Joe Behan resigned from the Fianna Fáil party in protest at the Budget citing not alone cutbacks in health but also in education. Mr Behan has accused the Cabinet of being out of touch with the electorate.

Just one question for many of these backbench FF deputies. Why did they not shout stop when the FF/PD government allowed public expenditure to rocket by 25% in the two years leading up to the 2007 general election. The property boom bubble supported this growth in public expenditure. It was clearly unsustainable. Many of these deputies won their seats on the back of benign budgets. It is possible that the outgoing government would have been re-elected without such a massive growth in public expenditure.

Four years ago Richard Bruton FG Finance spokesman warned of the unsustainability of the public expenditure splurge and spoke continuously about the inevitable consequences.. Economists such as George Lee, Dr Alan Ahearne and David McWilliams warned about a property boom crash. They were accused of talking down the economy.

The present Medical Card proposals would not get through the Dail. Any effort to force them through would tear the FF Party asunder. The Independents and Greens would probably desert. Tonight on RTE Taoiseach Brian Cowen announced that he would set up a process to deal with the problem. The Government intends to try and renegotiate with the IMO with a view to securing savings.

It is likely that the proposals will be substantially amended or parked. However FF backbenchers, Green Party and Independent TDs had better get used to bad news. Indeed a supplementary budget cannot be ruled out in July 2009 (after the Local Elections) to arrest the slide in the public finances. In addition there may be at least two more harsh budgets one in December 2009 and the other in December 2010. The Government has scored a huge political own goal. Happy are those sitting on the opposition benches.

Ireland:Cowen's Downfall-What happened after referendum on Lisbon Treaty went down (Comedy)

Per Damien Mulley

Very funny comedy. Brian Cowen goes to war with the the middle class, working class, farmers, Dick Roche, Brian Lenihan, Micheal Martin, Enda Kenny, Eamon Gilmore, Patricia McKenna and Sinn Fein.

Questions and Answers debates Irish Agriculture

Maeve Dineen Editor of the Farming Independent and Presenter of RTE’s rural life programme Ear to the Ground was the star panelist. She was articulate and direct in her answers. She displayed a clear insight into farming problems and the threat posed to Irish farming by the WTO.

Journalist Eamon Delaney is apparently a strong supporter of Brian Cowen. He emphasized that Ireland has benefited immensely from free trade. This is fine as far as it goes. He obviously supports free trade in food. Unfortunately he failed to refer to the dangers posed by imports -of food products such as beef from Brazil- which often lack traceability. Is he not concerned with the health implications? Is he not concerned at EU hypocrisy on the environment? Apparently the EU is determined to reduce Greenhouse Gas emissions. Yet it is prepared to increase beef imports from Brazil. Much of these will come from the destruction of the Amazonian Rainforests. The burning of the forests will increase the levels of CO₂ in the atmosphere. Eamon Delaney's support for free trade in food fails to take account of the necessity to ensure security of supply.

Padraig Walshe of the IFA emphasized the dangers poised by the WTO. He stressed that 50,000 farmers would disappear and that a further 50,000 off farm jobs would go.

Eamon Gilmore and John Gormley were largely supportive of Irish farmers. Will John Gormley push for the use of the veto if necessary? Will the Government use the veto to rein in Peter Mandelson who appears to have gone beyond his brief at the WTO.

Ireland- Taoiseach Brian Cowen losing out in Dail exchanges

There is increasing evidence in Dail exchanges that Brian Cowen is prepared to adopt a more aggressive approach to the opposition than Bertie Ahern. Former Socialist Party TD Joe Higgins said in 2003 that "asking the (former) Taoiseach Mr Ahern a question is like trying to play handball against a haystack. You hear a dull thud and the ball does not come back to you. It goes all over the world, but it certainly does not come back to the person asking the question". In marked contrast Cowen is more combative.

Prior to assuming the mantle of Taoiseach Cowen had been quite dismissive towards Kenny. In a Dail exchange in February Mr Cowen-then Tanaiste- attempted to belittle Kenny on the issue of Mr Ahern's finances and the Mahon Tribunal when he said "You are neither qualified nor able to evaluate that evidence”. This may yet come back to haunt him. The personalised nature of the comment has energised Kenny.

Political journalists assumed that Cowen as Taoiseach would destroy Kenny in exchanges. This is not what has transpired.
In the Dail yesterday (Tuesday) Enda Kenny raised the HSE announcement last week that it was contacting more than 4,500 patients whose x-rays and CT scans at Our Lady`s Hospital, Navan, and Our Lady of Lourdes Hospital, Drogheda, might have been misread. Cowen injudiciously attacked Kenny and alleged that he was attempting to make political capital out of the issue. He came off second best in the exchanges.

Today in the Dail a row erupted when Mr Kenny questioned the Taoiseach about health expenditure.
In reply Cowen claimed that Fine Gael had not backed a single initiative aimed at improving health services. This comment drew howls of disapproval from the FG front bench.
Mr Cowen told the Fine Gael spokesman on Health, Dr James Reilly, that if the heckling continued, he could ensure that Fine Gael leader Enda Kenny would not be heard in the chamber again.
This was a bad lapse in judgement.

Mr Cowen was then tackled by Labour leader Eamon Gilmore on price increases and on the alleged failure of the National Consumer Agency and other bodies to act.
The Dail microphones picked up a comment made by the Taoiseach to Tanaiste Mary Coughlan : 'We need to get a handle on this, will you ring those f***ers.'
The use of the F-word although not used in the Dail exchanges was a further embarrassment for the Taoiseach.
All in all a bad week for the Government and for Mr Cowen.

Cowen to be next leader of FF and Taoiseach

With a procession of Ministers and backbenchers proclaiming support for Brian Cowen from early morning, his accession to the top was assured. Only Noel Dempsey had reserved his position. However he has now decided to support Cowen. Ministers such as Micheal Martin, Dermot Ahern and Mary Hannifin have parked their ambitions.
Aged 48 Brian Cowen could conceivably survive as FF leader for ten years or more.
If such a scenario unfolds Ministers such as Micheal Martin will have missed the boat.

Cowen has served in a wide variety of ministries and as such has plenty of experience. He is conservative in outlook. His tenure in the various ministries was not marked by many radical initiatives. He referred to the Health Ministry as Angola and was glad to leave the Department.
Fortunately for him he is departing from the Department of Finance at a time when there has been a serious deterioration in the public finances. The Department of Finance will be a poisoned chalice for the foreseeable future.


Cowen is talented and does not suffer fools gladly. However his command of the finance brief was not quite as comprehensive, as is assumed by his admirers.
He generally adopts a more bellicose approach than Bertie Ahern. He once showed his contempt for the PDs by stating, “When in doubt leave them out”
Enda Kenny and Eamon Gilmore must reshape their strategies if they hope to dent Cowen's prospects in the next General Election. They cannot allow Cowen to browbeat them in Dail exchanges. Cowen will adopt a contemptuous and strident tone in an effort to deflect criticism. Kenny and Gilmore must think quickly on their feet to score direct hits. Opportunities abound for the opposition parties. High inflation,rising unemployment, a ramshackle health service, a serious property crisis and myriad other problems will provide suitable targets for direct hits. Any opposition leader worthy of the name should dent Cowen's confidence.

Ireland-Who will be the next leader of FF?

Today in the Dail Enda Kenny and Eamon Gilmore attacked Bertie Ahern’s evidence to the Mahon Tribunal. Brian Cowen’s defence was interesting to say the least. He concentrated his fire mainly on FG and Enda Kenny. He gave qualified support to Bertie Ahern. He stated that Mr. Ahern had the support of the Dail and the FF party. He also emphasized that Mr Ahern would continue to lead while he holds that confidence. Cowen’s defence left few hostages to fortune.

Ever since Bertie Ahern announced that he intended to stand down as leader, aspiring candidates for the leadership have begun to prepare the ground for the impending contest. Bertie Ahern’s decision to anoint Cowen as his successor has not deterred Micheal Martin, Dermot Ahern and Noel Dempsey. It has fueled some thinly disguised resentment among likely leadership candidates.

The assumption amongst most media commentators and cognoscenti is that Cowen is home and dry. Nevertheless there is many a slip twixt cup and lip.
Cowen was a strong supporter of Albert Reynolds and belonged to the country and western wing of the party. Superficially he has huge support within the party. Nevertheless much of this support is soft and could desert Cowen. Micheal Martin had links with the Haughey wing. To a certain extent the Haughey and country and western wings still exist within FF. Martin will have huge support from Munster TDs and Senators and from many in the Haughey/Ahern wing. He cannot be ruled out.

In addition Dermot Ahern is able and could be a dark horse.

A vigorous leadership contest has the potential to reopen old animosities. If such a scenario were to unfold Brian Lenihan could emerge as a compromise leader.

Ireland- The Greens squirm as no confidence vote in Taoiseach is narrowly defeated

A motion of no confidence in Taoiseach Bertie Ahern has been defeated by 81 to 76 votes in the Dáil. Nothing too surprising there. The vote was a foregone conclusion. However it is not without embarrassment for the Government on a number of fronts.

The Green party which - prior to the election-savaged Mr Ahern dutifully trooped into the lobbies to support the Taoiseach. The Greens have u-turned on incineration and co-location. They have lost out on the M3. Green Party Minister Eamon Ryan has now stated that he will be backing a yes vote in next year's referendum on the new EU treaty. Green politicians have sold out on the use of Shannon Airport by US military personnel. They have shed any remaining vestiges of credibility. FF now has a new mudguard. Unfortunately for our erstwhile environmental party the electoral guillotine may fall in the 2012 General Election.

Not unnaturally no FF TD voted with the opposition. Fianna Fail TDs may huff and puff but when the chips are down they are rarely found off side. That is the strength of FF. However Bertie must watch his back as aspiring Taoisigh jockey for position in advance of the inevitable leadership contest. Already Dermot Ahern and Noel Dempsey have been out of the blocks.
Brian Cowen who professes loyalty to the leader is biding his time. Micheal Martin , Mary Hanafin and Brian Lenihan wait in the wings. Bertie has been seriously damaged both by the appearances at the Mahon Tribunal and the narrowness of the winning margin tonight. Interestingly Enterprise Minister Micheal Martin and Overseas Development Minister Michael Kitt were away on business. However they were 'paired' with Opposition TDs to balance numbers. It appears at this juncture that 4 Government TDs may have been AWOL. IF so the writing is on the wall for Bertie.

Both Enda Kenny and Eamonn Gilmore performed strongly. The opposition scents blood. Interesting times ahead on the Irish political scene.

Ireland-Brendan Howlin not to run for Labour Party leadership

Brendan Howlin's decision not to run is somewhat surprising. He is on the left wing of the party and yet is seen as close to FF. This is a major disadvantage for aspiring candidates. He is especially remembered for his comments in relation to the Mullingar Accord. He said that he did not wish for Labour to become cheer leaders for Enda. He was nailing his colours to the FF coalition mast.
The decision of Michael D Higgins-also on the left wing of the party- to support Eamon Gilmore was a major blow for Howlin. At this stage there appears to be a groundswell of support towards Eamon Gilmore. Howlin detected this and opted out. A third failure to secure the leadership would be unthinkable.
His position as Leas Ceann Comhairle would be an issue in the course of the campaign if he failed to resign. In such an event he would then be seen as hedging his bets.
Obviously a bird in the hand is worth two in the bush.