Ireland:Brian Lucey Economist poses 10 Questions to the Government on Nama

Economist Brian M Lucey has been a strong critic of NAMA. He poses 10 Questions for TDs and Senators who support Nama.

• What evidence does NAMA have that the current market price of property, land etc is not in fact the correct price to pay?


• What evidence does NAMA have that the current market price of these is not in fact going to decline for a number of years, as would be the case if Ireland were to follow the common experience of previous property crashes?


• Why would a temporary nationalisation of the banks be a bad thing, given that this would provide the taxpayer with a valuable asset which could be sold in future years?


• Why does no independent analyst support the governments view on NAMA? This includes the Swedish finance minister who ran their bad bank system, who said to the Irish Times that he “favours the more severe mark-to-market write-down of assets rather than a ‘through the cycle’ valuation.”, and that “it (NAMA) does not sound like the right solution to buy assets from private banks.” It also includes the IMF who said " Insolvent institutions (with insufficient cash flows) should be closed, merged, or temporarily placed in public ownership until private sector solutions can be developed ... there have been numerous instances (for example, Japan, Sweden and the United States),


• where a period of public ownership has been used to cleanse balance sheets and pave the way to sales back to the private sector", in the context of saying that the likely losses for Irish banks were such as to render them insolvent.


• Why not force the equity and bond holders in Irish banks to take the first place in the queue to absorb the losses that the banks would have to book were current market prices to be paid for the loans made. After all, that’s what risk capital is for?


• If the state overpays for the loans relative to current market prices, what, apart from a functioning banking system, does the taxpayer gain?


• What percentage of book value of the loans should NAMA pay, given that current market prices for land and development properties are somewhere around 30% or less of book value?


• If NAMA were to pay say €60b for loans that are worth only €30b, how can this transfer of a full years tax revenue to private speculators be justified in this economic time?


• If, as is entirely possible, the loans transferred to NAMA do not provide sufficient income to meet the coupon payments of the bonds issues by NAMA, will the taxpayer, at least in the short term, not have to meet these payments?
  

Ireland: Socialist Fintan O'Toole's flawed political agenda laid bare on Late Late Show

Irish Times columnist Fintan O'Toole along with Nell McCafferty and Dr John Crown- appeared on tonight's Late Late show and attacked deficiencies in the Irish political system. Present in the audience were politicians from FF, FG, Labour, Sinn Fein and Greens.

O'Toole criticized the parish pump mentality and lambasted cute hoorism. He savaged the clinic system and demanded an end to multi-seat constituencies and a fundamental realignment in party politics.
Undoubtedly he is correct in some respects but in reality he is an elitist and a theoretician. The clinic system keeps politicians in touch with the requirements of the electorate. This is something which Fintan would not understand. Ending mult-seat constituencies would be undemocratic and would skew the results of elections in a manner similar to the UK. There the Lib Dems can secure 20% of the vote and yet end up with a very low proportion of seats. O'Toole has a leftist political agenda-something which he failed to declare. He took a cheap shot at FG leader Enda Kenny. O'Toole wants a left wing government. He has contempt for an electorate which in the main votes for centre right parties. We must do Fintan's bidding apparently. Tonight Fintan hectored and lectured not alone the politicians but also the electorate.

Spain and Britain have political systems polarized on a left right basis so beloved of O'Toole. The Spanish and British economies have been run into the ground by their Socialist governments. Fintan O'Toole needs to divest himself of his Socialist dogma and go back to the drawing board. He is out of touch on many issues.