NAMA: Garret Fitzgerald admits lack of competence

In an Irish Times article on Saturday Garret Fitzgerald made the case for what he termed responsible opposition on the issue of NAMA. Again today on RTE Radio’s Morning Ireland he sang a similar tune.

Both FG and Labour have serious misgivings in relation to NAMA-and rightly so. As opposition parties it is their solemn duty to point out the glaring inadequacies. Failure to do so would be highly irresponsible. In the Irish Times article he stated that "I have hitherto avoided any comment on the relative merits of NAMA vis-à-vis other possible approaches because I have not felt competent to comment on the finer points of what is a highly technical issue".

Quite frankly this is an amazing admission. Yet this morning Garret strongly criticized the 46 economists who expressed serious misgivings about NAMA. He is referring to such learned academics as Prof Brian Lucey, School of Business, Trinity College Dublin, Prof Karl Whelan, Department of Economics, University College Dublin, Dr Constantin Gurdgiev, lecturer in finance, School of Business, Trinity College Dublin,Dr Moore McDowell, senior lecturer in economics, Department of Economics, UCD amongst others. With a few dismissive comments Fitzgerald rubbished them. Garret with his admitted lack of competence knows more than all of them put together. His arrogance was breathtaking. Garret appears to want a quick fix and to hell with the long-term consequences. Now is the time to point out the glaring weaknesses in the government proposals.

Amongst the questions posed by Brian Lucey are the following:

• 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?
  

It is particularly noticeable that Fitzgerald has failed to address these questions. Instead he has played the man and not the ball.In addition he has failed to address FG or Labour criticisms in any meaningful way. The FG proposals stand up to scrutiny. They may not be perfect but certainly protect the taxpayer to the maximum possible extent.If as appears likely the FG proposals do not find favour in the Dail, NAMA will in all probability go through in some shape or form. It must be radically changed if this generation of taxpayers is not to be paupered. Brian Lenihan must take on board the criticisms of the 46 leading economists and those of FG and Labour.
As far as Garret Fitzgerald is concerned Ireland can marry NAMA in haste and repent at leisure.

Obama’s lack of foreign policy experience a huge threat to American security

So Barack Obama would withdraw US troops from Iraq in 160 days. Irrespective of the rights and wrongs of the decision to send US troops to Iraq the reality is that a US withdrawal in 160 days would plunge Iraq into chaos. Civil war would develop between Shias and Sunnis. Saudi Arabia has stated that in such an eventuality it will support the Sunnis. It is highly probable that Iran would neutralise Iraq. In essence Iran would begin to dominate the Gulf area.
This would threaten oil supplies and add to the upward spiral in oil prices as supplies from the Middle East began to dry up.
It is highly unlikely that Israel would stand idly by and allow an emboldened Iran to threaten its own security. The Middle East would be plunged into a military conflagration.

Obama has also threatened to intervene in Pakistan in pursuit of Osama Bin Laden. This would immediately precipitate the fall of the Pakistani Government. Moslem extremists would then seize power and take possession of the Pakistani nuclear arsenal. This would bring about a nuclear Armageddon.

Obama’s lack of foreign policy experience has frightening implications not alone for American security but also for the security of the West and friendly Middle East countries.
On security issues Obama lacks maturity and sound judgement. Countries such as Iran are more likely to challenge an inexperienced President. John McCain is strong on foreign policy issues. Hence it is unlikely that unfriendly countries would be too anxious to test his resolve.

John McCain exposes Barack Obama's lack of foreign policy experience