The big NAMA question

The critical question surrounding the National Assets Management Authority (NAMA) project is – What price is the Government, on behalf of the taxpayer, going to place on the assets of the various financial institutions?

Here’s how Finance Minister, Brian Lenihan answered the question (Morning Ireland, 1st report, 3rd item).

That is the absolutely fundamental question and we’re working on the valuation of these properties and I will announce on behalf of the Government the approximated, estimated figure for how much state bond will be required in the Dail debate in September…I haven’t finalised the figure yet and of course the announcement of that figure is one of considerable market sensitivity.

Here’s my translation:

I’m not going to answer that question now and if I’m forced to do so in September I will only give an ‘approximated, estimated figure’. I’ll refuse to answer any awkward questions at that time by simply saying that the exact figures are of ‘considerable market sensitivity’.

I agree with the Labour Party’s suggestion that the banks should be temporarily nationalised, a strategy that would cost about €5 billion. That would still leave the taxpayer responsible for billions of bad loans currently held by the banks but at least we would know the risks we are facing and have some degree of control over events.

And that’s exactly what the Government is working to avoid. The Government strategy is actually very simple. It wants to transfer the massive liabilities currently bringing down the financial institutions onto to the shoulders of the taxpayer while at the same time ensuring that those institutions remain, to the greatest extent possible, in private ownership.

Private ownership protects profits and ensures continued state protection, principally by the Financial Regulator, for the widespread criminality that has long infected the Irish financal sector.

The hope is that when the dust settles the banks can return to what they do best – squeezing massive profits out of unprotected consumers. The burden of cleaning up the mess created by the reckless and greedy bankers will be left to generations of future taxpayers.

There is, however, one potentially serious obstacle in the way of this cosy strategy between politicians and their banking masters. Ordinary Irish citizens might not wear it; they might, for the first time in modern history, actually rebel.

An editorial in yesterday’s Sunday Independent on the NAMA question refers to a poll in the same newspaper in which a clear majority were in favour of nationalising the banks. The editorial concluded:

The poll reveals a truly worrying level of cynicism about the beneficiaries of public policy, and that cynicism is poisonous to society.

The Government has a duty to rebuild public faith in the political system and it must start by debating its policy decisions openly and honestly. There cannot be the faintest hint of favouritism or cronyism in a decision that could impoverish a generation and it demands justification on a grand scale.

The Government is gambling the future: the people need to know why, and they need to know who benefits.

Public faith in the political system? Openness and honesty in debating public policy? An end to cronyism?

The present corrupt system of administration in this country will never allow such enlightened policies to emerge; only an actual rebellion will do that.