Two Wrongs

I don’t about your mothers but mine taught me that ‘two wrongs do not make a right’.

The ‘Bank Guarantee’ worked in that it temporarily avoided a catatrophic meltdown of the banking system.  The global financial ‘tsunami’ caused by everyone realising at the same time that the Property Emperor had no clothes has washed through and over us. Nonetheless, it was a huge risk and a bet that the state cannot afford to have called in.

We are still standing but only through the good offices of the ECB and the German Kanzler. Our banks are bust, having been caught out in a frenzy of property speculation, ranging from the bogs of Leitrim to the shopping centres of Bulgaria, exceeded only by the lunacy in Florida.

Just in case you missed the salient point of the last paragraph, allow me to repeat it. Our banks are BUST. These are ex-Banks. They have expired. They are no more. etc. etc.

Many types of financial intensive care are being applied to keep the patient on life support. Some it amounts to transfusions of other people’s cash. The patients are being mightily ventilated, that’s for sure. With an enormous effort of huffing and puffing the drastic reductions in house, hotel and office and mall values are being kept from freefall, until a transplant can be found. The transplant procedure is called NAMA and it involves transferring the capital of the State and its taxpayers to the broken banks and those who broke them.

Those with the most to lose have come up with a scheme whereby, having bet their farm and lost it, now want to bet our farms and our children’s inheritance  on one last spin of the property roulette wheel. NAMA is an attempt to copperfasten the state to the guarantee so that the chips do not have to fall for those responsible.

We are being coerced and bullied and frightened into accepting NAMA in a manner that shames our politicians and reveals the depth of their fear at being held to account.

We are told there are no alternatives, when there are a myriad to choose from.

We are told this is for the sake of Ireland’s international reputation, when in the world’s erstwhile most open economy anyone with half an eye can see us for what we are.

We are told that all will come right in the longterm when at the same time we know that the climate is changing, the oil is running out, the Internet is accelerating the rate it is disrupting old business models, global pandemics are forecast and no one knows anything about what the 15 months will bring, let alone the next 15 years.

Let us be clear about one thing. We are arguing about who should bear the losses after 6 years grabbing the winnings as fast as hands could fly. This argument is purely financial. We have not lost a slate of a roof of any of the unlovely semi-d’s nor off any of the shiny offices nor the glamorous hotels. The productive capacity of this economy and its workforce has not diminished one iota.

We are arguing over pricing and money and at what rates the capital of the economy shall be put to work. In essence, we are arguing over the rates of return to capital and to labour. Those who until recently held a lot of capital are trying to hold on to it at the expense of labour.

NAMA copperfastens the State to an ill thought out panic stricken response to a crisis that could have been avoided. NAMA props up a yesterday that should never have been in the hope of a tomorrow that will never come. NAMA puts the last of the State’s credit on the table when we need it for other challenges.

If NAMA is the answer then it must have been a very silly question, indeed.