In this column last August I criticised the ridiculous economic strategy better known to us all as NAMA. I illustrated how it can never achieve its objective and how it will be a financial millstone around our necks for generations to come. It come to light in the last week that Messrs Cowen and Lenihan knew this all along but decided to carry on regardless.
The day after the Emergency Budget last April Brian Lenihan stated that Nama was "about bailing out the Irish economy. This is about ensuring that businesses who cannot access credit can access credit". This was patently untrue and he knew this at the time.
In September his colleague Brian Cowen said: "All of our activity is toward protecting the taxpayer, while affecting a restructuring of the banking system which will help us deal with the core issue: more access to credit for Irish businesses at this time." This too was untrue and he also knew it to be untrue at the time.
You see an eminent economist nemed Steven Seelig who is also the senior advisor for monetary issues in the International Monetary Federation (the IMF ) told them so. Mr Seelig on behalf of the IMF warned Messrs Lenihan and Cowen on April 29 last year that the IMF in his words “do not believe that NAMA will result in a significant increase in bank lending in Ireland.” Proof that Messrs Cowen and Lenihan did not have IMF backing for NAMA.
We also know that the original mark-down estimate of 30 per cent was an absolute fairy story based on wishful thinking rather than any reasoned economic analysis. Valuations will be much lower and will end up costing the taxpayer vastly increased sums. On Thursday last the ratings agency Standard and Poor's estimated that the cost of Ireland's bailout would be as high as €25bn. In my view this is a conservative figure.
It is also anticipated that as of July 1 the ECB will no longer provide credit lines to our banks. The banks are well aware of this and are currently recalling cash from their clients in any way they can. The manner and methods they are utilising are more than a little distasteful with serious and undue pressure being brought to bear irrespective of how an individual has honoured his/her obligations. They are acting like bullies.
Even so they cannot recoup enough funds to overcome this deficit and as a result they will without doubt be nationalised late this year. Messrs Lenihan and Cowen know this too yet they persist with the NAMA fiasco. This is why they are so far behind target in transferring the toxic loans into NAMA. They know that the concept is doomed and are trying to minimise the losses to which they have committed us. That they are willing to take such an ill-advised gamble with all of our lives and futures displays frightening levels of hubris.
This country is apparently managed by a pair of grifters. They cannot do the right thing because they are indebted to too many vested interest groups. They have in all probability lost sight of what the right thing even is. Taking care of the bankers, developers and a motly assortment of party hacks is their priority because they are indebted to these people. They know that these people can also open a Pandora’s box for Government if not properly taken care of. We, the electorate, are just the means to this end. This became obvious when we found out that they chose to force through NAMA in spite of mass protestation including that of the IMF. Crazy in the extreme!
So we are in the situation that a couple of grifters, economic illiterates choose to defy the majority of established economic wisdom and implement a plan that is certain to fail. They are willing to do this because they themselves are unlikely to feel the reprecussions. Their buddies fresh from the NAMA bailout will see them right.
They are so out of touch with peoples needs and feelings that they are willing to play Monopoly with our lives. I for one object to this cavalier atttiude towards my childrens future.
Postscript: Messrs Cowen and Lenihan are aptly titled for messers is precisely what they are! Unfortunately we will be the ones to pay for the mess and we will pay a heavy price.
Pearce Flannery, founder of acclaimed business advisors Pragmatica is widely regarded as Ireland's premier business consultant, business coach and motivational speaker. He is a board member of Autopolis, leading international automotive consultants. His blog www.grabbingtheoyster.com is hugely popular having a reputation for straight talking and innovative thinking on socio-economic and political matters.
Contact Pearce: [email protected].