Green Bananas Amended Bill

September 11, 2009

Minister John Gormley TD Min for the Environment Heritage and Local Government has quoted the president of the USA  Barack O Bama as
against nationalisation and therefore a supporter of NAMA. Barack O Bama is against blanket nationalisation of banks in an economy, most
people are including this commentator and every other commentator I’ve read on the Irish economy. Selective nationalisation on a temporary
basis is quite a different matter, its the best safeguard there is to defend the interest of the tax payer.
Gormley or Eoin Ryan of the Green party may have views tarnished by the will to save their political lives. With the experience of the financial crisis in the USA, including bail outs of Fannie Mae and Freddie Mac and the collapse of Lehman Brothers, on the contrary, not only is O Bama moving towards a position in favour of nationalising troubled banks who fail a stress test but also leading Republicans and even Greenspan:
“It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” Greenspan told the Financial
Times in comments published on Wednesday.
“I understand that once in a hundred years this is what you do,” said Greenspan, a champion of free markets who is revered by many influential
Republicans.
Republicans typically stand for small government and deregulation, but ideology has a way of being put aside in a crisis. Greenspan has
acknowledged he was wrong to oppose some forms of market regulation.
“Republican Senator Lindsey Graham, who is close to losing presidential candidate Senator John McCain, told Reuters on Wednesday
nationalization is an option for dealing with troubled U.S. banks if they fail Geithner’s “stress test.”
But Graham warned against the Japanese example of piecemeal measures taken in the 1990s, which he called “throwing good money after
bad. … That is what we’ve been doing quite frankly and we need to stop that,” Graham said.”
“In America, investors and academics are debating not whether to nationalize but when and how.
“The opponents of nationalization are becoming fewer and fewer. I believe Geithner’s plan eventually is a Trojan horse for future nationalization,”
said Daniel Alpert, managing director of Westwood Capital in New York.
“If we actually do this, within a relatively short period of time opportunity investors are going to want in and take an equity position if the federal
government stands behind the bank,” Alpert said.
Lawrence White, a professor at New York University’s Stern School of Business, said it was too late for the taxpayers to see a profit — “These
are just big negative holes that need to be filled” — but added that the United States successfully nationalized banks in the 1930s and during
the savings and loan crisis 20 years ago.
“The process works,” White said. “The difficulty arises when you’re dealing with a large depository institution — a Citigroup or a Bank of
America.(Additional reporting by Susan Cornwell in Washington; editing by Todd Eastham)”
NAMA is a flagship of risk, wasteage and bad planning, the worst Ireland has ever seen. Its potentially is the worst piece of legislation ever
passed by any economy in response to serious threats to any economy. Its a recipe for disaster, a smokescreen concealing a chaotic coverup
of bank losses. Banks should already have been asked to write down their losses under penalty if NAMA is misled. The discount figure Lenihan
will announce next Wednesday for loan write down is not only a risk but its a smoke and mirrors trick played in favour of developers and the banks. Lenihan has said until each of the loan books is examined the precise markdown of these loans is impossible to assess. Its obvious that some developer loans will get more favourable treatment than others, black hole potential for corruption grows exponentially!
Lenihan, Gormley and Ryan will offer us a ‘pig in the poke’ toxic loan discount figure next Wednesday. http://en.wikipedia.org/wiki/Pig_in_a_poke
The figure given will be a figure targeted at opponents of NAMA, sufficiently low enough to appease critics. What critics should realise is that the legislation provides for the adjustment of that figure based on the formula of the examination of individual property portfolio collateral supporting each toxic loan. Lenihan has made it clear it will be impossible to give a final figure until that exercise is complete. This will allow him on an individual basis to adjust the figure upward at the expense of the tax payer. This will be casino economics at its worst.
Think of a €90 billion white elephant project with leeway to go back to the ECB for more funding should NAMA fail. Think of a low tender put in to deliver that project. Think of the cost to the tax payer rising and rising as each loan book exercise adjusts the costs upwards. Think of the astronomical legal costs as challenges to NAMA sweep through the courts. Think of the damage being made to the Irish economy, the rise in property values and taxes that will be imposed on tax payers for generations to come. Think of the bail out given to bank share holders of tax payers money, money for health and education and public works etc.
Think of the incompetence of Lenihan, Gormley and Ryan as they impose NAMA ( Not Another Mess Again ) top of the rubbish heap of global response to property bubble based national financial crises. Its a black hole ready to suck tax payers into a hole it may never emerge from. Its a bail out for property developers. Through its secretive per loan valuation methodology where valuators will examine individual loan books belonging to individual property developers with bankers who should be answering before a public enquiry, NAMA has entered the casino, its pockets filled with tax payers’ ECB loan money, ready to spend, spend and spend. Cheering along are shareholders, bankers, stock brokers
and other financial service beneficiaries of the previous bubble. NAMA has led the Irish economy onto the rocks, its time for the financial services and the legal services industry to parasitically pick Ireland’s bones.
NAMA (Not Another Mess Again! )

NAMA (Not Another Mess Again! )

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Gormley or Ryan of the Green party  have views tarnished by the will to save their political lives. For example, Minister John Gormley TD Min for the Environment Heritage and Local Government has quoted the president of the USA  Barack O Bama as against nationalisation and he implies by this O Bama is therefore a supporter of NAMA. This is a falsification of the current US thinking on nationalisation, see below.

But what Irish supporters of nationalisation mean when they use this term is selective nationalisation on a temporary basis when this is in the best interest of our economy and the best safeguard there is to defend the interest of the tax payer.

With the experience of the financial crisis in the USA, including bail outs of Fannie Mae and Freddie Mac and the collapse of Lehman Brothers, on the contrary, not only is O Bama moving towards a position in favour of nationalising troubled banks who fail a stress test but also leading Republicans and even Greenspan now  support nationalisation:

http://uk.reuters.com/article/idUKTRE51H7C120090218

“It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” Greenspan told the Financial Times in comments published on Wednesday.

“I understand that once in a hundred years this is what you do,” said Greenspan, a champion of free markets who is revered by many influential Republicans. Republicans typically stand for small government and deregulation, but ideology has a way of being put aside in a crisis. Greenspan has acknowledged he was wrong to oppose some forms of market regulation.”

“Republican Senator Lindsey Graham, who is close to losing presidential candidate Senator John McCain, told Reuters on Wednesday nationalization is an option for dealing with troubled U.S. banks if they fail Geithner’s “stress test.”

But Graham warned against the Japanese example of piecemeal measures taken in the 1990s, which he called “throwing good money after bad. … That is what we’ve been doing quite frankly and we need to stop that,” Graham said.”

“In America, investors and academics are debating not whether to nationalize but when and how. “The opponents of nationalization are becoming fewer and fewer. I believe Geithner’s plan eventually is a Trojan horse for future nationalization,” said Daniel Alpert, managing director of Westwood Capital in New York.

“If we actually do this, within a relatively short period of time opportunity investors are going to want in and take an equity position if the federal government stands behind the bank,” Alpert said.

Lawrence White, a professor at New York University’s Stern School of Business, said it was too late for the taxpayers to see a profit — “These are just big negative holes that need to be filled” — but added that the United States successfully nationalized banks in the 1930s and during the savings and loan crisis 20 years ago.

“The process works,” White said. “The difficulty arises when you’re dealing with a large depository institution — a Citigroup or a Bank of America.(Additional reporting by Susan Cornwell in Washington; editing by Todd Eastham)”

In Ireland, Allied Irish Bank or Bank of Ireland are not Lehmans, a vast domino bank upon which a large number of other banks depended, AIB and BOI are precisely the kind of banks both O Bama and Greenspan would consider nationalisation being the best option.

Instead, Lenihan, Gormley and Ryan propose NAMA as a flagship of risk, waste and bad planning, the worst Ireland has ever seen. It potentially is the worst piece of legislation ever passed by any economy under serious financial threat. Its  recipe for disaster, a smokescreen concealing a chaotic coverup of bank losses, falsified loan books and wild gambling with depositors and share holder money.

Banks should already have been asked to write down their losses, under penalty of criminal prosecution if  NAMA is misled. Instead NAMA provides a method for the banks and NAMA to conceal losses and false accounting. Phantom collateral,  misleading evaluations and other irregularities that fueled the property bubble should be a matter for public inquiry and not concealed.

The discount figure Lenihan will announce next Wednesday for loan write down is not only a risk but its a smoke and mirrors trick played in favour of developers and the banks. Lenihan has said until each of the loan books is examined, the precise markdown of these loans is impossible to assess. Its obvious that some developer loans will get more favourable treatment than others with black hole potential for corruption.

Lenihan, Gormley and Ryan will offer us a ‘pig in the poke’ toxic loan discount figure next Wednesday. http://en.wikipedia.org/wiki/Pig_in_a_poke The figure given will be a figure targeted at opponents of NAMA, allegedly sufficiently low enough to appease critics.

What critics should realise is that the legislation provides for the adjustment of that figure based on the formula of the examination of individual property portfolio loan collateral supporting each toxic loan.

Lenihan has made it clear it will be impossible to give a final figure until this exercise is complete. This will allow him on an individual basis to adjust the figure upward at the expense of the tax payer! This will be casino economics at its worst and makes a mockery of the figure he will announce Wednesday next.

Think of a €90 billion white elephant project with leeway to go back to the ECB for more funding and more expense for the tax payer. Compare it to a low tender put in to deliver any project whose costs rise exponentially over time. Lenihan is used to this as this has been a feature of infra structure projects in Ireland over the past 10 years. Think of the cost to the tax payer rising and rising as each loan book exercise adjusts the costs upwards.

There will be delays and  astronomical legal costs as challenges to NAMA sweep through the courts. Damage made to the Irish economy will be severe leading to unsupportable property values, rising taxes,  imposed on tax payers for generations to come.

Think of the bail out given to bank share holders of tax payers money, the haemhorrage of money for health and education, social services and public works etc.

Think of the incompetence of Lenihan, Gormley and Ryan as they impose NAMA ( Not Another Mess Again ) top of the toxic rubbish heap of global response to property bubble based national financial crises. We beat Japan in coming up with an even worse response.

NAMA is a black hole ready to suck tax payers into a hole it may never emerge from.

Its a bail out for property developers, bankers and share holders. For developers NAMA’s secrecy will hide from the law what would otherwise be considered criminal fraud.

With NAMA’s secretive per loan valuation methodology, where valuators will examine individual loan books belonging to individual property developers with bankers, who should be answering before a public enquiry, NAMA has entered the casino, its pockets filled with tax payers’ ECB loan money, ready to spend, spend and spend.

Cheering along are shareholders, bankers, stock brokers and other financial service beneficiaries of the previous bubble. NAMA has led the Irish economy onto the rocks, its time for the bankers, share holders, financial services industry and the legal services industry to parasitically pick Ireland’s bones.

Any true Green with an ounce of integrity left should jump the NAMA ship now before its too late!

coming up

The Amendment bandage fig leaf  proposed to cure the haemhorrage

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