Watership Ireland Inc Down!

November 19, 2010

In early August 2009 I began a site namasayno.com, since allowed to lapse as unfortunately NAMA came to be in spite of the huge opposition to NAMA at the time.

I used a pic to dramatise the impact of NAMA and the policy of FF on Ireland, it had an image of a huge anchor covering almost the whole island in the background. The message was, that government policy on the banks and NAMA was a huge anchor around Ireland’s neck, that would eventually drown us.

I didn’t imagine at the time this would happen so soon. 

With words such as ‘loan’, ‘bailout’, ‘rescue’ being used as misnomers for the IMF intervention, I’ll use the anchor metaphor again, not to describe the Government policy that brought us here, but for a new anchor the IMF is about to put around our necks.

The history of indebtedness and its destructive effects on countries can range from the story of Haiti and the debt reparations enforced by France in return for independence, to the Versaille Treaty in early part of this century that arguable gave rise to WW11.


More recently, destruction and economic damage was wrought in Argentina in the 1990’s as a result of direct intervention by the IMF, whose history of involvement to resolve debt crises to date has been abysmal.

Right now the economic state of our banks is abysmal. Our banks are bankrupt and drowning our country in debt. The reason we have IMF in our midst is that alongside sovereign debt, the recapitalisation of the banks, in the face of their unpredictable and ever increasing losses, is Government policy in dealing with our banking sector, has ended in abysmal failure. In spite of a welcome verging on acclaim from some quarters eg http://bit.ly/aHa2uv, entry of the IMF into the above equation poses significant risks for Ireland.

There is significant risk the ‘debt anchor’ the IMF will give to Ireland, can both break this country and bring down the euro in its wake. The biggest risk posed by the IMF intervention is its stated purpose to deal with the banking crisis.

At its worst, if the IMF package fails to restructure the Irish banking system, becomes a sponsor of ‘black hole’ Anglo and pours money into the banks, without closing banks and allowing the broken one’s to fail, without requiring a write down restructuring of Anglo debt, then the IMF package is doomed to fail, just as the Government policy on the banks has failed.

Taking on more loan ballast from the IMF without being able to restart our economy and without beginning a recovery and growth cycle could be our road to perdition.

Another risk to the IMF intervention is the irony that Brian Lenihan, who single handedly as Minister for Finance is largely responsible for our current debacle, is leading the negotiations with the IMF.

The Brian Lenihan and Mary Coughlin ‘red line’ posturing over Corporation Tax CT does not bode well. CT can withstand an increase to 15% – 18% and all sectors of Irish society should be make the sacrifice based on fairness and ability to pay. Its likely Lenihan will favour the financial service industry and the banks and the wealthy over ordinary taxpayers and continue his mess building of the Irish economy.

As an analogy to our current situation it may be useful to read ‘Watership Down’ by Richard Adams. Citizens of Ireland can draw many lessons from that book according to our present circumstances, as we try to flee from under the yoke of the Government who gave us this mess.

The IMF seen as ‘Cowslip’ may not be the panacea or safe harbour we think it is:


“The company cope with many dangers, but by far the most threatening is when they meet a rabbit called Cowslip, who then invites the group back to be members of his warren. Here, the company encounter an apparently prosperous rabbit colony with ample food and protection from predators by a human whose farm is near their warren. However, Fiver is profoundly suspicious especially when he observes that these rabbits do not tell the customary tales of El-ahrairah but instead recite fatalistic poetry. When Fiver attempts to leave, Bigwig learns firsthand the deadly secret of the warren; the whole area is a human designed rabbit farm with numerous snares placed to harvest them. After helping Bigwig escape from a snare, Fiver convinces his fellows to leave this honey trap of a colony immediately, who after being exposed to the warren’s horrific secret, flee with them.”

Let there be no doubt our Government negotiating team brought this mess on our heads. In august 2009, I set up a website, namasayno.com, since lapsed because NAMA went ahead in spite of protestations, from which I quote:

“Let the banks sort out their own mess”

“According to the Sunday Independent, p9, August 5, Comment And Analysis, there are 6 alternatives to NAMA, quoted below:

1 MARK DOWN THE BANKS’ LOANS. Force all the Irish banks to mark down the value of their loans to curent market value – ‘the mother of all stress tests’. This would result in the banks reporting substantial losses. They would require new investment to remain solvent. This new money would come from the tax payers in return for shares in the banks. The state would have majority ownership of the banks, quite possibly 100%. That holding would be sold at a future date, when market conditions improved and the banks were cleansed.

2 NATIONALISE THE BANKS Take all Irish financial institutions into state ownership, write down the value of the loans to current market value, restructure the banks and then re-sell them to the stock market when conditions improve.


Use the current NAMA legislation to buy all bad loans from the banks at current market value, but simultaneously nationalise the banks so that there is no conflict of ownership.

The state would own NAMA and the banks, so the price at which loans are transferred is not controversial.

Once the banks have been cleansed and market conditions improve, sell the banks back to the stock market.


Create a State-owned ‘Good Bank’ and capitalise it with billions of tax payers’ money. The good bank can lend money to viable businesses and restore the flow of credit to the economy. Legacy banks are left to fend for themselves. Some may be rescued by additional tax payers’ money, but some could be allowed to fail.


Force all the banks risk investors – institutions that loaned the banks money – to swap those debts for shares in the banks.


The State could ensure the banks against future losses on their loans, setting a floor on their losses. The banks would pay for that insurance with shares, giving the State a majority holding in the banks.”

There were available many alternative restructuring models for the banks and NAMA other than the blind guarantee that mistakenly was extended to Anglo:

The only systemic importance of Anglo has been the corrupt banking practices it represented were allowed to inflict a killer blow to the sovereign independence of Ireland signalled by the arrival of the IMF yesterday!

Inside that Government banking package were big liabilities and exposure for the taxpayers and Irish citizens.

In comment on the above list I wrote:

“I don’t believe the above list is complete. Insufficient weight is given to external market forces in how our economy’s competitiveness is to be maximised in the global market.

We could commission a report from the IMF that would make public its findings and recommendations and our country agrees to bite the bullet in following its recommendations. This would avoid the problem of local sectional interests being an obstacle to making change.

Clearly NATIONALISATION of the banks is a runner in the above list, this avoids losses to the tax payer, ‘us’, in favour of gains to the banks and their shareholders.

I believe a solution involving NATIONALISATION and NAMA could also be a runner, but only if NAMA was set up on the proper footing. I don’t believe the current legislation for NAMA is sufficient to make this work. NAMA as currently constituted and proposed has too little transparency, is too independendent of regulatory controls.

What will work is if the banks were nationalised, if the bank regulatory system was primed and strengthened, to instead of being an advisory body, that NAMA could intervene in Irish financial matters as a bank regulator with advisory influence from the Central Bank.

This proposal involves a combining of the Office of the Bank Regulator with that of NAMA while concurrently nationalising the banks during the cleanup period.

Both NAMA and The Regulator independently are without any substantial credence at present, joining them both into a stiffened and strengthened regulatory system charged with cleanup powers, subject to agreed legislation and legal enforcement powers could do the business.

Such powers should extend to bringing to justice those responsible for fraud or financial irregularity including those who brought this mess on us.

We need a name for this new institution. Let’s call it NAMREG, (NATIONAL ASSET MANAGEMENT REGULATOR).

Toxic cleanup could include letting some banks sink while saving others. Bottomline any bank that comes into the NAMREG net goes into nationalisation. Tax payers, not shareholders benefit from the cleanup. ”

My prediction that  ” Insufficient weight is given to external market forces in how our economy’s competitiveness is to be maximised in the global market ” has certainly come home to roost.

Looking forward, I would add the following in 2010:

In the ludicrous situation we have at present of NAMA funded with €2.5 bn of taxpayers money for administration costs complaining the banks are not being honest in the information being forwarded to NAMA, given NAMA will only deal with loans over €20 ml and the rest of the loans will be dealt locally by the banks. Given the failure of Government own policy, predicted here in 2009, and Government FF rejection of the many viable alternative proposals in dealing with the banking sector outlined above, its time for the IMF to close the NAMA quango, allow Anglo and INBS to fail, agree to writedown of senior bondholder losses at Anglo, restructure and recapitalise the rest of the banking system by transferring the good loans from Anglo to AIB/BOI and put those banks on a sound footing.

A new nationalised banking sector in Ireland composed of AIB/BOI bought with IMF loans, a restructured Public Service, a fairer and more equitable Tax System, a managed process of allowing Anglo to fail with bondholders taking their fair share of losses, might not only get this country on its feet again, but it could possibly save Portugal and Spain.

If the package is more food for zombie Anglo and the zombie policies of FF, its goodbye ‘EURO’, the EMU and possibly the EU as well.

Ireland Inc could be crippled with debt reparations  based on a failed political and economic model such as that of Haiti or Argentina in the early 1990’s.


Colm Brazel


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