September 2010 Archives

Nama could become toxic dump

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The Government set up Nama to help rescue the banks and get credit flowing. We were assured that it would make a profit for the taxpayer without disrupting or distorting markets or bailing out developers. Nama's short history suggests that it is unlikely to achieve these objectives because it is paying well above market rates for loans; the proportion of performing loans is much lower than projected; banks are transferring fewer good loans; and discounts are far higher than expected due to poor security and documentation.

For these reasons, Nama could become an expensive toxic dump rather than a well-balanced asset recovery vehicle as originally envisaged and it would become part of the problem rather than the hyped solution.

To head off this possibility, the Government should immediately introduce a bank resolution scheme. Once in place, Nama should hand back all its loans to the originating banks and bondholders and let them jointly deal directly with borrowers without involving long-suffering taxpayers.

In contrast to the Government's tip-toe approach, the hand back should be accompanied by focused guarantees, selective defaulting and debt-equity swaps leading to the creation of "good" banks and work-out institutions.

Letter published in the Sunday Business Post on 19th September 2010.

Economic Recklessness

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Through greed, incompetence and negligence a few hundred people have set this country back a decade, or more, in economic and social terms. In the few cases where "sanctions" have been applied, they have amounted to big pensions and fat payoffs instead of sanctions and punishments.

Notwithstanding the magnitude of the crisis, we still see no plans for a comprehensive public enquiry and we know that proving white collar crime can be extremely difficult due to complexity, wriggle room and "lapses of memory".

Given the scale of the economic and social devastation, it is inconceivable that any further painful remedial measures will be accepted by the nation unless firm lessons on "moral hazard" are seen to have been applied.

This could be done by designating economic recklessness (alongside the existing crime of reckless trading) as a crime and setting up a judicial or Dail-based investigation to identify the most culpable organisations within the public and private sectors based on public testimony of experts. The Honohan and Regling scoping enquiries would be relevant inputs regarding developments prior to September 2008.

Having decided which boards and groups of administrators should be examined in detail, the investigation should proceed with public questioning of relevant individuals leading, where appropriate, to files being passed to the ODCE or DPP. The level of proof for economic recklessness convictions should be the civil rather than criminal level to take account of the difficulties associated with prosecuting "white collar" crime.

Penalties for economic recklessness should include lengthy prison sentences, massive fines (linked to the wealth of the convicted) with significant scaling back for those who admit complicity or become whistleblowers.

National Debt

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A table in Cliff Taylor's piece (22nd August) indicates that €32 billion will be needed to service the national debt over the five years to 2014. This amount which will rise due to additional bank bale outs amounts to a full year's tax revenue.

How can it possibly be paid without massive political, economic and social consequences?

Letter published in the Sunday Business Post on 29th August 2010.

Name for Dublin's Wheel

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How about "The Spinning Wheel" to reflect the fact that our politicians are always spinning and going around in circles?

Letter published in the Irish Times on 25th August 2010. Other suggestions included:

  • Ireland's Eye
  • Whirly Gig
  • Dublin Money-Spinner
  • Wheel of Fortune
  • The Wheeler Dealer
  • Roulette
  • Dublin Eye Soar
  • The Turning Point
  • Wheel-a-Wheel-Abhaile
  • Eye of the Tiger (RIP)
  • Dub Hub
  • Eye'll Go On
  • Pointless

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This page is an archive of entries from September 2010 listed from newest to oldest.

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