07 October 2009

Greens and NAMA, part II

According to Joseph Stiglitz, Nobel Prize wining economist* and author of 'Globalization and its Discontents' (amongst other things):
The "principle of overpaying banks for loans is criminal", "The Irish Government is squandering large amounts of money to bail out banks" and NAMA is "a massive transfer of money from the public to bankers" - Irish Times, Irish Examiner
Stiglitz was speaking on RTE's Primetime last night and advocated allowing the banks to collapse, that those who lived by the sword of Capitalism should be prepared to die by the sword of Capitalism:
"Which means when you can’t pay your debts, the share holders lose everything, the bond holders become the new shareholders and if that does not fill in the hole in the losses of the banks, then because the Government is going to provide deposit insurance, it becomes the owner. Then it [the Government] quickly sells it, or as quickly as it can, because when you have trauma like this you may not be able to do it quickly, but the joke is we call that ‘pre-privatisation’" - Irish Examiner
Stiglitz has been a vocal critic of Obama's plan to bail out the US Financial sector, so it comes as no surprise that he has serious misgivings about NAMA, but when a Nobel Economist accuses the government's behaviour of being 'criminal' you would hope the folks in Leinster House would sit up and take notice.

I watched Monday night's Frontline with some interest because of its coverage of the ongoing renegotiations of the Program for Government (on the substance of which I am not commenting). I was heartened to see the strength of the anti-NAMA sentiment expressed by some of the party members in the audience, prompting one group to go as far as suggesting that if voting against the Program for Government was the only way to prevent NAMA from happening, they would do so in spite of whatever concessions the Green negotiators were able to wrest from Fianna Fail.

Two votes are scheduled for Saturday's Special Convention, the first on accepting the new Program for Government needs to be passed by 2/3 of the members present. The second on rejecting NAMA also needs to be passed by 2/3 of those present. While there is a significant group with anti-NAMA sentiments within the Party I would have doubted that it would amass the 66% of votes needed to mandate a rejection; however it is much easier to get the 33% + 1 vote necessary to reject the Program for Government, especially given that the motion for Green support for Lisbon II only received exactly 66% of the votes during the July Special Conference. If the Program is rejected, the Greens pull out of Government, an election is called which presumably will be won by a Fine Gael/Labour coalition, both of whom are fervently opposed to NAMA, though they differ over what the alternative should be.

I've already written on my belief that were an election to be held in the next twelve months the Greens would cease to be a significant parliamentary party for at least the next ten years. Opinions differ in the mainstream press on who would be the sole TD to survive a snap election, most suggesting Trevor Sargent though I noted last night that Vincent Browne believes Eamon Ryan would emerge relatively unscathed. Either way the party would take a decade to recover by which time there may not be a role for a dedicated environmental party, given the mainstreaming of Green issues and their adoption by other parties.

For Party members to risk the destruction of the Party itself over the issue of NAMA shows just how passionate its opponents are, and with just cause. I fervently believe that NAMA is one of the most criminal pieces of self-serving legislation to be foisted upon an unwilling public, rewarding Fianna Fail's financial backers in the construction and banking sectors for destroying our economy. It doesn't take a Nobel Prize to see that.

The McCarthy/An Bord Snip report proposed cuts in public expenditure of up to €5.3 billion; NAMA proposes to buy loans on properties with a current market value of €47 billion for around €54 billion, the difference between the two figures being more than the total savings to the Exchequer proposed by the An Bord Snip cuts. While eliminating NAMA would not have the effect of preventing the proposed cuts to Education, Heath and Welfare, it is indicative of the burden that this and future generations of citizens will have to accept should NAMA be enacted. There is no justifiable reason to pay above market rates for toxic assets when using public money to do so.

My intention on Saturday had been to weigh up the revised Program for Government on its merits, despite my strong opposition to any continued coalition with Fianna Fail, and vote purely on the proposal as presented. Given the scale of the disaster this nation faces should NAMA become reality I feel I must now also consider this as part of my vote.

Pat Fitzpatrick, leader of the grassroots group "Greens Against NAMA" will be on Vincent Browne tonight at 11:05 on TV3, and I will be watching with great interest.

* as mentioned before on this blog, I am well aware that there is no such thing as a Nobel Prize for Economics, but common parlance refers to it as such so I have chosen to do likewise.



At 9:57 pm, Blogger ryano said...

"There is no justifiable reason to pay above market rates for toxic assets when using public money to do so."

I don't think you can go so far as to say there is no possible justification. For example if not paying above market value in the form of bonds required you to pay out a lot more in the form of cash for either recapitalisation or deposit guarantees. Even if you don't agree with such a proposition, I think it's at least an arguable point.


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