Three cheers for Sean Barrett. I know there have been lots of columns putting Nama down, but for me
this is the best one. Straight-forward, simply-written and deadly.
The builders will be relieved of their gambling debts on high property prices. The bankers will be relieved of the costs of their incompetent lending and senior regulators will no longer have egg on their faces but be reinvented as neo-Keynesian economic heroes who save the economy.
It will be so easy. Nama pays off the builders at a bit less than bubble prices, builders pay off the unreformed banks and banks will immediately begin investing in productive economic activities and will never be codded by builders again, really. Nama is a macroeconomic three-card trick to refinance incompetent Irish bankers and reflate a property bubble without addressing reform in the property market, banks or bank regulation. It has dire microeconomic consequences for these sectors and adverse consequences for the rest of the economy.
… The proposition that Nama should pay more for impaired assets because it alone is aware of their long-term economic value is at best a gamble with public money founded on a belief that Nama knows something that no one else in the market knows about these items.
This way of doing business has been agreed, we are told with some pride, by the IMF, the ECB and the EU Commission. This might be as simple as international bureaucrats rescuing national bureaucrats from a hole of their own making. We also need to know whose version of this crisis was communicated to the international bureaucracies.
I love his take on the bureaucrats involved. More than anyone, they're getting away scot-free.
We need competence in financial regulation across the Central Bank, Financial Regulator and Department of Finance, with massive management changes in all three bodies. We must solve the present crisis in the three sectors that caused it, bad builders, bad bankers and bad regulators.
The only quibble I have with Barrett's piece is his reliance on the Canadian model. We don't control our own currency, Canada does. I'd love to ask Barrett about the euro's role in the crisis and our regulators' failure to grasp how the old rules don't apply when you have a currency priced to suit an economy to which we're only loosely tied.
