Tuesday, January 14, 2014

NAMA: Rebadging Failure as Success

Photo Credit: Google Images
Fintan O'Toole calls out the economic failure in Ireland in today's Irish Times (and, incidentally, in The New York Times also) and in particular those politicians who hold the country up as an example to others. The debt has soared, public services have been slashed, and quality of life has deteriorated for all but those who have emigrated in the last five years. Things are admittedly pretty awful, and made worse by rich men in expensive suits praising the country for its prudence and fortitude.

NAMA was actually designed to do this.  Its model works thus: you have a property worth $50m, for which a developer has a loan of $100m, you pay the bank $20 for the loan, re-capitalise the bank for the $80m shortfall (i.e. repay the German inter-bank lender) through off-books sovereign debt, then sell the property for $30m, making (ahem) a $10m 'profit'. So NAMA then is a success, because it drove a profit from its loan book. The State, meanwhile, is crippled.

Anyone can be successful if they are allowed to define the rules for success themselves.  Small minds are destroying this place.

No comments: