‘What is morally wrong can never be politically right.’ Abraham Lincoln
The green party membership is about to be pitted into the biggest decision of its life. The Greens Against NAMA group set out their stall here.
How did we come to this impasse, where a political party is asking its members to forego one of its founding principles in the name of expediency? It’s all happened so quickly that some of us are startled when we are reminded about a core principle of the green movement, the sharing of resources. Yet the NAMA 2009 bill is the very opposite of this core principle. And not only that but it won’t even solve the problem it’s supposed to, to restore credit flow to Irish business.
This is a debate that will search out the very heart of the Green movement. To an outsider it may appear the most ungreen of issues. To those of us in the Green Party it is fundamental.
But, leaving aside the principle argument, NAMA will add to the mess we are in. The price we are being asked to pay is way too high, we are being asked to take on enormous long term debt in order to get credit flowing now. The conjurors in the Dept of Finance, starting with the Minister for Finance, have spun a yarn of yields and bonds and Long Term Economic Value (LTEV) that will not work. The property bubble was of our own making, and if we accept NAMA we will be creating another mess. It’s the last throw of a defunct regime. Do the Greens need to be a prop to this?
That NAMA will be a success is based on the assumption that the country is about to turn the corner and go into a growth phase. This may not be the case and it’s now up to Green Party members to make a judgement call on this and many other aspects of what’s being put before us. We have high and rising unemployment and it has all the appearance of being of a structural and not a cyclical nature. We’ve done the house building, the office and shop building. We’ve become uncompetitive in manufacturing, and missed out on the knowledge economy. So high unemployment will most likely stick around for far longer than the NAMA plan assumes. The traditional relief valve of emigration is not available as unemployment is now global.
So we will have to solve our unemployment problems here. And just when we need to have all our resources at hand we are throwing away one of them, the capacity to borrow if we decide to retrain, reskill, build infrastructure or do anything else. NAMA will see us tapped out on credit, and most of it will be given to the banks, the very ones who should be providing credit in the first instance!
The chances of us having to service the NAMA debt is very high. Loans backed by UK and US assets will suffer as a result of the ‘Quantitative Easing’ in the Sterling and Dollar currencies. These currencies will devalue over the next few years by as much as 20 or 25%. We lose.
For the same reason, much of the income to service NAMA bonds will be reduced. Again we loose
Here at home NAMA has a big problem. Not even one with the enormous powers of the Minister for Finance can buck the market laws of supply and demand. We have built far too many houses, too many shops and too many offices. NAMA taking properties of the market will not solve the problem. These properties will overhang the market and prices will stay low. That’s how a market works and we should deal with our problems in honest terms not the hocus- pocus of long term economic value. To do otherwise is delusional and extremely dangerous. We are merely post-poning the inevitable and throwing away our cash at the same time. Again we lose.
The supposed 25% equity stake that developers put into their projects is a figment of Brian Linehans imagination. We lose.
Our politicians are far to Dublin centric. I invite John Gormley, and his colleges to come down to the country and see the legions of houses, finished and otherwise, that lie all around Ballyforan, Coothall, Loughrea, and every town in the land. Swanky apartment blocks on the Dublin quays will eventually sell but semi d’s and the one offs that line the country roads will never sell. We are handing over cash the country has not got for houses that we do not need.
The banks are laughing all the way to their own vaults with our money. That same money will rest there until the banks are well and truly ready to lend again. We are in the down leg of the economic cycle and banks will not lend until that changes. Look at the UK, after pumping billions into their banks the credit flow is only slightly better than a year ago.
To those members who say we shouldn’t be attacking our own Programme for Government we have tell you the following.
Motion B was put forward by the five objecting green party groups as a reflection of what the members expressed in Athlone through the preferendum. It was a motion to accept NAMA but with conditions attached. One of the chief conditions was that we only pay current market value for the loans. The greens know that LTEV is bunkum. However the Nationals Executive
Committee of your party has decided, for some strange reason, not to allow motion B onto the table at the RDS on the 10th of Oct. This is the motion that Greens Against NAMA would have promoted. It would have allowed us to stay in Government. But now we are forced into an ‘all or nothing’ situation.
Where now is all the good work done in Athlone? Where now is the core structure of a membership led party? In power we have quickly become just another political party, we could be Fine Geal, New labour, The Conservatives, whoever. The Green leadership have endangered the bond of trust with the members. Their high credibility is now in peril.
We know that all the goodies promised in the renegotiated programme for government will never make NAMA acceptable. We know that all the promises will never materialise because NAMA will rob us of our ability to implement them. Brian Cowen knows that too. But it will not matter to the leader of popular politics. He deals in opinion polls and spin. The greens should not join him in this deception. We should return to principle led decision making. The members can make that decision on the 10th and our electorate will thank us for it.
The biggest deception in this whole game has been to instil fear into the electorate; if we let the bank bondholders take a hit we will endanger the national finances and the cost of servicing our sovereign debt will soar. What a convenient blurring of the worlds of national debt and corporate debt. Nothing could be further from the truth. If we allow this blurring to go unchecked we will meld bank debt to our national debt and then we will be pinned with a huge debt to GNP ratio that could make life very difficult for Ireland. Cowen knows this yet he has spun a different and misleading tale. If he does not know this, then he’s surrounded by a bunch of yes men and that’s a very dangerous position for the Taoiseach to allow himself to be in.
The truth is that bond managers are hardnosed business men and they will be much happier to lend to a country that takes on its’ problems and deals with them in real terms, not in LTEV deception. We have a big enough of a debt monkey on our backs without taking on the rubbish that the banks want to be rid of. If it were worth anything the banks would not be ‘selling’ it to us.
Bondholders received the vast bulk of banks profits all through the boom. When you heard of AIB making €3bn or €4bn profits in their half yearly returns, it was to the bondholders the profits went. In the US 98 banks have gone bust this year. In all cases the bondholders have taken the hit. Why should it be any different here?
In the jig that is NAMA the banks are calling the tune. Fianna Fail is a much compromised political institution. The banks know where the bodies are buried; they know every dodgy land deal, the rezoning stories, the iffy planning decisions. The stories lie in the computerised bank account records. The banks designed NAMA. The banks are calling the tune on NAMA. Fianna Fail is dancing to that tune and the Greens and green principles are getting trampled under the hooves of Cowen, Linehan and co. The great work done in building up a very special political party is about to be extinguished with one big silly, costly deal, NAMA.
John Gormley says so long as the taxpayer is protected what’s the problem? How niave? The banks already have one hand on the €2.75Bn bonds which are being held back in a so called risk sharing exercise. In a year of two they will be stuck again and we will still have the gun pointing at our heads, and ‘their’ bonds will get passed over to them.
The bank levy which Brian Linehan has trumpeted so often is not in the legislation. The Taoiseach has stated that such a levy would deter future bond managers from investing in the banks. Do we need a clearer example of what NAMA is all about? Again Cowen and Linehan have elected to look after the banks. NAMA is the most glaring case of socialising the losses while keeping the profits private.
John Gormley says that he’s changing the long term future of Irish politics through reforms in the new programme for government. And we in Greens Against NAMA say these changes are necessary, and should there be a general election it behoves any incoming government to carry on the good work started by John and all the Green parliamentary party. Since the days of Lawyer and Burke, the Baileys and Bovale, nothing has really changed and that change must happen.
However we cannot barter such changes for €54Bn. It’s a reward for corruption and incompetence. Hard lessons are learned through loss. The banks are in the business of risk and it is with them that the solution to their problems must start. Whether it’s the Swedish model or the Good Bank/Bad bank solution, it’s only when they mark loans down to true market value, sell off surplus assets and ask their bondholders to swap bonds for equity that the state should step in.
What message does NAMA send out about the greens? It tells banks and other political parties that green principles are easily bought. It tells the developing world, where debt is a massive problem, that green politics is not going to help change their world.
To the 1500 green party members we say; do not sit at home and watch this decision unfold on TV, get informed, read the papers, read both sides of the argument, get up to the RDS and vote, we won’t even have to tell you which way to vote. You have a responsibility to your country to do so.