From Socialist Voice, April 2009

National Asset Management Agency: Corporate welfare on a grand scale

The Government has produced its budget—the third attempt within six months to get it right. A central plank of Government strategy was the establishment of a National Asset Management Agency—a “bad bank”—and giving it the responsibility for negotiating the best price for the bad debts resulting from speculative investments around the globe by the Irish ruling class, which appear now to be almost worthless.
     Irish banks accumulated foreign debts to the value of 60 per cent of GDP by mid-2008, most of it for speculative property investment. The Irish ruling class has borrowed billions and invested it in a whole range of now greatly devalued properties, in London, New York, Chicago, Bulgaria, Turkey, Iraq, India, China, and all points west.
     In fact the job of this new misnamed body will be to manage huge liabilities that the state has agreed to take responsibly for on behalf of the Irish people—debts that Irish workers had no hand, act or part in accruing but yet will have to pay for, as will future generations, amounting to possibly €80–€90 billion. In fact the Irish state will hold assets of very dubious value. If these were really assets the banks would not be so fast in handing them over to the state.
     The establishment of the National Asset Management Agency will result in a significant increase in gross national debt. Before the budget the credit rating agency Standard and Poor’s downgraded Ireland’s sovereign debt rating. The consequences of this downgrading are that the Irish Government will have to pay increased interest for the money that it needs to borrow from international financial institutions. At present the Government is borrowing an average of €45 million per day.
     Now that the state has decided to buy these liabilities from the banks, the dance has begun, with a simulation of contending interests battling it out in a non-existent struggle. Experience has shown that the present owners of these liabilities—the banks and speculators, developers, and the Government—all make up the Irish ruling class. They are the same people: they share the same ideology, they share the same class interests, they have gone to the same private schools and colleges and are members of the same golf clubs and corporate hospitality facilities.
     We got a glimpse of who the Anglo-Irish depositors and lenders were, by courtesy of Brian Lenihan, on 20 January last. It is estimated that the bank—now nationalised—had 300,000 retail depositors, only 72,000 of whom are Irish. Corporate depositors amount to 12,000, and again only 3,500 of these are Irish. So those who benefited most are the big corporate interests, both Irish and non-Irish.
     Many of the shareholders of the financial institutions had already lost everything, which was reflected in the anger at the AGM of the bank in the early part of the year.
     The Green Party will provide the cover of a non-existent contest over the price the state should pay for these liabilities. Dan Boyle has been in the media spinning the story as an insider with knowledge of the current thinking of the Government and with the pretence that the Green Party is going to face down these corporate interests. He has said that the Government is prepared to strike a hard bargain and pay only half the book value of the six banks that have availed of the guarantee liabilities scheme. Davy’s, the stockbrokers, have stated that the banks are willing to take only a 15 per cent write-down of these bad property liabilities.
     We will have the usual dance around the table. The establishment newspapers, the economic pundits and RTE’s talking heads will spend hours discussing this or that scenario, while Government spin doctors will be working overtime to convince a sceptical population that the discussions have been tough.
     All will be alluding to the calibre and the independence of the sandbaggers running the National Asset Management Agency; and when it is announced that they have agreed that the write-down will be in the region of 30 per cent or less it will be trumpeted as a victory over greedy bankers and for common sense.
     This approach by the Government will simply not work. It has exposed Irish workers, their children and grandchildren to massive debts. They will be forced to put more and more money into failing banks, and most probably these will end up in some form of nationalisation. This kind of nationalisation is about saving the ruling class, about protecting the interests of capital, not about controlling capital.
     The approach of the Government has all the hallmarks of control determined by outside influences. Whatever the Government has done and will do has to cross the table of both the EU Commission and the German government.
     Workers and small businesses know from experience that if you owe the bank €10,000 it will chase you down and squeeze all the blood out of you, take your home, or force bankruptcy on you; but if you owe the bank €50 million or more they will bring you to lunch in the fanciest of restaurants. While they present the case that we can all make it, that you can become one of the big players, when a choice has to be made they come down firmly on the side of their own class interests. Working people, including those who consider themselves middle class, and small businesses will be sacrificed to this goal.
     The only serious solution is for the state itself to establish a bank and to put into it the national pension fund, allowing people to transfer their savings and their mortgages. Trade unions could also invest their pensions, thereby removing them from the global gambling casino called the stock market. In addition, the state could borrow internationally and make up whatever shortfall there may be to make sure that it is well capitalised.
     This could quickly begin to allow cash flow to small business and to reassure those with savings and family home-owners that their savings are safe and that their home will not be repossessed.

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