From Socialist Voice, August 2009

NAMA: socialising the debt

The Government has produced its draft legislation outlining the legal ground rules and the role of the National Assets Management Agency. It plans to take anything up to €90 billion in bad loans off the books of those banks that have opted for the Government guarantee scheme. What this will mean is that the Government will take the bad loans off the banks’ hands, and in return the banks will get Government bonds or securities.
     As the total figure for all participating banks may be close to €90 billion, the combined figure for the two main banks, Bank of Ireland and Allied Irish Banks, may be in the area of €60 billion. Recently it emerged that property developers and speculators have taken out and secured multipliable loans with different banks and financial institutions, using the same assets as collateral.
      NAMA will have its own “separate” management, with people recruited from the very same corporate interests that one way or another will be beneficiaries of this mass shift of debt onto the backs of working people. Their first priority, as is the state’s, will be to protect the interests of the ruling elite. Valuations by NAMA are determined by the EU Central Bank, which states: “The overriding consideration at the current juncture is the maintenance of financial stability and the restoration of an adequate flow of credit to the economy.”
     Experience has shown that governments in societies like ours will sell cheap and buy dear. The example of Telecom Éireann, were the state sold cheaply, shows that the banks will make sure that the state (i.e. the taxpayer) will pay the best prices for these toxic assets and no doubt over time will sell them off at knock-down prices.
     We will be buying up not alone land banks around our towns and cities but property from Dublin to Shanghai; and when we have finished buying up very dodgy properties we will have to give the banks further money in order to recapitalise them. There is also no guarantee that, even after the removal of these bad debts and the recapitalisation of the the banks, small firms will have access to new loans to keep their businesses afloat. This is all designed to keep international finance houses on side.
     It appears that the Government wants to pay over and above the current market value of these properties. They are willing to pay more than twice the current value, which is to reflect the potential longer-term economic value of the assets. In other words, Irish taxpayers will be buying a pig in a poke.
     The big financial backers of the establishment parties will walk away, with the state taking over responsibility for their debts. Then they can start all over again. A casual look at the register of political donations to the establishment parties reveals a who’s who of bankers, builders, and property speculators.
     This is simply throwing good money after bad, with banks still tottering on the brink and all the taxpayers’ money flowing out to meet the banks’ and financial institutions’ international debtors.
     So whichever way you look at it, the banks and their shareholders win and workers and taxpayers pay a very heavy price. You can also be sure that the banks will not be paying any tax on the transfer of these assets to the state. Workers lose every way.
• The state will have to pay higher interest on its borrowings internationally, as its credit rating is going down.
  • More and more state revenue will be spent trying to service these borrowings.
  • More and more public services will be cut.
  • Thousands more jobs will be lost, in both the public and the private sector.
  • Private and corporate shareholders in the banks will carry no risk and will gain the most.
     This is a case of Irish workers taking all the pain. The much-talked-about “sharing the pain” is nothing more than a ruse to cover a major attack on workers and their families, while the rich and powerful minority class remain firmly entrenched and retain control over the reins of economic and thereby political power.

How are the mighty fallen!

The other side of Government economic policy—trying to ensure a soft landing for its banker and speculator sponsors—could be facing a problem, thanks to the collapse of Zoe Properties. The refusal by Mr Justice Kelly to grant examinership (now under appeal in the Supreme Court) could put its property on the market, where it might make about half the price NAMA is prepared to pay for its “toxic assets.” The total subservience of Irish politicians, in government or opposition, to national and international capital is clearer than ever.

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