THE HARDEST part of figuring out the right answer is deciding what's the right question. A few months ago, we were being asked to choose between the National Asset Management Agency or nationalisation. I opted for Nama, but it turns out I was answering the wrong question. Or maybe it was the right question then, but the wrong question today. The point is, we've got to stop distracting ourselves with sideshows, writes SARAH CAREY
So stop asking yourself why we’re bailing out developers (we’re not); how much this will cost us (a lot) or why the little people have to pay (because that’s what little people are for). You should also spare yourself the bother of reading the litany of “Not I” articles spawned by the McCarthy report, for Colm’s €5 billion is a fraction of what the banking problem is going to cost us.
Here’s where we appear to be: Nama is a good idea once we don’t over pay for the assets. Paying the right price will render the banks that are unofficially insolvent officially insolvent. This will necessitate recapitalisation on such a scale that nationalisation will be an automatic consequence. There is no way of not paying – at least €30 billion but possibly more – to get ourselves out of this mess. We have two options in how we spend that money.
The first option requires us to write a cheque for €30 billion and use it to overpay for the banks’ troublesome assets. We will thus become the proud owners of some loans and the property on which they are secured.
Option two involves writing one cheque for €15 billion for the loans and another one for another €15 billion which will make us the even prouder owner of some banks.
In either case we’ve to borrow the money, presumably from the Germans, but under option two, we’d own more stuff. Owning stuff is good.
Here’s where it gets tricky. Apart from bank shareholders, there are six people in the country who think that owning stuff is not good. Unfortunately, those six people work at the top of the Department of Finance. There are only four reasons why they might think this way.
One: they are right-wing ideologues determined to protect shareholders at all costs; two: they are weak and being bullied by the banks; three: they are terrified they’ll screw it up and make an even bigger mess than the one we’re in already, or four: there’s something they’re not telling us.
The smart money is on three. And hey, it’s a reasonable position. More bad government is a bad idea. That’s why back in April, I argued against nationalisation.
But then along comes Colm McCarthy, a sober, patriotic man. On Monday, he said on RTÉ Radio One's Morning Irelandthat even if we overpay for the development loans, we could still end up nationalising the banks anyway because they've got so many other bad debts. So we could overpay for the sole purpose of avoiding nationalisation, but still end up having to do it? Ah, no.
There is now only one question that matters. How can we stop the insanity? The sad and sorry answer is: the Greens.
The Greens wanted power and Trevor Sargent did a moral backflip to get it. Now we get to find out if they’ve any backbone. Putting Fianna Fáil into government when we knew a train wreck was coming down the tracks was an appalling decision. A failed attempt to ban stag hunting, a review of regulations on organic food and a direct election for Dublin City’s Mayor do not justify that decision.
Getting us Nama plus nationalisation would make their deal with the devil for power worthwhile. Let us not forget what Uncle Ben told Spiderman: “With great power comes great responsibility.”
For Gormley and Boyle, it’s time to zip up their superhero suits.
The first thing they need to do is forget this silly business of the special conference. Looking for permission from your members is not a glorious example of democracy but an act of weakness. They are leaders, so can they lead please?
Secondly, they need to be very specific and responsible in what they demand. Dan Boyle’s comments on the legislation have been both.
He has stressed that there is no developer bailout. He has acknowledged that an asset management agency is required and he has supported the widely praised suggestions from Trinity College’s Patrick Honohan regarding the shareholding structure of Nama. This is all constructive behaviour.
The hard bit though is that the Greens will have to be ready to walk out if they don’t get what they want and what we need. People will try to scare them out of an election. They will say the last thing the country needs is an election. Rubbish. An election will take three weeks and Nama is taking almost a year to establish.
They will say that the international markets will react badly. Balderdash. Our political parties are the same, so the world will know that it won’t matter who wins. The only people who won’t like it are those who’ve been buying bank shares for the past three months and they shouldn’t matter to us.
They’ll say that the Greens will get hammered at the polls, but the leadership should ask itself this: Would they rather fight a general election which they precipitated over nationalisation or one prompted by Jackie Healy-Rae over rural buses? There’s only one right answer to that question.