Having read through lots of stuff, it seems to me that Fine Geal offer the only real alternative to NAMA. (I’m not an Fine Geal supporter) Nationalisation is very risky, we don’t know how big a mess the banks are, and nationalisation would make us respondsible for all thier obligations. That could be a very big bottomless pit.
You have a soulmate in the first commenter to Constantly Turgid’s blob:
It’s real simple actually. The elite get shafted first but not so hard that they run screaming from the country. Nama pays just very slightly over current market values. Banks will belong to you and me and the elite previously shafted in the first sentence - so we can avoid the nasty “nationalisation” word. Everything is done in the open with civil servants under the constant glare of transparency (what a hoot!). Banks will be really nice to their customers from now on and stop paying themselves big salaries. Any profits from NAMA are distributed directly back to the citizens - after deduction of CGT at source.
See not hard at all. Don’t see why Turgid had to make so…well…turgid.
I’ve a better chance of winning the Italian Lotto tonight than ever seeing something like this implemented here. And I haven’t even bought a ticket.
The differences between all the plans boil down to how the risks and returns are shared out.
With the current government plan the shareholders bear some losses, bondholders lose nothing. Most of the risks remain with the taxpayer and a large proportion of the upside remains with the current bank shareholders.
With the Labour plan, current shareholders lose everything. On the face of it the bondholders seem to be losing nothing all though there is always the possibility of a debt for equity exchange.
The differences between the FG plan and Constantin Gurdgiev’s proposal (NAMA 3.0) are purely superficial in my mind.
The most important points are that existing shareholders lose everything and bondholders take a large share of the risk and losses.
I actually think that using NAMA as Gurdgiev’s has proposed would be easier to implement than the FG plan. Setting up a new bank just seems too cumbersome when in reality we could achieve the same results by restructuring the existing banks properly.
Using NAMA also allows the whole process to move much quicker.
As I’ve pointed out previously everything revolves around exactly who
these bondholders are; how much of the bonds they have; what marks they’re marking them at; and what they are being used for collateral against. The possibility is that (certainly in FF’s eyes) the whole system collapses if the bonds get smashed… i.e insurance companies, assurance companies, pensions and indeed more pain to the banks who hold each others debt!
It is not just about the solution, NAMA, nationalisation, or any other proposal. We don´t trust our political class, that is, the people who would be implementing any of this schemes.
Should we propose the direct election of an INDEPENDENT, and non partisan Minister of Finance, by the citizens of Ireland, as the first step in any “plan” to sort-out our economy?
Problems like transparency, corruption, or nepotism are impossible to deal with, without direct accountability to the citizenship.
What if then, the democraticaly elected minister had to present his/her results, to an AGM of citizens, and had to pass a vote of confidence to stay in office?
a) start preparations for sharp withdrawal of state guarantee and collapse of banking system as result ( which bank will be used as new national bank, how much money has to be borrowed from ECB for transfer of deposits from collapsed banks to new national banks, which assets can be seized from banks immediately for using as guarantee for new bonds, how much everything will cost, etc)
b) when it will ready – try negotiate better deal directly with bondholders of banks, so banks after that will not have any debt and it will not cost more then temporary difficulties during collapse of banking system
Any other suggestions about liquidity injections are useless, until bondholders will be not paid fully
Government must have plan B, if any other plan will go wrong
Nationalistion of the six banks (zero compensation- equity and bond holders get nada, they are insolvent), shares held by NAMA/NTPF/NTMA (all merged into one body)
Banks to be consolidatded into three goups (AIB,BOI, Permo/TSB/Nationwide/ESB)
Bad Debts removed to the new super NTMA agancy for work out.
Remaining 3 Banking goups refloated on Stock Exchange, or sold in to the trade (undelrying businesses model is still excellent- all those fees and juicy interest margins) for say 30bn when time is right.
Cash from public refloat issue used to pay off debt.
Our banking system is f***ed, we all know that.
Why are we going to pour our money into creating a “bad bank”?
Why don´t we create a good Irish bank?
Why don´t we create an institution that serves the Irish people, and the Irish economy? A bank not listed in the stock market, that doesn´t engage in business abroad, and is not run for profit. Directly owned and managed by the Irish citizens, or at least for those ones that don´t want to gamble with their savings, just having a safe place for them.
Would it be possible to create such a bank?
I just think the whole idea of creating a bad bank is about the “nationalisation” of the debts of speculators, big and small, not about stabilising a new, and much needed, “healthy” banking system.
We have an opportunity to create something good out of this catastrophy, if we learn our lessons, IMHO.
Track 1 – Establishment of a National Recovery Bank
The first step is to establish a National Recovery Bank. This would be a wholesale bank funded by the ECB which would stand ready to provide the necessary liquidity to the covered banks to get credit flowing. It would be willing to buy at a fair market price the small business lending books or the mortgage books of covered banks. The key features of the National Recovery Bank would be as follows:
The necessary capital would be provided by the State, and could initially be in the range of €2 billion.
It would be established under Irish Asset Covered Security (ACS) legislation, allowing it to cheaply raise additional funding of €30-€40 billion, initially from the ECB and over time from private markets when they re-open.
Existing banking relationships would be maintained (customer whose loans are transferred to the NRB would still have their loans serviced by the retail bank)
It could be established and operational within four to six weeks, and inject new lending into the economy without delay.