Mike Soden, former BOI CEO, was on Newstalk this morning advocating that NAMA should actively buy up residential property in order to boost the market price. His thesis was that if people can “wake up one morning and see property has risen 10%” that will encourage more transactions and help the banks deal with the avalanche of defaulters.
After all we’ve been through in the last four years, it’s as if many within the establishment have learned nothing. Soden thinks the property crash is the problem. He fails to grasp that it was the artificially primed bubble that he and his cronies presided over that was the real issue. And, incredibly, he wants NAMA to artificially pump the market again.
For his knowledge of basic economics, Soden can take an F. If this is the calibre of the guys running our banks during the bubble, it is no wonder we are where we are. These utterly failed businessmen with their clapped out dogmas and ignorant group-think should be swept aside. I wonder if our financial institutions would be better off run by former engineers. At least they wouldn’t try to ignore the basic rules that govern how their environment operates.
Even if he is way off the mark on rational terms, there are probably thousands of people who would jump back in to the BLT game if they could get financing and they had just seen a 10% jump in prices. So in one sense he is probably right.
In the sustainable sense, the right and proper sense, the financial and economic sense, the once bitten twice shy sense…
I heard that interview this morning on the way to work. I thought Soden was rambling and inarticulate and the interviewer let him speak without questioning him further. I could only partially understand what Soden was saying. It was a confusing incoherent monologue of half-finished sentences.
Soden ran a bank for a while and made a mess of it before resigning over booking prostitutes using Bank facilities.
His argument appeared to be that NAMA should buy residential property and then sell it. Soden said that NAMA had plenty of commercial property but little residential. NAMA already has plenty of residential property in the form of large developments that are being treated as commercial rather than residential property. It has consistently refused to sell these properties because of a stated policy of not wanting to sell property for less than it is worth.
He did not explain where NAMA would get the money to fund these purchases or how the scheme of purchase would operate: would it buy high and sell low to give vendors artificial state-funded (that it funded by you and me) gains that would then create some form of buoyancy?
The most sense was from the Newstalk business correspondent who, after the interview, said that interventions in the property market should be avoided and referred to the consequences of the implementation of the recommendations of the two Bacon reports.
Just let the property market find its own floor without costly and procrastinating interventions.
Usually the case, I’m never sure if it’s because the interviewer has been told to give the person an easy ride as their opinion is that of the media franchise’s owners or if the journalist has a notion what’s going on and hence isn’t able to challenge
Let’s just be thankful he didn’t suggest that NAMA invest in a new online venture - hoorsdirect.ie or somesuch. How this stupid fuck still gets to do the talking head circuit is beyond me. We might as well bring back Frank Dunlop to eh … manage … public appointments.