Joseph Stiglitz on Nama and similar schemes

Hydrosylator

Joseph Stiglitz, nobel laureate economist, spoke on Primetime earlier in the week, about Nama and similar practices.

Some of his more pivotal points:

• Nama is a criminal robbery of taxpayers
• Banks are panicking people and their governments into acting in haste
• In the free market the banks are happy to be part of when the going is good, their shareholders would lose, and the bondholders become the new shareholders, and it would be business as usual
• In a state-rescue situation, the state is the bondholder, and would be wisest to "pre-privatise" the banks, bringing them under state control, and then re-floating the banks, re-capitalising the banks at the states benefit, rather than expense.

I'm not an economist, but I think his proposal, which isn't a wild theory it's an established practice, is better than Nama. Thoughts?

Lockstep

I have a lot of respect for Stiglitz anyway; his work seems very good (to my untrained economist eyes)


The ideas you outlined below seem sound as well.

Hydrosylator

kickoutthejams wrote: »

I have a lot of respect for Stiglitz anyway; his work seems very good (to my untrained economist eyes)


The ideas you outlined below seem sound as well.

Yeah I already respected him too. That said, I own two of his books and haven't finished them yet. He doesn't hold back on the details and you really need to set aside time to read them or you get completely lost. There's a man who knows his onions.

Lockstep

Have you read Globalisation and it's Discontents?

A cousin of mine was an economic advisor to Clinton and said it would be a great book on economics for me to start off on.
Well written and easy to follow.

Sand

The recurring theme with NAMA is that only bankers, stock brokers and property industry types are arguing its a great deal for the Irish taxpayer.

Every single independant authority has been shouting some variation of "Stop! This is madness!" whilst the Government has been plain out lying about support for NAMA. Even the ex-Swedish Finance minister who presided over the scheme that NAMA is allegedly based on returned to Ireland when he heard it was being claimed he supported NAMA - he clarified that he very much disagreed with the implementation of NAMA.

NAMA is theft on a massive scale, and unfortunately the thieves are running the country.

The only reassurance I have is that the next government can default on the NAMA bonds, and offer to reverse the deal on the same terms, plus interest.

Hydrosylator

kickoutthejams wrote: »

Have you read Globalisation and it's Discontents?

A cousin of mine was an economic advisor to Clinton and said it would be a great book on economics for me to start off on.
Well written and easy to follow.

I've read most of it. It's a hell of a book, a real eye opener.
It reminds me of a Michael Parenti quote:
"Capitalism works, but for whom does it work?"

lmimmfn

What Stiglitz says is only common sense, NAMA is daylight robbery for the irish tax payer, not only is it wrong to bail out the banks and devs like that( dump capitalism when it fails, revert to socialism to bail them out and back on the capitalism bandwagon again ) at our expense but basing the assets at a potential future value is a disgrace, what future value?
if NAMA is setup no average working person in the country will have any cash to spend on property/house trading up or even to get a mortgage to allow property values to increase again, i.e. property will not increase in value for a very very long time with the tax required to fund NAMA, to make matters worse soon we will be back to the 80's tax regime, no consumer spending=more job losses=more on welfare=higher taxes=emegration=brain drain

It shouldnt be a government decision to take, it should be the peoples, not only that FF never ever once provided any alternatives whatsoever, i have never in my life heard of only providing 1 solution to any particular problem, with 0 cost/benefit analysis. Smells well fishy to me.

I will seriously consider skipping country when things improve elsewhere if NAMA is implemented. Without NAMA its expected to be 2020 before we get back to where we were at in 2006/2007, with NAMA you can add at least another 10 years as it will slow recovery and take ages to offload the property.
Not only that but theyre not even going to publish the individual sale vales of properties and assets when they sell them, only yearly balance sheets, i.e. developers with brown envelopes will have a field day, luckily politicians in this country arent corrupt, er oh yeah i forgot they are, 2nd worst in the western world behind Italy last i heard.

Hydrosylator

lmimmfn wrote: »

I will seriously consider skipping country when things improve elsewhere if NAMA is implemented. Without NAMA its expected to be 2020 before we get back to where we were at in 2006/2007, with NAMA you can add at least another 10 years as it will slow recovery and take ages to offload the property.
Not only that but they're not even going to publish the individual sale vales of properties and assets when they sell them, only yearly balance sheets, i.e. developers with brown envelopes will have a field day, luckily politicians in this country arent corrupt, er oh yeah i forgot they are, 2nd worst in the western world behind Italy last i heard.

I know the feeling. I'm self employed and the last year has been hell. If this country get's hit by a NAMA / Bord Snip Nua double-whammy, it's going to get worse, and then stay that way until the property market comes back to where it was, which might never happen. There'll be even less business for people like me. I don't know what to do except fight it at every turn.

This whole thing is straight in line with the policies that defined the last ten years in this country. Look after your mates and they'll look after you. Jobs for the boys. **** the voters, they're all stupid *****.

onekeano

It's unbelieveable! The Green Party used to come across as the political Google ie. "do no harm". It's unbelievable that given the amount of scandal, the outrageous payoffs for ineptitude or abuse of position - eg. Neary, Molly & O'Donoghue. :mad:

Now the proposal to drive through NAMA which Stiglitz (the Nobel winning economist) called "a crime" is going to commit several generations to a huge burden of debt and who makes this decision - effectively a couple of hundred tree huggers who seem more concerned about fur and "staying in power" underpinning a party that for 15 years has bred a culture of doing whatever it takes to stay in power and getting their snouts as deep as possible into the trough!

Roy

creeper1

Sand wrote: »

NAMA is theft on a massive scale, and unfortunately the thieves are running the country.

.

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him. It benefits no one to make crazy accusations like this. Might I remind you that that the Finna Fail party, along with its coalition partners, was re-elected in the 2007 general election.

The party had broad support then and I believe now. Yet you call them theives :rolleyes:

As for Stiglitz he should not stick his nose into Irish politics. Using colourful words like "criminal" etc to describe NAMA is not what we need.

I expect the NAMA bill to be passed in the middle of this month. It's time for the country to get behind it and let recovery have a chance.

ei.sdraob

creeper1 wrote: »

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him. It benefits no one to make crazy accusations like this. Might I remind you that that the Finna Fail party, along with its coalition partners, was re-elected in the 2007 general election.

The party had broad support then and I believe now. Yet you call them theives :rolleyes:

a fianna failer i see

about the highlighted bit

please remind us who dealt Mr Cowen this hand? :mad:

SLUSK

creeper1 wrote: »

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him. It benefits no one to make crazy accusations like this. Might I remind you that that the Finna Fail party, along with its coalition partners, was re-elected in the 2007 general election.

The party had broad support then and I believe now. Yet you call them theives :rolleyes:

As for Stiglitz he should not stick his nose into Irish politics. Using colourful words like "criminal" etc to describe NAMA is not what we need.

I expect the NAMA bill to be passed in the middle of this month. It's time for the country to get behind it and let recovery have a chance.

Do you own alot of houses, are you a developer yourself? Or are you perhaps an owner of alot of shares in irish banks? Why else would you support a plan which redistrubutes wealth from taxpayers to bankers?

nesf

Heaven forbid someone has a dissenting view to the mob! Time to get out the pitchforks lads!

ei.sdraob

nesf wrote: »

Heaven forbid someone has a dissenting view to the mob! Time to get out the pitchforks lads!

already sharpened


it makes me sick that someone actually believes that

"its not pool olde Cowens fault, himself and his party are just dealt a wrong card from above"
:rolleyes:

nesf

ei.sdraob wrote: »

already sharpened


it makes me sick that someone actually believes that

"its not pool olde Cowens fault, himself and his party are just dealt a wrong card from above"
:rolleyes:

And I don't give a ****, getting personal with a poster because of their politics is not allowed on here.

skearon

ei.sdraob wrote: »

a fianna failer i see

about the highlighted bit

please remind us who dealt Mr Cowen this hand? :mad:

George Bush's failed regulation in the US, and him allowing Lehman Brothers to collapse.

thebman

creeper1 wrote: »

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him. It benefits no one to make crazy accusations like this. Might I remind you that that the Finna Fail party, along with its coalition partners, was re-elected in the 2007 general election.

The party had broad support then and I believe now. Yet you call them theives :rolleyes:

He's doing his best to make sure FF skeletons don't come out of the closet.

I don't think Brian Cowen is a thief or Brian Lenihan but they do have and previously have been in bad company.

Most of their colleagues who have been thieves in the past and presently have information they don't want to come out from property developers and banks so those people are being protected at the taxpayers expense.

This is wrong and while not making them directly thieves they will have robbed the Irish taxpayer of billions!!

Billions that is required to be invested in our appalling infrastructure which has not been sufficiently improved during good times and now must be improved on borrowed money in bad times.

ei.sdraob

skearon wrote: »

George Bush's failed regulation in the US, and him allowing Lehman Brothers to collapse.

and our banks didnt give out money to anyone who could move :rolleyes:

skearon

Sand wrote: »

The recurring theme with NAMA is that only bankers, stock brokers and property industry types are arguing its a great deal for the Irish taxpayer.

It's only recurring because some members of the opposition are pushing this populist nonsense.

What they often forget to mention is that NAMA has the full support of the IMF, EU Commission and most importantly the ECB, the people who are providing the 50+ billion euro. Is it credible that the ECB would risk this money if they though NAMA was not the best plan to fix the Irish economy??

Aside from NAMA being self financing, its critcially important for the Euro that all participating countries get their economies back on track, hence the close involvement of the Commission and the ECB in the formulation of NAMA.

To protect jobs we need an economy that is growing. An economy cannot grow without a properly working banking system, that's a simple fact.

Stiglitz is entitled to his opinion, however his suggestion that the market should take its course is entirely inappropriate in Irish circumstances. The market did take its course with Lehman Brothers!!

skearon

ei.sdraob wrote: »

and our banks didnt give out money to anyone who could move :rolleyes:

Yes they did, and people took it, so they share the responsbility.

ei.sdraob

skearon wrote: »

Yes they did, and people took it, so they share the responsbility.

and FF didnt add fuel to the fire no?

nesf

ei.sdraob wrote: »

and FF didnt add fuel to the fire no?

See, while I'm no fan of FF's economic policies over the past decade it's pretty much par for the course in an asset bubble for a Government to be pro-cyclical. Because this time "it'll be different". The proposed economic policies of the Opposition as recently as the last election were no different. It's easy with hindsight to point to each budget and say what was done wrong but if FF had jumped on brakes they'd have burst the bubble and guess what, everyone would be lambasting them about how they creating a recession/prolonged the bad times etc.

SLUSK

Are you telling me that NAMA is the best thing for Ireland because the "experts" say so? You have gotta be joking.

SLUSK

skearon wrote: »

George Bush's failed regulation in the US, and him allowing Lehman Brothers to collapse.

In a free market economy you allow unsuccessful companies to fail. The Lehman Brothers collapse was one of the only things they did right. They should have let them all collapse.

If you say they should have been saved you obviously do not believe in a free market system.

puffdragon

creeper1 wrote: »

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him. It benefits no one to make crazy accusations like this. Might I remind you that that the Finna Fail party, along with its coalition partners, was re-elected in the 2007 general election.

The party had broad support then and I believe now. Yet you call them theives :rolleyes:

As for Stiglitz he should not stick his nose into Irish politics. Using colourful words like "criminal" etc to describe NAMA is not what we need.

I expect the NAMA bill to be passed in the middle of this month. It's time for the country to get behind it and let recovery have a chance.

Criminal is not "a colourful word" its dark, dingy and illegal, criminals go to jail and are classed as the scum of society,lets be very clear what the man is saying here,if NAMA is passed then our government are no better than the population of our prisons at the moment,and I would agree with that analogy.
A spade is a spade in my book,stupid is what stupid does!!

asdasd

If you say they should have been saved you obviously do not believe in a free market system.

I hate to sound like a Marxist, since I hate Marxism. But the free market system does not work, at least not in the financial markets. It needs government intervention. If all the banks had failed, then all credit would have dried up in the US and around the world, and most deposits lost. The economic consequences of that would have been enough to push world GDP into freefall.

ei.sdraob

asdasd wrote: »

I hate to sound like a Marxist, since I hate Marxism. But the free market system does not work, at least not in the financial markets. It needs government intervention. If all the banks had failed, then all credit would have dried up in the US and around the world, and most deposits lost. The economic consequences of that would have been enough to push world GDP into freefall.

free markets do work

the reason they failed is interference (read interest rates)

asdasd

the reason they failed is interference (read interest rates)

sigh.

The alternative to the governments setting interest rates is what? A free for all with the banks setting interest rates? It was lack of government regulation that caused the problems, which is why in regulated countries like France, no real bubble and no problems which were not externally caused.

ei.sdraob

asdasd wrote: »

sigh.

The alternative to the governments setting interest rates is what? A free for all with the banks setting interest rates? It was lack of government regulation that caused the problems, which is why in regulated countries like France, no real bubble and no problems which were not externally caused.

yes a free for all

and if banks fail they fail

none of this socialist crap bailing out banks

thebman

asdasd wrote: »

I hate to sound like a Marxist, since I hate Marxism. But the free market system does not work, at least not in the financial markets. It needs government intervention. If all the banks had failed, then all credit would have dried up in the US and around the world, and most deposits lost. The economic consequences of that would have been enough to push world GDP into freefall.

How does saving the banks work. Sorry lads your too big to fail so we are going to pay to keep you afloat.

Now don't go taking mad risks again or we'll have to bail you out again.

Sounds moronic to believe that companies that drove themselves bankrupt have learned anything other than the government will save them if they go under so they can do whatever the hell they want and nobody can touch them as they can just stop lending to get the government to do what they want.

asdasd

Now don't go taking mad risks again or we'll have to bail you out again.

There is a different scenario with Ireland and the US. In ireland I would have left the banks go bankrupt and let HSBC buy the assets for a dollar, if they wanted it. Something like that.

In the US no one bank could have taken that on. The US is too big to fail. Thats why the government came in. The depression was caused by Free market economics in extraordinary circumstances. By letting the banks fail, they exacerbated the depression. If we didnt know that history, and had acted the same, we would have had a worldwide depression which would have made the (mostly US based) depression of the 30's look like a day out at the beach.

ei.sdraob

asdasd wrote: »

There is a different scenario with Ireland and the US. In ireland I would have left the banks go bankrupt and let HSBC buy the assets for a dollar, if they wanted it. Something like that.

In the US no one bank could have taken that on. The US is too big to fail. Thats why the government came in. The depression was caused by Free market economics in extraordinary circumstances. By letting the banks fail, they exacerbated the depression. If we didnt know that history, and had acted the same, we would have had a worldwide depression which would have made the (mostly US based) depression of the 30's look like a day out at the beach.

if they fail

they just print more money (which they have to do either way now) to cover deposit guarantees (not shareholders or bondholders now! regular savings and current accounts which dont amount to much)

we nor the rest of the world are no longer on gold standard like happened during great depression

by handing money to the banks we show the that its ok to be irresponsible and theres no risks

Liam Byrne

creeper1 wrote: »

In fairness I think Mr Cowen is doing the best he can with the bad hand that has been dealt to him.

Creeper1 is right, folks! Cowen is only the Taoiseach and was dealt a bad hand by the former Taoiseach and Minister for Finance.......not his fault at all. :rolleyes:

creeper1 wrote: »

I expect the NAMA bill to be passed in the middle of this month. It's time for the country to get behind it and let recovery have a chance.

You cannot coerce people into getting behind a bad idea and crap leadership.

If there was proper leadership and the proposed solution protected the economy and the taxpayer and made sense (rather than being a massive, foolish, ill-conceived gamble) then they might get behind it.

creeper1

ei.sdraob wrote: »

a fianna failer i see

about the highlighted bit

please remind us who dealt Mr Cowen this hand? :mad:

As has already been answered, this hand was dealt to him by international events beyond his control. It really is hypocrisy on the part of his critics.

In previous budgets during the celtic tiger opposition leaders were screaming at him "Scrooge". Now those same people are saying that he overspent.:rolleyes:

IF you look at the property bubble it could have been contained had a property tax been introduced say 2002 - 2004. How much support would there have been for that? None!

Hindsight is always 20 20. Whoever called Cowen a criminal is a DISGRACE. He also did not "associate with criminals". Nor is NAMA criminal.

We get that people are angry. After all if you lost your job or seen your income decline then you are looking for someone to blame. I'm afraid you should be looking elsewhere.

ei.sdraob

creeper1 wrote: »

As has already been answered, this hand was dealt to him by international events beyond his control. It really is hypocrisy on the part of his critics.

In previous budgets during the celtic tiger opposition leaders were screaming at him "Scrooge". Now those same people are saying that he overspent.:rolleyes:

IF you look at the property bubble it could have been contained had a property tax been introduced say 2002 - 2004. How much support would there have been for that? None!

Hindsight is always 20 20. Whoever called Cowen a criminal is a DISGRACE. He also did not "associate with criminals". Nor is NAMA criminal.

We get that people are angry. After all if you lost your job or seen your income decline then you are looking for someone to blame. I'm afraid you should be looking elsewhere.

excuse me! hindsight?

but was it not the bellowed Bertie Ahern

who told people to go and "commit suicide"

for talking down the boom

:rolleyes:

Zynks

creeper1 wrote: »

IF you look at the property bubble it could have been contained had a property tax been introduced say 2002 - 2004. How much support would there have been for that? None!

Absolutely right there. They should have introduced property tax and abolished stamp duty, which artificially inflated state coffers making the government machine addicted to unsustainable levels of income and expenditure.

They didn't have the balls to make the decisions then, now they have to make much worse decisions. They are paying the price of their own incompetence, and so are we, on the double.

We are now facing lower employment, higher taxes, possibly higher interest rates soon and NAMA, which if is not robbery it is at least a very cynical way to pass the bucket.

BUT, it is our fault ultimately. We kept voting these guys in over and over... the writing was on the wall and we chose to ignore it.

AlekSmart

Absolutely right there. They should have introduced property tax and abolished stamp duty, which artificially inflated state coffers making the government machine addicted to unsustainable levels of income and expenditure.

Perhaps if an earlier generation of Fianna Fáil had not abolished Domestic Rates back in 1978/9 then we might not be where we are now ?

Not content with that the same fellow`s also abolished Road Tax and replaced it with a £5 registration fee.......gosh what larks

Oh by golly but THOSE Politicians had Balls...by the bucket load !!

Step forward Dr Martin O Donoghue and take your bow :eek:

ifconfig

The recent selective quoting of Prof Nouriel Roubini in saying that NAMA was
"the right approach" will see from Mark Little's interview on Prime Time last night that by any measure we have taken the wrong approach. Focus particularly on what he says from about 2:20mins in to the clip about the right approach being that the shareholders first take a hit and if needs be, be wiped out and next the unsecured creditors.

This along with Willem Buiter's contribution on News at one [URL="javascript:showRadioPlayer(%22/news/news1pm/player.html?20091105,2642928,2642928,real,209%22)"]yesterday[/URL]
confirms that the biggest mistake was to extend the bank guarantee to include unsecured creditors. That sowed the seeds for the albatross around the neck of the Irish state and the soon to leave the station trainwreck that is NAMA as conceived by the property religion Fianna Fail and there incompetent and spineless cohorts the Greens.

So much for the cheapest bailout in the world.

Amhran Nua

• Nama is a criminal robbery of taxpayers

Language like that coming from a respected figure like Stiglitz is the most damning indictment imaginable of a major government policy. Criminal, no less.

Hydrosylator wrote: »

it's going to get worse, and then stay that way until the property market comes back to where it was, which might never happen.

Lets hope it never does, it was no good for the economy at any stage.

creeper1 wrote: »

As has already been answered, this hand was dealt to him by international events beyond his control. It really is hypocrisy on the part of his critics.

So the lax financial regulation, the attempts to legislatively inflate an already gigantically overheated property bubble, the pouring of record once off tax returns into persistent costs, setting up a financial two card shuffle that one of the premier economic minds on earth has damned as "criminal", these were all international events?

creeper1 wrote: »

In previous budgets during the celtic tiger opposition leaders were screaming at him "Scrooge". Now those same people are saying that he overspent.:rolleyes:

True enough.

creeper1 wrote: »

How much support would there have been for that? None!

Lack of support hasn't stopped them implementing NAMA.

creeper1 wrote: »

Whoever called Cowen a criminal is a DISGRACE.

The Nobel laureate you have idly branded a disgrace is less so than a minister for finance whose sole knowledge of economics was received by cramming Greenspan's biography after he got the job.

creeper1 wrote: »

We get that people are angry. After all if you lost your job or seen your income decline then you are looking for someone to blame. I'm afraid you should be looking elsewhere.

We should be looking directly at FF and the greens, to make sure they don't get us into any more trouble. Blame will be dealt with later.

old boy

the 1st thing i noticed was our clown cowen being called mr cowen, now if that is not groveling ?

Slozer

skearon wrote: »

What they often forget to mention is that NAMA has the full support of the IMF, EU Commission and most importantly the ECB, the people who are providing the 50+ billion euro. Is it credible that the ECB would risk this money if they though NAMA was not the best plan to fix the Irish economy??

(Taking the case of Anglo Irish Bank as an example).

1. ECB has backed this bank. ECB has given Anglo the money to fund the developers.
2. As we all know of the toxic loans Anglo has this bank had no way of survival without the
the intervention of the Irish government.
3. The collapse of this bank would have meant that the ECB didnt get their money back
(void of the government's intervention).
4. Upon the mergence of the banking crisis the government then go to the ECB and ask them what can they do.
5. The ECB on realising the diastourous financial outcome to them of seeing this bank go under decide that they can transfer this bad debt from the Anglo Irish bank to the Irish people by pretending that they are helping out the Irish governemnt by giving them the billions that they need to fund NAMA. Thus insuring that a. they will directly get their money back and b. have their loans secured by the Irish government.

Developers can default on their loans so too can banks, they can go bankrupt, its all part of business and when they do the Irish people will be left with massive debt, unable to default, unable to go bankrupt, forever in the debt of the ECB.

Damn right the ECB see no risk in this!