NAMA - figures are not adding up

Scofflaw

ei.sdraob wrote: »

should we know what is about to be transferred before the transfer starts

Ronan himself mentioned that the lack of information makes trying to make sense of NAMA not easy

If we were voting on NAMA, then yes, we should know before the transfer starts. Unfortunately, we're not voting on NAMA, so it's irrelevant until the next election, when we get to vote on those who have put NAMA in place.

cordially,
Scofflaw

Amhran Nua

P. Breathnach wrote: »

First, what you say does not relate to the point I was making.

Secrecy can just as well be obfuscation instead of "eyes only" outright non disclosure. In this case the confusion is arising due to a key figure not be adequately clarified.

P. Breathnach wrote: »

Second, it seems to be a very small "group of professional economists", comprising only one member. [That does not invalidate what he says.]

Professor Karl Whelan was one of 46 economists who signed a letter to the government warning of the dangers of NAMA last August. You can find other signatories in the comments in the blog post as well.

Some 46 of the country’s economists have taken a step beyond economic commentary and signed an article in this morning’s Irish Times calling on the Government to reconsider its proposed National Asset Management Agency (NAMA) project.

The letter, which was drafted by Professor Brian Lucey of Trinity College Dublin, says that NAMA should only pay the banks the market value for the loans it buys off them, and not factor in ‘long-term market value’.

“The key difficulty facing the Government is that to pay prices now prevailing would leave the banks sitting on losses sufficiently large as to effectively bankrupt them, which would then require the State to invest capital sufficiently large as to in effect nationalise the banks,” the economists say.

“It is thus clear that the Government are determined to pay a price for land and speculative developments greatly in excess of the market clearing price.”

Lucey said he had contacted some 250 economics lecturers about the letter and not one of them had disagreed with the views it had expressed on NAMA. However, just 46 of the country’s economists signed the letter and these include Professor Karl Whelan, Department of Economics, University College Dublin (UCD); Prof Frank Barry, professor of international business, Trinity College Dublin (TCD); Prof John Cotter, professor of finance, Smurfit School of Business, UCD; Prof Kevin O’Rourke, Department of Economics, TCD; and Dr Constantin Gurdgiev, lecturer in finance, School of Business, TCD.

Alan Ahearne, the special adviser to the Minister for Finance Brian Lenihan TD, has refuted the letter from economists in an email printed in the Irish Times, which says that a number of the claims made are incorrect. He also said that most of the economists in the country had not signed the letter.

You will note the Alan Ahearne at the end there is the same individual who was making out that the EU ordered NAMA into existence.

ei.sdraob

Scofflaw wrote: »

If we were voting on NAMA, then yes, we should know before the transfer starts. Unfortunately, we're not voting on NAMA, so it's irrelevant until the next election, when we get to vote on those who have put NAMA in place.

cordially,
Scofflaw

If the government tomorrow logged into everyone's bank accounts and withdrew/over-drafted 12000 euro (NAMA divided by population) from every single man, woman and child

would you stand back and say

"oh sure we are not voting on this, this event is irrelevant until next election"


the people of this country have every right to know where, whom and how much is involved in NAMA, i don't consider 300million for one of the banks to be "small detail"

P. Breathnach

Amhran Nua wrote: »

Secrecy can just as well be obfuscation instead of "eyes only" outright non disclosure.

Indeed.

I was commenting on one particular thing that I did not see, and do not see, as opaque. By bringing in something that does not relate to what I said, it seems to me that you are obfusticating.

Professor Karl Whelan was one of 46 economists who signed a letter to the government warning of the dangers of NAMA last August. You can find other signatories in the comments in the blog post as well.

You linked one blog post by Karl Whelan.

Amhran Nua

P. Breathnach wrote: »

Indeed.

I was commenting on one particular thing that I did not see, and do not see, as opaque. By bringing in something that does not relate to what I said, it seems to me that you are obfusticating.

Okay, lets take another commentary from another economist from last month:

Posted by Dr. Constantin Gurdgiev
The EU Commission has granted its nod of approval to Nama (here). The Note states that:

"The Commission has found that the establishment of NAMA constitutes state aid to the participating institutions pursuant to Article 107(1) of the TFEU, but that this aid is compatible by virtue of Article 107(3)(b)."

It is therefore clear that Nama is a form of aid. If so, who are the logical recipients of such aid - and there simply has to be someone benefiting from aid. How does this square against the Irish Government repeated statements that Nama is not a rescue plan for either the bankers or the developers.

"The scheme and intended operations of NAMA are in compliance with the guidelines set out in the Commission's Communication on the treatment of impaired assets (see IP/09/322 ) as regards disclosure and ex ante transparency, eligibility of institutions and assets and the alignment of banks' incentives with public policy objectives."

Emphasis above (mine) relates to the following issues:

* Transparency: what transparency does the Commission have in mind, given that Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny?
* Alignment of banks' incentives with public policy objectives: does the Commission seriously think that incentives for the banks to repair their balancesheets through increased lending margins and higher costs, or reduced competitiveness in the banking sector due to Nama subsidy to select banks, or the need for recapitalization by the taxpayers post-Nama constitute properly aligned incentives for the banks to act in the interest of the public?

You linked one blog post by Karl Whelan.

Ah now you're just dragging your heels here.

Scofflaw

Alan Ahearne, the special adviser to the Minister for Finance Brian Lenihan TD, has refuted the letter from economists in an email printed in the Irish Times, which says that a number of the claims made are incorrect. He also said that most of the economists in the country had not signed the letter.

That made me laugh, I have to say. A bit like saying "well, not everybody in the country was at that protest".

“The key difficulty facing the Government is that to pay prices now prevailing would leave the banks sitting on losses sufficiently large as to effectively bankrupt them, which would then require the State to invest capital sufficiently large as to in effect nationalise the banks,” the economists say.

“It is thus clear that the Government are determined to pay a price for land and speculative developments greatly in excess of the market clearing price.”

There, essentially, is the NAMA rub. If we overpay for the assets, we will surely make a loss on NAMA. The question is what size of a loss, and whether the loss can be clawed back from the banks. I appreciate it's fashionable to talk as if the loss was the size of all the NAMA money, and to dismiss the idea that the bank levy will ever be used, but the former is a little silly, and the latter open to debate - as far as I can see, the arguments for using the levy mechanism are far stronger than those for not using it, but we won't know for 10 years.

cordially,
Scofflaw

Scofflaw

ei.sdraob wrote: »

If the government tomorrow logged into everyone's bank accounts and withdrew/over-drafted 12000 euro (NAMA divided by population) from every single man, woman and child

would you stand back and say

"oh sure we are not voting on this, this event is irrelevant until next election"

No - in that case one would go round to Government Buildings with a pitchfork and a mob, in order to get one's money back. Doesn't pass muster as an analogy.

ei.sdraob wrote: »

the people of this country have every right to know where, whom and how much is involved in NAMA, i don't consider 300million for one of the banks to be "small detail"

Sure. I'm just pointing out that our knowledge of what is in the loans is likely to have no practical implications this side of the election. NAMA is too complex to get people out on the streets about it - short of misrepresenting it to the point where you're actually being less transparent than the government.

cordially,
Scofflaw

P. Breathnach

Amhran Nua wrote: »

Okay, lets take another commentary from another economist from last month:

And you are still doing the same thing: I was responding to a particular point that was made, and you are coming in with something broad (and contentious).

Ah now you're just dragging your heels here.

No.

You should really tighten up your posts. If you respond to a point I make, it would be nice if what you said actually related to what I said. If you describe something as coming from "a group of professional economists", then it would be better if the group had more than one member.

Amhran Nua

Scofflaw wrote: »

There, essentially, is the NAMA rub. If we overpay for the assets, we will surely make a loss on NAMA. The question is what size of a loss, and whether the loss can be clawed back from the banks.

But after NAMA the banks will need further recapitalisation, which is a roundabout route to effective nationalisation. The option myself and others have been promoting is to do what one normally does in these situations, and exchange the toxic loan debt for equity to senior bondholders, and focus policy instead on job creation and sustainment.

P. Breathnach wrote: »

And you are still doing the same thing: I was responding to a particular point that was made, and you are coming in with something broad (and contentious).

Correct me if I'm wrong here, but you were arguing that NAMA was being operated and set up in the full light of day with complete transparency?

Liam Byrne

Scofflaw wrote: »

I'm hardly going to argue that politicians lying is acceptable, no matter how routine it is, but on the other hand, it remains irrelevant to the question of whether NAMA will work or not.

Not completely.

We can't trust the people implementing it to (a) be competent or (b) work in our interests without lying or (c) (re)align themselves with vested interests.

And that is a major problem.

As has been said earlier, if FF told me it was raining while I was getting soaked I still wouldn't believe them.

jmayo

Liam Byrne wrote: »

Not completely.

We can't trust the people implementing it to (a) be competent or (b) work in our interests without lying or (c) (re)align themselves with vested interests.

And that is a major problem.

As has been said earlier, if FF told me it was raining while I was getting soaked I still wouldn't believe them.

oh I would believe them alright, but I would still check one of them wasn't pi**ing down on me from on high and I definetly wouldn't buy an umbrella off them to keep me dry.

P. Breathnach

Amhran Nua wrote: »

Correct me if I'm wrong here, but you were arguing that NAMA was being operated and set up in the full light of day with complete transparency?

No. What I said was

I see an intention that NAMA be transparent, and I see no sign that anybody is seeking to avoid that.

In particular, I was suggesting that what ei.sdroab was adducing as some kind of proof of lack of transparency was nothing of the sort.

I did not claim that NAMA would or should operate with "complete transparency", as I think that is excessive, so my position is

Institutional transparency does not mean that people should have immediate and full access to every transaction

There is a balance to be struck between confidentiality on some matters (for reasons of individual privacy or commercial sensitivity) and public accountability.

Amhran Nua

P. Breathnach wrote: »

There is a balance to be struck between confidentiality on some matters (for reasons of individual privacy or commercial sensitivity) and public accountability.

So would you view Dr. Gurdgiev's statement that "Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny?" is indicative of a balanced level of transparency for the public good?

Scofflaw

Liam Byrne wrote: »

Not completely.

We can't trust the people implementing it to (a) be competent or (b) work in our interests without lying or (c) (re)align themselves with vested interests.

And that is a major problem.

As has been said earlier, if FF told me it was raining while I was getting soaked I still wouldn't believe them.

Really? Personally, I would note that what they had said aligned with the truth on that occasion. If I was in a speculative humour I might consider why they felt it was in their interests to make a statement to me that aligned with the truth on that occasion.

Either way, the problem remains that whatever solution will be implemented by the government will be implemented by the government.

cordially,
Scofflaw

Scofflaw

Amhran Nua wrote: »

So would you view Dr. Gurdgiev's statement that "Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny?" is indicative of a balanced level of transparency for the public good?

The questions there are surely "is Dr Gurdgiev correct?" and "why do you believe Dr Gurdgiev to be correct?".

cordially,
Scofflaw

Amhran Nua

Scofflaw wrote: »

The questions there are surely "is Dr Gurdgiev correct?" and "why do you believe Dr Gurdgiev to be correct?".

Ah so the question is not whether or not NAMA is overburdened with secrecy, but one of whether or not the good Doctor is a) qualified and b) not pushing mistruths or being mislead.

Here's his bio, to deal with the qualifications question:

Dr. Constantin Gurdgiev is the Editor of Business & Finance magazine, Ireland¹s number one business publication, is a Dean of Finance with CBSM, and a Research Fellow with Trinity College, Dublin. He also is a Founder and an Academic Director of the Open Republic Institute - Ireland’s only independent economic and social policy think-tank.

Constantin is an Honorary Fellow of the Copenhagen Institute, Fellow of the Pharmaceutical Economics and Policy Council, Member of the Academy of Political Science, the American Economic Association, the American Finance Association, Member of the Editorial Board of five international academic journals and a Member of the Executive Panel of the McKinsey&Co. He holds PhD in Macroeconomics and Finance from Trinity College, Dublin, MA in Economics from Johns Hopkins University (USA) and MA in Pure Mathematics from the University of California, Los Angeles.

Dr. Gurdgiev's academic research focuses on theoretical models of habit formation, taxation and international finance. His contributions to academic literature range from analysis of international debt markets to financial economics and theoretical macroeconomics. He is currently working on academic books in the areas of international debt and development, finance and economics of the property rights.

Prior to joining College of Business Management (CBSM) he taught economics, finance and mathematics at University College, Dublin, Trinity College, Dublin, the National University of Ireland, Maynooth and Johns Hopkins University (USA). Between 1990 and 1998, he served as a strategy director with the West-East Global Trade Co, Ltd in Los Angeles, CA.

Dr. Gurdgiev frequently contributes to economic and social policy debate in Ireland and Europe. His work on European policies is published by international think-tanks, including the Policy Institute, the Institute for International Integration Studies, CATO Institute, Centre for New Europe, Copenhagen Institute, CEPOS, Open Europe, and the Stockholm Network. He currently edits Ireland's only independent policy analysis quarterly, the Open Republic magazine.

He is the recipient of the World Medal of Freedom, 2006 and Man of the Year, 2005 awards from the American Biographical Institute. In 1998-2000, Dr Gurdgiev was awarded a Millennium Scholarship Award from the University of Chicago. In 2000-2004 he was the holder of the Whatley Award from the Trinity College, Dublin.


So that just leaves the question, why on earth would he be pushing falsehoods, or otherwise be so drastically misinformed about NAMA?

P. Breathnach

Amhran Nua wrote: »

So would you view Dr. Gurdgiev's statement that "Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny?" is indicative of a balanced level of transparency for the public good?

I have already indicated that I regard what he says as contentious.

If he were correct, I would be concerned.

Amhran Nua

P. Breathnach wrote: »

I have already indicated that I regard what he says as contentious.

If he were correct, I would be concerned.

You see his bio above - have you any reasons to believe he might be incorrect?

P. Breathnach

Amhran Nua wrote: »

... So that just leaves the question, why on earth would he be pushing falsehoods, or otherwise be so drastically misinformed about NAMA?

You have focused the question. Can you answer it?

Amhran Nua

P. Breathnach wrote: »

You have focused the question. Can you answer it?

Yes, he wouldn't be pushing falsehoods or be drastically misinformed about NAMA. Neither of those options make any sense whatsoever.

Scofflaw

Amhran Nua wrote: »

The questions there are surely "is Dr Gurdgiev correct?" and "why do you believe Dr Gurdgiev to be correct?".

Ah so the question is not whether or not NAMA is overburdened with secrecy, but one of whether or not the good Doctor is a) qualified and b) not pushing mistruths or being mislead.

Not really, no. Both of those apply only to the second question.

Amhran Nua wrote: »

Here's his bio, to deal with the qualifications question:

Dr. Constantin Gurdgiev is the Editor of Business & Finance magazine, Ireland¹s number one business publication, is a Dean of Finance with CBSM, and a Research Fellow with Trinity College, Dublin. He also is a Founder and an Academic Director of the Open Republic Institute - Ireland’s only independent economic and social policy think-tank.

Constantin is an Honorary Fellow of the Copenhagen Institute, Fellow of the Pharmaceutical Economics and Policy Council, Member of the Academy of Political Science, the American Economic Association, the American Finance Association, Member of the Editorial Board of five international academic journals and a Member of the Executive Panel of the McKinsey&Co. He holds PhD in Macroeconomics and Finance from Trinity College, Dublin, MA in Economics from Johns Hopkins University (USA) and MA in Pure Mathematics from the University of California, Los Angeles.

Dr. Gurdgiev's academic research focuses on theoretical models of habit formation, taxation and international finance. His contributions to academic literature range from analysis of international debt markets to financial economics and theoretical macroeconomics. He is currently working on academic books in the areas of international debt and development, finance and economics of the property rights.

Prior to joining College of Business Management (CBSM) he taught economics, finance and mathematics at University College, Dublin, Trinity College, Dublin, the National University of Ireland, Maynooth and Johns Hopkins University (USA). Between 1990 and 1998, he served as a strategy director with the West-East Global Trade Co, Ltd in Los Angeles, CA.

Dr. Gurdgiev frequently contributes to economic and social policy debate in Ireland and Europe. His work on European policies is published by international think-tanks, including the Policy Institute, the Institute for International Integration Studies, CATO Institute, Centre for New Europe, Copenhagen Institute, CEPOS, Open Europe, and the Stockholm Network. He currently edits Ireland's only independent policy analysis quarterly, the Open Republic magazine.

He is the recipient of the World Medal of Freedom, 2006 and Man of the Year, 2005 awards from the American Biographical Institute. In 1998-2000, Dr Gurdgiev was awarded a Millennium Scholarship Award from the University of Chicago. In 2000-2004 he was the holder of the Whatley Award from the Trinity College, Dublin.

That answers question 2 - why you believe Gurdgiev to be correct. Unfortunately, it's by reference to authority, which I don't ever find impressive.

Amhran Nua wrote: »

So that just leaves the question, why on earth would he be pushing falsehoods, or otherwise be so drastically misinformed about NAMA?

OK - good question. Why would someone who is a qualified academic of a particular philosophical bent believe that something opposed to his philosophy of economics is a bad idea?

amused,
Scofflaw

Scofflaw

Amhran Nua wrote: »

Yes, he wouldn't be pushing falsehoods or be drastically misinformed about NAMA. Neither of those options make any sense whatsoever.

Unfortunately, they're not the only options. NAMA may be a very bad thing according to Dr Gurdgiev, and he may mean that both honestly, and with good reason within his philosophical framework.

However, there are extremely highly qualified economists who believe that social welfare and public health coverage are bad things. I disagree, not on the basis of their economic analysis, but on the basis of the different social goals to which I and they subscribe.

I know enough about Dr Gurdgiev to suspect that he and I have very different social goals in mind, and that his economic analysis of NAMA may be, in effect,of no use to me, since he analyses it in relation to goals that I would not support.

cordially,
Scofflaw

Amhran Nua

Scofflaw wrote: »

That answers question 2 - why you believe Gurdgiev to be correct. Unfortunately, it's by reference to authority, which I don't ever find impressive.

References to authority are perfectly valid when its a globally recognised authority on the subject who is being referenced.

Scofflaw wrote: »

OK - good question. Why would someone who is a qualified academic of a particular philosophical bent believe that something opposed to his philosophy of economics is a bad idea?

amused,
Scofflaw

Sorry now, but you're wandering off the substantive point - there is a clear indication from a recognised authority in the field of finance and economics that NAMA is cloaked in excessive secrecy, far beyond that which might be required.

Scofflaw wrote: »

I know enough about Dr Gurdgiev to suspect that he and I have very different social goals in mind, and that his economic analysis of NAMA may be, in effect,of no use to me, since he analyses it in relation to goals that I would not support.

But we aren't talking about his economic analysis in this case, merely his factual objection to the secrecy of the project, which is why he was brought into the discussion.

Doesn't look like either of you has a leg to stand on, to be honest.

ei.sdraob

Scofflaw wrote: »

I know enough about Dr Gurdgiev to suspect that he and I have very different social goals in mind, and that his economic analysis of NAMA may be, in effect,of no use to me, since he analyses it in relation to goals that I would not support.

what social goals

BrownianMotion

Scofflaw wrote: »

Unfortunately, they're not the only options. NAMA may be a very bad thing according to Dr Gurdgiev, and he may mean that both honestly, and with good reason within his philosophical framework.

However, there are extremely highly qualified economists who believe that social welfare and public health coverage are bad things. I disagree, not on the basis of their economic analysis, but on the basis of the different social goals to which I and they subscribe.

I know enough about Dr Gurdgiev to suspect that he and I have very different social goals in mind, and that his economic analysis of NAMA may be, in effect,of no use to me, since he analyses it in relation to goals that I would not support.

cordially,
Scofflaw

Not knowing anything about Gurdgiev's philosophy, can you elaborate on what you mean by this?

This might be straying a little from the main discussion but I'd be interested to know what your social goals are, what Dr. Gurdgiev's are and how they are affected by NAMA.

P. Breathnach

Amhran Nua wrote: »

References to authority are perfectly valid when its a globally recognised authority on the subject who is being referenced.

Sorry now, but you're wandering off the substantive point - there is a clear indication from a recognised authority in the field of finance and economics that NAMA is cloaked in excessive secrecy, far beyond that which might be required.

But we aren't talking about his economic analysis in this case, merely his factual objection to the secrecy of the project, which is why he was brought into the discussion.

Doesn't look like either of you has a leg to stand on, to be honest.

So if Gurgdiev says something, then all discussion is over? If he posits "that Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny" it is necessarily a true and accurate interpretation of how NAMA is set up and is to be run?

I don't buy it. And I dislike any line of argument which is no more than a demand that I should defer to those that you deem to be my betters.

P. Breathnach

ei.sdraob wrote: »

what social goals

Something akin to suggesting that there be no social goals.

ei.sdraob

P. Breathnach wrote: »

Something akin to suggesting that there be no social goals.

Im specifically asking what objections does Scofflaw have against Gurdgiev, and what social goals is he referring to

I find the social goal FF+Greens have (and supported by you and Scofflaw) of burdening generations of people in this country with debt for a mess they didnt cause rather disgusting, or/and artificially propping up the prices high causing more companies to go to wall and more unemployment

but its ok the incompetent people that got us here, can be trusted to get us out

Amhran Nua

P. Breathnach wrote: »

If he posits "that Nama is set to report only to the Minister for Finance and will operate under the veil of total secrecy, outside constraints of public scrutiny" it is necessarily a true and accurate interpretation of how NAMA is set up and is to be run?

If you dispute his clear and unequivocal statement, this is either because you think either

• He is lying or
• He doesn't understand NAMA

I think we can lay the latter to rest all things considered, so why would he lie, thus risking his reputation?

Liam Byrne

P. Breathnach wrote: »

Something akin to suggesting that there be no social goals.

That would appear to be FF & Green philosophy, so don't you find it strange that he still disagrees with them ?