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Possible solution to NAMA crisis

  • 10-09-2010 6:14am
    #1
    dermo88
    Closed Accounts Posts: 1,000 ✭✭✭


    There has been a great deal of discussion regarding the Banking crisis. There is a great deal of anger and mistrust. But so far, nobody has ever discussed a solution.

    My idea is completely off the wall. It might work.

    1. Convert the NAMA residential property holdings into social housing. This has the effect of removing much of the problems on the social housing lists on one hand, while on the other, removing the current housing allowance/subsidy that currently goes into the private sector. It is nationalised, it is only rational that it be used.

    2. In the 1920's, in the aftermath of the Weimar hyperinflation, Germany created a non legal tender currency called the rentenmark. It was backed by state owned land. Based on this model.

    (a) Could a non legal tender internally traded punt be created along the same lines. Nominally private, carrying an interest rate, floating alongside the Euro within the Republic of Ireland. It could be accepted as an accepted medium of exchange.

    (b) It would 'float' alongside the Euro, and treated like a share on ISEQ. The Euro would remain legal tender. The Punt however could only be used within the Republic of Ireland. That way, there is a possibility of reviving demand. Depending on the valuation applied to the NAMA properties and their discount rate it would devalue gradually, but would carry an interest rate far above that currently received by depositors on Euro denominated accounts. However, should the monies owed to Anglo-Irish Bank be recovered, over time, it could appreciate in value.

    (c) The Nama Punt lasts 15 years in circulation, at which point it is replaced by the Euro at its closing rate.

    (d) The Nama Punt is partially used for social welfare payments, a proportion of salaries, it can be used to pay taxes, a portion of pensions, and a portion of state sector and semi state sector salaries.

    (d) It primarily gets used by the state sector. Private sector bodies can participate voluntarily.

    (e) Its a pure paper currency, denominations follow Euro, except 2-5-10-20-50. Nothing higher than 50 is issued.

    (f) Debit cards may be issued.

    (g) Savings accounts may be used.

    (h) It is a limited use internal trading currency unit.

    I am well aware of the obstacles. I mean.....why should we accept anything other than Euro. But considering the straitjacket faced by Ireland....maybe it is a solution that could be looked at.


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