What is Nama?I was a little bit unsure exactly what NAMA was all about but i knew it was a word that was being floated about in these recession crisis times so it wasn't likely to mean a new venture scheme that i was getting an extra Christmas bonus. I have done the research and the news AIN''T GOOD. A Christmas bonus, I'll be lucky to still have a job if the finances of our economy are what i am led to believe, "IS McDonald's open on Christmas morning?
The National Asset Management Agency (Nama) is the Government’s “bad bank” scheme to “cleanse” five financial institutions – AIB, Anglo Irish Bank, Bank of Ireland, EBS Building Society and Irish Nationwide – of “toxic” loans amassed during the property bubble. The Government says this is the only chance to get the banks lending again and stimulate economic growth.
Although political parties are bitching, "i told you so" that ain't really true and neither is it the point,we want solutions not stupid Browne points to come out of this mess. I am not really a fan of politics so i don't mind who is in the Dail, and by all accounts the opposition have an opportunity to lay down ideas yet ditto. The government did not mean for this mess to happen, unlike generation before, we forgot to set aside a few euro in the biscuit tin or under the mattress.
The Celtic Tiger had set up home and was never going to leave, unfortunately the Tiger and her cubs have said "Au Revoir" without a goodbye kiss or a warning letter. Ireland got it's principles wrong, when you owe more than what you can pay, the bubble bursted and everyone is going to get wet.
NAMA is essences is sorting out the banks mistakes. It is difficult for people to pay for the mistakes that banks made in offering loans and credit but it is more naive to ignore these losses as it needs to be sorted. The government say the only answer is NAMA. The Government will pay 54 billion euro in the form of bonds in exchange for the loans. there is approximately 2000 bank customers where loans will transferred to NAMA. The state is paying 7 billion euro extra for these loans on top of their estimated current market value.
I think to overpay for these loans is insane, it is basically robbing the tax payer. I think they should play by the rules of Capitalism, shareholders loose everything when they screw up and make mistakes. The bond owners should become the new shareholders and if that doesn't work the government who are the deposit insurance take control until the banks get their house in order. The argument is that they need banks to lend in order to attract the financial markets. The banks will then be (reasonably) healthy after dumping the bad loans on the taxpayer, their share prices will go up, they won't be perceived as being very weak, and life goes back to normal for them. It could take 4 to 5 years for the full effect of NAMA to fix the problem.
Final Thought
We are a small country dependent on other countries stability and we can't play if we don't have the ball as it is in other countries court. We need to breath in and hold on tight as we are going to fall but we need to brace ourselves for the hit and remember this Christmas after the last sweet is taken out of the box of quality street, keep a hold of that tin as you might need to keep a few euro aside or it will be ham sandwiches on the 25th of December with less "HO HO" and more "OH NO". We will be alright we are after all the "Fighting Irish" and with a couple pints we will soon forget and we will survive.
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