Saturday, August 1, 2009

We are where we are

Well where exactly are we??

Nama is the new fantasy property game. Nearly all the usual players are rolling up their sleeves and joining in.
The pitch has been well watered to suit the establishment, not the taxpayer. It seems to have been seeded with magic mushrooms.
The mandarins of the Department of Finance love Nama; Brian Cowen loves it; the Financial Regulator loves it; the banks love it; accountants love it. They are all on the mushrooms.

And next month, the Nama game will be endorsed by the Dail and the Seanad. The majority of Ireland's oligarchs will line out to play the Nama fantasy game.
On Thursday evening -- as the Nama document was being launched -- all the interested parties were ecstatic. The mushrooms were working -- we will pay billions for assets which would fetch zero on the open market, assets that no one else wants.
Quite a mug's game, you might think. And you would be dead right.

It seems the Europeans never heard of the way we do these things in Ireland. We have invented a unique monopoly -- a fantasy monopoly, unheard of in the history of commerce. A monopoly that screws itself, not the customer; a monopoly that is programmed to make a loss. Our special monopoly pays too much, not too little.
Fine thoughts, but there is a small problem: there is no reason on God's earth for believing that property prices will rise even as high as the fantasy "long-term" prices to be paid by the taxpayer. They are equally likely to continue falling.

Not so, say the fantasists. The valuations will be "through the cycle" valuations, which is more mumbo-jumbo for pretending that prices will climb over time.
Every powerful property player was being swept along in the property fantasy game. All the banks were waiting for Nama to rescue them. They refused to force any developers to pay back any money. They failed to take them to court. Bankers and developers agreed a standoff. Bankers did not want their money back.
If the judge blinked at the plan he must have swallowed hard when he heard that part of Carroll's master strategy was to draw down an €8m loan from none other than Anglo Irish Bank. More fantastic still was the purpose of the loan: to complete the bankrupt bank's state-of-the-art new headquarters in Dublin's Docklands.

Activity at Anglo is at a standstill. Staff are twiddling their thumbs up at their Stephen's Green headquarters. In a short period of time the business of Anglo could be confined to the square footage of a telephone box.
Yet the men on the magic mushrooms are still pretending that a bankrupt bank should be lending millions to an insolvent builder for a headquarters they will never occupy.
On Friday afternoon Judge Peter Kelly refused the application for an examiner. The first sign of sanity was restored to the Nama game.

The Sindo

No comments: