Saturday, August 29, 2009

Economics 29/08/2009: Nama critics are out of touch academics?

Today’s letter in the Irish Times got me going, along with Noel Whelan’s article on the subject…

“Madam, – The professors’/doctors’ thesis was good (“Nama set to shift wealth to lenders and developers, Opinion, August 26th). To a person who has lost over 70 per cent of their entire pension fund invested over 22 years, it is nice to hear their comment from a secure pension position. It is also nice to read that they now want to confiscate the remaining part of my pension fund.” 

Well, I am sick and tired of this ‘their secure pension / job position’ crap – pardon my use of vernacular here. Here, on the record:
  • I have no public pension and have to rely on my own savings to generate one;
  • I am in the negative equity, just as many Irish people are;
  • I have no tenure in any of academic institution and am paid per each course I teach and each student I supervise, despite having brought more business to TCD than my income from TCD recovers;
  • I have no PAYE earnings in Ireland;
  • Most of my income comes from pure performance-based pay for private clients in Ireland and abroad;
  • I know first-hand what it means to have a two-person unemployed family in this country and yet neither myself nor my spouse have ever drawn on unemployment benefits;
  • I know first-hand what it means to have a child when your spouse does not qualify for maternity benefits from an employer;
  • I know first hand what it means to pay for my own and my family private health insurance;
  • I have no desire whatsoever to see my family income go to support this letter writer’s pension fund – private or public. Full stop!
So message 1 from today to the Irish Times – please stop publishing letters and articles that border on slanderous and inaccurate in their allegations.

Now, let us deal with another piece in today’s Irish Times by Noel Whelan titled “Selling Nama to sceptical public requires political will”.

Whelan simply cannot understand the basic difference between a political reform proposal (Lisbon Treaty) and public expenditure proposal (Nama) and in confusing the two reveals something very interesting about our politicians. As a senior (by tenure, if not by accomplishment) politician, Mr Whelan has no apparent idea that any public spending/ investment undertaking requires cost-benefit analysis. Factual evidence, not ‘selling to the public’ is what such undertakings are based upon. Any hard facts, Noel? Nope.

Instead, Whelan:
  • Prefers to dismiss those who provide factual arguments as some sort of ‘out of touch’ academics;
  • Blabber on about political selling of Nama to the general public;
  • Suggests that arguments of numerous specialists in the area of economics, finance and real estate are nothing more than a “populist card” similar to that played in Lisbon I referendum, and that we – critics of Nama – “scaremonger about its consequences or encourage an “if you don’t know, vote no” stance.”
Well, Mr Whelan, do come out with your facts. Will you? Sadly, he does not. Instead he proceeds to deflect the debate about Nama into an imaginary land of make-believe villains (economists, finance experts, independent observers) combated by the noble knights in shining armor (Mr Whelan including). Don Quixote he is not, but the windmills are aplenty in his article.

“In the past three weeks more time has been allocated to squabbling over issues surrounding the proposal than to shedding light on its contents.” Clearly, Mr Whelan cannot get his a***s of the chair to read this blog, or Irish Economy blog, or anything else but the Irish Times. The debate on Nama has been raging on for months now and in the last three weeks myself and others have comprehensively shredded into pulp the entire Government proposed legislation on Nama. Is there any point of repeating this again in detail in a collective letter? No, Mr Whelan, there is none.

Whelan goes on to repeat, parrot-like the ‘arguments’ against the critics of Nama produced by Mr Ahearne and by the official Government note on how to respond to critics of Nama:

“In all that noise fundamental features of the Nama project have been distorted or misunderstood. These include that Nama will buy loans rather than property, that developers will still be liable for the full amount of their loans and that the success of Nama is contingent on a modest improvement in our economy and property market over the next five to 10 years and not on a return to a bubble.”

These are virtually verbatim taken out of Alan Ahearne’s pitiful ‘letter’ to his ‘colleagues’ which itself was a poorly re-edited rendition of the official unpublished, privately circulated “Nama Q&A” note prepared by the DofF to accompany the release of the Nama legislative proposal.

Whelan has no idea what he is talking about here and is, at the very best, slides into blind repeating of the Government official lines. No serious observer has argued that Nama will buy properties, but that it will acquire properties as a collateral in the process of buying loans. No one is disputing that the developers will be liable, but the extent of liability is highly uncertain and nothing is being done to prevent them from legally shielding their properties from Nama. (Noel, perhaps, really has no clue that this can be done in this country, but hey, I am not about to start running a kindergarten Economic 0.0001 course here for him).

“What is surprising, however, is the limited and broad-brush nature of their contribution. One might have thought that such a group giving the public the benefit of its expertise could have done so in a more substantial manner than merely affixing their names to what is in effect a lengthy letter.”

Oh, Noel, please, get your head out of Biffo’s 'Ideas Bog' and read our separate numerous contributions on the ‘substantive’ aspects of Nama made elsewhere. You can start with my own contributions on this blog or with my article in the Irish Independent yesterday, or Business & Finance archives, or the Sunday Times… You can proceed to read Brian Lucey’s and Karl Whelan’s articles in the Irish Times and elsewhere.

And so, the Irish Times’ message 2 of the day: try to avoid publishing political drivel as a factually-based opinion. Unless, that is, you are doing it in a subversive manner of letting the public know just how detached from the reality can our politicos really get…


charlberg said...

Noel Whelan is dead right. For far too long, corrupt politicans who neglected their legislative duties for private jet rides to horse races and movie festivals on the French riviera, and bankers who were pillaged depositors' savings for private investments have been blamed for the asset bubble and the implosion of Irish banking sector. Thankfully, in his astute article, Mr. Whelan sets things straight and emphatically demonstrates for all to see that all along it was actually 46 university professors' fault...

Brian O' Hanlon said...

A rare text artifact did emerge from the direction of the architectural establishment this year. The architect Paul Keogh wrote an essay earlier in the year about Irish towns and cities. A subject he knows a great deal about.

Meanwhile, elected members continue to rezone swathes of agricultural land, often remote from schools, shops, services and transport; frequently ignoring the advice of their professional planners and accepted concepts of sustainable development. Recent interventions by Minister Gormley - and the criticisms by the chairman of An Bord Pleanala of ‘indiscriminate and excessive land rezoning’ - are therefore most welcome.

Suppose in an ideal situation, there was no object to NAMA. We move the loans to the NAMA vehicle and proceed with our business. I know that my phone and those of many construction professionals will begin to ring. People who took out loans will need to make some attempt to do good again.

The simple fact that most people refuse to debate, is that Ireland has planning applications for several times more building stock that it could ever require. The only way to make good on loans that NAMA will take on board, is to develop these projects. How is that going to help? This is the nettle that no one wants to grasp. It felt good to own a field on the edge of an Irish town. It felt good to know that your land had been zoned residential or commercial. In every town across the Irish landscape, people made sure to support politicians and local representatives who would take care of them, by re-zoning their land. This is where the ugly problem raised its head in the first place. How are we going to deal with that in the future?

I commented earlier, in Ireland we have a rather primitive construction industry which wasn't ready for the pressure the Celtic Tiger put upon it. How is it going to be ready to munch it's way through €90 billion's worth of bad loans, I don't know. I am probably biased. I have at least a couple of dozen phone numbers on my phone today, who I would love to call and give work to. All of them are excellent trades people and craftsmen who would dearly like to have a job. But I think there are as many questions about NAMA avoided, as there are questions asked.

The extended comment of mine on this subject is available at my blog site.

Brian O' Hanlon

Anonymous said...

Noel is a FF hack. Accept that fact and everything he says makes total sense.