26 August 2009

Economists warn Ireland's Government of the "economic folly" to create NAMA as planned

A group of senior economists has urged the Irish government to reconsider its approach to the planned National Asset Management Agency (NAMA), saying that "not to do so would be economic folly".

The 46 academics, including ten professors, have entered the debate on the future of Ireland's economy in general and NAMA in particular with an article that is published in today's edition of The Irish Times.

The group of economists argues in the article that "alternatives to NAMA are possible" and there are "a number of other ways to lay the ground for a healthy banking system".

The experts say that - in its current form - NAMA "commits the State to overpay for troubled bank assets". Instead only the current market value for assets (ca. € 30 billion) should be paid, and not 'optimistic' higher values envisaged under NAMA. This would leave the banks in need of more capital, and more of it should come from bondholders and shareholders of the banks.

The government's advisor Dr. Alan Ahearne has disputed a number of the group's claims and criticised its arguments. But when one has the choice between the arguments and 'expertise' of the current government, which created the crisis and has nothing to offer but incompetence on one side, and a group of 46 well-known, established and experienced economists on the other, I know whom I trust and listen to.

The Emerald Islander

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