Eamon Gilmore calls again for the temporary Nationalisation of Ireland's major Banks

Eamon Gilmore (photo), leader of Ireland's Labour Party, has again called for the temporary nationalisation of the country's main banks "as an alternative to the setting up of the government-proposed National Asset Management Agency (NAMA)".

Speaking on RTÉ News, Gilmore said that "a mechanism should be established to write down bad debts, before returning the banks to the market when they are restored to good order".

The Labour Party leader also emphasised that "it is a necessity to get the banks lending to businesses again".

His proposal was not without cost, Gilmore added, but he claimed it would mean a lot less risk for the taxpayer than the government's plan.

Under the government's proposed legislation, NAMA would be taking over € 90 billion worth of debt away from Irish banks, so that they can start lending again.

The amount NAMA would pay for the debt has yet to be decided. But in an article, published in yesterday's edition of The Irish Times, 46 economists warned that NAMA might pay too much and thus create an extra burden for Ireland's taxpayers. (see yesterday's entry below)

Fine Gael has already stated that it will oppose the government's NAMA plan when the Dáil debates the legislation next month. Since Sinn Féin, which demands a referendum on NAMA, is against it as well, this means that all opposition parties in parliament are united on the matter, even though they do not agree on the details of possible alternatives.

The Green Party, who is the junior partner in the government coalition, will hold a special conference to debate the plan. (see my entry of August 25th)
The outcome of this conference is far from certain, and neither is the continuous support of the Green Party for the current government.

As things stand at present, anything is possible. A temporary nationalisation of our major banks - as demanded today and previously by Eamon Gilmore and his party, as well as by Sinn Féin and the Socialist Party in separate statements - would in my opinion be the safest and least costly option.

We can expect that the government will not listen and stick to its original plan. So I suggest that now is a good time to contact your local TDs, especially those from Fianna Fáil, and tell them in no uncertain terms what you think of NAMA. It might also be helpful to mention that their own seat will be in serious danger if they ram through a legislation that no one in the country really wants, but for which everyone would have to pay severely over decades to come.

The Emerald Islander

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

Ireland's Government is crumbling at the Edges

Since both Houses of the Oireachtas (Ireland's parliament) are on their long summer holidays, August is usually a month with few political news and events. However, as we are in the deepest economic and political crisis since the foundation of the State, the political matters have not gone away this year as they normally do when Leinster House is empty for months.

There are too many dark clouds hanging over Ireland at present, and in particular over the current government, which is slowly but steadily crumbling at the edges of its coalition.

Only recently two Fianna Fáil backbench TDs resigned the 'party whip', which means that they are no longer members of FF's parliamentary party group. They did not (yet) go as far as their former colleague Joe Behan from Wicklow, who left Fianna Fáil for good last year and now sits as an independent TD. But they might well follow Behan if things are getting any worse.
And there are more Fianna Fáil backbenchers who feel increasingly isolated and uncomfortable in their party. It only needs a few more of them to have the courage and guts to leave, and the government will be without a majority.

And there is of course the always present 'Green factor'. Ever since the Green Party made its fatal decision to join Fianna Fáil in a government coalition two years ago, a significant minority of party members are very unhappy with their leadership.
Many have meanwhile left the Green Party altogether, while others - like Brendan McCann, who was the Green candidate in Waterford in several local and general elections - remain nominally party members, but have gone into political hibernation.

In the recent local government elections the Green Party was almost wiped out completely and lost most of their previously 18 local councillors, while one of their former councillors - Nessa Childers - was elected to the European Parliament for the Labour Party on the same day.

So it is no surprise that the mood in the Green Party is pretty foul at present, and even within their small parliamentary group (of six TDs and two unelected Senators) there is a constant rumbling and grumbling, combined with great uncertainty where to go from here and how to proceed.

The government's plan to establish a National Asset Management Agency (NAMA) is the most controversial subject at present, and Taoiseach Brian Cowen is facing renewed pressure from the Green Party over it.
To make things worse for the Fianna Fáil leader, Mattie McGrath, one of his backbenchers from Co. Tipperary, has expressed strong doubts about NAMA as well.

Senator Dan Boyle (left), the chairman of the Green Party, has again warned that his party's support for the NAMA legislation "cannot be taken for granted".
In an interview with RTÉ News, Senator Boyle said that the Greens had "an internal process to complete" and that their members would ultimately make the decision.

This is the grass roots democracy for which the Green Party has been rightly famous over the past 25 years. But much of its actual people power has evaporated since many key people who opposed the Green's participation in government have left the party. It will be interesting to see in which direction the remaining Green Party grass roots will turn when they vote on NAMA.

In recent days, both Taoiseach Brian Cowen and Minister for Finance Brian Lenihan have expressed strong confidence that the Greens will back their NAMA legislation, if not outright then perhaps with some amendments. But I would not put a bet on that, if I were a betting man.

Meanwhile another Fianna Fáil backbench TD came out of the proverbial woodwork and said he would "require many more assurances from the Minister for Finance" before he could vote in favour of the proposed NAMA legislation.

Mattie McGrath (right), Fianna Fáil TD for Tipperary-South, stated that he has received "a huge amount of calls from people worried about the NAMA legislation". Some of them, he said, were "demanding a referendum on the NAMA plan".

This would not be a bad idea, and if adopted by the government, a NAMA referendum could easily be held together with the second referendum on the Lisbon Treaty on October 2nd.

"It appears that a few hundred bankers have brought the country to its knees, and that the tax payer will have to pick up the bill," Deputy McGrath said, demanding that "the minister [for Finance] must provide detailed assurances to TDs at the Fianna Fáil parliamentary party meeting in Athlone next month".

Mattie McGrath, who was elected in 2007 for the first time and is therefore a 'new face' in the Dáil, added that he could "not trust the Department of Finance", given its record in dealing with the banking crisis to date.

Such clear and open words from a Fianna Fáil TD are rare, and very welcome. They show that not everyone in Fianna Fáil has lost the plot, and that there are still some government politicians with a portion of common sense left intact.

The question is how many of them are there, will their number be large enough to make a difference, and will they have the courage to stand firm, even if it could mean bringing down the government.
Should they do that, indeed, coming generations of Irish people will remember them fondly, and most of the Irish people alive would be most grateful.

Perhaps the Greens will beat the unhappy Fianna Fáil backbenchers to the post and pull the political emergency break. They will be punished by the voters for their support of Fianna Fáil anyway, if they stay in government or walk out. But if they could see their mistake of 2007 and have the guts to admit it, they might have a chance to survive as a party and - over some years - regroup and regrow again. (If they stick to Brian Cowen and Fianna Fáil until the bitter end, the Greens will most likely join the PDs as a sad footnote in political history.)

As much as the parliamentary holiday period is usually regarded as 'quiet', it is full of tensions and possibilities this year. Watch this space, and stay informed.
The Irish government is crumbling, and its days are numbered. I predict that it will not last until 2012, when the next regular general election is due to happen.

There are various elements that could end Brian Cowen's rule, from the Greens walking out to a backbench revolt in his own party.
And we should not forget the second referendum on the Lisbon Treaty. If the people of Ireland have the courage to follow their hearts, minds and conviction and say 'No' to Lisbon for a second time (on October 2nd), the government could collapse like a house of cards.

This would be the best thing that could happen to Ireland, and the first real step on the way out of recession and crisis.

The Emerald Islander

Gormley is "happy with NAMA"

John Gormley (photo), the leader of Ireland's Green Party and Minister for the Environment, Heritage and Local Government*, today declared that "within the next two years we should see a turnaround in the Economy".
But, according to Gormley, this will only happen "if the vision of the green economy is implemented". In other words, it is most unlikely.

Speaking at lunchtime on the This Week programme on RTÉ Radio 1, Minister Gormley also said he "believes that the fundamentals of the Irish economy are still strong enough", but that "the green vision is the only one to get us through".

Having entered government on a coalition pact with his previously worst political enemy Fianna Fáil (and on a big dream of creating a 'green government') less than two years ago, it appears that Gormley is still dreaming and either unaware of the reality, or closing his eyes deliberately, willing to soldier on until the inevitable bitter end.

John Gormley also stated that he is "happy with the establishment of the National Assets Management Agency (NAMA)".
The creation of this new agency was announced recently by Finance Minister Brian Lenihan. It is supposed to take over all the bad loans and 'toxic' assets Irish banks have accumulated over the past decade of financial madness and recklessness. Nobody knows if this concept will work, and even less what the experiment will cost Irish taxpayers.
Numerous economists have pointed out that a full nationalisation of all Irish banks - and even if it is only for a limited period of time - would be a much better and safer solution, and certainly cost the state a lot less.
But once again the government has made up its mind and is now pressing ahead, regardless if the action makes any sense or not.

It is worth to remember that John Gormley is not an economist. Before entering full-time politics he worked as a language teacher, which is an honourable profession, but does not make one an expert on the Economy.
But since there is not a single economist among Ireland's government ministers, almost everyone of them is lately developing into some kind of self-appointed armchair analyst of the Economy. John Gormley is only the latest among his colleagues to come out with statements on economical matters.

The purpose of all this is to give the Irish people the impression that the government knows what it is doing, and that all is not so bad after all. In 26 days the nation will go to the polling stations and elect 13 Members of the European Parliament and all local Councillors in Ireland's counties and cities. On the same day there are also two by-elections for Dáil Éireann in Dublin, caused by the deaths of the former TDs Seamus Brennan (Fianna Fáil) and Tony Gregory (Independent).
Going by recent opinion polls, the two government parties (Fianna Fáil and Green Party) can expect a hammering on all levels, as there has never been so much dissatisfaction with an Irish government since the foundation of the state.

So John Gormley's attempt to talk up the Economy on national radio, less than a month before election day, has only one purpose: to win votes for his disintegrating party, which has lost two sitting City Councillors (in Dublin and Cork) and several long-established candidates and activists recently.

It won't work, and being an intelligent man, John Gormley must know it. But since he has chosen to be First Mate on a sinking ship, he just keeps going and pretending.
Having supported the Green Party myself for many years, I feel in a personal way sorry for him. However, he made his choice, and he will get the public's reaction for it. Had he even a little bit of green spirit and honesty left, he and his two colleagues would resign from the government and with that trigger an early general election. This is what Ireland really needs urgently, as only a new government would have a chance to lead us out of the current crisis. Every day the present administration stays in office is another black and wasted day for Ireland, and especially for our failing Economy.

The Emerald Islander

* Ireland must be the only country in the world that has - traditionally - no Department (or Ministry) of the Interior. Thus most of the functions of a Department of the Interior are handled here by the Department of the Environment, Heritage & Local Government. However, the responsibility for the Police (in Ireland called the Garda Siochana) is not included and instead part of the Department of Justice.