On Tuesday 30th March 2010 Ireland carved the name on its own headstone. By implementing the NAMA plan the Irish state has condemned itself to decades of fruitless and torturous debt service that will ultimately sink the nation.
This day marked the transfer of the first loans to NAMA, and consequently further promises of capital injection for the banks. In transferring impaired loans from bankrupt banks to a national vehicle, NAMA, the Irish state has assumed the liabilities of failed private enterprises. The scale of those liabilities is staggering. Having finally been forced to acknowledge some of their losses on loans transferred to NAMA and remaining capital requirements, the cost of the bank bailout is at last being revealed.
Anglo Irish Bank alone is likely to cost the exchequer €20bn in recapitalisations, in addition to the losses NAMA will suffer on its transferred loan book. Expect similar losses from each of AIB and BOI, who while only slightly less reckless lenders than Anglo, have far larger loan books. Overall then, the total bill will be way north of €50bn. I estimate at least €80bn, not including interest payments on the increased national debt. That is 65% of GNP just to keep 3 businesses open.
Clearly this is a debt that cannot and will not be repayed. Whatever the government’s intentions to honour its debt, it cannot wish into existence the means to repay such a massive amount of money. Ireland is bust, its banks bankrupt, its citizens jobless, and its government has just made the largest financial commitment in history!
The NAMA scheme will drain vital resources from the economy. Real growth has no prospect of returning while this financial monster sucks money out of the economy. The scheme, though it should never have started, will continue until it is finally obvious to everyone involved that there is no way it can proceed. Only when Ireland is on its knees, a hollowed-out replica of the 1980s with not a cent left in the country will our heads of state finally concede that the game is up and default. It might be 10 years from now, but it will happen. Debts that cannot be repayed are not.
In the meantime the deception continues. Welcome to the decade of pointless suffering.
Tags: banking, banks, bubble, debt, economy, government, ireland, nama, property
