Tuesday, 17 August 2010

Nama Zombie hotels to drive legitimate concerns out of business

One of the best descriptions of Nama I came across was on the blogosphere, namely Bock. He described the government / banker / developer scam thus:

“Whatever they tell you about haircuts, remember that Nama will still be paying the banks more than their loans are worth, through a deft piece of doublethink known as Long-Term Economic Value.

This means that Nama doesn’t buy the assets from the banks at their current value, but at some price which they hope will emerge perhaps ten years from now. It’s like buying an Ikea table and waiting for it to become an antique.”


But it seems that the Irish builder/developer class, their banking payrollers and, by extension, Fianna Fail just cannot see the connection between their cronyism and the country’s subsequent headlong plunge into crisis.

It has been remarked before on the blog how people who badged themselves free-marketeers – clowns like Charlie McCreevy – consistently used State intervention in the form of so-called “stimulus” policies to interfere in the residential and commercial property markets.  Even when the market was overheated Fianna Fail kept these policies going in a bid to keep the billions flowing into their builder buddies' bank accounts. It was like injecting crack/cocaine into someone suffering from an epileptic fit.

They did the same in the hotel industry with their tax breaks, and now many of these hotels that came into being on the back of such largesse are being taken over by Nama, effectively becoming “zombie” operations that, despite unsustainable borrowings and debt levels, have been allowed to stay open and operate at below cost price.

The result? Viable businesses will go bust as they can’t compete against such artificial, unfair competition. The Irish Hotels Federation expects 80-90 long-established, legitimate hotels to go into receivership this autumn.

What are the "free-marketeers" saying now?

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Ella said...

Hi GM, the government should stop interfering and the market will sort itself out quicker. Their shenanigans is just prolonging the downturn the country is experiencing. Hey just love the piccie from Quadrophenia

The Gombeen Man said...

But then their buddies would have to fire-sale all their near-worthless assets, and that wouldn't do, Ella, would it?

Dakota said...

That was and is the contradiction, Free Marketeering, Irish style. Grand when you can control the market, based as it was on lower interest rates in the EU, but when the behemoth moves on, the house of cards comes tumbling down. Point is, by very definition you can't control a free market. Like it or not folks we are as much a part of the EU as "Eire" now. Probably more so.. That being said, the thing that galls me is the Me Feiners in the know, who openly supported Government policies, by either their silence or vocal praise. You have to have support to make such policies.

At this stage the country needs two things

(1) A clear, and most importantly detailed, timeframe for NAMAs activities into the future. If it is sustaining businesses, such as Hotels, operating at a loss then explain why. Er, funny feeling, that won't happen.

(2) A National Government. That, well, that speaks for itself?

Anonymous said...

GDAY MISTER GM its time to bring back BERTIE that great norsoide gurrier with a culchie gombeen tax fiddle mindset we need more tax breaks our great blessed and holy little nation is in peril, BRING BACK BERTY let the word go out from your prize winning blog UP THE REPUBLIC

The Gombeen Man said...

That IS the galling thing, D. The shyster political caste didn't operate in a vacuum - they had support. Probably still do if the truth be known. And yeah, I'd be as surprised as you if we get any transparancy on Nama.

Good to hear from you Mr BH. B-B-B-Bertie is the man alright, a political giant who makes the likes of Mandela, Kennedy, Haile Selassie, Ghandi, Gorbachev and all the rest look like pygmies.

I'd say he'd have some great idea to d-d-d-dig out the country, like put all of what's left of the public finances on a horse.

Anonymous said...

"like put all of what's left of the public finances on a horse. "


Anonymous said...

Did you see...


Go to the Head of the Class
The Fiscal Taskmaster: Brian Cowen
View All »NextPrevious
Illustrations by Newsweek; Source Material: Peter Muhly / AFP-Getty Images

With Ireland's once-roaring economy staggered by the banking crisis--unemployment is at 13 percent, emigration is rising, and the money markets rank Ireland not far behind Greece on the list of Europe's big-time losers--Prime Minister Brian Cowen and his able finance minister, Brian Lenihan, are prescribing harsh medicine. They've pushed through austerity packages drastic enough to win the admiration of the international community, raised taxes, and slashed some public salaries by more than 10 percent. But the Irish aren't showing much gratitude--Cowen's ratings have plunged to a mere 18 percent, and his Fianna Fail party can expect a drubbing in the 2012 national elections. Still, there's some hope that his government's unpopular measures will be rewarded in the long run: surveys suggest that Irish consumer confidence is on the rise again, and the economy notched up modest growth in the first quarter of 2010.

Dakota said...

Anon@18:17 Yeah thats it, the cycle will start again, boom to bust to boom. Once the initial boom has been established then it will happen again inevitably. Thats the way it is now.

GM, yes the political caste did have support within the golden circle. SO now, IMO is the time for individuals to voice their concern, that sanity needs to be brought to bear, in this nation. What about the legacy of the celtic tiger? What about the disintegrating social fabric...etc? Aspirations such as clarity, ethics, accountability from the elite, fairness (remember that?), decency (now an old fashioned concept), level headed behaviour, all needs to be used here. But lets be real shall we, does anyone really think the Irish public will demand accountability from those in power? Unfortunately, the majority of people here were on the bandwagon, no one shouted stop then... And now? Well, IMO, the ones that made a bundel in the celtic tiger are sitting pretty. Self explanatory? Thats the way it is.....

The Gombeen Man said...

Like yourself Dakota - I've not much faith in the great Irish public. Quite the opposite, in fact.

Anon, I honestly don't see how Mr Cowen can be lauded so fervently by the "international community" for making shapes to clean up his own mess. And as long as there is a world-wide recovery of sorts there will be "modest" growth due to the wide presence of multinationals in Ireland and their distoring effect on GDP.

High unemployment, 20 Billion deficit, people with less spending power.

Where's the domestic recovery coming from?