As a child I was never a huge fan of Lewis Carroll’s ‘Alice’s Adventures in Wonderland’ or, as it became popularly known, ‘Alice In Wonderland’. Apart from Alice, I found the characters less than pleasant and quite frightening at times. The White Rabbit was one stressed out bunny, The Cheshire Cat was crazy, The Queen was blood thirsty and volatile and the Mad Hatter was, as his name suggests, an unpredictable lunatic.
On reflection, I don’t think that Alice in Wonderland is a child’s story at all. Having re-read it as an adult, though, it is very enjoyable. I now appreciate Lewis Carroll’s ability to tell a story and the cavernous imagination needed. There’s even a few nuggets of wisdom. I think it is the Duchess who says, “If everybody minded their own business, the world would go around a great deal faster than it does.” Just in case you don’t know anything about Alice In Wonderland, it was written in 1865 and is the story of a little girl named Alice who fell down a rabbit hole and found herself in the very bizarre Wonderland.
I think Brian Cowen has fallen down a rabbit hole! Or at the very least, he has hit his head on something quite hard. Various quotes from the book keep springing to mind as I read about the Government’s schemes intended to solve our economic problems. The Cheshire Cat puts it very succinctly in Alice in Wonderland when he says, “We’re all mad here”, a totally applicable quote when you look at the proposals for NAMA. Or how about a quote from Alice herself, “It would be so nice if something made sense for a change.”
NAMA in Wonderland
Every time I read about the proposed National Asset Management Agency I feel like Alice. It makes no sense to me at all. Why would anyone buy assets at a higher price than they are currently worth in the ‘hope’ that they will realise an even higher value sometime in the future? There are no guarantees whatsoever that things will recover as quickly as they are currently predicting. If we have to buy them at all, doesn’t it make financial sense to buy them at today’s value. Obviously it wouldn’t solve the whole problem for the bank, but surely it would be a help and why is it our problem anyway? Isn’t it between the banks and the developers that they lent to? Also if, as we are being promised, that we are going to make a killing on this deal in six to ten years, then why don’t the banks just hold onto the assets and ride it out on their own. Six to ten years isn’t that long in banking terms.
We are also assured that the developers who took these huge risks and created the problem will not get away with it. We have been told that even if NAMA buys their debt to the bank the individual developer will still be expected to pay back the full amount. Whoever came up with that one has been drinking tea with the March Hare. It makes even less sense than buying the stuff in the first place. If a developer owes 100 million and now the asset has been bought by NAMA for 60 million where is he going to get the money? How can you take 100 million off someone if they don’t have it? Surely if they had it in the first place they would have continued to service the loan.
And, on the other hand, if I was a developer and I had a loan out on a development for 100 million and that property was now only worth 30 million I’d be a bit miffed at having to pay back the full amount also. It would be much easier to put everything in my spouse’s name and continue living in my big house and stick two fingers up at everyone and tell them shove the bloody building!
Mad Hatter’s Tea party
Then there is what may well turn out to be the Mad Hatter’s Tea Party; the day to day running of the agency itself. From what I can gather NAMA will be controlling land, commercial property and partly finished developments. The land is probably the least of the problems, but it will still need looking after. As for the commercial property and the half finished developments; these are living, breathing structures that need to be cared for. How much is it going to cost to run NAMA each year? You can’t ‘store’ property until the value bounces back! And who is going to finish the unfinished stuff? How are those contracts going to be given out? The sheer administration alone is a mammoth task.
A few months ago I read about Jessbrook Equestrian Centre, former home of convicted criminal John Gilligan, in one of the Sunday papers. The property was seized by the Criminal Assets Bureau a while back. There are already potholes in the driveway, the gardens are overgrown and it is apparently being used as a storehouse for stuff. Effectively it’s falling into disrepair because it is not lived in. That’s what happens to buildings when they are not cared for. While Jessbrook Equestrian Centre may have been the result of ill gotten gains, is that a reason to let it fall down? To be fair, CAB isn’t focused on minding the assets, just confiscating them; but shouldn’t someone be in charge of looking after them?
How much NAMA is going to cost changes from one report to another; some as high as 90 billion, some now saying 40 billion and others 60 billion. For the sake of argument let’s settle on a figure of 50 billion; has anyone actually considered how large a sum this is? We have become accustomed to the word ‘billion’ from the news media but take a second and actually think about the reality of it. The population of Ireland is only 4 million and that includes children and the elderly. 50 billion euro is a vast sum of money. Do we have 50 billion lying around somewhere in a safe? I don’t think so. I think we are just about to hijack and stamp all over our children’s future for years to come.
Mock Turtle was spot-on
Of course if I suggested any of this to those in favour of NAMA, the banks, the bank regulator, the developers and the government, I would be told that I just don’t understand the complexity of it or perhaps I’m not able for such lofty arithmetic. Again I refer us back to Alice in Wonderland when the Mock Turtle said, “Reeling and Writhing, of course, to begin with, and then the different branches of arithmetic — Ambition, Distraction, Uglification, and Derision.” It’s funny how the Mock Turtle’s definition of arithmetic fits so well with what happened to our own economy.
Sadly we can’t just close the covers of a book on this one and bounce back to a saner reality as this is our reality for now. Maybe we are all mad as the Cheshire Cat said. As a solution the currently proposed structure of NAMA seems impossible, but when Alice was talking to the Queen she said, “There is no use trying; one can’t believe impossible things” and the Queen promptly replied, “I dare say you haven’t had much practice. When I was your age, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
Take the last bit and say it in Brian Lenihan’s voice and it could almost be a soundbite. Let’s hope Brian Cowen finds his way out of the rabbit hole before September and realises that NAMA, as a solution, is a surreal fantasy.