Why not forget NAMA and leave the banks to market forces?

[civilservant]

There are lots of threads on NAMA already, but I'm starting this one to try to gather in one place all the reasons why posters think it is not a good idea to leave the banks to the mercy of market forces. Dermot Desmond says that foreign banks would be reluctant to move into Ireland but I would question that view.

[nuj]

Excellent idea. Pity the goddam guarantee was introduced a year ago, rendering the argument moot.

[shmuck]

Excellent idea. Pity the goddam guarantee was introduced a year ago, rendering the argument moot.

Just get rid of it! who's in charge the lawlords or the people?

[Captain Con O'Sullivan]

Its a great question to ask a Fianna Failer. A couple of years ago if you mentioned state intervention at all they'd look at you as if you had two heads.

The party that is all for the Free Market finds itself the single biggest intervener in privat business in the Republic's history.

It was the same in the states where the Repugs regard anything other than free market forces as the bottie burbs of Beelzebub.

And then when they realised they and their mates were in danger of having the trough taken away from them they couldn't throw public money at the banks fast enough.

You won't be hearing too much from Fianna Failers on the amazing powers of the free market for a while.

[Panopticon]

There are lots of threads on NAMA already, but I'm starting this one to try to gather in one place all the reasons why posters think it is not a good idea to leave the banks to the mercy of market forces. Dermot Desmond says that foreign banks would be reluctant to move into Ireland but I would question that view.

For the sake of argument, here are a few points, which I haven't necessarily thought through and which I don't necessarily agree with. Lots of these are conditional on a systemic bank failure.

1. There is a high likelihood of bank insolvency without government intervention, and that would require us to guarantee lots of deposits or effectively declare bankruptcy as a state.
2. We should be sceptical of too much state intervention in banks; NAMA is the only alternative to having to eventually nationalise everything.
3. AIB/BOI would probably be taken over; having the entire Irish banking sector headquartered outside the state is a bad thing.
4. Banks provide a lot of employment. This is in part a means of avoiding or reducing the size of mass redundancies.
5. Major systemic changes to the banking sector would scare investors and citizens away from participating in exchange, especially if one of them goes insolvent/bankrupt. That would be very bad for the economy and it would make monetary policy entirely unpredictable.

The more difficult argument to rebut is "why don't we nationalise the banks?", because it's a better solution.

[civilservant]

3. AIB/BOI would probably be taken over; having the entire Irish banking sector headquartered outside the state is a bad thing.

Can you elaborate on why this is a bad thing?

4. Banks provide a lot of employment. This is in part a means of avoiding or reducing the size of mass redundancies.

I'm sure that if foreign banks came in to set up in ireland or take over the branch networks of AIB and BoI, they would keep a reasonable percentage of the bank employees

5. Major systemic changes to the banking sector would scare investors and citizens away from participating in exchange, especially if one of them goes insolvent/bankrupt. That would be very bad for the economy and it would make monetary policy entirely unpredictable.

People need banks. They might lose faith in AIB/BoI and the rest but what would stop them doing business with Barclays, HSBC, Rabobank, etc.?

Why do our banks have to be Irish? We are Europeans after all.

[Kensington]

If the banks collapsed, it would be 1929 all over again. We need the banks to start lending again or the economy cannot and will not recover. The reason? The banks make our money.

[Hal]

The more difficult argument to rebut is "why don't we nationalise the banks?", because it's a better solution.

No it isn't.

[Supermanpolitician]

There are lots of threads on NAMA already, but I'm starting this one to try to gather in one place all the reasons why posters think it is not a good idea to leave the banks to the mercy of market forces. Dermot Desmond says that foreign banks would be reluctant to move into Ireland but I would question that view.

Pretty sure there was a thread on this exact subject already.

[cactusflower]

There are lots of threads on NAMA already, but I'm starting this one to try to gather in one place all the reasons why posters think it is not a good idea to leave the banks to the mercy of market forces. Dermot Desmond says that foreign banks would be reluctant to move into Ireland but I would question that view.

There is a real possibility that NAMA will not be enough to save the banks and they'll go down anyway, after we've put tens of billions into unwanted property to save them.