NAMA: A deal to bankrupt workers and save developers

By Sean Kelly

The government has looked around for economic gurus to give advice on how to solve the crisis. They have rolled out Peter Bacon once again to sell the NAMA (the National Asset Management Agency) idea.

Bacon was a former executive chairman of Ballymore Properties, owned by property developer Sean Mulryan.
During the boom years, his Bacon report on the housing crisis was boosted as the solution to rampant house price bubble. Instead it did everything the developers wanted.

NAMA will buy all of the toxic loans from the struggling Irish banks, helping them pay off their debts to ‘bondholders’ – bigger global banks and investors who shipped in cash to fund the Irish property bubble and now want it back.

Bacon claimed NAMA would break up the ‘crony capitalist connections that would stop the transfer of assets from powerful and often politically well-connected developers’.

In reality it’s designed to save the developers – who are all big financial backers of FF.

The Dept of Finance and NAMA have already agreed to protect the 20 biggest developers, and not force them into receivership. These developers and their bankers are the very people who caused the problem – they should be jailed.

Instead, its workers facing court cases and repossesion of their homes: they get no bail-out. Their mortgages’ are now worth more than the value of their homes, so they can’t even sell up and clear their debts.

NAMA will dump as much as €90bn worth of local and foreign ‘property’ that might never recover its‘value’ on Irish workers – what a bargain! The whole deal depends on property values not falling more. But there’s little sign of a slow down in the property crash.

We’re bailing out the banks and their top executives on the off-chance that the property market will recover.

NAMA also bails out another bunch of crooks and swindlers: the global and Irish bankers who pumped up the property, debt-inducing speculation bubble, which got us here in the first place.

Splits in the ruling class

In times of crisis, splits emerge in the ruling class. The current property crash and the question of what to do about the toxic loans crippling the banks is a case in point. In fact, it seems as if the economists are barking mad at each other!

For example, a group of twenty academic economists have come out against Bacon’s plan and the government as a whole.

The group have called for the banks to be nationalized, sorted out, and then re-sold onto the private market.

But although the gang of twenty’s specific ideas differ from the NAMA plan, their ideas for sorting out the crisis are still based on many of the same principles as Bacon’s NAMA plan: it’s all about sorting out capitalism and getting accumulation back on track.

Their plan won’t address pay inequality within the banks, overpaid executives, or the culture of greed that pervades the upper ranks of the financial sector. And nor will their plan for nationalizing the banks address the social ills that capitalist societies produce.

Their plan is only to get us back to where we were before this mess started: an inherently unequal society run by stooges of the capitalist class and their crony pals in Leinster House.
Fine Gael: no alternative
Fine Gael and George Lee’s strategy isn’t the right one either.

The former RTÉ economics editor and current Fine Gael candidate in Dublin South thinks the solution is to move politics to the right, not the left.

Like other economists, and despite what his fans have said, Lee never fully grasped what was going on in Ireland.

He never once laid out for his RTÉ viewers just how much the current crisis stems from capitalism’s inherent contradictions.

Fine Gael are afraid that the banking debts could sink the whole country, just like in Iceland. They are right to say international bondholdes should take the hit, but will they follow through on this threat?

FG won’t talk up the need for redistributing wealth in Ireland, never mind internationally. Instead they are in favour of massive wage cuts across the public sector.

Just like government guru Bacon, they’re pinning their hopes on a US-led recovery as capitalists there start investing in response to Obama’s stimulus package.

Despite their disagreements on how to handle the crisis, all these ruling class economists are right wing. They think the government can fix the economy by slashing spending and taxing workers. They’re in favour of attacks on the health service, on public transport, or on education. They all want to bring back fees for all sorts of public services, such as universities.

Marx’s solution

These divisions among the country’s leading economists reflect the sense of paralysis among the ruling class. Capitalism has done things their theories didn’t predict.

Their ideas about tweaking the market, developing favourable economic environments, or about using the latest management ideas to up the rate of exploitation are struggling to solve the crisis.

Marx’s analysis of capitalism explains the economic crisis better than any other ideas. Capitalism stops working and goes into crisis because there is no plan to co-ordinate all of societies resources. We saw this with the bankers reckless lending to developers.

Marx explained the solution is collective ownership of the means of production – the factories, workplaces and the banks – so production can be planned and co-ordinated. And alongside this, we need deeper democracy in workplaces and in society as a whole.