HEART BEAT:It is an insult to our intelligence and conveniently ignores how we got here, writes MAURICE NELIGAN
ADOLF HITLER wrote in Mein Kampf ,“the broad mass of a nation will more easily fall victim to a big lie than to a small one”.
I am referring to Nama and the fact that it is posited as not being a bailout for the banks and developers. We were told that a risk-sharing mechanism was to be built in, so that the entire burden would not fall on the taxpayers.
This was to be a sop to the Green Party, and had such division of risk been meaningful it would have been welcome, no matter what deep reservations most felt about the concept. The share when it came was 95 per cent to the taxpayer and 5 per cent to the banks. Enough said.
I am sorry that the analysis proffered by Dermot Desmond did not come earlier. It was published in this newspaper on Nama day and maybe was too late to influence the debate.
This was a great pity, as it was an analysis of great strength. Furthermore, it came from somebody whose credentials in this field are undeniable. It’s not too late to have a long, hard look at what he wrote and to possibly involve him in the solution. Is that too much to ask?
The bank shares have risen, as predicted by Senator Shane Ross, and various authorities have spoken from the banking and some commercial and construction sectors and repeated that Nama is the only game in town, and that we should get on with our lives and trust the powers that be.
This insults our intelligence and conveniently ignores how we got here. In the Minister’s strong performance in the Dáil, the bankers were to blame for their reckless lending – amen to that. However, he did not mention the crazy developers who, irrespective of any demonstrated need or market, lumbered us with the apartments, houses, offices, etc, that lie empty today in testimony to folly.
He did not mention that he and his colleagues presided over this debacle and, in fact, encouraged it with tax breaks and wholly inappropriate rezonings.
There were, of course, ethical and prudent developers and bankers who took no part in this rush for fool’s gold, and it must be galling for them to be tarred with the same broad brush of public opprobrium.
When sanity reasserts itself, these are the people we will need to help move us forward.
It is a source of wonder that when property values are rising the free market is extolled.
When there is a surplus of overvalued property that nobody wants or can afford,
the market is said to be “distressed”.
This led us to the concept of “long-term economic value”, which in turn has led us to the edge of the cliff. It is nonsense – if nobody wants or can buy these “assets”, then they are worth little or nothing.
We cannot gamble our nation’s future on the hypothesis that they will be worth more in the future. They were grossly overvalued and this market is painfully adjusting itself. Nobody knows where it will end.
We cannot blithely assume that we have reached the bottom and then wager the national shirt upon it. We cannot even trust the values that are being placed on much of this property at the present time, as it is not being tested in the market.
Furthermore, much of this development is surplus to need for the foreseeable future. How many folk have secure and unstressed jobs that will allow them purchase these apartments and houses? How many businesses are waiting in the wings to occupy the acres of untenanted office space?
I was taken with another Ministerial assertion. He told us that the drop in property values had pushed up property yields, and that the gap between yields and interest rates is much higher than at any time since the mid-1990s.
This sounds great, apart from the fact that rents, both commercial and domestic, are steadily falling. There are no upward rent reviews. There is too much untenanted property to change this any time soon.
The establishment of this body has done little or nothing to assuage the feeling that those responsible for bankrupting the nation are walking unscathed from the ruins, ready to rise again on another sunny day when we plebs will have forgotten all about the past.
Virgil wrote, “Sic vos non vobis mellificatis apes” – “thus you bees make honey, but not for yourselves”. Maybe it’s time we all shared the honey?
- Maurice Neligan is a cardiac surgeon