NAMA will kill Irish economy for years to come

Date Published: {J}

Was ‘treason’ too strong a word? No. When this government agreed to take on the liabilities of Anglo-Irish Bank, converting the risks of financial speculators into a personal liability for every citizen, then yes they did betray the people of Ireland. Not with malice aforethought, but with too little regard for the consequences on ordinary people, born of too high a regard for the interests of a wealthy minority.

But that minority was taking a punt to turn a profit. It may have suited the government to pretend that demand for property was infinite, but the investors still knew it was a game. You get in, grab what you can, you hope to get out before the bubble bursts.

Anglo was obviously overexposed to property, so anyone hanging in there at the end was well aware that they were taking a huge risk. And so they lost – or at least they should have. But investors in Anglo were not taking a gamble on the property market as such. In effect they were betting on the government being too weak and too dependent on the property sector to allow them to lose. So really they won. Not on the open market, but in a game of bluff against the state. For our money.

And now the nation is up to its epiglottis in debt. Those who got carried away in the ‘Tiger’ years and joined in the national madness, who borrowed money to buy a house for twice what it was worth so they could sell it for three times, they will have to pay that back now. Sorry, but proper order. Those of us who either couldn’t afford or knew better than to get into overpriced property . . . Well we’re going to have to pay it back too. Lessons this government teaches us: No sensible decisions goes unpunished.

How did it come to this? It’s really pretty simple. People invested in the Irish property market because it was a magic money machine. Then the money just vanished overnight.

Oh dear, where did it go? It seems it was never there in the first place, because buildings simply aren’t worth that much in reality. Who knew? NAMA’s estimate is that about half of the total money borrowed is now not going to given back, and frankly I think that’s wildly optimistic. We all now have to pay up to five thousand a year each, so even more people are going to be defaulting on their mortgages and other debts. Do you have five thousand a year you weren’t using?

It’s insane, and it’s going to kill the economy stone dead for decades. All because this government pledged that we – the ordinary citizens, the workers, the donators to and recipients of welfare, health services and pensions – would keep the empty promises of speculators. In no uncertain terms, we owe that money now because of the stupid prices that were paid for property in this country.

Remember a few years ago, when you saw some awful little building on sale for several million, and you laughed and said "Who’s going to pay that kind of money?" Turns out, the answer was you will.