Independence is the stake in the Nama bet

Posted by TheYank at 10:52AM on 8/21/09

Nama. Have you heard the name? If yes, you probably have a vague idea that Nama is some government scheme or new department to bail out the banks. And you're not wrong.

I'm not going to give a full economic/financial/philosophical explanation of Nama. All you need to know is that Nama is the government's last throw of the dice. Taoiseach Brian Cowen and friends have a stack of chips and they're betting it all on Nama. Nama's going to rescue the banks and get the government out from under the guarantee it provided to every bank depositor and bondholder last fall. If Nama fails, Ireland's banks will fall and they'll bring the state with them. And Ireland - for all intents and purposes - will cease to be an independent country.

What are the odds of a win or a loss? Well, I can't say with any certainty, but neither can the government or anyone else. The people who have drawn up this plan and made this bet are basically schooled in the same rules and philosophies as the people who got us into the mess in the first place. In fact, many of the people involved are the very same people who led us into this.

That makes me uneasy about this bet. A month ago or so I thought the government might just scrape by, but now I'm less certain. If I wasn't so invested in the government winning its bet I'd probably be looking to see if I could take some of that action myself and bet against Ireland succeeding. That's how shaky things seem right now.

Today we learned that the leading opposition party, Fine Gael, is going to vote against the government's Nama plan when it comes up for a vote in September. That's maybe not all that remarkable, but I like the language from party leader Enda Kenny: "At its core, Nama is a €90 billion 'double or quits' gamble by Fianna Fáil on the property market. A €22,500 bet for every man, woman and child in this country." I have very little faith in Kenny, but at least he seems to get what Nama is.

And if Nama fails, "What then?", you may well ask. Well, Ireland will have to be bailed out by some other entity and that will almost certainly be the European Central Bank - that is, the Germans. So after nearly 90 years of incrementally increasing independence and stability, a few short years of inebriated investment and indulgence could see Ireland as a 'province once again.' Only this time we'll be a German province living by Germany's rules.