Socialism for Rich People -or- Capitalism?

(Or NAMA versus a Good Bank)

Richard Bruton’s blog outlines Fine Gael’s alternative to NAMA. Instead of purchasing toxic assets from the banks at a discount, the FG plan would leave them where they are. They would give the banks 16 months to restore their balance sheets or face administration (this ain’t gonna happen for most of them, but happily the banking guarantee would have run out by then). In order to ensure that business and households have continued access to credit they would set up a government run National Recovery Bank. This bank would borrow on the wholesale market and supply our current Zombie retail banks with credit to keep them lending.

This sounds like a better plan all round than trying to rescue all of the indigenous Irish banks. Rather than privatising profits while socialising losses it’s high time we reacquaint those, who took undue risks with other people’s money, with the discipline of the market and capitalism. Bankrupt banks and developers should go bust, the taxpayer should not be lumbered with the bill.

Fine Gael’s Good Bank plan

Hat Tip –

No bio, some books worth reading – The Rational Optimist: How Prosperity Evolves – Matt Ridley .

Crisis Economics: A Crash Course in the Future of Finance -Nouriel Roubini, Stephen Mihm