There is no alternative?

Ciarán O’Hagan a bond expert at Société Générale, Paris has a guest post on Irish Economy. It’s an illuminating read, from the perspective of a bond market practitioner critical of NAMA. One of the pro-NAMA arguments he explodes is the notion that the bond market won’t tolerate a default by the banks on their obligations to their bond holders. Ciarán highlights the difference in the interests of the banks’ bondholders and investors in Irish government debt –

Foreign investors *in Irish sovereign debt* share much the same interest as the Irish taxpayer. They want to see the government extricate itself from liability for the banks, rapidly. At the same time, they need to see sharp cuts in the public deficit, and a banking system that works (even if that means, inter alia, flogging off the branch networks).
So if it is credibility of the sovereign you are talking about (the proponent of NAMA love to fudge this notion by the way) then we need more penny pinching policies. Policies more on the lines of what Fine Gael propose go in this direction.

If instead you want to be everybody’s best friend (the quintessential trait of the Irishman in foreign company), and you want to try to keep everybody happy (somewhat), at the risk of sinking the whole boat, … than sure, dole out money like there is no tomorrow (or as if on tap from the ECB ad vitam eternam).
These notions are hardly very difficult to understand, are they? Even for those outside the ivory tower? Even for non-economists?
And yet the press – mostly – assure the public there is no alternative.

International Credibility does not need NAMA, it needs determination

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