Selling State Assets

Robbing Paddy to Pay Seán

The government has decided to sell off State assets in order to fund the banking bail-out and has appointed Colm McCarthy, formerly of An Bórd Snip, to do the valuation.

An Bórd Strip.

Let’s just figure this out step by step.

Privately-owned banks lost a huge amount of money due to their own greed, dishonesty and incompetence.

International financial gamblers who made a bad decision when they decided to purchase bonds issued by those banks, now stand to lose their investments.

The government issues a blanket guarantee to the dysfunctional banks and protects the gamblers against losses arising from their own mistakes.

It fails to quantify the losses of the banks, and underestimates the losses of the worst bank by a factor of five, or even ten.  It has still not established how much the losses of this bank will be.

In saving these banks and the gamblers who bought into them, the government brings about the most expensive bank rescue in the history of the world.

In order to pay for the losses caused by the greed, dishonesty and incompetence of four or five banks, the government sets up a body to value the country’s assets.  The money raised by selling the national energy companies, road network, railways, broadcasting corporation, airports, mineral resources, gas and oil will be used to save the banks.

At the end of the process, the banks will be saved, but  all the country’s assets will be gone.  The State will have nothing to show for it because all the money from the sale will go straight to paying the debts incurred by these four or five privately-owned banks.

The country will no longer own anything, but the banks will be safe and the international investors will get their money, which has been raised by selling off everything we own.

The government sees nothing wrong with this.

Am I missing something here?

24 thoughts on “Selling State Assets

  1. I’m with heedy mortal on this, this is the biggest heist in history. In the same way David Copperfield made the Statue of Liberty disappear, our government and the banks are making our national assets and any wealth held by the middle and working classes disappear in to the pockets of the worlds wealthiest people, whilst making us believe that it’s for the better good.

    We will be getting all this money back in the form of loan from the IMF eventually, and at extortionate rates, when we have run out of things to hock, and can’t afford to pay our way.

    That is unless the knowledge economy kicks in and saves us……

  2. You got to love FF – The Republican Party, the party of the Small Farmer etc etc.

  3. And who will be the ones to pick up these bargains? Probably the same well placed people whose asses were saved by the guarantee. Full circle, neat no?

    I’d say they have their eye on one or two of these, but they’ll pretend they want to sell everything, and then there’ll be relief all round (except for the chosen target) when they announce they are only going to sell the selected one or two. The NRA and Local Authorities have been doing this for years with routes for new roads: They select 5 optional routes to split the locals, then announce the one that they always knew was the best one, and the other 4 sets of parishes is relieved and quite happy to let it go ahead. Divide and conquer.

  4. It looks like absolute desperation, and good decisions are rarely made when one is absolutely desperate!

  5. For fuck’s sake. This is the financial crime of the millenium and they’ll just get away with it. THEY WILL. Bertie will run for President and get it. We’re already paying for him to travel to lucrative speaking engagements. Eh… eh….eh … eh… I didn’t even know the guy could fucking speak properly. Mary Harney will fuck off on an all expensive paid trip to some exotic locale where she will be fisted by several burly men while she gets her arse waxed and WE WILL pay for it. So again I say, fucks sake!

  6. For all the other misdemeanours / crimes / whetevers, I think Bertie getting the presidency would be the proverbial straw. I’d imagine there’d be a huge shout from Ireland keen to tell the world that this is not the man we want to represent us. Bertie getting that seat is a blatant finger to everyone in the country!

  7. EssoDee — Correct. The same people whose gambling debts were underwritten by the government will use the money to buy the assets which were sold to raise the money to underwrite their gambling debts.

  8. It seems like they are trying to avoid an inevitable collapse. The money going into these banks has to come from somewhere and you can only squeeze so much blood out of a turnip. There isn’t the jobs there to pay enough tax. All very well and good selling off our airports and roads, but eventually if people don’t have the money to fly or drive.. they’re won’t be enough money coming in from tolls etc.

    It’s like putting a cork into a gaping hole in a sinking ship, hoping it will stay afloat.
    Economic systems are going to have to go through systemic overhalls, because the whole system is one big pyramid scheme built upons layers and layers of greed.
    Castles made of sand melts into the sea eventually, comes to mind.

  9. I suppose if you’re gonna go down, might as well at least be merry, Ann’s Friend.
    Row, row, row your boat gently down the stream.. :)

  10. Bock,

    “Am I missing something here?”

    It’s even worse than that.

    Not sure of your policy regarding links but here is a reply to “The Alchemist” on irisheconomy.

    http://www.irisheconomy.ie/index.php/2010/07/26/revisiting-the-ndp/#comment-61877

    “The Alchemist,

    I’ve been looking at this because I heard the word “lease” mentioned at least twice in coverage.

    http://www.finance.gov.ie/documents/publications/reports/2010/capitalreview.pdf

    Page 36:

    5.3 Assessment of Sectoral Capacity and Anticipated Medium-term Demand

    5.3.2 Housing

    “The number of unoccupied dwelling units in the country weakens the case for continuing with a construction-centred investment programme. Acquisitions of existing stock will continue to play an important role in the early years of the programme but the only viable medium term option is to undertake a re-balancing of investment towards a more lease based model.”

    “the only viable medium term option is to undertake a re-balancing of investment towards a more lease based model”

    The Government intend using current expenditure to provide an income stream to developers administered by NAMA (or its SIV’s).

    Apart from the fact that this is a disgrace it most certainly is not an “investment”.

    It is a commitment to a stream of expense for the next (say?) 21 years.

    It is fundamentally undemocratic as any future Government would have to break the leases in order to recover the income stream.

    NAMA becomes the biggest slum landlord in Europe to protect the banks and developers.

    30,000 houses (or housing units) could be bought for €1.5bn at an average price of €50,000. A good price for distressed liabilities.

    Guess who will be the preferred developers and who will be bankrupted?

    Page 36:

    “Construction/acquisition of social housing units to be used only to replace units lost through tenant purchase; to meet needs where leased properties are unavailable and to meet special housing needs;”

    “This will result in a rebalancing between current and capital expenditure: with an increase in leasing, current expenditure will rise.”

    Page 80:

    8 Health and Children

    8.3.2 Future Policy Direction and Key Projects

    “In terms of primary care, the HSE has identified an extensive list of proposed developments to advance provision of primary care centres. Submissions were invited for proposals to develop over 250 sites and the Board of the HSE has approved in principle advancement of 182 locations. These projects are being progressed as leases.”

    Page 87:

    11. Office of Public Works

    “Lower tender prices, pursuit of leasing solutions where suitable and increased efficiency in the use of the existing asset base will allow for delivery of a very high level of outputs from a more limited level of expenditure. However new leases will have a current expenditure implication.”

    So the question is. How much have the current Government restricted the freedom of future Governments to manage the economy.

    Are we looking at €2bn per annum from future tax revenues?

    It seems that the current Government is determined to sell out this country lock, stock and barrel.

    Or more correctly social housing, health care and public works.

    Why don’t they just sell the Republic and lease it back.

    That should provide enough for a great party in 2016.”

  11. You got it exactly right, Bock. There is a part of economics that is called “the circular flow of money” that is meant to explain good old fashioned economics. What you have described is Irish economics and politics where the money definitely stays in the circle. The FF circle. One further point. No prosecutions yet. Now why nearly two years on from a massive share support scheme, billions being mis-described in accounts, banking balance sheets that were cocainesque in delusional terms we still have no prosecutions. There is a regime in power, not a government.

  12. What the country needs is a martyr. Or even better a couple of them. “Today in Dublin a father of five who could no longer afford to feed his family, butchered his children and mailed a heart to each of the five Irish Banks.” Or “Today in Dublin, a man who was paying more taxes and charges than he was taking home pay, set himself on fire outside of Anglo Irish Bank on St Stephens Green.” With a few martyrs like that this fucking greedy, cowering nation might wake up to the scam going on.

    I might just be that man. I can’t take any more of this.

    Darren

  13. Jesus Darren, that’s a bit dark isn’t it. Setting yourself on fire or butchering up your children.
    The recession has an awful lot of answer for. What can’t you take any more of by the way?

  14. Well, there’s nothing new here. Forced privatisation of state assets and the consequent social and economic vulnerability is straight out of the neo-liberal / IMF playbook.

    The funny thing is, I don’t think many of the FF/Glasraí politicians and DoF technocrats are convinced neo-liberals. They are just not very bright, utterly out of their depth and running around like headless chickens.

    So they reach for the nearest brainless policy comfort blanket. They’ve been told for years that state ownership is bad and inefficient and the private sector always does things better. They simply don’t have the character and independence of mind to question this piece of repeated propaganda.

    So it’s beholden upon us to collapse this government ASAP and make sure it doesn’t get replaced with one driven by FG Toryboys.

  15. “The air we breathe?”

    They can’t sell it so they decided to tax it.

    Carbon Tax?

  16. It’s scorched earth policy. F.F. know that they are out of office for at least one term next time around. They want to leave the place in such a shambles that no Government can make a go of it. With the added advantage of selling the State to their friends in the Golden Circle for little or nothing.

  17. On Monday the “new capital spending plan” was published. No money for Thornton Hall or Luas to Lucan.

    On Tuesday, RPA puts a glossy expensive leaflet through my door about consultation for Luas line to Lucan.

    On Wednesday we are told that a 400 cell prison will be built in Thornton Hall.

    Does this government’s left hand know it also has a right hand? Has anyone spoken to the RPA/Justice and said “Stop spending the f**king money, it’s not there!” Obviously not.

    Many have posited the idea of a grand conspiracy to enrich cronies/beggar the country. Unfortunately this is not likely.

    What we are observing is incompetence. Incompetence of a level and a scale that is breathtaking.

    Surely Dermot Ahern read the section of the capital plan pertaining to justice before it was launched? Surely he could have picked up the phone to Biffo/Yehudi and said where’s my prison, before they had the grand launch. Surely Finance could have called the RPA and said to stop spending on the following…………….

    I dunno about setting myself alight, but I definitely feel like weeping.

  18. John The Pessimist

    What is happening now is either pure insanity or outright treason.

  19. @Mick
    One sure way to ensure Bertie doesn`t become president would be to do away with the office, sell off the Aras, Farmleigh, The Phoenix Park and all the filthy animals that live there.
    Every cloud has a silver lining

  20. If they sell RTE they cant expect us to pay a licence fee to a private company can they?
    I suppose they will still collect it, then keep it for themselves. but who will buy RTE without government money.
    The same for all the transport companies. I would guess most of these assets are worth very little without sacking large amounts of staff and changing work practices.
    Cant see FF upsetting large amounts of voters.

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