Please feel free to add your comments/ suggestions, concerns and correct me if I have anything wrong. However, no jargon is allowed.

The government is spending your money –  and gambling with your children’s future – so you have a right to have your voice heard. Please comment.

The questions:
1. Form: Why is NAMA a commercial entity? This lacks transparency and accountability…not open to scrutiny by public or journalists.

SPVs are dodgy accountancy vehicles used by Enron and Worldcom to hide funds. At their most basic, they just move numbers from a public spreadsheet to one that’s encrypted with a password. Has a Wizard of Oz feel to it: “Don’t look behind that curtain, there’s nothing there”. This does not really give you confidence in their overall purpose does it? International investors will not be fooled.

The shares in these SPVs will be held by 49% by NAMA and 51% private investors. So, who will own the majority shareholding of the SPVs – banks, pension funds, developers – and will their interests be in the public interest? Doubtful. A potential conflict of interest? Most certainly.

2. Valuations: prices to be paid by government for bad bank loans is out of whack with reality and it increases the risk of reinflating the property bubble. As a commercial entity, it seems strange that NAMA would buy property at more than it’s worth. It’s a bit like a business owner going into an auto showroom, looking at price tag and saying: “I’ll pay you 30% over the sales price” for that transit van. It does not make commercial sense.

3. Risk sharing: this is the really scary thing. The risk is still on us, the taxpayers – not on the risk aware shareholders who bought the stocks or the experienced bondholders – who were unaware of the gamble they were taking by electing a government who “looked the other way” when developers, business people and bankers were gambling BIG MONEY using risky derivatives called CFDs. Our regulator was like Homer Simpson at the controls of the Springfield Nuclear Power Plant.. snoring away. (See Lessons from the D’Oh School of Economics” on this blog)

4. Cost: a huge burden is being placed on every taxpayer to fund this open-ended money pit. Our services will be cut and our children forced to emigrate – once again – to find work. Is it really worth the price? There ARE other, quicker, ways to get the economy moving.

5. Transparency: Where is it? Nama is getting muddier, and more complex, by the day. If you can’t explain something clearly then it’s possible you’re either trying to hide something or do not understand it yourself. Either way, it’s not a good governance strategy.

6. Time: will it take a generation to unwind? What does that mean for our health as a nation?

7. Teeth/ Consequences:  will Nama take a tough enough line on valuations and developers? This is crucial. Will any property developer, banker go to jail, go broke, etc. as a result of NAMA actions.

8. Money, money, money: the banks do not have enough money in the coffers, or capital. What capital ratios are banks are obliged to have now and in the future? (The capital ratio is the percentage of a bank’s cash on hand to its risk-weighted assets, or the stuff they have that can be converted into cash.)

9. Future funding: Will Nama lead to a large shareholding in the main banks if they can’t raise private equity? They have no cash.

10. Cash flow: The biggest question of all – since it’s the purpose of Nama – how EXACTLY will it lead to more money flowing to businesses?

11. Supervision: Who will set and monitor the costs for running NAMA – including consultants’ professional fees – to ensure value for money, transparency, accountability? Will it be the Comptroller & Auditor General, Irish accountancy firms or independent international audit companies?

12. Stability: will NAMA force banks to split in two – commercial and investment – to ensure no bank is “too big to fail” ever again? A purely commercial bank focuses on consumers’ needs and ensures good lending practices. Investment banks can take all risks – and the consequences good and bad – without jeopardising the economy.

Paul A. Volker, former Federal Reserve chairman who is also one of the architects of Obama’s economic strategies thinks this is essential for the recovery and stability of the US financial system.

13. Control: Will NAMA give the government more, or less, control? The government is seems currently unable to force bankers, developers to pay back funds, face criminal charges, hand back bonuses… so will NAMA give them more control over those issues than partial, short-term nationalisation?

14. Future stability: In future, will banks be forced to save a certain percentage of all deposits/ funds in their coffers (“fractional reasoning” – usually 13%) before they invest/loan the rest? Usually, when they take in €100 they keep €13 rainy day money and loan out of invest the €87. At height of boom they lent/ invested ALL of it, leaving the vaults empty. Now they are borrowing money so they have something in the vaults when the government, and international observers, comes for a look-see.

15. Regulation: Will NAMA suggest new regulations to ensure this mess cannot happen again? Is this in its remit or will lessons be lost due to “gagging” clause?

US regulators may be given power to take over failing firms that pose a risk to the entire financial system and unwind the firm’s derivatives contracts, pay the parties less than what they’re owed, or transfer the contracts to another, healthy financial firm.
http://www.huffingtonpost.com/2009/11/03/new-too-big-to-fail-bill_n_343818.html

16. Accountability: why aren’t the boards of the banks gone? Will NAMA have any power to force out those who were on boards at time of reckless lending? Why are we still funding Anglo Irish Bank and Irish Nationwide? They are not of systemic importance to the economy.

17. Conflicts of interest: the people needed to do the NAMA job are property, banking and legal experts yet they have the most to gain. How can conflicts of interest be avoided?

Interesting issues raised by others:
Complexity: Hugely complex project management/ organisation challenge faces Nama valuers: http://www.garrymiley.com/2009/07/31/WhatIsTheStars.aspx

Secrecy/ Gagging clause: “hope you cover the clause forbidding NAMA from criticising govt. A corollary of blasphemy prohibition?!” From a tweet to @marklittlenews.

Please add your views here….

Nama, according to its website, is an independent commerical entity designed to  take bad loans off the banks to make sure they start lending again.

Sweden’s Bo Lundren, who presided over their Nama-type body, said that in any crisis there are three things you must do:
1. Increase liquidity (lending to businesses and consumers)
2. Restore confidence (take quick, decisive action to show there is leadership)
3. Increase your capital base (get money back into the banks to make sure they are stable enough to continue)
See his comments here: http://www.iiea.com/events/bo-lundgren-on-the-rehabilitation-of-the-banking-system

Liquidity: So far, the government has done nothing to FORCE the banks to lend to SMEs again. These SMEs are stagnating: putting off hiring staff or downsizing and delaying development plans and innovation strategies.

Confidence: Um, we are talking about Irish politicians, right? I don’t think anyone – from international observers and domestic business people to Nobel-Prize winning economists and former regulators – truly believes that our so-called leaders will do anything to disrupt their gravy-train. Corruption, cronyism, conflict of interest, vested interests, jobs for the boys, winning money on the “horses” ring a bell here?

Capital base: Irish banks were reckless with their money and your money. They took the cash we put on deposit and loaned it ALL out. That’s right, no rainy day money. Coffers are empty. The normal practice is to keep 12% and loan out or invest 86%. Our bankers abandoned this and spent it all. Now they have to borrow it back – and this is getting more expensive every day.

So, Nama – it’s just a total nonsense.

This “commerical” and “off the balance sheet” entity is just one big smokescreen that’s hiding the size of our debt. Commerical entities funded by taxpayers’ funds – weird or what? Yes, there are semi-states but this is a commerical entity. No transparency – not subject to Freedom of Information legislation, not required to file an annual report. No accountability – who is running it, how much are they being paid, are they independent or just more people with vested interests?

Enron used to run an “off the balance sheet” entity. Those guys are in jail or dead from the stress.

Nama is just more jobs, and more money, for the same old people so they can keep the party going … but we’re footing the bill.

The view that there is no alternative is “just wrong” he said. “There is an alternative. Play by the rules of capitalism – if you can’t pay back your debt, shareholders and bondholders lose.  If the Government puts in money, it needs to get control commensurate with the money put in. It also should get a return proportionate to the risk involved – in this case, it’s a big risk.”

For more on Prof. Stiglitz’s views see:
Trinity talk – http://www.irishtimes.com/newspaper/finance/2009/1008/1224256168742.html
State squandering money – http://www.irishtimes.com/newspaper/breaking/2009/1007/breaking45.htm
Opposition urges Nama rethink -
http://www.irishtimes.com/newspaper/breaking/2009/1007/breaking61.html

If you do not understand that then let me take on the persona of Princess Leia from Star Wars when speaking in a holomessage to General Kenobi: “Years ago, you served the planet in the Global Warming period; now your little green island begs you to help us in our struggle against the Fianna Fail-Bankers-Property developers Empire. I regret that I am unable to present the taxpayers’ request to you in person; but we have fallen passive under an attack of half-truth, financial jargon and PR speak. I’m afraid my mission to bring you to the ordinary people has failed. I’ve placed information vital to the survival of the Irish state  into the memory systems of some brave economists, business people, journalists and brave citizens. My people will know how to retrieve it. You must see this mission to destroy Nama safely delivered to the ECB.  This is our most desperate hour. Help me, Obi-Wan Gormley; you’re my only hope.”

It was an interesting debate but since time was constrained I did not have a chance to outline my points so here they are in a nutshell.

1. We are not a capitalist country. In fact, there is no purely capitalist country. Ireland is a mixed economy. We have aspects of capitalism (private controlled enterprise) but some aspects of socialism (government controlled health care, transportation and some energy providers). Even the “there is no way in heck we will every have a remotely socialist policy” United States uses some socialist concepts. For example, military equipment suppliers are guaranteed a profit on everything they make for the US government. They are considered so important to national security that they cannot be allowed to go bankrupt. Poor Obama is also trying to socialise the health care system but those red-paranoid Yanks just won’t see the logic. 

2. Capitalism will never die as long as human beings live according to their true nature – people always want to better their situation.  They work out of self-interest, not some love of the common good despite what some communist and socialist regimes have said in the past.

3. Capitalism is changing.  Most people realise that capitalism is an unfair system that breeds inequity between the haves and have nots. Therefore, a new type of capitalism may be emerging. In the past, some people have called it the Third Way but I think we’re even beyond that concept now. Bill Clinton and Tony Blair are considered supporters of this concept. Read more here: http://en.wikipedia.org/wiki/Third_Way_(centrism) or http://www.cesj.org/thirdway/thirdway-intro.htm or http://www.fiu.edu/~mizrachs/thirdway.html

4. Capitalism is like a pair of shoes. Everybody likes different ones. Each capitalist nation has its own unique features. These countries leaders will continue to make choices about their economic system based on individual style and wear the economic system that suits their intended purpose. For example, you wouldn’t wear high heels if you planned to climb a mountain just as you wouldn’t wear ballet shoes at the Electric Picnic. Know why? You’d get muck absolutely everywhere.

We also talked about NAMA and but I’ll write about my objections to this – management, transparency, risk, timing, control and more – in a different post.

For example, if as “mayor” you allowed a builder to construct a hospital in an earthquake zone using substandard materials you’d find your city in a state of emergency at some point along the city’s timeline.

The SimCity concept spawned  a game called Capitalism. According to reviewers, Capitalism is an tough strategy game, like chess, where players must constantly think ahead. It can easily overwhelm novices. “But by adjusting several factors — the competency and managerial style of the computer-controlled rivals, for example, can be varied from very aggressive to conservative — gameplay can be suited to various styles and speed. The game even allows a player to hire presidents to manage the day-to-day operations of different divisions so the player can concentrate on the big picture.”

The interesting thing about Capitalism is that it’s based on a real world model so you have to take into account land cost, overheads, demand for the products, and competition. You can then test different scenarios to see where they can lead. It’s an excellent way to test theories and practices in a safe environment. Star Trek fans might think of  it as a holodeck on the Starship Enterprise with the safety protocols turned on.

Before we let the government launch the great Nama experiment —allowing us to take all the risk —let’s lock them in a room and force them to play out all the possible risks and outcomes of Nama on a SimNama game. Any game developers out there who want to take up the challenge?

For one moment, why not imagine your Ireland. What would it look like if you had your say? Try this quick, very basic, exercise and see what you come up with!

 1.     Start with a blank piece of paper

2.     Imagine the society you would like to live in (safer, happier, healthier, well-educated, open, tolerant, more positive, entrepreneurial, socially active, community-focused, takes care of most vulnerable, more efficient).

3.     Write down some of the basic principles this society should live by: respect for others, transparency in government, efficient use of taxes/ public money…(This is your constitution)

4.     Choose a system of governance that supports this (democracy, social democracy, socialist, communist, libertarian, theocracy, dictatorship, anarchism, monarchy, republic)

5.     Choose an economic system that supports this:
a. general concept: private, state, communal?
b. level of control: hands-on or hands-off system?
c. most common types: capitalist, socialist, mixed economy. social market economy, the third way,

6.     Find the best and the brightest in the nation, ask them to govern and apply all of the above.

7.     It can happen. Make your voice heard. Write. Talk. Vote when you have the chance in every local and national election.

 For more information on our existing constitution click on: http://www.constitution.ie/constitution-of-ireland/default.asp?UserLang=EN

The men stand around wear ill-fitting hairpieces and dresses. The women do, too. Then a burly fellow pounds the ground with a big stick like Moses parting the Red Sea. The crowds in the hallway move aside to make way for… the judge.

The tipstaff and criers who lead judges of the Supreme, High and Circuit courts from their chambers to the courtroom create an impressive spectacle. They represent a tradition dating back to the founding of the Four Courts in 1796.

Back then, they had a more practical purpose.Tipstaffs carry a wooden or metal staff with a crown on the top. In the past, the crown was removed to reveal arrest warrants stored within the hollow shaft. It’s a quaint and fairly harmless tradition. However, another old-fashioned legal practice isn’t quite so charming or practical.

Legalese is causing great harm to our ability to communicate with one another.

Pomp and circumstance

Irish solicitors seem stuck in the 18th century, even when communicating with clients. It’s all pomp and circumstance. Legal letters, terms of engagement contracts, websites, marketing materials and even emails are sprinkled with Latin phrases, heretofores and thereins.

What legal practitioners don’t seem to notice is the way it makes clients feel and the barrier it creates between them. If a client does not understand a document they may feel stupid, ashamed or angry. This is not a great way to build client relationships.

The Lisbon Treaty is a classic example of legalese gone mad and we all know how the public felt about it the first time around. Here’s a sample: “Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level. The institutions of the Union shall apply the principle of subsidiarity as laid down in the Protocol on the application of the principles of subsidiarity and proportionality. National Parliaments ensure compliance with the principle of subsidiarity in accordance with the procedure set out in that Protocol.” Lisbon Treaty, Article 3b, Paragraph 3

Last month, Secretary-General of the European Commission, Catherine Day, said legal language was necessary for the Lisbon Treaty. “It needs to be actionable later on in court” she told the Pat Kenny radio programme.

While it’s true that laws are written more for legislators than for members of the public, Plain English legislation is becoming the international norm. That makes good sense. Laws are written to help govern the people. If you can’t understand a proposed law how can you be expected to obey it or to debate for, or against, it before it is passed?

Misunderstandings and misinformation

During the first Lisbon treaty campaign the government did little to explain the document’s significance or counteract the emotive posters of the No campaign.  Maybe they didn’t know how?

The civil service has its own legalese dialect and our Taoiseach Brian Cowen is undoubtedly one of its native speakers. He’s from a political family so the poor guy probably grew up with civil-service-speak in his house.

Can you image the scene? His parents, when instructing the nanny to get the child some fresh air, may have said: “Going forward, the perambulations of the offspring will heretofore be undertaken with a childcare advocate in attendance. Said advocate will ensure the client obtains a measure of the appropriate levels of the two hydrogen-one oxygen combination as prescribed by parental recommendations.”

This communication style is highly infectious and trickles down to the government’s communications with Joe Public, their client. Even government bodies that are designed to represent and defend the people’s rights find themselves using phrases like “fettering their responsibility” without knowing why. They’ve been brainwashed with the jargon since they took their civil service exams.

What a feeling

When government officials, solicitors and business people use gobbledegook to communicate with their customers they are not doing their job. Professional jargon is often convoluted, elitist and weakens the writer’s intended message.

Client communications say something about the writer and the organisation. A jargon filled letter can provoke strong emotions in the reader. If the language is inappropriate to its audience, the reader may think the company is dishonest, incompetent or hiding something. Reputation is everything and clear communications ensure a lasting, and lucrative, customer relationship.

Legalese fits modern society about as well as those wigs fit barristers. It’s time to cast this tradition aside.

Margaret E. Ward is managing director of Clear Ink and a writing skills trainer for the legal profession. Blog: margaretward.ie

Western society has hang-ups about ageing, and older people are often invisible or ignored.

Fianna Fáil TD Mary O’Rourke, one of the more senior members in the Dáil, was being asked for her advice to older people running for politics last Monday.

Thankfully, O’Rourke did not have a “senior moment”, the American expression for forgetfulness or a momentary blanking of the mind, as she replied. The political veteran – whose BER energy rating, if she were a house, would be just fine – replied that her genetic make-up meant she was not a delicate person and had lots of energy.

Obviously, the RTÉ reporter did not ask the question with any malice, but the throwaway comment reflects Irish society’s casually expressed, but deeply ingrained, views of the aged. We assume that anyone over 50 is slowing down, putting on a robe and slippers, obsessing about health problems, the weather, Daniel O’Donnell and preparing to die.

These ideas translate directly into the workplace and society. The third-highest number of complaints to the Equality Tribunal last year – 82, up from 41 in 2007 – involved age discrimination. This bias may range from something as subtle as refusing an employee’s training course request because they might not be around much longer to outright abuse due to the person’s age.

Some of Ireland’s best thinkers – business leaders, entrepreneurs and politicians – are over 55. Can you imagine Dermot Desmond, Martin Naughton, Margaret Heffernan, Feargal Quinn or Jackie Healy-Rae willingly packing it in because they’d reached a certain birthday?

Western society has hang-ups about ageing, and older people are often invisible or ignored. How often do you see the over-55s represented in the media, advertising or entertainment industries?

By contrast, Asian society is renowned for its reverence for older people. RTÉ’s Margaret Ward, who has been stationed in China for a few years, told me older people there are quite visible and active in society, since they retire quite early. “You see them in parks a lot, doing tai chi, playing cards and mahjong, doing ballroom dancing, group sing-songs and using public gym equipment.”

So, where do our beliefs come from? We’ve probably been overly influenced by advertising research. Marketing executives believe older people are more set in their ways so they are less likely to spend money, change brands or try something new. The golden demographic – 18- to 34-year-olds – are lusted after for their spendthrift ways.

As the recession deepens, however, marketers are changing their views. The New York Times reported last month that there is an increasing interest in marketing goods and services to consumers aged 50 and older. “Among those aiming more at the older demographic are giants like Chrysler, Kraft Foods, L’Oréal, Procter Gamble and [retailer] Target,” the paper said.

It’s not altruistic; they’re just following the money. Baby boomers have entered their later years and they’re not dropping like flies. Life expectancy in Ireland is increasing. According to the Central Statistics Office, men’s life expectancy is 76.8 years (up 1.7 years) and women’s life expectancy is 81.6 years (up 1.3 years) in the most recent data.

There are probably more “active retired” individuals than the widely characterised sick, doddery pensioners waiting for the Grim Reaper. Although Ireland has one of the EU’s younger populations, with just 11.5 per cent of us over 65, this is set to rise to 26 per cent by 2011.

Seniors are having their moment. During the medical card protests last autumn, one campaigner said: “They underestimated the generation that marched for civil rights in the 1960s, marched for tax reform in the 1980s and march in the noughties for the right to a decent health service.”

Eighty per cent of all older people voted in the last election, and a new political party has been formed. John Wolfe (71) launched the Seniors’ Solidarity Party this week to lobby on issues of concern for the over-50s and their families.

We’re all 21 in our heads, and most people over 55 do not feel old. New website EveryMonday.ie, which I edit, found that 80 per cent of 500 people over the age of 55 who were surveyed believed 80 years of age, not 65, was old. So, 80 is the new old and there’s a lot of living to be done in our last 30 years.

It’s time we all question our attitudes and ask: what role do older people play in our society, in our businesses and in our personal lives?

Margaret E Ward is a journalist, blogger and managing director of Clear Ink