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P. Bacon: sell off semi-states to help couples in negative equity


Vega1447

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Sounds to me like the collective property of the Irish people (sem-states) being sold off to help out people who made bad decisions when buying their house.
If semi-states are sold then the proceeds should be used for productive investment - not handouts to (some) home-owners.

Bacon isn't finished there. "The other area we will have to look at is young people, who were encouraged into the property market by erroneous policy incentives that emphasised the likelihood of a soft landing, they have now been destroyed, financially,'' he says passionately.
"But one way to deal with that would be for the state to realise the value of its own assets and use the proceeds from these sales to tackle the whole problem of mortgage debt,'' he suggests.
The idea of selling off the semi-states and using the money to free up young debt-laden mortgage borrowers, is often what other people describe as a "people's NAMA''.
For others it is moral hazard and Bacon agrees that any such scheme would have to be carefully designed to prevent money being given to those who simply can't be bothered paying the mortgage.
"It would be a way to relieve the negative equity portion of the mortgage present in younger households,'' he explains.
"The current circumstances are so difficult, you do have to be radical,'' he adds.
The Interview: Economist and Government adviser Peter Bacon - Irish, Business - Independent.ie
 


HarshBuzz

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eh, let me see.....

No
 

controller

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I do not agree with the selling off of essential services like
• ESB
• Board Gais
• CIE (Rural areas would never get any service because of isolation)
• Water

We only have to look to the UK to see that such privatisation does not work
 

controller

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There was a report on RTE Radio 1 yesterday morning, saying that we have 1 Quango for every 5000 people in the state and the total wage bill is €13billion...........FFS. That is where you could get money
 

Sync

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First of all, I disagree with the concept on principle. I owe my debt. I chose to get a mortgage. No one else. Not my neighbour who didn't invest, not my gran who's lived in her own house for 50 years. Their taxes shouldn't pay for my debt. The assets purchased and developed with their taxes should be used to pay my debt.

Second: If "young people" are to somehow be judged to be less competent than a 40 year old investor, then they shouldn't be allowed take mortgages out. I don't see why a 25 year old who made a bad investment should get a break when a 45 year old doesn't.

Third:
For others it is moral hazard and Bacon agrees that any such scheme would have to be carefully designed to prevent money being given to those who simply can't be bothered paying the mortgage.
People aren't stupid. I remember when SSIAs came out, everyone with an ounce of sense opened one for every relative they had. Bankers opened them for friends, then paid into them themselves. However they design it, people will ensure their finances match the requirements. Hell they'd be stupid not to.
 
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DCon

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eh, let me see.....

No
It would be destined to fail, with politicians sticking their beaks in to look after friends and constituents.
 
D

Dylan2010

thats what bankrupts should do, liquidate their assets. They should even be condsidering selling the motorways. However knowing the way politics work here the proceeds would just end up in keeping insane promises and propping up the dead hand of the state.
 

Macy

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Sounds to me like the collective property of the Irish people (sem-states) being sold off to help out people who made bad decisions when buying their house.
If semi-states are sold then the proceeds should be used for productive investment - not handouts to (some) home-owners.
I don't agree with selling state assets, as it's short termism however it's done and the consumer/ citizen never ends up with a good deal. However, at least with proposals like FG's there's some hope of return for the state.

This proposal just seems bizarre - sell them off (at the bottom of the market) to give to people in negative equity in the hope they start spending? There's no guarantee that it would kick start spending at all - I know if I got a windfall (as Bacon didn't seem opposed to on Pat Kenny) it would pay down debt but I doubt it would change my spending habits that much. Pretty much like the banks have done on the back with his last bright idea NAMA.
 

bormotello

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In this corrupted country it will become developers bailout and selling state assets will be used only as justification to sell, while after selling will be completed, money will be wasted
 

maxthedog

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After inventing NAMA as a builder/banker bail-out paid for by the taxpayer.

The same bright spark wants us to sell off our assets too bail out more bank debt, and it is bank debt, cleverly marketed as ordinary peoples mortage.

A scam artist of the highest order.
 

locke

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Given the state of the country's finances, I can think of better things to do with the money if the semi-states are sold.
 

hammer

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Interesting.

We give Anglo €30 billion
INBS €5 billion
BOI €3.5 billion
and own 90% of AIB.

We also write off loans worth €2.8 billion to the wealthiest man in Ireland.

We bail out developers.

But Johnny & Mary can go f.... themselves.

Interesting concept posters.
 

WTTR

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To increase spending throughout the economy

Vega1447. I would have piped you on this one, if I could open a thread.

Now, we have that great mind, Peter Bacon, the originator of the NAMA concept coming out with the suggestion that our National assets should be sold off and proceeds handed out to mortgage holders; so as, wait for it – to increase spending throughout the economy. A concept that is known to the readers of politics.ie: http://www.politics.ie/economy/140411-cma-global-sovereign-credit-risk-report.html#post3081095
 

Catch 22

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How many times do we have to pay the bondholders?

Why can't they find money for proper broadband?

Why can't they find money for jobs?
 
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Clanrickard

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Interesting.

We give Anglo €30 billion
INBS €5 billion
BOI €3.5 billion
and own 90% of AIB.

We also write off loans worth €2.8 billion to the wealthiest man in Ireland.

We bail out developers.

But Johnny & Mary can go f.... themselves.

Interesting concept posters.
Can you give examples of these developers being "bailed out"?
 

Libero

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Listening to Bacon on Pat Kenny's show this morning, I thought he was overlooking completely the main reason for the relatively high rate of precautionary saving: the dread among ordinary people that the state is going to collapse.

So long as that dread persits, nudging people to spend more as consumers will prove ineffective. Especially when the state doing the nudging with one hand is, with the other hand, increasing taxes and cutting welfare supports, all while pushing up state borrowing. Ricardian equivalence lives.

Once we agree on that main cause of precautionary saving, and that it has negative effects on consumer and aggregate demand, we have to turn to how the state resolves the dread. And that should see Bacon advocating an intelligent, energetic national effort to move the state towards solvency, where decisions on cuts and taxes are made with primary reference to this predicament rather than the politically-driven approach we saw crystalised in the government's a la carte dining on the McCarthy Report. Electorally-driven austerity is a miserable creature and we've already seen the sacrifice of the prospects of those with the capacity for economic productivity (the young unemployed) in favour of those with no such capacity (pensioners), and a starvation of support for productive private enterprise in favour of semi-states and dead banks.

If Bacon has the ear of senior policymakers (whether elected or not), he should use his voice loudly on that main front, rather than gently remarking the government efforts have been necessary but insufficient.

The plight of those in negative equity is a discrete issue, and while grossly indebted young people are a drag on the economy, there is a conflict between a barely-solvent state aiding their situation and, elsewhere in the economy, lowering the rate of precautionary saving and encouraging business investment.
 

droghedasouth

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Why not compensation for the thousands of small bank shareholders who took the governement and the regulator at their word, wore the green jersey, and held on to their bank shares.
 

HarshBuzz

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Listening to Bacon on Pat Kenny's show this morning, I thought he was overlooking completely the main reason for the relatively high rate of precautionary saving: the dread among ordinary people that the state is going to collapse.
saving won't save them in that case! (unless they have their funds sequestered offshore)
 

Libero

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saving won't save them in that case! (unless they have their funds sequestered offshore)
I think the Great Irish Public would rather suffer the consequences of unpaid public obligations, rather than stand by while the state pillages private savings in private banks.

It's a topic for another thread; I'll just say that while I've poured scorn on posters suggesting some sort of mass public revolt is imminent, a government raid on bank savings would be about the last thing the politicians responsible would ever do (and yes, I've got my savings outside that reach) - it would be a lot more fatal, in every sense, than handing IOUs to public service workers, pensioners and those on welfare.
 

HarshBuzz

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I think the Great Irish Public would rather suffer the consequences of unpaid public obligations, rather than stand by while the state pillages private savings in private banks.

It's a topic for another thread; I'll just say that while I've poured scorn on posters suggesting some sort of mass public revolt is imminent, a government raid on bank savings would be about the last thing the politicians responsible would ever do (and yes, I've got my savings outside that reach) - it would be a lot more fatal, in every sense, than handing IOUs to public service workers, pensioners and those on welfare.
not a risk I'm (or you) willing to take

desperate men do desperate things
 

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