BY: SHANE ROSS
Frank Daly, the chairman of Nama, is hardly the first guy you would invite to a wife-swapping orgy or to a drunken dinner party.
Nor would the former taxman draw a crowd to hear his speeches at the dreary lunches he has chosen to address.
In short, poor Frank is a worthy guy, honest as the Almighty, clever, efficient — and dull as ditchwater. For instance, despite his high business status, he is unlikely ever to author a piece for these pages. He has the potential to switch an entire generation of Sindo readers over to the joys of the Observer or the Guardian for titillation.
Frank has sometimes appeared as a witness at Oireachtas committees. He looks deeply uncomfortable in front of the cameras. He attended the Leinster House dungeons when he was a director of Anglo, nearly sending the assembled TDs and senators to sleep on the spot.
That is precisely why Frank is in the chair at Nama.
When Minister for Finance Brian Lenihan was picking the top man at Nama, he did not select the usual political hack who hardly knows his financial posterior from his elbow. He resisted the temptation to appoint a colourful Fianna Failer who would cut a dash in the media.
The last thing needed at Nama was colour or charisma. And it got neither when one of the dullest men in Ireland took the job. Nama was to be the personification of Frank.
For months Frank ran from the press, refusing to return calls, hiding behind public relations spinners while quietly doing the Nama gig in the background.
BY: ZERO HEDGE
The big news out of Europe this morning, and the reason for the drag on the euro is an article in Der Spiegel, “Merkel’s rules for bankruptcy” according to which Germany is now actively (and very secretly) pushing for a plan outlining a set of insolvency rules, which would require that private investors bear a portion of the rescue burden, and much more importantly, would see at least a partial give up in state sovereignty, where a new insolvency trustee (the “Berlin Club”, which we fail to see at least for now, how it differs from the Paris Club) would take implicit control over and override a default nation’s treasury, in essence pushing the bankrupt country into a form of Feudal vassal state-cum-reparations subservience. Welcome to financial warfare in the post-globalization period.
The first national bankruptcy on European soil in decades was only prevented because the remaining countries in the euro zone came to the aid of their faltering fellow member with billions in loans and loan guarantees. The chancellor, determined not to allow the Greek debacle to be repeated elsewhere, proposed the establishment of a procedure to ensure “orderly national bankruptcies.” The German chancellor hoped that the plan would create “an important incentive for the euro-zone members to keep their budgets under control.”
Finance Minister Wolfgang Schäuble, in complete agreement with Merkel, said: “We have to think about how, in an extreme situation, member states could become insolvent in an orderly fashion without threatening the euro zone as a whole.”
BY: NEW YORK BOOK REVIEW
I believe that misconceptions play a large role in shaping history, and the euro crisis is a case in point.
Let me start my analysis with the previous crisis, the bankruptcy of Lehman Brothers. In the week following September 15, 2008, global financial markets actually broke down and by the end of the week they had to be put on artificial life support. The life support consisted of substituting sovereign credit—backed by the financial resources of the state—for the credit of financial institutions that had ceased to be acceptable to counterparties.
As Mervyn King of the Bank of England explained, the authorities had to do in the short term the exact opposite of what was needed in the long term: they had to pump in a lot of credit, to replace the credit that had disappeared, and thereby reinforce the excess credit and leverage that had caused the crisis in the first place. Only in the longer term, when the crisis had subsided, could they drain the credit and reestablish macroeconomic balance.
This required a delicate two-phase maneuver—just as when a car is skidding, first you have to turn it in the direction of the skid and only when you have regained control can you correct course. The first phase of the maneuver was successfully accomplished—a collapse has been averted. But the underlying causes have not been removed and they surfaced again when the financial markets started questioning the creditworthiness of sovereign debt. That is when the euro took center stage because of a structural weakness in its constitution. But we are dealing with a worldwide phenomenon, so the current situation is a direct consequence of the crash of 2008. The second phase of the maneuver—getting the economy on a new, better course—is running into difficulties.