Lenihan has got figures 'all wrong'
Lee casts doubts on minister's break-even claims
Published 18/09/2009 | 00:00
THERE is "a glaring black hole" at the heart of the Government's NAMA plans, Fine Gael TD George Lee told the Dail yesterday.
The former RTE economics correspondent cited calculations on the long-term economic value of toxic assets to be taken over, and said the Government had failed to accurately calculate the debt-servicing costs on the €54bn in bonds to be advanced.
"We feared the Government would get this all wrong. Our fears already are being borne out," he said. "The figures published by the Government are already being exposed as wishful thinking at best."
Mr Lenihan had recklessly ignored the fact that the interest rate on which he based his break-even calculations will increase over time, Mr Lee said.
"The long-term forecasted ECB rate is not the current historic low of today, but 3.8pc over the next 10 years.
"When you add in the 0.5pc to be paid on top of the main ECB rate, it means the average funding cost will be 4.3pc. This translates into running costs over 10 years of about €10bn."
This calculation, as set out on the website Daft.ie, even allowed for an annual return of 2-2.5pc on the NAMA assets, net of operating costs.
"Minister Lenihan is like a salesman from a sub-prime mortgage bank. He is offering a family a cheap introductory rate to buy a dodgy investment property, while neglecting to tell them that interest rates will soon shoot up, rents are falling, and property prices are still nose-diving," Mr Lee added. "This is a recipe for negative equity and big losses."
Tanaiste Mary Coughlan, meanwhile, said Ireland has lost ground in international competitiveness every year since 2000.
This slow deterioration had then been hit by the global contraction, leading to national income declining rapidly and unemployment rising sharply -- even though there had recently been a modest improvement in cost competitiveness.
Green Party TD Paul Gogarty told the Dail: "Everyone is to blame in this situation -- even the Greens. We all had our credit cards. We didn't just sit in our sandals and eat lentils."
He added: "Anyone who is an enemy of Tom Parlon is a friend of mine. That is why I am supporting this legislation."
The debate was adjourned to next week.