NAMA 3 Constantin Gurdgiev

[CorkGuy12]

Dr. Constantin Gurdgiev has proposed an interesting alternative that he calls Nama 3.0 that includes also some proposals advanced first by Patrick Honohan, Brian Lucey and Karl Whelan

It follows the swedish bad bank model, and includes such things as debt-equity swaps, full writedowns of impaired assets, accountability, transparency.

Debt to equity swaps ensure that the banks will not be 100% government owned.

Detailed information here:
http://trueeconomics.blogspot.com/2009/08/nama-30-more-weight.html

 

[Duke of Marmalade]

Re: An alternative to nationalization - give the government options

Dr. Constantin Gurdgiev has proposed an interesting alternative that...includes also some proposals advanced first by Patrick Honohan, Brian Lucey and Karl Whelan...and includes such things as debt-equity swaps

This is the "silver bullet fantasy" which lets the bondholders take the hit. I really don't think that is practically feasible, but these are very learned gentlemen and maybe someone can point out were my following line of argument is wrong.

First of all the Gov would need to announce that it was not renewing its guarantee to bondholders come September '10. It would presumably be renewing its deposit guarantee. This would automatically trigger bank bankruptcy and hence would actually mean that the deposit guarantee would kick in. Where is the State going to find the funding for these deposits?

The learned ones point to General Motors as the precedent for making bondholders swap their bonds for equity but GM didn't have depositors.

They also claim that this is what the Swedes did but my instinct is that they are misleading us in that. If this proposal is, as I suspect, an impractical fantasy then it is quite irresponsible for the learned ones to keep pedalling it.

 

[sunrock]

Re: An alternative to nationalization - give the government options

Why would any bondholder swap their bond for worthless equity?...the banks are bankrupt.How much are the deposits in the banks worth...of course the deposits should be safeguarded.This NAMA buisness seems like a way of stringing out the whole sorry mess and a strung out government trying to play for time and hoping that something will happen to resolve or improve the situation.
First of all the shareholders ,and I`m one of them ,should be told their shares are worthless.
People must realise that the banks will have to be run prudently and have to be very careful lending money in these recessionary times. There is massive overcapacity in small buinesses and a lot of them are going to fail...its called capitalism.