This week experienced a turning point in the public consciousness regarding NAMA the National Asset Management Agency.
People are asking questions - really fundamental questions - about the wisdom of the government's strategy of using NAMA to buy up the bad loans from the banks.
If ever we need a very public debate about what we should do - this is the time and this is the issue. The amount of money involved is staggering - decisions made in the next few months will have implications for generations to come. It is not good enough to say that we can't understand what's going on, each of us has a responsibility to get to grips with the nature of the problem and the proposed solution.
What's noticeable is the way language is used to filter our thinking.
Toxic
We describe the loans as "toxic" thereby conveying an almost medical imagery - that of surgically removing the bad stuff so that we can cure the situation.
Haircut
This is the very gentle description for the reduction in the value of the loan book that should be considered. So one hears we'll take those 90 billion worth of loans and give them a haircut of say 30% so NAMA will pay about 60 billion for them.
This is really soft language - what could be more reasonable than a haircut!
Market Value and Long-term Economic Value (LEC)
Poor us! We really don't appreciate the complexities of the word "value". We are told that the market value of the 90 billion loan book is only 30 billion but we should pay more we should really take account of the long-term economic value - the "lec" so to speak.
So now we have some new maths:
30 billion euros is really 60 billion lecs
90 billion with a haircut gives 60.
Any three card trickster would be proud.
