What exactly constitutes “an academic exercise”?
Last Friday’s Irish Times Opinion piece signed by 20 academics should be a classic “academic exercise” in that
(a) the authors have no power to implement their recommendations and
(b) there will be no adverse consequences for them even if their recommendations are adopted and ultimately prove to be fatal.
The key conclusion of their published position paper is that they “see nationalisation as being the inevitable consequence of a required recapitalisation of the banks done on terms that are fair for the taxpayer.”
The academics arrive at this conclusion because “Analysts have repeatedly estimated the extent of bad loans at these banks (AIB & BOI) to be of the order of at least €20billion.”
As a consequence of asserting the reliability of the analysis of these 3rd party Analysts, the academics conclude that the Government’s stated goals for NAMA and the banking system cannot be achieved.
The academics summarise the Government plan as follows:
(a) purchase the bad loans at a discount reflecting their true market value;
(b) keep the banks well or adequately capitalised;
(c) keep them out of State ownership.
And their great fear is: “These three outcomes are simply mutually incompatible, and we are greatly concerned that the Nama process may operate to maintain the appearance that all three objectives have been achieved by failing to meet the first requirement. This would arise if Nama purchases the bad loans at a discount – but still well above market value.”
But there’s something here that’s fundamentally at odds with “normal academic standards” in this foray into public affairs by the 20 academics, and it is this:
Neither the analyst community nor this group of academics have had any direct access to the loan books of those banks, whereas the Government, through its agents, has been able to conduct a detailed inspection over a period of several months.
Is it not highly “unacademic” that, without any access to the available “hard evidence”, a large group of academics, representing some of our most prestigious 3rd-level institutions, should choose to publicly proffer such a definitive contradiction of the analysis made by Dr. Bacon & Co., who have had direct access to that "hard evidence".
And here’s an associated take on “academic exercises”: The cynics in the political opposition, the media and the academic commentariat have all loudly asserted that the Govt inspection of the loan books of AIB & BOI, and the stress-testing of these, in advance of injecting the €3.5bn preference share capital, is an “academic exercise” – a purely cosmetic due diligence to fool the public that they were not just throwing money at the banks.
Yesterdays about-turn by AIB – by some distance the more hardball, brass-necked of the pair of major banks – who were forced to accept that they needed to raise an additional €1.5bn in share capital, suggests that the due diligence and stress testing processes have been robustly conducted. Not just an academic exercise after all, perhaps?
The economic and banking crises have been a godsend for publicity-seeking academics, previously unknown faces are now familiar & their names are now on the lips of pub-goers in all parts of the country.
I suspect I’m not alone in being surprised at just how many “experts” there are on the payrolls of our publicly-funded 3rd-level institutions.
An Bórd Snip Nua please take note.
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