NAMA Scary Simple

This is how it works. A bank is owed 12 billion euro, bank goes to NAMA and says I'm owed 12 billion and no one believes that I will get it back. NAMA says OK give me 150 million per year and I will tell the ECB that you are good for 10 Billion. Bank goes to ECB and gets 10 billion for 100 million per year. So at this stage the bank is paying 250 million a year for 10 billion. Bank then goes to the Irish Government and says "I'll give you 10 billion for 500 million a year", Irish Government says "Perfect, because even though I'm paying you 500 million, you are paying me 150 million into NAMA which is a state body, so I am really only paying 350 million a year for 10 billion". The bank says "perfect 10 billion cost me 250 million a year and I am getting 500 million a year for it".

The overall effect - the Irish Government could get up to 50 billion at 3.5%, leaving the debt to GDP ratio at about 60%, still much lower than most EU countries. Very clever Mr Lenihan - scary clever.