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Is it always someone else's fault?
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Elected once and that arguement holds true.. Re-elected for the last 18 or so years, we could have been more sensible in chosing a government
Oh indeed, but their second term in Government was a chance for them to radically change how spending etc were structured. An opportunity missed unfortunately.
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bauderline wrote: »The ONLY thing you are bailing out at the moment is a crap and incompetent government.... .
.. and greedy banks, developers, unions, public and private sector staff.. We wanted it all.. we just didn't want to have to pay for it.
Thats what we thought we were getting in the last recession with the PD's.. a pig in a dress is still a pig..bauderline wrote: »What is badly needed in this state is a brand new policitical party with fresh and radical ideas to take this country forward and sweep away all the old vested intests...
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.. and greedy banks, developers, unions, public and private sector staff.. We wanted it all.. we just didn't want to have to pay for it.
Thats what we thought we were getting in the last recession with the PD's.. a pig in a dress is still a pig..
I disagree, the current tax hikes and levies are DIRECTLY being used to address government borrowing deficit... which is mainly due to an out control public spending nurtured by the current government.
Money that has been sunk into the financial institutions will eventually be recouped and should even bring a return for the tax payer......
The gravy train for unions is all but over... they just haven't realised it yet.
... and I don't get how you think we are bailing out the private sector...
I was under the impression the PD's were a FF break away ? Good intentions but never really worked did it... No we need an entirely fresh batch of political representatives who are articulate, intelligent and have the drive to move this country forward into sustainable period of prosperity...0 -
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johnnyskeleton wrote: »If it were possible to recoup the value of these loans, the banks would do so. The fact that they don't is because the scale of losses is so great that they would be insolvent. The idea that the NAMA will do a better job of dealing with underperfoming loans is ridiculous. Let's face it, this scheme is going to cost us money, for if it wasn't going to cost us money, there would be no point in doing it.
Again I have to disagree here.... the agency will be buying these loans from the banks at a reduced rate of so many cents to the euro... it does remain to be seen what that works out at as the banks will no doubt be fighting to every cent they can get as they are taking the hit on this.
The fact of the matter is that behind every bad loan to developers there is either property or land. Much of it is worth a fraction of what was paid for it but if you take into account that the agency has bought at a discount and that given enough time, likely ten years at least those assets will recoup in value. One way or another the agency will gets its money back, what do you think the agency will do, forget about the bad loans and leave the debtor with the asset.... I don't think so.... will they give away the assets ? ... I don't think so....
The crux of the issue is that the banks need the money now so that they can start to function correctly again. If the banks don't function neither does the irish economy and whilst the irish economy isn't function we are going to be stuck here writing posts to each other.... now theres a depresing thought !!
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bauderline wrote: »The fact of the matter is that behind every bad loan to developers there is either property or land. Much of it is worth a fraction of what was paid for it but if you take into account that the agency has bought at a discount and that given enough time, likely ten years at least those assets will recoup in value. One way or another the agency will gets its money back, what do you think the agency will do, forget about the bad loans and leave the debtor with the asset.... I don't think so.... will they give away the assets ? ... I don't think so....
The crux of the issue is that the banks need the money now so that they can start to function correctly again. If the banks don't function neither does the irish economy and whilst the irish economy isn't function we are going to be stuck here writing posts to each other.... now theres a depresing thought !!
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This is the one shining light.. If handled correct we can actually "make" money on this. The government is the only body capable of purchasing the assets and holding onto them long enough for the market to recover and regain value.
The banks needs cash now to kickstart the economy.
My one hope is that the land assets don't get sold off to the usual old suspects at discount rates in a few years, when we could and should have held out until the maximum realistic value is obtained (and by realistic value there is no real point in hording prime land to drive up the price and force citizens into more rediculous mortgages in order to own a house, a balance needs to be found).0 -
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Join Date:Posts: 13664
bauderline wrote: »Again I have to disagree here.... the agency will be buying these loans from the banks at a reduced rate of so many cents to the euro... it does remain to be seen what that works out at as the banks will no doubt be fighting to every cent they can get as they are taking the hit on this.
But it will not be so reduced that it will affect the banks profitability right? Otherwise, they will still not be able to lend to all these SMEs they go on about and the whole exercise will be pointless. So the markdown, while being the maximum the banks can take, will still be very small.
For example, AIB Group has a total loan book of c. €137bn, with Commercial and development loans totalling €47bn, total deposits and capital of c. €169bn, bad debt provisions of under €2bn, minor group profits (c. €200m) and assets other than loans of c. €40bn. So already they're not in great shape.
If they write the C&D loanbook down from €47bn to €45bn (4% write down), they have already wiped out their entire bad debt provision and profits. This means that other bad debts e.g. residential mortgage, personal loans, credit cards, overdrafts will be a direct loss to the company. With no profits, there is no reason to buy off them. However, they would remain afloat and would have a few billion to loan out. They could then loan out money, although it would only be to people who are highly likely to pay it back (i.e. no return to the heady days of easy credit, and anyone without job security etc can forget about a mortgage).
If they write the C&D loanbook down from €45 to €36 (20%), not only do they have no profits and no bad debts provision, but they are also down €7bn on their balance sheet. They are technically insolvent with assets of €168bn and liabilities of €169bn. However, because part of the liabilities are government recap money, they could be given examinership powers to keep trading. If they were, they would either not loan out very much money as they would still be in trouble or else they would need a further recapitalisation. They would most likely do what banks across the world are doing, and hoard cash and try to shore up their balance book while working out bad debts.
If they write the C&D loanbook down from €45 to €22.5 (50%) this might just provide value for taxpayers money in the long run, but the bank would be insolvent and would need a large bailout or would go under. If it were to remain trading, it wouldn't loan out any money, not even to low risk persons or companies.
You can't have your cake and eat it too.bauderline wrote: »The fact of the matter is that behind every bad loan to developers there is either property or land. Much of it is worth a fraction of what was paid for it but if you take into account that the agency has bought at a discount and that given enough time, likely ten years at least those assets will recoup in value. One way or another the agency will gets its money back, what do you think the agency will do, forget about the bad loans and leave the debtor with the asset.... I don't think so.... will they give away the assets ? ... I don't think so....
Do you honestly think that land values, which in some cases have dropped by 80% will increase in value by 400% (the increase needed to return to 2006 levels) over the next ten years? For example, the Irish Glass Bottle site was purchased for €413m in 2006 but is now worth 40% of that, making the land worth c. €165m. Realistically I can see it being worth €125m. Now, how is that property going to increase by 250% (based on Davy estimate) nevermind 330% (based on my estimate)? Bear in mind that that is a top of the range investment site, very close to Dublin City Centre. So what about the acres bought at close to a million in the back of beyonds, which are now worth no more than their farmland values (but with less farmers willing to buy them)? Even if they do, who will pay the interest of c. 4.5bn per year on that 80bn while we wait for this recovery?
I don't think they will forget the assets or give them away, but I do think that they will either write off large portions of the loans (i.e. at cost to the tax payer) or else they will repossess and sell the assets back to the developer at a fraction of their worth (again, at a cost to the tax payer).bauderline wrote: »The crux of the issue is that the banks need the money now so that they can start to function correctly again. If the banks don't function neither does the irish economy and whilst the irish economy isn't function we are going to be stuck here writing posts to each other.... now theres a depresing thought !!
But there are better ways to go about it, such as breaking up the existing banks, selling off the assets and allowing new banks to take their place. You have to remember too that far too much of our economy was based on unsustainable credit driven businesses, so even if the banks do start lending again, it should only be on a prudential basis.This is the one shining light.. If handled correct we can actually "make" money on this. The government is the only body capable of purchasing the assets and holding onto them long enough for the market to recover and regain value.
The banks needs cash now to kickstart the economy.
The big assumption here is that property prices will not just return to 2006 prices, but will also beat inflation and expenses as well. IMO, the government is the only body foolish enough to puchase these assets and hold on to them in the hope that the market "recovers" to ludicrously inflated prices.My one hope is that the land assets don't get sold off to the usual old suspects at discount rates in a few years, when we could and should have held out until the maximum realistic value is obtained (and by realistic value there is no real point in hording prime land to drive up the price and force citizens into more rediculous mortgages in order to own a house, a balance needs to be found).
I hope they don't do that too, but I know that they will. Tell me this though, if land prices were driven artificially high by hoarding up to 2006, and you think we will get 2006 prices back, how will we do this without hoarding the land?0 -
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