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NAMA: Successful or failure

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    #32
    Niall Keane
    Closed Accounts Posts: 1,154 ✭✭✭Niall Keane


    O.k. I throw my hands up, I take your first comment, apologies for the tone, yea it was a bit pot and kettle.

    On your next points:
    but it's not the core of the problem.
    The rate of default on home loans is relatively low.

    So Far! if house prices have indeed fallen by 50%, a person with say €350,000 mortgage, has a building worth €175,000, which they are efectively paying approx €700,000-€850,000 over their lifetime. Forfeit, rent, set up trusts for children, and come to an arrangement for the rest at €200 a month? never entirely paying back.
    The shareholders in the banks, backed by the courts and the constitution.
    I wouldn't hold my breath, laws and constitutions can be changed, especially when they adversly effect a large amount of those contributing to society.

    Re. the economics, is NAMA not already trying to bend and break the rules? Taking performing loans? I'm just asking why are we doing this - changing the economic rules, to receive debt rather than rid ourselves of it?


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    #33
    drunkmonkey
    Registered Users Posts: 28,196 ✭✭✭✭drunkmonkey


    Niall Keane wrote: »

    Re. the economics, is NAMA not already trying to bend and break the rules? Taking performing loans? I'm just asking why are we doing this - changing the economic rules, to receive debt rather than rid ourselves of it?

    that's one of the most sensible things i've heard through this whole sideshow that is NAMA.

    Just let the debt go...there will be bad casualties but it will be a minority that bare the pain not the majority of us poor islanders

    it'll be sad to see some of the banks & builders go, but there will be new banks & builders when the dust settles...


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    #34
    P. Breathnach
    Registered Users Posts: 12,089 ✭✭✭✭P. Breathnach


    drunkmonkey wrote: »
    that's one of the most sensible things i've heard through this whole sideshow that is NAMA...

    I thought it was one of the least sensible, so much so that I just let it go.


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    #35
    Hasschu
    Registered Users Posts: 411 ✭✭Hasschu


    When Lenihan talks about a return to rapid growth he is not talking about GDP. Give the man credit for some intelligence he is talking about growth in government aid to banks and developers. Prop up Anglo Irish and you are making sure that they will not push Developers into bankruptcy. All those vacant properties residential and commercial would hit the market with a bang. Property values would plummet to a point where they are (god forbid) affordable. The development industry was generous to FF in the boom years and it would not be good form to abandon their friends now that we are in bad times. The taxpayers will pay the piper and the economy will continue to sink but the Irish voters will sleep walk to the polls and do what they have done for over eigthy years. Only an IMF or ECB takeover can save the country now. Cronyism and nepotism require outside intervention to bring them to a halt.


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    #36
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    ionix5891 wrote: »
    that's one thing im having trouble with understanding

    why do BANKS have to lend?

    why cant a government set up a lending body to do just that? and let the banks wallow in their own **** that they pooed

    Banks have to lend because we have put a lot of money into them by way of recapitalisation and we are also liable for any losses they incur as a result of the guarantee. So Brian Lenihan is correct in saying we have to bail out the banks, but the reason we have to is that he has taken steps to ensure that we had to as far back as last September. NAMA, recapitalisation, nationalisation of Anglo are all sideshows to the one big catastrophic event - when the government guaranteed all banks assets to save a failing Anglo Irish Bank. Had they not done so we might have a fightin chance. As it happened, the government got to save their mates and they have boiled us slowly, so that very few would realise that we were being screwed until now, when it is far too late.


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    #37
    silverharp
    Registered Users Posts: 18,406 ✭✭✭✭silverharp


    johnnyskeleton wrote: »
    - when the government guaranteed all banks assets to save a failing Anglo Irish Bank. Had they not done so we might have a fightin chance. As it happened, the government got to save their mates and they have boiled us slowly, so that very few would realise that we were being screwed until now, when it is far too late.

    I'm not too sure about the mates angle but we have been put on the hook to supposidly keep the bond market sweet. A gutsy decision would have been to let the banks fail , cut a deal with the bond holders for 40% and move on. We'd have outsourced some of the pain.
    Give it a year or 2 and the gov. will be raising debt at 8% while the state puts us full full throttle into bankruptsy.

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



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    #38
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    silverharp wrote: »
    I'm not too sure about the mates angle but we have been put on the hook to supposidly keep the bond market sweet. A gutsy decision would have been to let the banks fail , cut a deal with the bond holders for 40% and move on. We'd have outsourced some of the pain.
    Give it a year or 2 and the gov. will be raising debt at 8% while the state puts us full full throttle into bankruptsy.

    It has been suggested before that the government met with the head of a certain financial institution which was on the verge on insolvency on the evening before the bank guarantee, and it is fair to assume that the guarantee arose as a direct result of the government's decision to try to keep that institution solvent. Of course the government's efforts proved futile as we now know, although any efforts to suggest that result in a government statement to the effect that said institution was systemic to our economy. It's a very liberal definition of systemic in my view.

    As regards letting the banks fail, I would be in full support of this. Apparently that makes me a right wing capitalist, but I still think the market would have recovered. I disagree with your analysis that it would have negatively affected the market for Irish bonds, as the biggest problem in that regard is the guarantee. Had we allowed the banks to fail and allowed new banks to take their place, I would argue that Irish bonds would be more attractive than they are now.


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    #39
    silverharp
    Registered Users Posts: 18,406 ✭✭✭✭silverharp


    johnnyskeleton wrote: »
    I disagree with your analysis that it would have negatively affected the market for Irish bonds, as the biggest problem in that regard is the guarantee. Had we allowed the banks to fail and allowed new banks to take their place, I would argue that Irish bonds would be more attractive than they are now.


    sloppy grammer on my part , now we are going to get it in the neck as the gov. will have to borrow at increasing rates to cover the banks losses.

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



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    #40
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    silverharp wrote: »
    sloppy grammer on my part , now we are going to get it in the neck as the gov. will have to borrow at increasing rates to cover the banks losses.

    Sorry if I took you up wrong. At a 4% coupon (the lowest available to Ireland at the moment, AFAIK, it goes up to 8.75% for some very short term funding), each of those billions adds another €40m to government expenditure per year. €80bn for NAMA is €3.2bn in interest alone per year (assuming the low low rate of 4%). That's more than twice what we spend maintaining law and order in the country. At 8.75% interest, and the full whack of NAMA at €80bn would be €7bn p.a., somewhere between 20-25% of the total tax take.


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    #41
    Niall Keane
    Closed Accounts Posts: 1,154 ✭✭✭Niall Keane


    One thing is for sure: Anglo will suffer further losses after NAMA comes into operation.
    "In a post-NAMA situation, we estimated additional impairments of between €1.5bn and €3.5bn under a range of further stress scenarios," Mr O'Connor told the Oireachtas committee on finance and public service.

    Anglo was nationalised in January and any further losses will have to be borne by the taxpayer.

    The State has already been asked to pump €4.9bn into the bank and could have to pay as much as €7.5bn to cover bad loans.

    Every 10pc decline in the value of land will add another €1.5bn to the bank's losses, Anglo said yesterday.

    The bank has already calculated that some development land has plunged 70pc in value.

    The bank expects NAMA to take a portfolio of lands valued at €17.7bn from Anglo when it comes into operation after the legislation is enacted.

    It could be more if the agency decides to take control of so-called associated loans, Mr O'Connor added, without putting a figure on the amount.

    The final figure will be decided by NAMA when it begins, he said.

    The establishment of NAMA would help the bank by reducing uncertainty over future impairments and reduce the amount of debt on the balance sheet, Mr O'Connor said.

    It would also help the bank access funding and liquidity, especially from foreign lenders, he said.

    - Deirdre McDonagh

    today's Independent

    The bank calculates 70% fall in value of some development land, and I bet the planning permission hasn't even ran out yet, how much of a write down is being discussed - 10-15%.
    As a country we will never recover from this!


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