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NAMA through the cycle valuation of assets

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  • 30-07-2009 6:20pm
    #1
    Assets Model
    Registered Users Posts: 308 ✭✭


    Is it just me or does that seem seriously dodgy. I'm trying to find out exaclty how it works but does it involve paying what the assets might be worth in the future? Seems fairly risky if it does..


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    #2
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    assets + the cost of funding and nursing this €90bn turd across the trough ....minimum 10 years ...most likely 20-25 years .

    realistically the model would only work if we took the turds @ 20% of face value ....but then we would have no banks .

    I do not believe our banks are worth saving , lets take the hit and invest €20bn in creating a new boi and a new aib + what we already gave them ....€7bn was it ???

    €20bn of tier one capital translates into well over 100% of GDP of effective lending capacity ...in fact to around 150% of GNP


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    #3
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    Sponge Bob wrote: »
    assets + the cost of funding and nursing this €90bn turd across the trough ....minimum 10 years ...most likely 20-25 years .

    realistically the model would only work if we took the turds @ 20% of face value ....but then we would have no banks .

    I do not believe our banks are worth saving , lets take the hit and invest €20bn in creating a new boi and a new aib + what we already gave them ....€7bn was it ???

    €20bn of tier one capital translates into well over 100% of GDP of effective lending capacity ...in fact to around 150% of GNP

    i pretty much agree with you as i went on to describe into detail in another thread

    NAMA is just wrong, its basically a bailout in anything but name, and shifts responsibility for the current mess from FF to future generations


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    #4
    SEPT 23 1989
    Registered Users Posts: 43,028 ✭✭✭✭SEPT 23 1989


    how would we explain this one to our children and grandchildren?

    would this be our generations institutional abuse scandal?

    we knew it was happening and did nothing

    when we are much older and they ask us why the country is a basket case

    we wont be able to look them in the eye

    because our generation let it happen

    i really really hope this scenario never arises:mad:


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    #5
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    Find your local FF and Green TDs and senators and tell them that in the strongest possible terms . You have 4 weeks to find them before they disappear off to Dublin .

    If you do not do that then you are no better than the parents who locked their own daughters in a Magdalen Laundry .


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    #6
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Assets Model wrote: »
    Is it just me or does that seem seriously dodgy. I'm trying to find out exaclty how it works but does it involve paying what the assets might be worth in the future? Seems fairly risky if it does..
    It does.


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    #7
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    How NAMA works.

    1. NAMA acquires developer loans from banks at well above market value but somewhat below book value.
    2. NAMA takes a long term view of development assets and does not foreclose on developers.

    3. EITHER

    a) The market picks up, the developers finish the developments, sell their units and pocket their profit. The tax payer may beneifit somewhat here since they acquired the loan at a discount ("haircut") on the book value.

    OR

    b) The market does not pick up. NAMA (the public) loses everything.

    So from from the public's point of view the downside is lose everything but the upside is limited.

    From the developers point of view, it is a massive bailout.

    I have heard Lenihan and others argue that it is not a bailout on the basis that the developer still owes the book value amount. This, of course, is disengenuous rubbish. Bailouts are usually loans but on better terms than the market would otherwise provide. This is exactly what NAMA is doing. Instead of facing imminent liquidation, NAMA will allow developers to sit out the downturn and make their profits when things pick up.

    From the banks point of view, it is free money.

    It would be far better to allow development land to crash to the extent that it is basically free, then allow others to come in and utilise this land, employ craftsmen and builders and help the economy recover.

    Instead, it will sit idle until somehow things pick up even though NAMA itself will create a vast overhang of rotting empty half built sites and prevent the market from recovering.

    But politically it makes perfect sense since the full amount of the damage will only be known years or even decades down the line.


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