NAMA - 90 Billion to our national debt. Accountants, Lawyers & Bankers get rich

andrewdeerpark

newname wrote: »

But the thing is these people will charge big money whether they help the economy or not

That's the way the professional classes work, a barrister looses a case in court he gets paid, the auditors of Anglo Irish Bank, Ernst & Young, missed Sean Fitzparticks and Permanent TSB's millions flowing in and out off the books over several years audits and they got paid top dollar (OK euro), your accountant screws up your books, the taxman finds a big hole in an audit you get screwed and the accountant get paid with no liability.

What a setup and well said newname roll on NAMA.

andrewdeerpark

andrew wrote: »

In all seriousness though, top graduates could probably do a significantly worse job than those with experience. Not all financial professionals are as crap as you imagine them to be. Expertise will always come at a premium. I just think that where you see a gravy train there may actually exist a justified premium.

You cannot give these experts a blank cheque regarding fees are you suggesting no cap, transparency or disclosure of fees? How do you reward these experts on a performance basis when this is a long term setup?

andrew

andrewdeerpark wrote: »

You cannot give these experts a blank cheque regarding fees are you suggesting no cap, transparency or disclosure of fees? How do you reward these experts on a performance basis when this is a long term setup?

Of course you can't; I completely agree. They should be paid fairly, and on a performance basis. This is a lot easier said than done though. I mean, how do you even come up with the criteria upon which these people should be measured? All I know is that they'll be paid a premium. And that you can't put a cap on how much these people will be paid because of the amount of uncertainty that exists. And that they deserve to be paid a premium because they're experts and have other more lucrative stuff they could do. But yeah, transparency all they way.

andrewdeerpark

andrew wrote: »

Of course you can't; I completely agree. They should be paid fairly, and on a performance basis. This is a lot easier said than done though. I mean, how do you even come up with the criteria upon which these people should be measured? All I know is that they'll be paid a premium. And that you can't put a cap on how much these people will be paid because of the amount of uncertainty that exists. And that they deserve to be paid a premium because they're experts and have other more lucrative stuff they could do. But yeah, transparency all they way.

I accept you point on banking and auditing fees and bonuses, this is a global banking problem that was one of the reasons behind the global irresponsible lending practices, bankers were rewarded for the amount of the business generated rather than the quality of the business they completed. We need a lead from the US and UK on this one, which we are not getting, if this is not resolved then the global crisis will return in 30-40 years again.

Looking at history, globally paying top dollar in banking / auditing rarely delivers top performance NAMA will go down this road unfortunately.

AlekSmart

crazy to suggest that people just out of college would have the expertise to deal with such a complicated scheme. The money saved paying them less would probably be an order of magnitude smaller than the amount they would cost the taxpayer through doing a poor job. If there was an earthquake and your house was badly damaged, would you rather pay an experienced professional to fix it, or an apprentice? You're overestimating the number of experienced professionals there are who have the knowledge to do this sort of thing.

Andrew,I don`t think that is andrewdeerpark`s point as such.

One of the major contributory factors to Ireland Teo fucxxing itself up was the creation of an entire social strata of overblown,overegarded,largely unproductive "Professionals" who were given serious amount of credence by successive Governments comprised of small-town shysters in the main.

Thus we came to rely on the opinions of Estate Agents and Auctioneers as being worthy enough to base entire Administrative Strategies upon.
We collectively saw nothing wrong with paying Liam Lawlor "Consultancy Fees" to advise the Westlink Consortium,as we saw nothing amiss in Frank Dunlop lurking about outside Dublin County Council chambers to glad-hand the members.

We now inhabit a State mired deep in a swamp of "Professionals",very few of whom I would see as having anything of worth to contribute to disentangling Ireland Teo from the nets in which it is now ensnared..

Indeed,we are now witnessing the emboldened "professionals" in the Banking and Financial sectors starting to lash back at those whom they have already Royally Fcuxxed up.

Looking at history, globally paying top dollar in banking / auditing rarely delivers top performance NAMA will go down this road unfortunately.

There is already quite a furore in the USA concerning how many of the major Banking Groups,having repaid their Governments Funding injection,now decide to reinstate their somewhat incredible staff "Bonus " strategies.

These "Bonus" payments were instrumental in driving Banking and Financial Sector staff to perform all sorts of snake-oil tricks to improve their ratings and thus earn vast Bonus payments or stock-options.

The last thing we need here right now is anything smelling of this.

I`m even more downbeat that andrewdeerpark..I see vast tracts of Irelands Financial and Property sectors as being polluted and toxic,every bit as much as the debt`s they engineered.

To read of an entire soverign Country being brought to the brink of destitution by the crassly inadvisable actions of just 50 Individuals SHOULD be making us all VERY sceptical of allowing the same close-knit group to continue to dominate through their family and friend nominee structure.

Lockstep

Raskolnikov wrote: »

As if :P

Frankly, we get the politicians we deserve. Look at Fianna Fáiler, Michael "The Stroke" Fahy. He was actually jailed for stealing taxpayers money, yet he subsequently tops the poll in the local elections :eek:

Sickening isn't it?

I live in Connemara, and the man is one of my councillors.

DublinWriter

andrewdeerpark wrote: »

Give me a firesale of assets any day, have the sharp pain over 2 years and be done with it instead of this NAMA, saviour of the elite with their fees.

There's a golden rule in business - don't throw good money after bad.

Colour me simple, but I just don't get it - our hospitals and A&E wards are akin to something from the third world, yet the government are bending over backwards to save banks and property developers?

bernardo mac

and to add insult, bankers,lawyers,developers and politicians do not have to suffer on hospital waiting lists.Ever see one on a trolley?

AlekSmart

And that they deserve to be paid a premium because they're experts and have other more lucrative stuff they could do.

I`m not so sure I can agree with the above sentiment at all.

Surely a professional in any field will have access to a salary/renumeration package commensurate with that profession.

For example,an incremental salary scale should allow for the accquisition of experience itself with some allowances also payable for extra qualifications etc.

The notion of paying Off-Scale additional sums for specific tasks is one of the factors which contributed greatly to the level of "Professional Inflation" which is but one element of our current melt-down.

This,among other elements,virtually destroyed the ethos of "Public Service" in the very arena which most required it and replaced it with pure undiluted greed.

In the current National Emergency I cannot even begin to think of what "Stuff" could be "More Lucrative" than directing one`s proffessional acumen towards rescuing one`s own society from self-destruction.......or has Irish University education left all that Ancient Greek Civilization stuff behind it too.?????

Liam Byrne

bernardo mac wrote: »

Ever see one on a trolley?

Er, Haughey ? Almost every time the tribunal asked him to appear to explain his finances.

bernardo mac

Haughey was good at a PR stroke,maybe to stray a little further from the thread,story in Wexford still is that he drove the state [merc?]car into Tinnock Bridge,on the N11.Wrecked car and bridge.Now Tinnock roundabout ,access to motorway.[Haughey roundabout?]His chauffeur had originally refused to drive[drink] so the Boss did ,with drink on board ,in a hurry back to the Dail.Did not appear in Dail,or delayed due to riding accident.Bridge was rebuilt in amazingly quick time.Power,money and neck winneth

andrew

AlekSmart wrote: »

I`m not so sure I can agree with the above sentiment at all.

Surely a professional in any field will have access to a salary/renumeration package commensurate with that profession.

Exactly. My point is that a salary/renumeration package commensurate with administering NAMA will be a relatively large one due to the expertise required. A lot of people don't understand that there is a lot of expertise and experience required, and will feel that these people are getting paid too much, which I think is wrong.

For example,an incremental salary scale should allow for the accquisition of experience itself with some allowances also payable for extra qualifications etc.

The notion of paying Off-Scale additional sums for specific tasks is one of the factors which contributed greatly to the level of "Professional Inflation" which is but one element of our current melt-down.

This,among other elements,virtually destroyed the ethos of "Public Service" in the very arena which most required it and replaced it with pure undiluted greed.

In the current National Emergency I cannot even begin to think of what "Stuff" could be "More Lucrative" than directing one`s proffessional acumen towards rescuing one`s own society from self-destruction.......or has Irish University education left all that Ancient Greek Civilization stuff behind it too.?????

People with expertise will work for whoever pays them a sum commensurate with their skills. It's not very patriotic, but it's the truth.

andrewdeerpark

andrew wrote: »

Exactly. My point is that a salary/renumeration package commensurate with administering NAMA will be a relatively large one due to the expertise required. A lot of people don't understand that there is a lot of expertise and experience required, and will feel that these people are getting paid too much, which I think is wrong.

People with expertise will work for whoever pays them a sum commensurate with their skills. It's not very patriotic, but it's the truth.

So here is NAMA a communist style government bailout of the developers and banks from free market economics, and you are saying this communist vehicle should reward those administering it using free market economics to determine their fees, their is rich irony in that proposal!

As I have said in previous treads its capitalism for the peasants and communism for the well connected and elite when the market fails (on the downside) for those settings the rules, what a country.

EastWallGirl

This is from Shane Ross in The Independent yesterday:

http://www.independent.ie/business/irish/high-as-kites-on-nama-trip-1849287.html

Andrewdeerpark:
I accept you point on banking and auditing fees and bonuses, this is a global banking problem that was one of the reasons behind the global irresponsible lending practices, bankers were rewarded for the amount of the business generated rather than the quality of the business they completed. We need a lead from the US and UK on this one, which we are not getting, if this is not resolved then the global crisis will return in 30-40 years again.


The thing is that it is only international to the extent that the tentacles of how some of these banks spread around the world. It is certainly not international countries with half decent banking regulations have money to invest in their economies (economies spend out of recession not tax) while other countries are investing in education and R&D we will looking after 50 builders and the spare change will be going to pay out on behalf of the Catholic Church. Ireland is affected because Ireland as a country slavishly follows the USA and UK in everything and it has to stop.

There are no signals from the UK and USA as they want it to go back to business as usual, they dont want banking regulation, Ben Bernake does not want regulation and he is the one in charge.

Until Ireland looks around at other economic models (and a half baked version of a swedish model does not count) then you are going to keep going boom and bust you do not have he economies of scale that the US and UK have and we are going to see that in all its harsh reality in the next few years.

The smart economy is only going to happen here depsite the government not because of it, mainly becasue poeple are going to leave and other governments are throwing money at R&D and education.

I absolutely agree that it is depressing and the Shane Ross article really brings it home.

What I never understood is that Anglo Irish is not a cheque clearing bank, all the bank drafts I saw were underwritten by AIB, so it should of been allowed to fall but obviously that would of created issues for AIB.

To underline our problems I was in Italy a few weeks and everything I touched was made in Italy from cheap childrens balls to mens ties, Italy may be considered a basket case but it is a basket case with a manufacturing base.

I personally think that there is a need and demand for a co-operative banks or a bank that runs on Islamic principles, people are going to have to vote with what money they have left.

andrewdeerpark

EastWallGirl wrote: »

This is from Shane Ross in The Independent yesterday:

http://www.independent.ie/business/irish/high-as-kites-on-nama-trip-1849287.html

Ireland is affected because Ireland as a country slavishly follows the USA and UK in everything and it has to stop.

There are no signals from the UK and USA as they want it to go back to business as usual, they dont want banking regulation, Ben Bernake does not want regulation and he is the one in charge.

Excellent atricle from Shane Ross again, we can only hope the supreme court agrees with Justice Kelly however behind the scences this weekend the bankers and government will have been working to undermine his ruling and keep the NAMA con alive, so I would not be surprised by his decision being overturned, and Carroll limping along for the next 100 days into NAMA so we cannot test the real value of his assets in a firesale.

Never underestimate how corrupt this country actually is at the very top.

US and UK are accepted as the top financial districts of the western world so it not surprising we take our lead from them. Remember decisions in the UK high courts still effect Irish law to this day, we may have our own constitution however the power England has over us is still considerable to this day. Plus all our large institutions have listings in the London stock exchange with their rules.

It is worrying the way the UK and US have walker away from serious regulation changes of the banking system but then again money and lobbying wins the day here as well. The lessons of history are rarely learnt.

ParkRunner

Totally agree OP, I cannot see how this NAMA plan can work. It seems to be FF's last ditch attempt to keep the economy alive through sustaining an over inflated property market.

What I would like to know is who is going to buy these assets once the government takes them? There isn't a whole lot of money floating around in the economy these days with the level of unemployment and the array of levies on those working.

I don't see what the fear is in letting the market decide for itself what the correct value is for these assets. At least at true market value you would have sales and tax revenue and you would even still have work for the accountants, lawyers and bankers. But I can't see too many people scrambling to buy an inflated asset in a place where there are no resources and the buildings around you are becoming wrecks. There is far too much uncertainty regarding employment, future income and property prices for people to be taking a punt on this.

http://www.irishtimes.com/newspaper/finance/2009/0803/1224251928895.html

From the Irish Times:

Nama will use its own method to value the loans and underlying assets. This will be based on what the department calls the economic value of the assets, as against the market value which would be achieved if the underlying properties were put on the market today.

However, banking sources said that a free-for-all, with each bank acting unilaterally resulting from the collapse of a large property group, could cause problems for Nama.

It could force the flooding of the market with properties, with writedowns of up to 80 per cent being forced on sellers. This would have a damaging effect across the entire market and jeopardise the long-term economic valuation model being created for Nama, leading to distressed pricing across the market, according to sources

Just shows how over inflated these assets really are..up to 80%!

The Minstrel

Strange that there isn't even a wikipedia entry for Liam Carroll.

andrewdeerpark

The Minstrel wrote: »

Strange that there isn't even a wikipedia entry for Liam Carroll.

If he survives tomorrows liquidation threat and rebuilds his empire he will definitely make it in their.

Since he owns google’s headquarters in Ireland it is strange..

AlekSmart

EastWall Girl wrote...

Until Ireland looks around at other economic models (and a half baked version of a swedish model does not count) then you are going to keep going boom and bust you do not have he economies of scale that the US and UK have and we are going to see that in all its harsh reality in the next few years.

The smart economy is only going to happen here depsite the government not because of it, mainly becasue poeple are going to leave and other governments are throwing money at R&D and education.

I absolutely agree that it is depressing and the Shane Ross article really brings it home.

Excellent post and I feel it raises a point not yet generally realized,that an emigration cycle has already begun.
We all know and see that the large numbers of Eastern European "Gastarbeiter" have returned to their native countries OR to other less stultified EU countries.

However what many do not yet grasp is the by now steady flow of Irish people leaving the country.
Initially it`s the younger,single qualified and mobile people,but I`m now seeing and hearing the somewhat more embedded married with young children type talking of looking far beyond Hatch 17 for their future.

Shane Ross continues to be a shining example of why we NEED a seperate upper-chamber or Senate in our Democratic System.
I have,in the past had exchanges with him and always found him to be ready to listen and unafraid to use his Seanad position to ask arkward questions and make unpopular points.

He is far from perfect BUT he is head and shoulders above the individuals so obviously out of their depth in running th current incarnation of Éire Teo.

However,andrewdeerpark`s warning also should be heeded....

Never underestimate how corrupt this country actually is at the very top.

Mr Justice Kelly`s all to obvious reluctance to fawn over bottles of coloured smoke being waved aloft by Liam Carrols well remunerated Senior Counsel will have most certainly caused a sharp intake of breath in Dublin 4 and environs.

I have little doubt but the ruling élite had plenty to discuss over the corned beef and cabbage this weekend.

I`ll bet Mr Justice Kelly`s telephone and e-mail systems were glowing from the volume of observations by interested parties.....

I also believe that Justice Kelly`s remarks from the bench represented the first true assessment of the current situation by a senior administrative figure.

We as a people have to face up to a situation whereby 50 unelected and in many cases reclusive,but VERY well connected business figures essentially took-control of a soverign economy and royally shafted it.

Now,for me,the essential point is HOW were these 50 people ABLE to get themselves into this position and to what extent did they recieve assistance from within.

This current situation is FAR more serious than the 700 years of colonial oppression etc which we have come to accept as being the root cause of ALL our Country`s problems......This time,for sure we can`t simply blame the British for our destitution !!!

We really should be far more ANGRY about this bloody mess,yet we still follow the Zoe Development line and hope for the best !!!

bernardo mac

Quite interesting point AS re.our history of woes within the British Empire.It was often the local elite or materially better off Irish who continued to prosper or maintain a good standard of living while the majority suffered...the Famine being one example

Salvelinus

The tent at the Galway Races finally collapses, you know the scaries part? If there was an election tomorrow FF would get at least 25% of the vote.

bernardo mac

Interesting you should raise the FF tent topic, Salvelinus,recently overheard a conversation between a bookie and a FF TD regarding the former's difficulty with a town planning committee about the setting up of a new betting office.The TD,quite unhesitatingly,would look into the matter.Does not prove anything untoward but does indicate that habits and modus operandi are hard to ditch

andrew

andrewdeerpark wrote: »

So here is NAMA a communist style government bailout of the developers and banks from free market economics, and you are saying this communist vehicle should reward those administering it using free market economics to determine their fees, their is rich irony in that proposal!

As I have said in previous treads its capitalism for the peasants and communism for the well connected and elite when the market fails (on the downside) for those settings the rules, what a country.

What's ironic about using the market to detemine the wages of those working in a government body?

EastWallGirl wrote: »

This is from Shane Ross in The Independent yesterday:

while other countries are investing in education and R&D we will looking after 50 builders and the spare change will be going to pay out on behalf of the Catholic Church. Ireland is affected because Ireland as a country slavishly follows the USA and UK in everything and it has to stop.

There are no signals from the UK and USA as they want it to go back to business as usual, they dont want banking regulation, Ben Bernake does not want regulation and he is the one in charge.

Ireland's case is a bit different though. Firstly, the main problem here is being unable to pay back the large loans they took out to develop property. In the US and the UK and Europe (AFAIK!) the problem is with banks investing to too large an extent in underregulated investment vehicles (Credit default swaps) backed by dodgy mortgages. And so, AFAIK, a lack of regulation isn't what has cause the problems here.

If you're talking about the fact that Ireland isn't enacting a stimulus package like the US, the reason for that (AFAIK) is that Ireland is too small, and government expenditure would leak out of the economy due to exports. That and we don't have the means to raise the money.

Until Ireland looks around at other economic models (and a half baked version of a swedish model does not count) then you are going to keep going boom and bust you do not have he economies of scale that the US and UK have and we are going to see that in all its harsh reality in the next few years.


To underline our problems I was in Italy a few weeks and everything I touched was made in Italy from cheap childrens balls to mens ties, Italy may be considered a basket case but it is a basket case with a manufacturing base.

I personally think that there is a need and demand for a co-operative banks or a bank that runs on Islamic principles, people are going to have to vote with what money they have left.

What do you mean 'other economic models.' Before we started getting into the stupid property/construction boom, our export model was/is working fine. Also what's a bank run on Islamic principals?

And I was just wondering, did you know that the developers unable to pay back these loans aren't getting off scot free. They'll still owe the money they owe to the banks, just now they'll owe it to NAMA. NAMA is buying the loans from the banks, not the developers. And the reason the government is spending this money in the first place is that were the banks to write down these loans at their current market prices then the banks would be bankrupt, which would be terrible. And, for the record, I'd prefer nationalization to NAMA.

Sand

What's ironic about using the market to detemine the wages of those working in a government body?

Nothing. Id say the government could get good value for money by hiring on the necessary expertise from the lowest bidder. Wherever they may be found?

Or did you mean Irish market rates? Which are well known to be unrealistic?

Firstly, the main problem here is being unable to pay back the large loans they took out to develop property....And so, AFAIK, a lack of regulation isn't what has cause the problems here.

What? Seriously...what?

Two different problems - same underlying cause. Bankers too stupid and incompetent to be trusted to run something as complex as a bank.

Irelands regulations for banking were based on the assumption that banks were well managed by reputable professionals who knew how to manage their risk and run a profitable business. It was always assumed the expertise resided in the banks hence the view was comply, or explain why youre so clever and dont need to comply with the regulations. The regulations were optional.

If nothing else, the past few years have demonstrated that Irish banks are run by the greatest assembly of morons and idiots convened in one place since the last Scooter concert. They have no idea what they are doing, they have no idea how to manage risk, they have no credibility whatsoever. All they knew was they put money in this black box, and more money came out the other end. So they borrowed more and more money so they could put more and more into this magic black box and get more and more out the other end. High fives guise!

They ran their business so stupidly, not only did they run their own shareholders investment into the ground, they threatened the entire economic stability of the state. Irish banks clearly cannot be trusted to run themselves. They are too stupid to do so.

Irelands regulations need to be revised and enforced so that they are idiot proof. Because the people who need to be regulated are idiots.

And I was just wondering, did you know that the developers unable to pay back these loans aren't getting off scot free. They'll still owe the money they owe to the banks, just now they'll owe it to NAMA. NAMA is buying the loans from the banks, not the developers. And the reason the government is spending this money in the first place is that were the banks to write down these loans at their current market prices then the banks would be bankrupt, which would be terrible. And, for the record, I'd prefer nationalization to NAMA.

Dear Jesus.

Do you really believe that? Really?

The property is worthless. The markets know this. The banks know this. The developers know this. Even the bloody longsuffering taxpayers know this.

Serious question. If these housing estates in the middle of Leitrim are such good deals, why are the banks selling them instead of sitting on them and holding? Why arent they looking to reap the long term rewards? The answer is that these loans are worthless. They cannot and will not be repaid. The market values reflect that.

The banks cant push the developers to repay, because if they do they will realise those terrible market values. Luckily NAMA is here to take on the job of waiting for Godot, and is willing to pay over the odds to do so.

Either way, yes, the developers are getting off scot free. Their mates in Fianna Fail wont push them, because they cant afford to push them anymore than the banks can afford to push them as it stands. The banks are getting off scot free because they get to run away from their incompetency, giggling and laughing like schoolgirls...already planning for the next way to incompetently run their banks into the ground. Fianna Fail is getting off scot free because worse come to worst, they go into opposition for a few years, and get back in when everything is rosy again. The only person not getting off scot free is the taxpayer who will be proud owner of empty office blocks, housing estates in the middle of nowhere and half finished appartment blocks.

In deals like this, someone is always getting ****ed. In the NAMA deal, the bankers, the property developers, the lawyers and Fianna Fail are all lining up to take turns ****ing the taxpayer.

Oh yeah...Islamic Banking

Essentially works from the principle that you cannot create something from nothing - so interest makes no sense as it creates value from nothing.

A mortgage would work as follows:

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).

An innovative approach applied by some banks for home loans, called Musharaka al-Mutanaqisa, allows for a floating rate in the form of rental. The bank and borrower forms a partnership entity, both providing capital at an agreed percentage to purchase the property. The partnership entity then rent out the property to the borrower and charges rent. The bank and the borrower will then share the proceed from this rent based on the current equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's share on the property at agreed installments until the full equity is transferred to the borrower and the partnership is ended. If default occurs, both the bank and the borrower receives the proceeds from an auction based on the current equity. This method allows for floating rates according to current market rate such as the BLR (base lending rate), especially in a dual-banking system like in Malaysia.

The bank and the borrower would be partners in the purchase of the property. This would require more responsible judgment from the bank than we have witnessed recently in Ireland and abroad. Something even non-Islamic banks could learn from.

andrew

Sand wrote: »

Nothing. Id say the government could get good value for money by hiring on the necessary expertise from the lowest bidder. Wherever they may be found?

Or did you mean Irish market rates? Which are well known to be unrealistic?



What? Seriously...what?

Two different problems - same underlying cause. Bankers too stupid and incompetent to be trusted to run something as complex as a bank.

Irelands regulations for banking were based on the assumption that banks were well managed by reputable professionals who knew how to manage their risk and run a profitable business. It was always assumed the expertise resided in the banks hence the view was comply, or explain why youre so clever and dont need to comply with the regulations. The regulations were optional.

If nothing else, the past few years have demonstrated that Irish banks are run by the greatest assembly of morons and idiots convened in one place since the last Scooter concert. They have no idea what they are doing, they have no idea how to manage risk, they have no credibility whatsoever. All they knew was they put money in this black box, and more money came out the other end. So they borrowed more and more money so they could put more and more into this magic black box and get more and more out the other end. High fives guise!

They ran their business so stupidly, not only did they run their own shareholders investment into the ground, they threatened the entire economic stability of the state. Irish banks clearly cannot be trusted to run themselves. They are too stupid to do so.

Irelands regulations need to be revised and enforced so that they are idiot proof. Because the people who need to be regulated are idiots.

I was making the point that our crisis is different to the USA's because the crisis there and in other places is, as far as I can tell, partly due to unregulated and under regulated securities markets. Here, as far as I can tell, it was due to bad decisions on the part of banks with regards to who they lent to. You seem to think that it was in fact due to a lack of regulation that they were able to make these decisions. I don't know if this is the case, but it'd seem to me that it's im almost impossible to regulate against someone making a bad decision about who to lend to. But this is probably getting off topic...

Dear Jesus.

Do you really believe that? Really?

The property is worthless. The markets know this. The banks know this. The developers know this. Even the bloody longsuffering taxpayers know this.

Serious question. If these housing estates in the middle of Leitrim are such good deals, why are the banks selling them instead of sitting on them and holding? Why arent they looking to reap the long term rewards? The answer is that these loans are worthless. They cannot and will not be repaid. The market values reflect that.

The banks cant push the developers to repay, because if they do they will realise those terrible market values. Luckily NAMA is here to take on the job of waiting for Godot, and is willing to pay over the odds to do so.

Either way, yes, the developers are getting off scot free. Their mates in Fianna Fail wont push them, because they cant afford to push them anymore than the banks can afford to push them as it stands. The banks are getting off scot free because they get to run away from their incompetency, giggling and laughing like schoolgirls...already planning for the next way to incompetently run their banks into the ground. Fianna Fail is getting off scot free because worse come to worst, they go into opposition for a few years, and get back in when everything is rosy again. The only person not getting off scot free is the taxpayer who will be proud owner of empty office blocks, housing estates in the middle of nowhere and half finished appartment blocks.

In deals like this, someone is always getting ****ed. In the NAMA deal, the bankers, the property developers, the lawyers and Fianna Fail are all lining up to take turns ****ing the taxpayer.

The properties are worthless. The banks currently own these properties. NAMA will buy these properties from the banks. Developers will owe NAMA the money. Since they can't pay NAMA back because they don't have the money, the developers will take the loss and lose their money and go bankrupt or whatever. The way you seem to understand it, the government is buying assets off developers and giving developers money above market price, which isn't the case.

I'll tell you why NAMA is paying above market price:
NAMA is still going to purchase the assets at a price less than what the banks paid. This means that some banks will lose money on these assets. For some banks (AIB being one AFAIK), the amount of money lost will wipe out their reserves (reserves being the money banks use to pay depositers). They will be bankrupt. That is, of course, unless the government recapitalises the bank. That is, gives it more money so that it doesn't fail. As far as I know, for whatever reason the govt doesn't want to be seen to be recapitalising banks too much. If they bought the assets at market price, they would have to recapitalizes the banks too much for their liking after buying the assets. So instead, they're going to pay the banks over market price so that they don't have to recapitalizes the banks too much, or at all.

I'm pretty sure that this is what the story is, though I'm open to correction by posters who've done more economics/know more than I have. This is pretty complicated, and I'd hate to sound like someone who thinks they know it all but actually doesn't. I hate those kind of people!

zanuFF

If anyone wants to know what the scam behind nama is go the the propertypin and read the thread called

NAMA SCAM stop looking at where they want you to look

it will make your blood boil, there have been many massive scams pulled over the years in our great republic, some we all know of, many more kept quite, but this nama scam is going to be the biggest transfer of money from the many to the few that we will ever see.
Nama can never work there are far too many contradictions, but it is not ment to work it is only ment to transfer the debts to the tax payer

the bankers will be bailed out
the land bankers will be bailed out
the property scamers will be bailed out
FF will get their cut

and the fools will pay the price bend over lads, use lots of lube we are all about to be raped
anyway go over to the propertypin and read it

SkepticOne

andrew wrote: »

NAMA is still going to purchase the assets at a price less than what the banks paid. This means that some banks will lose money on these assets. For some banks (AIB being one AFAIK), the amount of money lost will wipe out their reserves (reserves being the money banks use to pay depositers). They will be bankrupt. That is, of course, unless the government recapitalises the bank. That is, gives it more money so that it doesn't fail. As far as I know, for whatever reason the govt doesn't want to be seen to be recapitalising banks too much. If they bought the assets at market price, they would have to recapitalizes the banks too much for their liking after buying the assets. So instead, they're going to pay the banks over market price so that they don't have to recapitalizes the banks too much, or at all!

What you are leaving out is that the money paid to the banks is only the beginning of what will be paid. The NAMA entitity will then bail out the developers by rolling up interest and lending them more where necessary.

I'm not a huge fan of bailouts but I can see that there can be a case for them to get an industry over a temporary hump. But of all the industries in Ireland that should not be bailed out it is the developers. This is not a hump that we're going through but the return to normality from a massive bubble.

EastWallGirl

The problem that the Irish Banks have is that not only did they invest in Irish Builders but also that they invested heavily in the parceled up sub prime ****e, an additional problem is that the regulator relied on 'principles based' regulation and not actual regulation.

It was not compulsory in the banks to invest in it, I know of a banker whose boss said they were out of bounds, so people did know they were bad.

Countries such as Australia, Canada, New Zealand and god forbid even Italy had banking regulation because they had that, they are able to throw money at things for when the eventual upturn happens. (Not that I agree with all of the targets).

So much of the pain could have been avoided.

The Irish debt is €60 billion (on a good day) plus the cash injection, with about 4.2 million people.

Countries such as Canada and Australia will still take educated emigrants, and their are countries in the EU (such as Germany) that will do R&D, I see some great investions leaving the country.

The scary thing is we are all talking about NAMA but their is no word about a Reguation based banking authority.

Ireland needs to look towards the smaller countries in Europe that understand the economies of scale and the extra protection that a small economy needs.

Think about it, imagine if we had of kept the Gas line as a national asset and not sold it off, Shell did not buy it 'just in case', they know what is down there.

Really great thread BTW, really enjoying all the contributions.

AlekSmart

Indeed EastWall Girl this thread appears to have a group of like minded people whose view of matters NAMA is quite correctly questioning.

The identification of Banking Practices and an effective regulatory structure as a core issue is something which appears to have fallen beneath the general radar,even amongst the "quality" commentators.

The other essential truth is that Éire Teo has virtually nothing of any tangible value to offer the world markets.
The identification of the Gas issue is another point of note as it rather sadly focuses on the lack of principles apparent in our Gubernatorial elite.

We really do need a short sharp period of re-education in order to get some form of focus for our future generations.
Current NAMA ethos is all to typically Galway Tent in essence..."Something`s bound to turn up".

Sand

You seem to think that it was in fact due to a lack of regulation that they were able to make these decisions. I don't know if this is the case, but it'd seem to me that it's im almost impossible to regulate against someone making a bad decision about who to lend to.

Out of curiousity, if it isnt the job of the regulators to prevent banks being so stupidly run that they cause an economic cataclysm that threatens to wipe out the prosperity of the state for generations...what do you believe their job actuallly is?

Chasing butterflies?

Irish regulators and regulations assumed banks knew what they were doing. They also assumed it was the banks own risk. We now know the banks have no idea what they are doing. We allso know that when the banks get into trouble, it is not their problem, it suddenly becomes our problem.

Hence Ireland needs idiot proof regulations where if regulations are not enforced and followed to the letter, people go to jail. They need to be idiot proof because Irish banks are run by idiots.

The properties are worthless. The banks currently own these properties. NAMA will buy these properties from the banks. Developers will owe NAMA the money. Since they can't pay NAMA back because they don't have the money, the developers will take the loss and lose their money and go bankrupt or whatever. The way you seem to understand it, the government is buying assets off developers and giving developers money above market price, which isn't the case.

I fully understand whats happening here. The bankers and property developers have made a complete mess. They have screwed up so badly it would be hilarious if we werent going to get billed for the clean up.

And thats whats happpening. Bankers and property developers have being privatising their gains for a decade now. But suddenly theyre facing massive losses. Their loss, right?

No suddenly it is our loss. Private gain. Socialised risk. No bank in Ireland can seriously believe it has any reason to manage its risk at this point. The best course of action is to leverage itself so highly so it can make as much money as possible in the good times. When the **** hits the fan, no big deal. The plebs will pay for it.

This is not a sound enviroment for a successful economy.

The price of NAMA is too high just to save AIB and Bank of Ireland from a mess of their own creation. Let them burn.