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

andrew

SkepticOne wrote: »

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.

NAMA, can't, won't, isn't bailing out developers. It's bailing out banks. NAMA can't lend to developers. NAMA can't set interest rates.

EastWallGirl wrote: »

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.

Irish banks did not invest heavily in sub prime mortgages.

Sunday Business Post wrote:

The sub-prime lending storm which has hit the US market will not reach our shores, according to IFG chief executive Mark Bourke.

The financial services company is seeing strong growth in its ‘‘non-conforming’’ mortgage business, with cheques worth €224 million issued by this division in 2006,compared to €94 million in the previous year.

But Bourke insisted that there was no comparison between sub-prime lending in Ireland and the US. ‘‘In this country it’s very near prime lending and it’s also a very immature market.”

The sub prime lending market was never very big over here. As he says, lenders considered sub prime here were actually relatively well off, being as he says 'near prime.'

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.

I suppose to be honest, I don't know enough about regulation to be able to say whether Irish banks need to be regulated more. It's just more regulation seems to be a knee jerk kind of reaction, without people considering that regulation can be harmful as well as ineffective.

AlekSmart wrote: »

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.

How is that an essential truth? The Celtic Tiger was built on exports. We still have those.

Sand wrote: »

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.

All I'm saying is, it's easy to assume that you can create fool proof regulations with regulate against stupidity and bad decisions while at the same time allowing for profit. It's a lot easier said than done, and seems like a knee jerk reaction to me.

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.

I agree with everything in this bit apart from the last two sentences. We can't afford to take the moral high ground and let the banks fail. It'd be awesome if we could let banks go to the wall and suffer from their stupidness, but we can't without breaking our economy

andrewdeerpark

AlekSmart wrote: »

Current NAMA ethos is all to typically Galway Tent in essence..."Something`s bound to turn up".

With the supreme court keeping Liam Carroll on life support till next week your statement above was never accurate (as I predicted).

The supreme court is going to grant the examinership, they couldn't do it today as they need time to come up with a conscise and well worded judgement in order to undermine Justice Kelly's excellent correct ruling last week, plus the public would smell the con to easily.

As I have said all along why is the establishment afraid of market forces on the downside, a bottom will be reached in any market just let it happen. The final con that is NAMA is crystallising with Joe public picking up the overpriced tab.

andrewdeerpark

andrew wrote: »

NAMA, can't, won't, isn't bailing out developers. It's bailing out banks. NAMA can't lend to developers. NAMA can't set interest rates.

Your wrong their, NAMA will be able to act as a bank and lend to developers in order to complete projects, my understanding is that it will be able to set interest rates, loan term etc aswell all under the power of the minister for finance. It will be a bank with no retail presence just like that other bastion of banking excellence: Anglo Irish Bank.

andrew

andrewdeerpark wrote: »

Your wrong their, NAMA will be able to act as a bank and lend to developers in order to complete projects, my understanding is that it will be able to set interest rates, loan term etc aswell all under the power of the minister for finance. It will be a bank with no retail presence just like that other bastion of banking excellence: Anglo Irish Bank.

Fair enough, NAMA will be able to ensure that projects are completed, and will set interest rates on loans. Banks preform these functions, but it's exaggeration to say that they'll be 'a bank with no retail presence.' And it's also an exaggeration to say (or imply) that this is tantamount to a bailout of the developers. Both these measures ensure NAMA loses as little money as possible on the assets it purchases. Meanwhile, developers will still owe NAMA the money, albeit at a possibly reduced interest rate.

andrewdeerpark

andrew wrote: »

Fair enough, NAMA will be able to ensure that projects are completed, and will set interest rates on loans. Banks preform these functions, but it's exaggeration to say that they'll be 'a bank with no retail presence.' And it's also an exaggeration to say (or imply) that this is tantamount to a bailout of the developers. Both these measures ensure NAMA loses as little money as possible on the assets it purchases. Meanwhile, developers will still owe NAMA the money.

It may work that way however this is all at the discretion of the minister for finance. Everyone knows best case senario their will be a 30% writeoff averaged out across the entire bailout, that loss will be carried by someone, taxpayer or bank!? But the bank will be managing these loans in house for NAMA for a fee so they will do the taxpayer either way.

SkepticOne

andrew wrote: »

And it's also an exaggeration to say (or imply) that this is tantamount to a bailout of the developers. Both these measures ensure NAMA loses as little money as possible on the assets it purchases. Meanwhile, developers will still owe NAMA the money, albeit at a possibly reduced interest rate.

Thats the argument that Lenihan is using to try to convince people it is not a bailout. If the IMF bailout a country it is in the form of a loan that has to be repaid in full. The fact that it is a loan does stop it being a bailout.

Nama is a bailout for developers. Left to the market the plug would be pulled on most developers and rightly so.

The big problem with the Nama developer bailout is this:

Bailouts should only be to get industries through a temporary period of difficulty. Otherwise they should be allowed to fail. To do otherwise is to damage other areas of the economy.

But the construction industry is not going through a temporary sticky patch. I think most people will agree with that. What has happened is that a massive bubble has burst and a vast glut of offices, apartments, building sites have been created. Why are we bailing out companies in order to further add to this glut?

Better to let those companies go bust and the price of their assets to fall.

The problem is we don't want to take the pain now. We want to kick the problem into touch even though this will delay the recovery.

AlekSmart

The supreme court is going to grant the examinership, they couldn't do it today as they need time to come up with a conscise and well worded judgement in order to undermine Justice Kelly's excellent correct ruling last week, plus the public would smell the con to easily.

My belief is that Justice Kelly put the heart crossways in the entire assemblage of Politico`s,Builders,Developers and assorted other shoal-swimmers who go to make up Irelands Property Marketeers.

Even Justice Kelly`s reported questions and remarks bore the stamp of an educated man being shown a Picture of a Duck then having a tape of a Duck Call being played before being asked what did the two items represent.......Mr Justice Kelly plumped for......A Duck !

Much to the chagrin of the folks in the cheap seats who were convinced they were looking at a Peacock

As andrewdeerpark says,it`s now all about a form of words devised by the JUDGES (That plural is important) of the Supreme Court which can be given enough positive PR spin to deflect attention away from the business at hand.

Its a Scam folks.....a very big and long running Scam.

andrew

SkepticOne wrote: »

Thats the argument that Lenihan is using to try to convince people it is not a bailout. If the IMF bailout a country it is in the form of a loan that has to be repaid in full. The fact that it is a loan does stop it being a bailout.

Nama is a bailout for developers. Left to the market the plug would be pulled on most developers and rightly so.

The big problem with the Nama developer bailout is this:

Bailouts should only be to get industries through a temporary period of difficulty. Otherwise they should be allowed to fail. To do otherwise is to damage other areas of the economy.

But the construction industry is not going through a temporary sticky patch. I think most people will agree with that. What has happened is that a massive bubble has burst and a vast glut of offices, apartments, building sites have been created. Why are we bailing out companies in order to further add to this glut?

Better to let those companies go bust and the price of their assets to fall.

The problem is we don't want to take the pain now. We want to kick the problem into touch even though this will delay the recovery.

But how is NAMA bailing out developers? It's buying assets from banks. Developers will still own loans on their worthless developments.

j1smithy

andrewdeerpark wrote: »

Looking at NAMA this is the great tribunal like scam of our generation (in my thirties). We are going to have our lost generation much like Japan's of the 90's, all the plebs pay high taxes while the connected elite reinvent their lost wealth of the last 2 years through NAMA.

I am attempting to start this thread because does anyone not see what is happening. This makes Charlie Haughey look like a saint; remember he only recalled the dail to save 1 of his friends: Larry Goodman, this is the FF tent taken to another level all together.

How will we all get done: FEES.

Remember all those tribunals, the lawyers, accountants and investigators made their fortunes through fees, the same will happen here, it will be under the radar and build up slowly but mark my words (you can print this post off tonight and date it) in 20 years time billions of euros will be paid to accountants (like Ernest and Young: Anglo Irish Auditors), lawyers, bankers, estate agents, engineers and who ever else is well connected for the contracts of management out of NAMA.

This is the army deafness, compo culture job of our generation and not one opposition voice has picked up on this fatal weakness in the legislation.

I love this country and work hard for the society I am part of, but I am p****d of with the constant cute huers creaming from the top while I and thousands like me work to sustain their elite lifestyle and the government constantly con the mob with these bailout schemes.

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.

If you're going to make a sensational post, at least get the figure right. The taxpayers maximum exposure is predicted at around €60bn with the banks taking up the rest of the slack. The developers and others will still owe the full amount loaned to them and only if they default will the property come under ownership of NAMA. NAMA can then sell, develop or rent the property to get a return then, but up to that point NAMA will only own the mortgage.

Please don't use the term "bail out" its cliché now and has lost all meaning. In fact its annoying to hear!

SkepticOne

andrew wrote: »

But how is NAMA bailing out developers? It's buying assets from banks. Developers will still own loans on their worthless developments.

It is buying assets from banks who would otherwise pull the plug on developers (and rightly so!). Developers are getting loans that they would not get in the market. Exactly the same as the IMF lending to a country when no one else will. This alone makes it a bailout. In addition, interest will be rolled up and in some cases further finance made available. Massive bailout.

EastWallGirl

Irish Banks may not have gone into the sup prime market, but they did invest in the bonds that consisted of parceled up sub prime mortgages, cerainly some of their losses, lack of liquidity comes form them holding these worthless bonds that cannot be cashed.

It could be argued that the borrowing in 2006-2008, was all done on over valued property so it may not be sub prime, but they are certainly carrying losses.

If any of these builders and their companies had any sort of underlying value or balance sheet figures, the Middle East and Asia would be sniffing around looking for a deal, which the banks would be stupid not to consider.

The thing is there is nothing of value...and NAMA is going to pay €60 billion to it.

NAMA is being set up to keep the dirty laundary hidden.

If you think any of these builders have any assets that can be touched in this country I think you will find they pay accountants and lawyers to avoid that.

The fact that NAMA's first review is to be held 5 years after it has started and that whistle blowing has been effectively banned, how are we going to find out anything?

I really hoped that th eSupreme Court would rule yesterday and when they did not I thought the week was given to give the other banks time to cut a deal with ACC but perhaps it is to word something that is a rejection of the High Court.

Can ACC go to the European Court?

gurramok

j1smithy wrote: »

If you're going to make a sensational post, at least get the figure right. The taxpayers maximum exposure is predicted at around €60bn with the banks taking up the rest of the slack. The developers and others will still owe the full amount loaned to them and only if they default will the property come under ownership of NAMA. NAMA can then sell, develop or rent the property to get a return then, but up to that point NAMA will only own the mortgage.

Please don't use the term "bail out" its cliché now and has lost all meaning. In fact its annoying to hear!

€60bn is overpaying for those debts, do you agree?

LostinBlanch

To those apologists saying that it's not a bailout - that's a load of boll*cks. That is exactly what it is at a fearful cost to ordinary taxpayers and citizens of the country.

IMO the whole thing is a fraud being perpetrated on the taxpayers of this country. I'm fully in agreement with andrewdeerpark on this, the supreme court judges are looking around desperately for a form of words that will allow the sick, the poor, the agd and the infirm to pay for Carroll's mistakes. Because that is exactly what will happen.

edanto

Seriously - what can we do about this?

Our combined anger has already made NAMA into news, people are talking about it and most people accept it as some kind of taxpayer funded bailout for banks/developers.

But what's the next step? What should we be looking to campaign on? Should we be looking to influence Lenihan? What are the decisions that he will be making that could improve the NAMA scenario for us?

jonsnow

Sand wrote: »

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.

I think Sand is making a very valid point here.There is a systemic risk to our economy in continually bailing out banks which are "too big to fail".The taxpayer is still paying for the last time AIB almost bankrupted itself with its ICI debacle.

Irish banks now feel that no matter what risks they take or how they behave they have the cushion of weak irish governments which will rescue them via the taxpayer.This cycle now seems set to continue.
At the very least the irish government should let all but the big two go to the wall to at least give the heads of those organisations some pause.

andrew

SkepticOne wrote: »

It is buying assets from banks who would otherwise pull the plug on developers (and rightly so!). Developers are getting loans that they would not get in the market. Exactly the same as the IMF lending to a country when no one else will. This alone makes it a bailout. In addition, interest will be rolled up and in some cases further finance made available. Massive bailout.

NAMA's going to own these loans, if developers can't pay back the loans they'll go bankrupt. Simple as. Where did you read that 'Developers are getting loans that they would not get in the market' and that 'interest will be rolled up and in some cases further finance made available.' Sources.

Its a bailout of the banks, not of the developers.

edanto wrote: »

Seriously - what can we do about this?

Our combined anger has already made NAMA into news, people are talking about it and most people accept it as some kind of taxpayer funded bailout for banks/developers.

But what's the next step? What should we be looking to campaign on? Should we be looking to influence Lenihan? What are the decisions that he will be making that could improve the NAMA scenario for us?

It'd be better to nationalise the banks for a short period instead of NAMA. Influence Lenihan to do that!

Sand

NAMA's going to own these loans, if developers can't pay back the loans they'll go bankrupt. Simple as. Where did you read that 'Developers are getting loans that they would not get in the market' and that 'interest will be rolled up and in some cases further finance made available.' Sources.

Its a bailout of the banks, not of the developers.

Why are you even arguing about this?

You talk as if NAMA is going to be some harsh taskmaster for the developers. As if Brian Lenihan is going to be some shadowy enforcers, a mild mannered Minister of Finance by day, an agent of righteous retribution by night. This is the old boys network in Irish business and politics taking this problem "in-house" so it can properly be passed onto the plebs to pay for.

Do you not see that the government cannot play hardball with the developers. The banks cannot play hardball with the developers. If they push the developers into bankruptcy they end up with worthless property hitting the market with critical impact on commercial property prices.

This is exactly what the banks and the government are trying to avoid. They want to continue the fiction that this property has some long term value thats near the peak prices paid at the height of the recent bubble. It is in effect denying there was any bubble..that this is a blip and that the real economic value of the property was reflected in 2006-2007 prices.

Look at ACC Bank and Zoe Group - the one bank that is not part of the Irish cozy cartel is pushing Zoe into bankruptcy to get what it can now. Its cutting its losses and accepting reality.

Everyone else is doing everything possible to prevent these properties coming to the market to be valued correctly. NAMA is the tool to be employed to try save the developers and the banks from the cold harsh winds of reality.

Even if developers are pushed into bankruptcy you can be quite sure with an army of lawyers and accountants they will hold back quite enough cash to live an easy life for the rest of their days. They wont be jailed, thats for sure.

NAMA is too complex a mechanism just for saving AIB and Bank of Ireland bondholders and managers. Its set up in this particular way to save the developers from bankruptcy also.

All the talk about a tough NAMA is just talk.

It'd be better to nationalise the banks for a short period instead of NAMA.

It would be better to let AIB and Bank of Ireland burn whilst setting up a good bank and protecting small deposit holders over all other considerations.

The idea that AIB and BoI would be let die would be revolutionary in Irish business - suddenly risk management might be considered important as opposed to an annoying distraction from the business of making money.

NAMA wont just cost billions now, it will cost hundreds of billions over the years as the banks rush headfirst into the next bubble with no concern because they know the plebs will have to save them. And the next bubble after that. And the next bubble after that. Banks that are too big to fail know theyre too big to fail. And that will affect the business management. Leverage as high as you can, reap in the profit while you can, then get out on a nice pension and leave the mess for the plebs to cleanup.

But what's the next step? What should we be looking to campaign on? Should we be looking to influence Lenihan? What are the decisions that he will be making that could improve the NAMA scenario for us?

Trying to influence Lenihan? Fianna Fail are accountable to their friends in the banks and the construction industry...waste of time trying to influence him.

I would wonder if there are legal options for challenging NAMA however. The government must heed the law, or at least give the appearance of doing so. I am no expert on the law, but the only way to stop NAMA would be to find some basis for a legal challenge. There was much talk of the developers issuing such a challenge if Nama was bad for them, thats died off since they were reassured it would be very good for them.

But theres no reason why a citizen couldnt launch a similar bid to block NAMA or at least seriously delay it.

But the main problem is the grounds on which to challenge it and if a challenge is even possible. The Fianna Fail and property developers lawyers will be doing their best to make sure its airtight.

whynotwhycanti

Originally Posted by j1smithy
If you're going to make a sensational post, at least get the figure right. The taxpayers maximum exposure is predicted at around €60bn with the banks taking up the rest of the slack. The developers and others will still owe the full amount loaned to them and only if they default will the property come under ownership of NAMA. NAMA can then sell, develop or rent the property to get a return then, but up to that point NAMA will only own the mortgage.

Please don't use the term "bail out" its cliché now and has lost all meaning. In fact its annoying to hear!



Bail out, Bail out,Bail out,Bail out,Bail out,Bail out,Bail out,Bail out,Bail out!

I am sorry you find this description irritating and a bit of a cliché but that is exactly what it is so you have to face the facts. NAMA is buying up the toxic assets of these corporations that could and probably would make these banks seize to exist. I for one cannot think of a better description than a bail out but you may prefer the term ‘government intervention’.

If a corporation is too big too fail then it is too big too exist. No private company should be able to have such power over a government and more importantly the tax payer. ‘If a corporation screws up to the point where it needs government largesse to survive, the government should let it go belly up, and the hell with its CEO and its chief financial officer. The trouble with the current too big to fail thesis is that it thwarts the clean up and natural corrective process of a bear market. Nothing gets sanitized, and the inefficient corporations get a new lease on life. The natural "cleansing" processes of a bear market are held in check. If a bank heads for bankruptcy because of the stupidity of its CEO and its board, should that bank be thrown a life-saver?’ (Taken from a economist newsletter I read, Richard Russell)
These banks made ridiculous decisions and took outrageous risks and should be allowed to fail. The banking system will not collapse and the wise banks who operated with some form of foresight and not as much greed would have survived. There are too many banks and too many bankers, with the financial system having too much power. The last ten years or saw a huge increase of people entering the finance industry. We need more teachers, nurses, doctors, engineers, scientists etc. These are the people that can bring investment to a country not some crooked banking system based on pure unadulterated greed and the situation we are in now is testament to that.

SkepticOne

andrew wrote: »

NAMA's going to own these loans, if developers can't pay back the loans they'll go bankrupt. Simple as. Where did you read that 'Developers are getting loans that they would not get in the market' and that 'interest will be rolled up and in some cases further finance made available.' Sources.

Its a bailout of the banks, not of the developers.

It is a bailout of the developers. Here's why.

1. I have already mentioned that just because something is a loan that has to be repaid in full, does not mean it is not a bailout.

2. There is provision in the bill to provide extra funding to developers.

3. NAMA will be very reluctant to foreclose on developers in difficulty since that will force their underlying asset onto the market. The whole flawed business model of NAMA is based on a "economic value" of these assets, but if this worthless land is forced onto the market then this "economic value" concept will be exposed for the fiction that it is.

SkepticOne

whynotwhycanti wrote: »

Bail out, Bail out,Bail out,Bail out,Bail out,Bail out,Bail out,Bail out,Bail out!

The annoying thing is not so much that there's going to be a bailout of developers but that it will be a failed misguided bailout based on an incorrect belief that the market is in a temporary trough that it will shortly emerge from. Not only that but a head in the sand approach to how markets work. It reminds me of Brendan O'Connor's (writing in the indo) urging of those who had invested in property to hold tight. If no one sells then the market can't fall.

AlekSmart

This is exactly what the banks and the government are trying to avoid. They want to continue the fiction that this property has some long term value thats near the peak prices paid at the height of the recent bubble. It is in effect denying there was any bubble..that this is a blip and that the real economic value of the property was reflected in 2006-2007 prices.

Look at ACC Bank and Zoe Group - the one bank that is not part of the Irish cozy cartel is pushing Zoe into bankruptcy to get what it can now. Its cutting its losses and accepting reality.

Well said Sand....If anybody wants proof positive of the worthlessness of this crock of shytt,then take a ramble around Sandyford Industrial Estate (as was).
It resembles nothing less than the set of the original Mad Max movie.....Unfinished,half-finished,all it`s lacking is the tumbleweed blowing through the largely empty caverns .....

The figures given to the High Court for Mr Fleming`s development here made some eye-watering reading as did Justice Kellys rather robust refusal to accept the wildly optimistic figures advanced by Mr F`s lawyers.

If any posters are seeking a REAL-TIME lesson in what this IRISH version of a recession is all about then take a Luas Green Line to Sandyford or a 46B bus from the city centre and spend an hour WALKING this parish of broken dreams......it`s SCARY SCARY stuff my friends..(Dub Vincent Price accent)

andrew

Sand wrote: »

Why are you even arguing about this?

Because it's important that quality debate regarding NAMA takes place. This can't happen if people are against NAMA because they think it's doing something that it's not. There are many more relevant issues regarding NAMA which will get left on the sidelines if people continue to go on about it being a bailout of developers.

You talk as if NAMA is going to be some harsh taskmaster for the developers. As if Brian Lenihan is going to be some shadowy enforcers, a mild mannered Minister of Finance by day, an agent of righteous retribution by night. This is the old boys network in Irish business and politics taking this problem "in-house" so it can properly be passed onto the plebs to pay for.

Do you not see that the government cannot play hardball with the developers. The banks cannot play hardball with the developers. If they push the developers into bankruptcy they end up with worthless property hitting the market with critical impact on commercial property prices.

You keep talking about 'worthless propery hitting the market.' These properties are already on the market. Commercial property prices are already falling because of this. The developers are already bankrupt, or will be, if they can't repay their loans or sell their property for more than they paid to develop it. Since they can do neither of these things, they'll have to default. Then, and only then, will NAMA own the propertes and be free to do things with them.

This is exactly what the banks and the government are trying to avoid. They want to continue the fiction that this property has some long term value thats near the peak prices paid at the height of the recent bubble. It is in effect denying there was any bubble..that this is a blip and that the real economic value of the property was reflected in 2006-2007 prices.

I fail to see how you've come to that conclusion.

Everyone else is doing everything possible to prevent these properties coming to the market to be valued correctly. NAMA is the tool to be employed to try save the developers and the banks from the cold harsh winds of reality.

I think what you mean is the fact that NAMA won't be using the market value of the houses in order to determine their value. Now there's something to talk about. The value paid for these assets is an important issue. But it's never going to get discussed through all the THIS IS A BAILOUT FOR DEVELOPERS noise.

It would be better to let AIB and Bank of Ireland burn whilst setting up a good bank and protecting small deposit holders over all other considerations.

Let the banks fail. Are you serious? Do you have any idea what that'd do to the economy? You think it's bad now, it would be significantly worse. Set up a good bank? Who do you propose does this?

The idea that AIB and BoI would be let die would be revolutionary in Irish business - suddenly risk management might be considered important as opposed to an annoying distraction from the business of making money.

It'd be nice to be able to do this, but it'd fúck our economy right in the poopchute.

SkepticOne wrote: »

It is a bailout of the developers. Here's why.

1. I have already mentioned that just because something is a loan that has to be repaid in full, does not mean it is not a bailout.

So the fact that we're not giving developers money doesn't make this not a bailout??

2. There is provision in the bill to provide extra funding to developers.

As a poster above said, that provision allows for the further development of properties whose loans have been defaulted.

3. NAMA will be very reluctant to foreclose on developers in difficulty since that will force their underlying asset onto the market. The whole flawed business model of NAMA is based on a "economic value" of these assets, but if this worthless land is forced onto the market then this "economic value" concept will be exposed for the fiction that it is.

The completed properties are already on the markets. The value NAMA pays for these assets has nothing to do with the developers. But as I said above, it's still an important issue, just it's misleading to suggest that the price NAMA pays for assets will somehow mean anything for developers.

SkepticOne

andrew wrote: »

So the fact that we're not giving developers money doesn't make this not a bailout??

Like I said, bailouts are not necessarily cash given away. Generally they are finance on better terms than the market alone would provide. If NAMA was going to act exactly as a group of lenders acting individually, looking after their commercial interests would in the absence of any NAMA or government scheme, then I would agree with you that it is not a bailout for developers. However it does not seem that this will be the case.

As a poster above said, that provision allows for the further development of properties whose loans have been defaulted.

But not limited to that. If there was a clause in the bill limiting the use of such funds to those purposes then that would go some way to arguing that it is not a bailout for developers.

The completed properties are already on the markets. The value NAMA pays for these assets has nothing to do with the developers. But as I said above, it's still an important issue, just it's misleading to suggest that the price NAMA pays for assets will somehow mean anything for developers.

Yes, some properties are on the market, but what will be avoided will be scenarios where large blocks of properties associated with particular loans will go on the market if since this will expose the workings of NAMA.

kodute

I'm curious to know how exactly letting the bad banks fail would "fúck our economy right in the poopchute" ?

If the government were to permanently/temporarily nationalise a bank and keep the economy ticking over while the others fail would this not be a better idea than NAMA?

Would a foreign bank (Rabo, RBS, etc) not step in and take whatever business was left behind by a fallen Irish (dud) bank?

It just seems to me, and I'm no expert clearly, that the justification for NAMA is 'fire and brimstone' but nobody is able to tell me what 'fire and brimstone' looks like.

LostinBlanch

Or better still set up a state bank and sub contract someone like Santander to run it.

Let the likes of AIB / BOI see exactly who is "too big to fail" then.

andrew

kodute wrote: »

I'm curious to know how exactly letting the bad banks fail would "fúck our economy right in the poopchute" ?

Would a foreign bank (Rabo, RBS, etc) not step in and take whatever business was left behind by a fallen Irish (dud) bank?

Lots of businesses would fail/be under huge stress without banks from which they could receive credit. Most businesses probably, especially small ones, which play a pretty big role in the economy. It's easy to say 'well other banks would just enter the market.' Most banks aren't doing fantastically at the moment. Entering the market, or expanding in order to pick up the slack from 2+ failed banks would probably require excess which most banks don't have or aren't willing to use at the moment. And then there would probably be further damage to Ireland Inc. reputation as a place to do business. This is a more nebulous harm, but a significant one none the less. So all in all it'd be very bad for the economy.

If the government were to permanently/temporarily nationalise a bank and keep the economy ticking over while the others fail would this not be a better idea than NAMA?

Yeah, from what I've read I think temporarily nationalizing banks which look like they're going to fail would be a much better Idea.

patnor1011

why not to start petition of some kind in your constituency getting people sign paper ordering their TD to vote against NAMA bill or NAMA creation. they are on your door every evening before election asking for vote so why not to push them even FF TDs to vote against. FF just today lost 2 TDs so get another 5-6 to vote against bill and with a little help we will have early general election. This government clearly cant put NAMA as burden for next generation. There has to be kind of NAMA referendum as we are going to pay for all that fun. This goverment cant say that they are doing right thing cos they did this in last 8+ years and put us in this mess.

Sand

I'm curious to know how exactly letting the bad banks fail would "fúck our economy right in the poopchute" ?

Basically the skies would darken and the waves would rise. Storms would rage across the country and lightning strikes would swoops down and arbitrarily kill people. Then a dull rumbling would arise in the west, and a huge tidal wave would swamp the entire island, sweeping away the herectics who question the infinite value of AIB and BoI.

Apprently Atlantis back in the day decided to let Bank of Atlantis take the hit for their own mistakes. Arent they sorry now?

Essentially though what would happen is the bankers would get fired. This would be a very bad thing. Then the bond holders would lose their investment. This would be worse. Deposit holders would be guaranteed by the government in a "good" bank. This would be awful.

Other than that... apparently the island of Ireland would be cursed. No bank wuould dare to enter with the prospect of making money given the very real reasons not to make money. Indeed if AIB and BoI to collapse we can reason that no other banks would exist in the entire world.

Would a foreign bank (Rabo, RBS, etc) not step in and take whatever business was left behind by a fallen Irish (dud) bank?

Thats crazy talk. Stop being crazy. The only banks that would do us the favour of opening a branch here are AIB and BoI. There are no other banks.

Because it's important that quality debate regarding NAMA takes place. This can't happen if people are against NAMA because they think it's doing something that it's not. There are many more relevant issues regarding NAMA which will get left on the sidelines if people continue to go on about it being a bailout of developers.

Lets say you owe money to the mafia and they threaten to take your balls? Then the mafia sell your debt to the Quakers and they threaten to tickle you quite harshly if you dont pay them back?

Is that not a bailout?

The only person distracting from real debate on NAMA is yourself given that you continue to pretend that that the developers are fearing the arrival of NAMA as some sort of instrument of dread.

The developers are already bankrupt, or will be, if they can't repay their loans or sell their property for more than they paid to develop it. Since they can do neither of these things, they'll have to default. Then, and only then, will NAMA own the propertes and be free to do things with them.

Developers wont be bankrupt because banks cant afford to push them into bankruptcy, and nor can NAMA.

Even if they were - who really gives a ****? Taxpayers ( namely myself and the 5 other people who havent lost theiir jobs this year) will be the proud owners of **** all.

I fail to see how you've come to that conclusion.

Think harder about why the high court judgement on Zoe suddenly had the banks, Fianna Fail and the developers ****ting kittens.

I think what you mean is the fact that NAMA won't be using the market value of the houses in order to determine their value. Now there's something to talk about. The value paid for these assets is an important issue. But it's never going to get discussed through all the THIS IS A BAILOUT FOR DEVELOPERS noise.

So stop trying to distract from the issue then.

Let the banks fail. Are you serious? Do you have any idea what that'd do to the economy? You think it's bad now, it would be significantly worse. Set up a good bank? Who do you propose does this?

Yes totally serious. The banks were good capitalists in the good years, privatising gains. I expect them to be good capitalists in the bad years too and privatise losses. It is their ****ing problem. Let them deal with it.

The government guaranteeing deposits to a more conservitive limit will do more to help the Irish economy over the long term than reinforcing socialised risk will do.

I dont doubt letting AIB and BoI die wouldnt involve cost. But that has to be weighed against the cost of NAMA. It has to be weighed against the cost of telling every single banker that they dont need to worry about risk, only to leverage gains and get out while the going is good.

NAMA is not going to cost only 90 billion. It is going to cost 90 billion plus the cost of every future government intervention to save a bank "too big to fail". And every time we will be told it will be unthinkable to let this bank fail, every time we will be told that lessons have been learned. And every time they will simply queue up to rape us again.

Wake up.

fly_agaric

andrew wrote: »

And then there would probably be further damage to Ireland Inc. reputation as a place to do business.

Do we really want the business of more companies & banks etc that are most impressed by our govt's excellent abilities to provision them with parachutes made out of the hides of the "little people"?

We have enough of that here already. Don't think we can afford any more.

Offtopic - I hate the phrase "Ireland Inc". I wonder, are we almost the only place where the media/business people (and politicians too ffs!) unashamedly apply such a phrase?

Well, I think I've heard "UK plc" but they don't count...

andrew

Sand wrote: »

Essentially though what would happen is the bankers would get fired. This would be a very bad thing. Then the bond holders would lose their investment. This would be worse. Deposit holders would be guaranteed by the government in a "good" bank. This would be awful.

Other than that... apparently the island of Ireland would be cursed. No bank wuould dare to enter with the prospect of making money given the very real reasons not to make money. Indeed if AIB and BoI to collapse we can reason that no other banks would exist in the entire world.

If you think that letting two giant banks collapse would somehow not harm the economy in a big way, then you're just plain wrong. You and many others seem to think that the harms of letting large banks fail have been fabricated by some sort of 'elite' group, and that letting banks fail isn't actually that bad. Seriously, the conspiracy theory forum would be a better place for that kind of stuff. Letting big banks fail is bad for the economy. Simple as. Worse than bailing out said banks.

Lets say you owe money to the mafia and they threaten to take your balls? Then the mafia sell your debt to the Quakers and they threaten to tickle you quite harshly if you dont pay them back?

Is that not a bailout?

The end result in both cases is that I bankrupt myself because I can't pay back the money.

The only person distracting from real debate on NAMA is yourself given that you continue to pretend that that the developers are fearing the arrival of NAMA as some sort of instrument of dread.

I'm the only one trying to move the discussion away from the retarded rabble about how Fianna Fail in it's entirety is composed of a mind bogglingly corrupt cabal of 'elites.' You probably find yourself agreeing with that statement, but statements like that are nothing more than epigrammatic bullshít which every tom dick and harry around here loves to spout in order to feel as though they're making a valuable contribution. It's asinine, and adds nothing of value. Rabble rabble elites rabble rabble etc.

Developers wont be bankrupt because banks cant afford to push them into bankruptcy, and nor can NAMA.

Either they have the money or they don't. If they can't pay off their loans, they lose their property and their money. It doesn't make a giant difference to NAMA if the developer goes bankrupt. It just means that the chance of that particular loan being repaid goes from slim to none. NAMA has an incentive to force bankruptcy because it further crystallizes the value of the loans which it owns. This adds a degree of certainty which they like to have.

Yes totally serious. The banks were good capitalists in the good years, privatising gains. I expect them to be good capitalists in the bad years too and privatise losses. It is their ****ing problem. Let them deal with it.

Except that it's not their problem. They're banks. The ****e reality is that they're our problem now. As crap as that is, you can't ignore that fact and that whether we like it or not something has to be done to prevent them from collapsing.

The government guaranteeing deposits to a more conservitive limit will do more to help the Irish economy over the long term than reinforcing socialised risk will do.

I dont doubt letting AIB and BoI die wouldnt involve cost. But that has to be weighed against the cost of NAMA. It has to be weighed against the cost of telling every single banker that they dont need to worry about risk, only to leverage gains and get out while the going is good.

NAMA is not going to cost only 90 billion. It is going to cost 90 billion plus the cost of every future government intervention to save a bank "too big to fail". And every time we will be told it will be unthinkable to let this bank fail, every time we will be told that lessons have been learned. And every time they will simply queue up to rape us again.

Wake up.

Christ that's cynical. I think that banks will learn enough from this; it's not as if they havn't suffered at all. Their share price is down, their social capital non-existent, their ability to make a profit reduced. While they haven't collapsed, they're basically in the ****ter. Sure they've been bailed out, but it was only at the last minute. If you get shot and nearly die, you still have an incentive not to want to get shot again. Just because getting shot won't kill you doesn't mean that you'd OK with getting shot again. I don't see why they'd be keen to repeat this experience.

fly_agaric wrote: »

Do we really want the business of more companies & banks etc that are most impressed by our govt's excellent abilities to provision them with parachutes made out of the hides of the "little people"?

We have enough of that here already. Don't think we can afford any more.

They'd appreciate the stability I think.

Offtopic - I hate the phrase "Ireland Inc". I wonder, are we almost the only place where the media/business people (and politicians too ffs!) unashamedly apply such a phrase?

Well, I think I've heard "UK plc" but they don't count...

Yeah it's a bit crap alright. How about 'Ireland & Sons Ltd.'