NAMA: Not great, but the best we have

oceanclub

I note that RTE on the 9 o'clock news gave a few cursory minutes to the NAMA Dail committee debate, and then made a huge deal of the fact that a single ex-FGer, Garret Fitz, came out for NAMA. Normally, they wouldn't give that much airtime to Garret the Great unless he's been caught running down Grafton St naked.

Oh, and George Lee's Mini-Me, whatsisname (I can't be bothered to look up his name), reporting that property prices will go up 88% in the next 7 years without any attempt at balance.

P.

Wreaking Bar

PunkFreud wrote: »

Firstly, I am aware that there are many NAMA threads already there, but otherwise I would be going off topic. Mods, feel free to merge this with another if you think it would be better.

NAMA is getting terrible press because we are all listening to the media, who will always jump on the anti- side. They don't want to be seen being for anything which the government wants. They will always sell more giving out about the whole idea.

Firstly, Fine Gael's idea is severly flawed. The "good bank" would just hand out loans to small businesses and the punters on the street. Seems good. However, this could potentially ruin the banks even more, costing the state much more. With the "good bank" handing out all the loans, there would be no loans for the other banks to give out (no customers). Thus their debts would cripple them even more with the loss of any future income. The fall of the banks would either A) cost the public even more ias they would then have to nationalise them or the shareholders (many savers and pensioners) would lose their savings and (with the bank guarantee) would cripple the government as they are obliged to refund everyone's deposits.

I got that far. ^^^

It would be cheaper to nationalise them than carry the cost of NAMA.

Do you not understand we are gambling a lot of money on a bet that is against us? The people in charge of this know they will be out of the picture when the crap hits the fan.

A good bank is a better way of going. Let the bad banks handle the property rather than NAMA. Why have NAMA handle it? Let the banks who have a vested interest in getting the best market value, do their best.

Sadly we will be bailing out everyone bar the TAX paying citizens.

I can't wait to see how much the running of NAMA will cost.

bangersandmash

oceanclub wrote: »

Oh, and George Lee's Mini-Me, whatsisname (I can't be bothered to look up his name), reporting that property prices will go up 88% in the next 7 years without any attempt at balance.

Interesting to see who said originally it :eek: (link,link)...

In addition to senior officials, the independent expert on property valuation hired by Nama, John Mulcahy of Jones Lang LaSalle, will attend.

Chartered surveyor John Mulcahy of NAMA told the committee that research showed that property prices can gain 88% in the seven years following a slump like the current one.

But Mr Lenihan quickly insisted that formula that NAMA will use to calculate property values would not factor in possible increases of 88%.

jmayo

pat kenny wrote: »

Hey ocean club do you have a link for that story?
Or was it on the radio?
If so which station?

They are some shocking statements if true.

What was so shocking ?
Fahey has a long list of investment properties, he is afterall a teacher who became a ff td and thus has probably a few connections in the property field.
Check out his entry in Register of interests for Dáil Eireann 2008.

• (l) 2 apts Castlerea, Co. Roscommon: letting;
• (2) Apartments 8A, 16 Eglington Court, Galway: letting;
• (3) House at Kilbeacanty, Gort, letting;
• (4) Apartment at Dun Aengus, New Docks, Galway: letting;
• (5) House at Dun na Coirbe, Galway: letting;
• (6) House at Rinawade Close, Leixlip: letting;
• (7) Shareholding in apartment at Gort na Coirbe, Galway;
• (8) Shareholding in extended family owned properties at Moydrum, Athlone: letting;
• (9) Shareholding in 4 Apts and Shop, Lower Gerald Street, Limerick: letting; (10) Shareholding in retail unit, two offices and warehouse at Crowe Street, Gort;
• (11) House at Jumeirah Estates, Dubai;
• (12) Dwelling house, The Grove, Crowe St, Gort, Co. Galway;
• (13) Shareholding in apartment at Tappen St, Boston, Massachusetts: shareholding in Fahey Higgins L.L.C Boston;
• (14) Five apartments owned in partnership at Rue Paul-Emile, Janson 1000, ten apartments owned in partnership at Rue du Sceptre 1015, Brussels;
• (15) Apartment at Cathedral Place, Limerick: letting;
• (16) House at Villefranche, France;
• (17) Deposit paid and contract signed on property at Porto De Mos, deposit paid on property at Alcantarillha, Portugal;
• (18) Apartment at Irishtown, Dublin.

Now I don't see a problem with posting this here in this is all in the public domain.

He did speak at a seminar in galway which was spoofing that bottom was reached and now was a good time to invest and buy into the market.
I believe seminar was circa Jan/Feb 2009 ?

Also Fahey is one of the thre ministers who made decisions regarding oil and gas exploration in Irish waters.
The other two are the well known Dublin Castle visitors, ray burke and bertie ahern.

Here is the complete list ... have fun folks reading about your public representatives...

http://www.oireachtas.ie/viewdoc.asp?DocID=11429&CatID=20

PS also check out bertie's entry which lists absolutely no shares and no investment property.
Somehow I find that scenario very very hard to believe ?

oceanclub wrote: »

I note that RTE on the 9 o'clock news gave a few cursory minutes to the NAMA Dail committee debate, and then made a huge deal of the fact that a single ex-FGer, Garret Fitz, came out for NAMA. Normally, they wouldn't give that much airtime to Garret the Great unless he's been caught running down Grafton St naked.

Oh, and George Lee's Mini-Me, whatsisname (I can't be bothered to look up his name), reporting that property prices will go up 88% in the next 7 years without any attempt at balance.

P.

It is very noticable how rte are giving coverage or rather not being more to the point.
One high profile event (Motorway opening) where the taosieach clowen was heckled as he made a speech was hardly covered by RTE, whilst Newstalk covered it live I believe.

I am disappointed with Garrett, maybe the banks got to him or maybe his son's property interests ?

LostinBlanch

Well, another thing that should send shivers down our spines. If NAMA gets through in FFs desired form who is going to have oversight of NAMA? That's right, the likes of Frank Fahey and other assorted clowns. Fintan O'Toole examines this in his article today.

Accountability to the Oireachtas will mean zero oversight and enforcement

IF YOU’RE not already worried about the National Asset Management Agency, may I offer you a single sentence from its architect and chief defender, Government economic adviser Alan Ahearne. This is from his e-mail to the group of economists who wrote in The Irish Times last week expressing their profound concerns about the scheme (Opinion and Analysis, August 26th). One of those concerns was about the transparency and accountability of Nama. Here is Dr Ahearne’s rebuttal of this argument: “This is wrong. The draft legislation sets out that Nama will be accountable to the Oireachtas in the usual manner.”
If this doesn’t send you running to the hills, you must have nerves of steel. In itself, it is deeply worrying that anyone in a position of influence thinks that “accountable to the Oireachtas in the usual manner” is a good thing. The only formula less reassuring is the “regulated by the Financial Regulator” at the end of all those radio ads urging us to take out more loans.

The usual accountability to the Oireachtas is zero. If Alan Ahearne can point to a single moment in the last 15 years when the Oireachtas stopped any act
of gross stupidity in the management of the public finances, in the non-regulation of the banks or in the inflation of the property bubble, I’ll give Nama my full support.

Who’s going to enforce this accountability? The likes of Frank Fahey, a member of the Oireachtas Joint Committee on Finance? If you’re in two minds about Nama, forget about me or any other sceptic. Just go to RTÉ’s Morning Ireland website and listen to Fahey in debate with George Lee last Friday.

Fahey (let’s call him FF for short, because he now speaks for Fianna Fáil on these matters) admittedly has some expertise in the property game. In his spare time, he has built up an extensive portfolio of apartments, houses and commercial property in Castlerea, Galway, Athlone, Limerick, Gort, Dubai, Boston, Brussels, France, Portugal and Dublin. I’m sure none of this would influence his judgment in any way but equally it does not seem to have done much for his insight into the causes and consequences of the catastrophe that has befallen us.

FF told us five breathtaking things on Friday. Firstly, Nama will work because “the property market will rebound . . . it has already started”. :eek: Yesterday, McInerney Holdings wrote down the value of its land banks by another €156 million, meaning that they have now written off 52 per cent of their value since the middle of 2008.

Secondly, FF told us that Nama “is very similar to what happened in Sweden”. Now, FF himself was on the Oireachtas finance committee two months ago when it questioned Bo Lundgren, who was the minister for fiscal and financial affairs during Sweden’s banking crisis in the early 1990s. Lundgren told the committee that “with regard to bad banks, asset management corporations, we only used that concept with the banks that were nationalised since valuation was not a problem because we owned both the good and the bad entity”. He also said, interestingly, that he did this because he is a conservative:

"I believe in market economy and market economy dictates that if we put in capital we should have the kind of influence and ownership that goes with the capital.”

Thirdly, FF told us that the Irish problem was caused by foreign banks: “Look at what the foreign banks have done to Ireland at the moment . . .”

My mind is so numbed by this that I can think of only three words: Jesus, Mary and Joseph.

Fourthly, FF told us straight up that Nama is a way of giving €30 billion to the banks.

Lastly, and best of all, FF assured us that the €60 billion or so that will be borrowed from the European Central Bank on foot of Government bonds is “not taxpayers’ money. It is ECB money.” :eek: When George Lee again made reference to taxpayers’ money, FF became loudly indignant: “I cannot believe, George, that you’re saying that this €30 billion will come from the taxpayer. This money will be paid in Government bonds which will then be cashed.”

These bonds, apparently, are magic money that comes from nowhere, like the money that pays for John O’Donoghue’s limousines or for e-voting machines. How much oversight are we going to get from clowns who don’t even know that public money is on the line?

One last point. There was some objection last week to the fact that I used the rise in house prices over building inflation to suggest that property is so overvalued in real terms that it would take another bubble for Nama to work. I used that calculation because it is the one most favourable to the pro-Nama argument. New house prices increased more than four times faster than house-building costs. But if people would like to link them to something else, how about this: they rose five times faster than average industrial earnings and more than seven times faster than the consumer price index.

Nice quote about the "magic money" that FF want us to believe will pay for all this!

Also interesting to note the comments at the end of the article, especially the first one with the link of declared donations to TDs, all put together in a spreadsheet for comparison purposes. I'm assuming these are correct or easily checkable as that information should be in the public domain. Mods: if the information is wrong let me know and I'll edit this.

LostinBlanch

Also, Fergus Finlay is calling for nationalisation again.

I won't repeat the whole article here, but he did have a good down to earth take on the whole NAMA idea.

So the proposition is that we take over the bad debts – and pay for them at a price that won’t cause the banks undue hardship. If that means it takes a generation for us to get our money back, or if we never get it back – if we’re still paying for it in three generations’ time – so be it.

The first thing that has to be said about a proposition like that is that you’d never persuade an Irish banker to give you money on those terms.

Just imagine trying to persuade your bank manager that you wanted a mortgage of, say, €500,000 to buy a house. The house is worth €300,000, and you want to repay the mortgage at €100 a week because if you pay any more than that your lifestyle will be affected. He wouldn’t just laugh you out of the bank – he’d have you thrown out.

LostinBlanch

Now Mary Ellen Synon is on newstalk calling for temporary nationalisation!

Nobody, not even the most biased of FF apologists or self interested bank / mortgage lenders pet economists could ever call her one of the usual suspects.

So now you've got people from all sides of the spectrum calling for temporary nationalisation and being against the FF NAMAlisation of our economy, or more importantly the cracks in society it'll exascerbate.

Count Dooku

LostinBlanch wrote: »

obody, not even the most biased of FF apologists or self interested bank / mortgage lenders pet economists could ever call her one of the usual suspects.

Not true
Lefties are calling for nationalisation, because they don’t know anything else
Corrupted centrists are calling for NAMA, because it is the best opportunity for corruption
Everybody else is calling to let banks go bust

thebman

SkepticOne wrote: »

Looks like this programme will be available tomorrow on podcast here.

Those figures mentioned previously aren't mentioned in the podcast. Listened to both available ATM.

It just says current market value where appropriate will be paid and it is by a FF but not the minister talking about what the minister has said so basically could be inaccurate.

What Joan Burton did say which is worrying is that although there is an evaluation board that the minister has the power to over ride the valuation with his own valuation.

old boy

a question for f fahey and b.lenihan, any chance that they would by my house at a price that i think it would make in 8 years time,(i am sure i can get some one to have a word in b.lenihans ear to fix the price), then with that money i can buy another house in todays market with 60% of what the money they give me, then i can have a slow pleasureable think as to what i will do with the remaning 40%.

PunkFreud

Ok, I'm glad many people have understood that I do not think NAMA is brilliant idea, just that it is the best of all the ideas being proposed.

Oh of course you do
And finally throw in a bit about wanting new government to appear objective.

What type of government would you like, a one party one perhaps ?

Don't be so patronising. Sometimes change is good. We've had this Government too long already, in my eyes, it's just an awful time for a change at the present time.
Don't assume things about people you don't know.

1) That we are, right now, at the bottom of the market
2) That we will see property prices increase by 88% in 7 years - or an average of 9.5% increase per year between now and 2016.

Since both these statements are complete fantasies, how can anyone have any hope in NAMA?

Yes, they are, but in 7/8 years time, do you really expect property values to still be falling? As long as we get back what we paid, it won't really matter (in my opinion).

I note that RTE on the 9 o'clock news gave a few cursory minutes to the NAMA Dail committee debate, and then made a huge deal of the fact that a single ex-FGer, Garret Fitz, came out for NAMA. Normally, they wouldn't give that much airtime to Garret the Great unless he's been caught running down Grafton St naked.

It's a big deal because he is the former leader of Fianna Fail's biggest oppostion party. It's pretty damning on his own party if he is against their own ideas.

I just want to say again that I am not for Nationalisation at all. I think Long Onion did a very good account on why NAMA is better. Many people already seem to forget how badly nationalisation went for Anglo and Northern Rock.

I AM NOT A FIANNA FAIL SUPPORTER

Salvelinus

PunkFreud wrote: »

Ok, I'm glad many people have understood that I do not think NAMA is brilliant idea, just that it is the best of all the ideas being proposed.


Don't be so patronising. Sometimes change is good. We've had this Government too long already, in my eyes, it's just an awful time for a change at the present time.
Don't assume things about people you don't know.


Yes, they are, but in 7/8 years time, do you really expect property values to still be falling? As long as we get back what we paid, it won't really matter (in my opinion).


It's a big deal because he is the former leader of Fianna Fail's biggest oppostion party. It's pretty damning on his own party if he is against their own ideas.

I just want to say again that I am not for Nationalisation at all. I think Long Onion did a very good account on why NAMA is better. Many people already seem to forget how badly nationalisation went for Anglo and Northern Rock.

I AM NOT A FIANNA FAIL SUPPORTER

But they won't be at celtic pyramid era prices. If by the next few years property prices fall an average of 50% (not impossible) from pyramid era prices, then it will take a 100% increase to go back to those levels.

Sand

it's just an awful time for a change at the present time.

Its a perfect time to change, as the current government is engaged on a disastrous path that will pauperise generations of Irish taxpayers ( a decreasing pool as anyone with a skill and and a bit of ambition will shake the very dust of Ireland from their boots when the true cost of NAMA becomes apparent).

Yes, they are, but in 7/8 years time, do you really expect property values to still be falling? As long as we get back what we paid, it won't really matter (in my opinion).

They very well could still be falling. Theres no particular reason to assume they will rise, especially given the massive oversupply and the declining demand as immigration is reverse.

I AM NOT A FIANNA FAIL SUPPORTER

No of course not, youre just randomly showing up to support an idea so terrible that only the likes of Fianna Fail TDs, property developers, bankers and property industry reps are arguing for it.

thebman

PunkFreud wrote: »

Yes, they are, but in 7/8 years time, do you really expect property values to still be falling? As long as we get back what we paid, it won't really matter (in my opinion).

The problem is to do that means intentionally forming another property bubble to get the prices back to unrealistic levels.

Exactly what FF and their buddies would like and it is not sustainable or a good foundation for an economy as has been clearly shown.

population

Sand wrote: »

Its a perfect time to change, as the current government is engaged on a disastrous path that will pauperise generations of Irish taxpayers ( a decreasing pool as anyone with a skill and and a bit of ambition will shake the very dust of Ireland from their boots when the true cost of NAMA becomes apparent).

Never has a truer word been spoken.

zootroid

Interesting article in the Irish Times:

http://www.irishtimes.com/newspaper/opinion/2009/0902/1224253663079.html

I had always thought NAMA was preferable to nationalising the banks, but obviously not at all desirable. If the banks were to be nationalised, shareholders would have to be paid off, and the banks would still have non-performing loans and still require further capital, so in that regard, NAMA is probably less costly. The main problem I have with NAMA is how loans are valued. Aside from the "long term economic value" aspect of valuation (which in itself is hugely worrying), I fear it will just be vested interests who decide what the loans are worth, afterall the taxpayer is picking up the bill, so who cares?!

I don't know enough about Fine Gael's plan to make a comment on it, so have some reading up to do.

SkepticOne

zootroid wrote: »

If the banks were to be nationalised, shareholders would have to be paid off, and the banks would still have non-performing loans and still require further capital, so in that regard, NAMA is probably less costly.

I don't think the government need pay much for entities that were begging to be rescued from oblivion by the State not so long ago.

thebman

SkepticOne wrote: »

I don't think the government need pay much for entities that were begging to be rescued from oblivion by the State not so long ago.

need and want to are two very different things.

The people that hold the tent up with money won't like not being paid much and dirty secrets will most likely come out if they don't get their way so the government doesn't care what it needs to do, only what it wants to do.

zootroid

SkepticOne wrote: »

I don't think the government need pay much for entities that were begging to be rescued from oblivion by the State not so long ago.

According to the Irish stock exchange, Bank of Ireland alone is currently worth about 2.4 billion. So, yes it would be costly to nationalise all the banks.

Count Dooku

zootroid wrote: »

According to the Irish stock exchange, Bank of Ireland alone is currently worth about 2.4 billion. So, yes it would be costly to nationalise all the banks.

We don’t need to nationalise all banks
BoI or TSB will be enough

oceanclub

PunkFreud wrote: »

It's a big deal because he is the former leader of Fianna Fail's biggest oppostion party. It's pretty damning on his own party if he is against their own ideas.

No, it's not a big deal if a single Fine Gael member is for NAMA. Funnily enough,
RTE didn't make the third item of news be about a Fianna Failer against NAMA. What should we expect of a station where pretty much every major celebrity is an out Fianna Failer?

P.

Long Onion

thebman wrote: »

The problem is to do that means intentionally forming another property bubble to get the prices back to unrealistic levels.

Exactly what FF and their buddies would like and it is not sustainable or a good foundation for an economy as has been clearly shown.

Surmising that a return to 2007 prices in 10 years time would amount to a bubble is equally as unfounded as surmising that (1) we are at the bottom and (2) that they will indeed recover.

Either way you look at it, there is guesswork involved.

SkepticOne

thebman wrote: »

need and want to are two very different things.

The people that hold the tent up with money won't like not being paid much and dirty secrets will most likely come out if they don't get their way so the government doesn't care what it needs to do, only what it wants to do.

I don't think there's much hope for the country with the current government in power anyway. Any solution involves some event where the government is forced out.

jmayo

PunkFreud wrote: »

...
Don't be so patronising. Sometimes change is good. We've had this Government too long already, in my eyes, it's just an awful time for a change at the present time.
Don't assume things about people you don't know...

Well forgive me for being a cynic and not believing.
There have a good few supposed objective posters on politics and economic forums who have been "objectively" endorsing NAMA and other government polices.
Funny how certain attitudes and phraselogy is used.

You use very familiar soldier of destiny tactics such as ...
blaming the media for jumping on every idea or policy just because it is that of the government.
(A lot of poeple would say portions of the media have been very soft on the government)
you rubbish the opposition ideas or label them a joke as in Labour's idea
You have some believe that property prices will recover within 7/8 years
(could you please tell us why this will happen ?)

PunkFreud wrote: »

...
Yes, they are, but in 7/8 years time, do you really expect property values to still be falling? As long as we get back what we paid, it won't really matter (in my opinion).

Yeah right :rolleyes:

population

Good article in the IT today

http://www.irishtimes.com/newspaper/opinion/2009/0902/1224253663079.html

oceanclub

jmayo wrote: »

Well forgive me for being a cynic and not believing.
There have a good few supposed objective posters on politics and economic forums who have been "objectively" endorsing NAMA and other government polices.
Funny how certain attitudes and phraselogy is used.

In PunkFreud's only other politically-related post, he says that Cowen is doing his best:

http://www.boards.ie/vbulletin/showpost.php?p=61872756&postcount=7

Even most Fianna Failers would find that hard to swallow.

P.

jmayo

oceanclub wrote: »

In PunkFreud's only other politically-related post, he says that Cowen is doing his best:

http://www.boards.ie/vbulletin/showpost.php?p=61872756&postcount=7

Even most Fianna Failers would find that hard to swallow.

P.

Yes I was trying to locate that.
To quote our non ffer.

"He apologised because what he did was wrong.

He has no remorse because he did his best. "

Now to most people these are two points stretching the imagination.
Firstly that clowen has actually apologised for anything and secondly that he did his best. :rolleyes:

LostinBlanch

David McWilliams in todays indo describes it as our economic stalingrad.

In every episode of debt-induced crises, governments break promises made in the boom and the simple reason is that is what they have to do. They don't have the money and they are not prepared to put the interests of investors above the people.

Most proper investors realise this, which is why money flooded back into Sweden after it let a bank go bust. It is why money flooded back into Finland, the US and Ireland (in 1993) after we broke our promises to bond and currency investors and devalued our currencies. Likewise, in the Asian crisis, investors took their losses on banks and moved on.

What? You mean we put national interests ahead of the banks and bondholders and they still invested in our economy? Phew that was a close one.

When investing, you take the rough with the smooth. You win some you lose some and only the naive believe that they will never make a loss.

What a strange idea, banks and investors actually paying for their mistakes.

Having worked in international banking in various countries which experienced banking crisis throughout the late 1990s and early 2000s, I know that no country reacted as we have.

Ah, but Ireland's different, haven't we been told that so many times before?

Our desire to protect all bank investors is the behaviour of fanatics. By this I mean that trying to pretend we have the money and the resources to bail out the banks when we do not is the economics of Stalingrad. We are trying to throw everything we have into the banks, exhausting our resources in the process. When investors see that we are being ruled by financial fanatics, they stay miles away because they know investing is pointless.

Inexplicably, NAMA is our economic Stalingrad and it scares all sensible people. It is based on the "big lie" that to lose here would spell disaster. In fact, the opposite is the case. Why wouldn't you want to invest in Ireland once the banks are wound down? You get a smart population, that isn't being mortgaged for the mistakes of the few.

The reason we must fight NAMA at every turn is because it is the economics of fanatics and the whole world can see this. It will keep money away from the country, not the other way around.

Nicely put.

MoominPapa

population wrote: »

Good article in the IT today

http://www.irishtimes.com/newspaper/opinion/2009/0902/1224253663079.html

I particularly like this bit

The proponents of Nama describe the sale at market prices of impaired assets as a fire sale. The description is, of course, wrong. A fire sale involves assets harmed by the fire and the damage is incorporated in the price. The sale of empty houses, shops, hotels and land bought at inflated prices arises from the economic incompetence of the builders and bankers concerned and not because of any fire damage.

I heard the selling of assets at market value being described as "fire sales" so many times in the last few weeks I stopped noticing and gave up on the hope that someone would point this out

Diarmuid

That IT article is one of the best on NAMA so far. To the point, no BS.