Alternative to NAMA

lmimmfn

voxpop wrote: »

But everytime it seems like nama is moving on, the ISEQ moves up. Is this not a sign of investor confidence returning or is it just greedy stockbrokers looking to make a quick buck on banking shares.

lol, thats a complicated one, Ireland isint based completely on ISEQ as nearly all multinationals in ireland arent listed on ISEQ its only the local companies or home grown ones. Of course their prices will increase based on Nama for the simple fact that its A solution to allowing the banks to refund companies again, the shares would go up with any alternative solution as long as it would mean those enterprises could be financed/refinanced again allowing them to expand etc. The problem is the cost of wages will increase but at no benefit to the economy until all Nama assets are sold( nad presumably at a loss from the 56 billion ).
That loss will have to be made up at the end by the taxpayer, nationalisation of the banks means a shorter term solution and a solution where the government would make the yearly profits that banks normally make( rather than being in the crap situation of making next to nothing on Nama or a huge loss ).
Its direct foreign investment and multinational investment that will suffer at first, then ISEQ due to us remaining uncompetitive because of the high taxes we have to pay. Would you invest in an economy whereby every working person has a 40,000+ tax mortgage for Nama? consumer confidence will also plumet( if it can be believed that it can even go further down ).

I for one am preparing myself to be 600euro less off a month over the next 3-4 years with Nama tax increases and for it to continue for at least another 10 years until the assets are sold off and then the loss on the 56billion+10 years interest being paid off from further taxes( most likely the total compound cost will be in the region of 67-70 billion after 10 years )

asdasd

Would you invest in an economy whereby every working person has a 40,000+ tax mortgage for Nama?

And many with negative equity.

voxpop

lmimmfn wrote:

Would you invest in an economy whereby every working person has a 40,000+ tax mortgage for Nama?

If corporation tax was low, I might

The only reason I mention the ISEQ is that its linked to the irish economy more so than other indexes.


Is nationalisation not likely to scare off external investors, plus (I think it might have been covered already) - banks work best when they are trying to make profits for the bank, not when they are working in the national interest (as they would be if nationalised).

Say if the government nationalised AIB and BOI and the ECB rate goes up - would these nationalised banks up their mortgage interest rate. IF they did, who would joe public blame ?


Btw Im not for Nama, but I do think that nationalisation sometime is trotted out as a silver bullet.

voxpop

asdasd wrote: »

And many with negative equity.

Nama or its alternatives wont effect negative equity - we are stuck with that no matter what solution championed.

lmimmfn

voxpop wrote: »

If corporation tax was low, I might

The only reason I mention the ISEQ is that its linked to the irish economy more so than other indexes.


Is nationalisation not likely to scare off external investors, plus (I think it might have been covered already) - banks work best when they are trying to make profits for the bank, not when they are working in the national interest (as they would be if nationalised).

Say if the government nationalised AIB and BOI and the ECB rate goes up - would these nationalised banks up their mortgage interest rate. IF they did, who would joe public blame ?


Btw Im not for Nama, but I do think that nationalisation sometime is trotted out as a silver bullet.

No i get you, if i was in charge i would go the good bank route and if the banks kept begging for money due to the bad Nama assets i would just nationalise them as a last resort due to the government overfinancing the bank based on the banks total value - its loans.
If the banks are nationalised they couldnt be nationalised as a public sector company they would have to still be private but owned by the government with the sole aim of making profit( that makes the government no more than a private investor in the bank, regulation should take control of the direction of the bank, i.e. that its not throwing out cash left right and centre to anyone wanting a loan )

If the ECB rate goes up then the good bank and any nationalised bank would have to increase its rate. The international rate that the government pays based on the bonds its sells the ECB is directly based on the ECB rate, therefore Nama also has to abide by the ECB rate so if the rate goes up so will the cost of Nama( they never even bother to factor in the interest rate in the total cost of Nama that they've been throwing around ).
No one is to blame if the rate goes up but the ECB as its will affect everything anyway.

The only problem with nationalisation of the banks is how long it takes to get the value back in the bank( because in the meantime the tax payer is subsidising the cost of paying for the bank - its profits ), to get the bank in a state whereby refloating it will bring a return of investment larger than what was paid and that the share value is at a level of close to what it was in the good times. Ideally anything beyond 5 years nationalisation would be a complete disaster as the banks would just join the rest of the unproductive public sector( not everyone is unproductive its just socialism ).

voxpop wrote: »

Nama or its alternatives wont effect negative equity - we are stuck with that no matter what solution championed.

Not really, negative equity is directly influenced by the state of the economy, the quicker a country gets out of recession and starts expanding again the quicker the negative equity will disappear and the value of the property recouped. Nama is not a short term solution and thats a big problem.

SeanW

I don't think we should support our banks AT ALL beyond the old deposit guarantee of what (was it?) up to €25,000 per accountholder.

Anglo was little more than a corporate kleptocracy, and it should have been let fail. In a free market, gross irresponsibility is usually punished by bankruptcy, which is quick and (usually) painless for everyone except the company shareholders and creditors. Unlike now, where the taxpayer is on the hook for all the shenanigans that went on there.
Bankruptcy liquidation also provides an important check on irresponsible behaviour by serving as a penalty for same. Take away the option for an organisation to fail, and similar surving organisations end up with a license to act like tools - which is exactly what our banks (and others worldwide no doubt) will do the next time an opportunity arises.

Greed isn't evil in and of itself. Creating a Moral Hazard is.

NAMA, to my mind, is just money down the toilet - my guess would be that we will lose €20bn on the deal (perhaps more if the properties never find a market). €20bn/4m people means that we all paid €250 per year in NAMA taxes, it would take the State 20 years to recoup this loss - before interest.

The biggest beneficiaries from NAMA will be the property developers. Fianna Fail has a long and toxic history with this well connected group and not only would their loans be owned by a very friendly government who will take a softly-softly approach with our money, but as we found out recently the NAMA bill will allow the extension of a FURTHER €10bn credit to the developers.

If this were not a developer bail out, the NAMA plan would entail buying the loans and properties, calling in the loans and siezing the properties, and hiring sub-contractors as necessary to finish the developments, or demolish them in the case of developments that were only started or had serious issues such as brownfield contamination.

Here's what should happen

The banks, as far as I know, are in no imminent danger - the ECB is lending them all the money they can use at 1% interest, so for our current banks, I'd allow them to struggle as long as it took them to either recover or reorganise/dissolve in an orderly fashion.

You can be sure that the existing banks would be eager to recover whatever they could from the property developers, and the spectre of the Liam Carroll nonsense, where the only bank looking to appoint a reciever to the Zoe group, was one not bailed out by NAMA (ABN AMRO/ACC) while all the other banks supported Zoe through the windup procedure even though its survival plan was regarded by a stream of High and Supreme Court judges to be a work of fantasy.

If none of those banks had a bank-developer bailout waiting you can be sure their attitude to Zoe would have been different, and it would be different to all the others too without NAMA.

Subsequently I would also make it easier to set up new banks, perhaps reduce some of the paperwork involved in setting up a bank, give a tax break to new banks etc. This would unfreeze the credit markets as creditworthy customers would get the loans etc from a new bank. The property sector might even recover as people in jobs could get mortgages on what are now relatively cheap properties.