11 billion already spent on banks that screwed up, 54 billion to be spent on NAMA....

achtungbarry

11 billion already spent on banks that screwed up, 54 billion to spent on NAMA.....

....... and we have been arguing over the 1.3 billion in public service cuts. (that are needed)

Yes, I am a public servant and yes I am more than prepared to take my cut and another if needed (I earn 26k).

Yes, I agree we need major reform.

Yes, the public servants need to more sackable. I am sick of the deadwood giving me a bad name.

Yes, I know the unions are moronic.

No, I make no apolgies for choosing the public service for its job security and safe pension all those years ago.

........ but for goodness sake we have been arguing over 1.3 billion while FF are spending 65 billion euro bailing out the banks and developers. 65 billion that will ultimately come from our pockets.

Does anyone else not see the madness in this?

I mean 65 billion vs 1.3 billion.

Which one we are we getting our knickers in a twist about ?

They have succeded in getting us all arguing over this 1.3 billion while they piss away 65 billion of our and the next generation's money to bail out their builder and banker mates.

Only in Ireland.:mad:

FFS we badly need to wake up and direct our anger where it really should be.

They (FF) as much as I hate to admit it, have played the whole thing brilliantly: Get them fighting among themselves about 1.3 billion while we spent 65 billion bailing out the banks and builders. Evil but brilliant.



Excellent article in Indo today (a rarity in itself)

http://www.independent.ie/opinion/columnists/gene-kerrigan/gene-kerrigan-anger-may-not-be-a-policy-but-greed-is-1965635.html

hinault

Yes, the govt have managed to played this public for fools.

Reform of the public sector is one issue.

And you;re correct to say, we are being sold down to swany with NAMA.

Nate--IRL--

Could not agree more with the OP

Nate

kwinabeeste

achtungbarry wrote: »

11 billion already spent on banks that screwed up, 54 billion to spent on NAMA.....

....... and we have been arguing over the 1.3 billion in public service cuts. (that are needed)

Yes, I am a public servant and yes I am more than prepared to take my cut and another if needed (I earn 26k).

Yes, I agree we need major reform.

Yes, the public servants need to more sackable. I am sick of the deadwood giving me a bad name.

Yes, I know the unions are moronic.

No, I make no apolgies for choosing the public service for its job security and safe pension all those years ago.

........ but for goodness sake we have been arguing over 1.3 billion while FF are spending 65 billion euro bailing out the banks and developers. 65 billion that will ultimately come from our pockets.

Does anyone else not see the madness in this.

I mean 65 billion vs 1.3 billion.

Which one we are we getting our knickers in a twist about ?

They have succeded in getting us all arguing over this 1.3 billion while they piss away 65 billion of our and the next generation's money to bail out their builder and banker mates.

Only in Ireland.:mad:

FFS we badly need to wake up and direct our anger where it really should be.

They (FF) as much as I hate to admit it, have played the whole thing brilliantly: Get them fighting among themselves about 1.3 billion while we spent 65 billion bailing out the banks and builders. Evil but brilliant.



Excellent article in Indo today (a rarity in itself)

http://www.independent.ie/opinion/columnists/gene-kerrigan/gene-kerrigan-anger-may-not-be-a-policy-but-greed-is-1965635.html

did you get a car loan or house loan? thats what Nama is - long term debt - whether its good or bad will still play out.

do you borrow for food? no - exactly no sensible person would, but that is what the government is doing in the current expenditure by paying wages for the PS. that is not sustainable in the medium term

bangersandmash

kwinabeeste wrote: »

did you get a car loan or house loan? thats what Nama is - long term debt - whether its good or bad will still play out.

Not quite the right analogy. Did you take out a loan to pay over the odds for a write-off that nobody else was prepared to touch with a barge-pole? That's what NAMA is.

Nate--IRL--

kwinabeeste wrote: »

thats what Nama is - long term debt

No it isn't, Nama bonds are 6 month Bonds and have to be rolled over after this. Have a read

http://www.irisheconomy.ie/index.php/2009/09/17/nama-bond-yield-formula-finally-revealed/

Nate

kwinabeeste

Nate--IRL-- wrote: »

No it isn't, Nama bonds are 6 month Bonds and have to be rolled over after this. Have a read

http://www.irisheconomy.ie/index.php/2009/09/17/nama-bond-yield-formula-finally-revealed/

Nate

From same site... I studied Economics in collegel, but not really familar with bonds... but when the author interprests that they are "long-dated bonds" not mean that?

# Karl Whelan Says:
September 17th, 2009 at 9:35 am

@Derek

My interpretation is that these are long-dated bonds with interest resets relating to short-term rates. In theory, you could be right that they are just six month bonds to be re-issued every period. But I suspect that they couldn’t take the risk of trying to re-issue that much short term debt every six months.

even from quick google search I still don't know , but my point is that borrowing for longer term (rolling 6 month bonds) is better than borrowing for wages.

hinault

Insights to NAMA and banking

http://bankermathews.com/

lmimmfn

the Nama conversation has been going on for months, it will cost way more than the expected 70 billion because of the new 80% wealth tax made on properties and development, no developers are interested in buying the Nama property so its value is plummeting.

11 billion on the banks will be a lot more before they're more than likely nationalised next year or the year after.

The only reason theres been so much fuss over the 1.3 billion to be saved on the PS wage bill is that the unions and PS decided to make a lot of fuss over it.

Its a bit late to be complaining about Nama now

Liam Byrne

kwinabeeste wrote: »

did you get a car loan or house loan? thats what Nama is - long term debt - whether its good or bad will still play out.

You left out a HUGE part of your analogy.......when you bought the car, did you pay €40,000 for a car that's barely worth €18,000

nesf

Nate--IRL-- wrote: »

No it isn't, Nama bonds are 6 month Bonds and have to be rolled over after this. Have a read

http://www.irisheconomy.ie/index.php/2009/09/17/nama-bond-yield-formula-finally-revealed/

Nate

That link does not say that. What is said is that interest rate paid on the bond will be adjusted to market rates every 6 months (i.e. if ECB rates go up then at the next rollover period the interest rate paid on the bond will go up accordingly). This is Karl Whelan's interpretation anyway and is more likely than the NTMA trying to re-issue 50 odd billion in short term bonds every 6 months.

PeakOutput

op i answered your post in the other thread when you said the same thing

the 1.3 billion and nama and bank guarantee are not comparable in anyway. one is an ongoing cost. the others are one off expenditure items. weather you agree with them individually or not is completely irrelevant they are incomparable

edit; also we might lose money on nama. i dont believe we will but its a possibility. but we wont lose 100% of the money we put in or even most of it. we are actually buying the debt. the money still has be paid on that debt. if it cannot be paid back nama can take the collateral be it land / properties etc these can be sold developed used for social housing or whatever. eventually the market will recover and the goverment will either have been paid back the debts or will own large amounts of the country to do with as they please. i dont see this as a bad thing at all

thebman

Ok you don't borrow for wages its that simple. If you go looking for investment on Dragons Den and say I need 120,000 euro investment to pay staff wages for the next year they will tell you where to go.

gnxx

I think that the real anger with NAMA will start when the same developers that owe money and have filed for bankruptcy start getting state contracts to complete unfinished housing developments.

Or when NAMA purchases properties that transpire to be worthless and are knocked down ( or sold at knocked down prices ).

Or when it is revealed that NAMA have spent millions ( or maybe billions ) to accountants, solicitors, barristers, developers, bankers and estate agents "for professional guidance" -- even though these are the same groups that caused the problems in the first place.

Or maybe it will be when the inevitable news articles reveal the winners from NAMA happen to have strong connections to Fianna Fail.

lmimmfn

gnxx wrote: »

I think that the real anger with NAMA will start when the same developers that owe money and have filed for bankruptcy start getting state contracts to complete unfinished housing developments.

Or when NAMA purchases properties that transpire to be worthless and are knocked down ( or sold at knocked down prices ).

Or when it is revealed that NAMA have spent millions ( or maybe billions ) to accountants, solicitors, barristers, developers, bankers and estate agents "for professional guidance" -- even though these are the same groups that caused the problems in the first place.

Or maybe it will be when the inevitable news articles reveal the winners from NAMA happen to have strong connections to Fianna Fail.

or when a developer defaults on his 3 billion worth of Nama property, claims bankruptcy and buys his 3 billion back for 1 billion in 7 or 8 years time lol.

hinault

PeakOutput wrote: »

the 1.3 billion and nama and bank guarantee are not comparable in anyway. one is an ongoing cost. the others are one off expenditure items. weather you agree with them individually or not is completely irrelevant they are incomparable

They will be comparable when NAMA valuations decrease and the tax payer will be left to pick up the price of that difference, on top of the extra taxation used to fund social welfare in the next few years.

Both NAMA and public sector = higher taxes.

What is only in dispute is which will account for the greater proportion of taxation.

NAMA will account for the higher proportion of tax which which will be needed to be raised.

PeakOutput wrote: »

edit; also we might lose money on nama. i dont believe we will but its a possibility. but we wont lose 100% of the money we put in or even most of it. we are actually buying the debt. the money still has be paid on that debt. if it cannot be paid back nama can take the collateral be it land / properties etc these can be sold developed used for social housing or whatever. eventually the market will recover and the goverment will either have been paid back the debts or will own large amounts of the country to do with as they please. i dont see this as a bad thing at all

It is quite simple, PO.
We are buying debt (loans) which have a valuation.
It is clear that the valuation applied to that debt is too high.

As the greater economy contracts and, it will contract for the next few years, the debt valuation for those lands/buildings, will also decrease because no one will want to develop that land in an economy which is contracting.
That land/buildings on which the valuations are pegged, is too high relative to the price which will be realised when the land/building is sold.

Social housing? We have an over supply of housing as it is.

hinault

gnxx wrote: »

I think that the real anger with NAMA will start when the same developers that owe money and have filed for bankruptcy start getting state contracts to complete unfinished housing developments.

Or when NAMA purchases properties that transpire to be worthless and are knocked down ( or sold at knocked down prices ).

Or when it is revealed that NAMA have spent millions ( or maybe billions ) to accountants, solicitors, barristers, developers, bankers and estate agents "for professional guidance" -- even though these are the same groups that caused the problems in the first place.

Or maybe it will be when the inevitable news articles reveal the winners from NAMA happen to have strong connections to Fianna Fail.

In a contracting ecocnomy like ours - where we will have contraction for the next 24 months at least - the value of the loans bought by the taxpayer from those banks, will fall.

Which means that the taxpayer will not only have transferred money to the banks but the valuation that may be realised for the bought loans,will bear no relation to the value transferred to the banks.

NAMA is a massive risk : the public finance deficits pales in to insignificance.
I am not saying that we should tolerate the public finance deficit : but in the list of priorities it is small beer compared to NAMA and the inherent risks there.

PeakOutput

hinault wrote: »

It is quite simple, PO.
We are buying debt (loans) which have a valuation.
It is clear that the valuation applied to that debt is too high.

As the greater economy contracts and, it will contract for the next few years, the debt valuation for those lands/buildings, will also decrease because no one will want to develop that land in an economy which is contracting.
That land/buildings on which the valuations are pegged, is too high relative to the price which will be realised when the land/building is sold.

Social housing? We have an over supply of housing as it is.

we dont have to sell that land at any time though. we can wait 20 years or more if we need to. if we want something built we dont have to pay extortionate sums to the owner(you can argue now of course that we are paying them now but you know what i mean)

we are getting something for our money how we make use of it is what will determine weather or not nama will be a success. nama says they will be pursuing the debtors as rigourosly as possible. as long as they do this the developers are not getting away scot free

gnxx

hinault wrote: »

In a contracting ecocnomy like ours - where we will have contraction for the next 24 months at least - the value of the loans bought by the taxpayer from those banks, will fall.

Which means that the taxpayer will not only have transferred money to the banks but the valuation that may be realised for the bought loans,will bear no relation to the value transferred to the banks.

NAMA is a massive risk : the public finance deficits pales in to insignificance.
I am not saying that we should tolerate the public finance deficit : but in the list of priorities it is small beer compared to NAMA and the inherent risks there.

Agreed. It makes it even more questionable why we are paying 54m for an original book value of 68m. We can assume that this 68m worth of loans probably has a real value of 50% at most.

My main point is that the initial transaction is done. We've been warned that it may take years before NAMA is wound down. Over the next few years, we are not going to get a true picture of how bad a trainwreck NAMA actually is.

What I do see happening over the next 24 months are various events such as those described above. Amazingly, this is when the penny will drop that NAMA is not only a reckless venture, but it is fundamentally corrupt and benefiting those who caused the problems.

gnxx

PeakOutput wrote: »

we dont have to sell that land at any time though. we can wait 20 years or more if we need to. if we want something built we dont have to pay extortionate sums to the owner(you can argue now of course that we are paying them now but you know what i mean)

we are getting something for our money how we make use of it is what will determine weather or not nama will be a success. nama says they will be pursuing the debtors as rigourosly as possible. as long as they do this the developers are not getting away scot free

This is the type of statement we can expect from the government over the next few years :-)

Leaving aside the billions given to the banks, NAMA is going to be very expensive in operational costs. I suspect that the bill for NAMA will make the tribunal look cheap.

We are getting something for our money. Something that is probably valued at 33% of the amount paid by the government. Over the next five years, as we start to see the portfolios that NAMA has purchased, we will realize how much of a folly this is. Even the prime time special on NAMA showed development land without access that was initially valued at millions. I doubt that this will regain a similar value even in 20 years.

The banks didn't see any point in chasing the developers for monies owed -- I can't really see NAMA having significantly better luck. We've already seen commentary relating to individuals restructuring their personal affairs to avoid the reach of banks and NAMA. Maybe this can be undone, but I'd guess that we may see years of legal battles with their associated costs.

The big problem is that if NAMA fails in the short-term, we don't have scope for a NAMA 2.0. Even with the NAMA funding, it is interesting to consider how much stronger is the balance sheet of BOI or AIB. Has the management structure changed significantly to avoid future problems? Are their other potential problems facing the Irish banks such as lawsuits from individuals that believe they were missold mortgages or possible actions from shareholders?

nesf

gnxx wrote: »

Agreed. It makes it even more questionable why we are paying 54m for an original book value of 68m. We can assume that this 68m worth of loans probably has a real value of 50% at most.

Why can we assume that? Remember we're valuing loans here not the face value of the properties involved so it's much more complicated than if we were simply buying property for resale at a later date.

gnxx

nesf wrote: »

Why can we assume that? Remember we're valuing loans here not the face value of the properties involved so it's much more complicated than if we were simply buying property for resale at a later date.

About 35% of loans taken on by NAMA are currently non-performing. These are going to be write-offs and I doubt that we will see 10% of the original loan value. The property purchased using these loans now has a value of no more than 50%. In some cases it would be substantially less.

The remaining performing loans ... I'd guess that 50% of these will convert to non-performing over the next 2 years.

My 50% figure is purely a guess. Unfortunately, all we can do is make assumptions and guesses because we're not getting detailed figures for the department of finance.

PeakOutput

gnxx wrote: »

unately, all we can do is make assumptions and guesses

at least someone admits they actually have no idea what they are talking about

Liam Byrne

gnxx wrote: »

We are getting something for our money. Something that is probably valued at 33% of the amount paid by the government. Over the next five years, as we start to see the portfolios that NAMA has purchased, we will realize how much of a folly this is. Even the prime time special on NAMA showed development land without access that was initially valued at millions. I doubt that this will regain a similar value even in 20 years.

Not to mention the scheisters and con-men who got one loan to use as collateral for an even bigger loan, and can't even pay back the FIRST one!

Jailing these scum would be nice, but we're never going to get THAT money back, no matter what personal assets they might have overlooked when they transferred them to their wives/mistresses/overseas accounts......

gnxx

PeakOutput wrote: »

at least someone admits they actually have no idea what they are talking about

All anybody can do on this subject is make guesses and assumptions since the dept of finance hasn't disclosed any breakdown figures on the loan books etc in question.

EDIT: In fact, even the Minister seemed very uncertain about the value of these loans since he couldn't state a concrete discount figure.

Daithinski

PeakOutput wrote: »

nama says they will be pursuing the debtors as rigourosly as possible. as long as they do this the developers are not getting away scot free

Developers have limited companies and have the luxury that you or I don't have in that they can declare the company bankrupt.

The developers can transfer their assets out of their name, and therefore technically have no means to pay.

NAMA are 100% correct saying that they will pursue, with the finest legal advice money can buy. And after paying out millions in legal/expert advice reports, they will inevitably come to the conclusion that the debt cannot be recovered as developers (company) is bankrupt.

The tax payers (a group that is getting smaller) will be stuck with the debt and the long term consequences.

Its becoming quite clear that the property market is still going down with a bit to go. NAMA has the potential to do irreversible damage to the ecomony.

The disgusting part is, the workers and unemployed (former workers) are going to be scraping by while the golden circle figure out how to rebuild their empires (which they inevitably will). Whoever doesn't emigrate will have to watch as these modern day fuedal lords, the ones who caused the mess, rebuild their wealth.

PeakOutput

Daithinski wrote: »

Developers have limited companies and have the luxury that you or I don't have in that they can declare the company bankrupt.

you or i have the luxury of setting up a limited company and taking the risks and rewards this brings

The developers can transfer their assets out of their name, and therefore technically have no means to pay.

NAMA are 100% correct saying that they will pursue, with the finest legal advice money can buy. And after paying out millions in legal/expert advice reports, they will inevitably come to the conclusion that the debt cannot be recovered as developers (company) is bankrupt.

assuming its not too late assets can be frozen. as far as i know a court has to declare the company bankrupt and oversee the winding up of the company the precedent has already been set that the o'leary group(ithink was its name) was not afforded the luxuries of the bankrupcy just so it could avoid nama (i might be using the wrong terms it could receviership and not bankrupcy but basically they went looking for something that they could get under the law but it would have gotten them out of responsibility with nama this was refused by the court)

The disgusting part is, the workers and unemployed (former workers) are going to be scraping by while the golden circle figure out how to rebuild their empires (which they inevitably will). Whoever doesn't emigrate will have to watch as these modern day fuedal lords, the ones who caused the mess, rebuild their wealth.

if they are bankrupt they are at at least the same level if not worse off as you are. so why instead of pissing and moaning about these entrepeneurs who create the massive wealth in our country(not saying they werent irresponsible and probably criminally irresponsible) dont you start building up your empire and start a company that will take over were they have left off and fill the gap with an ethical responsible business? why dont you? they have every right to attempt to set things up again (assuming they are not sent to jail which i dont believe will happen but obviously should if they have broken the law)


the general begrudgery just wrecks my head these are very very successfull business people who have brought billions into our economy. the next group of entrepeneurs who get to this massive level in business may or may not be better but without them our country would be nothing

conorhal

Yes the government are fools, but I find it a pretty amusing to watch the public sector unions have a conniption fit about a bail out for the banks when the public sector is effectively asking to the tax payer to bail out their irresponsible management and spending practices without nary a hint of irony.
What you are saying is that on top of the banks, the private sector should bail out the public sector to the tune of an aditional 20 billion euro a year, I don't think so!

narwog81

lmimmfn wrote: »

or when a developer defaults on his 3 billion worth of Nama property, claims bankruptcy and buys his 3 billion back for 1 billion in 7 or 8 years time lol.

AFAIK there is a clause stating that applicants will be vetted for suitablility in this kind of scenario.

just words? in Ireland, more than likely im afraid...

nesf

gnxx wrote: »

About 35% of loans taken on by NAMA are currently non-performing. These are going to be write-offs and I doubt that we will see 10% of the original loan value. The property purchased using these loans now has a value of no more than 50%. In some cases it would be substantially less.

The remaining performing loans ... I'd guess that 50% of these will convert to non-performing over the next 2 years.

My 50% figure is purely a guess. Unfortunately, all we can do is make assumptions and guesses because we're not getting detailed figures for the department of finance.

Why assume all this? What % of those non-performing loans are likely to start paying off again in a year or two? What detail in the loan book have you seen? Etc.

SkepticOne

The depressing thing about NAMA is that it is really a continuation of the stupidity that led to the problem in the first place. There is no new thinking gone into it. It is simply transferring the problem from the banks to the public.

That is why several people on here were able to correctly predict that it would be a de facto developer bailout. At the start there were a lot of people parroting Lenehan that this was not the case but now, thankfully, there are few.