NAMA-Why do we take it lying down?

Liam Byrne

Welease wrote: »

Yeah i heard them mention it.. but I never heard any further details.. It just sounded like marketing spin.. all banks are bad.. we propose a "good" bank

Without any further detail its difficult to speculate.

Unfortunately, given the level of opposition in this country, it probably got as far as "Lenihan told us to feck off and that NAMA was the only show in town" so let's go tell the electorate that FF won't listen and sure when they inevitably fvck up we'll get votes based on the fact that we were right.

Conversely, FF probably discounted it because they didn't come up with it (added to the fact that it wouldn't have helped out anyone from the Galway Tent).

In many cases, the only thing FG have going for them is that they're not corrupt and haven't screwed up the economy.

The "they couldn't possibly do worse" must have them happy out these days.

Liam Byrne

Welease wrote: »

but a society focussed bank really should be a winner.. you would imagine that the interest rates would be set to beneficial levels, and bonus's/profits kept to a minimum which allows them to do so

And again, in the absence of this, the closest thing to "a society-focussed bank" is......?

Welease

Liam Byrne wrote: »

And again, in the absence of this, the closest thing to "a society-focussed bank" is......?

lol true.. but lets not assume anything CU's and Banks are completely different beasts... It seems like they could be interchangeable, but it would be interesting to understand the reason for the differences.

For example, a credit union has a max loan 38,092 (or 1.5% of the assets of a person whichever is greater). It has level such as that in order to ensure it always has enough capital available to continue to exist (and offer credit when required). Because it can control its own funds, it can change it's interest rates in isolation.
Now the vast majority of people who would be using the society focussed banks would probably not require that extent of credit line, but they would require a mortgage. The mortgage would exceed the maximum levels of loan offered. This would require the CU's to borrow money at the more publically quoted rate which vastly exceeds the CU's own interest rates. This would immediately drive up the interest rates to a level more akin to a traditional bank. They would be borrowing money from the same institutions as banks. Would this force them to act like banks to survive?

We also have the issues that credit unions are based on individual members are their equal right and common bond. They (to the best of my knowledge) don't offer services to companies, and are not constructed or chartered to do so. Would the voting rights of the individual be detrimental to the needs to small/medium/large business's?

Not insurmountable problems, but just pointing out that as we dig a little deeper into some simple solutions, there is a reason a simple solution might not work.

The society focussed bank does seem like the best solution though. Whether we would want to potentially destroy CU's to achieve this, I'm not sure

Brussels Sprout

theghost wrote: »

This is probably a stupid question, but I'm economically illiterate. If the bank guarantee is not renewed, what happens to ordinary bank customers' deposit and currant accounts? If the banks fail do all customers' money go with them?

Well the idea was that it would be let known that the bank guarantee was going to lapse on a certain date in September 2010. This would then give time for both a new bank to come in and set up and for the depositers to switch over to it or simply take their money out. The money is guaranteed by the government so thee would be no need for a run on the bank.

That was his plan in "Follow The Money". Here's an article that he wrote a month ago about this topic.

OMD

Brussels Sprout wrote: »

Well the idea was that it would be let known that the bank guarantee was going to lapse on a certain date in September 2010. This would then give time for both a new bank to come in and set up and for the depositers to switch over to it or simply take their money out. The money is guaranteed by the government so thee would be no need for a run on the bank.

.

Surely that assumes the banks have the money available to pay back all the depositors. Isn't that the problem? They don't have it.

Welease

Brussels Sprout wrote: »

Well the idea was that it would be let known that the bank guarantee was going to lapse on a certain date in September 2010. This would then give time for both a new bank to come in and set up and for the depositers to switch over to it or simply take their money out. The money is guaranteed by the government so thee would be no need for a run on the bank.

That was his plan in "Follow The Money". Here's an article that he wrote a month ago about this topic.

But, to the original question, the worry would be that a Northern Rock situation would occur. In essence, everyone gets worried and doesn't want to risk losing their deposits so a frenzy of withdrawals occurs, which forces the bank into an unnecessary collapse.

OMD

Welease wrote: »

But, to the original question, the worry would be that a Northern Rock situation would occur. In essence, everyone gets worried and doesn't want to risk losing their deposits so a frenzy of withdrawals occurs, which forces the bank into an unnecessary collapse.

Not just one bank but all banks. That's 100 billion in deposits. Country then in total sh1te. If people thought NAMA was bad then this would be total disaster.

Brussels Sprout

OMD wrote: »

Surely that assumes the banks have the money available to pay back all the depositors. Isn't that the problem? They don't have it.

Welease wrote: »

But, to the original question, the worry would be that a Northern Rock situation would occur. In essence, everyone gets worried and doesn't want to risk losing their deposits so a frenzy of withdrawals occurs, which forces the bank into an unnecessary collapse.

Yes but now the banks are guaranteed by the government (Northern Rock was not at the time the run occurred).

How much do depositors have in the banks? (I'm not actually sure btw)
The key is that the deposits are guaranteed. These are a small fraction of the debt. It would be a lot cheaper than NAMA (I assume) to have the government pay back the deposits and let the debts go as opposed to trying to save all the toxic sludge along with the deposits. Basically we separate the banks between their deposits and their debts. The government pays the deposits and lets the debts go (which again I assume since I don't know the amount on deposit would be cheaper then NAMA)

OMD

Brussels Sprout wrote: »

Yes but now the banks are guaranteed by the government (Northern Rock was not at the time the run occurred).

How much do depositors have in the banks? (I'm not actually sure btw)
The key is that the deposits are guaranteed. These are a small fraction of the debt. It would be a lot cheaper than NAMA (I assume) to have the government pay back the deposits and let the debts go as opposed to trying to save all the toxic sludge along with the deposits. Basically we separate the banks between their deposits and their debts. The government pays the deposits and lets the debts go (which again I assume since I don't know the amount on deposit would be cheaper then NAMA)

It would cost twice as much as NAMA. And not just that. At least with NAMA we have 10 years to sort things out. With this plan we would have 7 months

Brussels Sprout

OMD wrote: »

It would cost twice as much as NAMA. And not just that. At least with NAMA we have 10 years to sort things out. With this plan we would have 7 months

Where did you get that 100 billion figure from? (I'm not being skeptical, I just couldn't find a figure before I wrote my last post)

Do you think that the 54 billion will be the end of it? The banks have lots more debt. There's talks now about a NAMA for people who bought mortgages that they can't afford to pay off?

Welease

Brussels Sprout wrote: »

Yes but now the banks are guaranteed by the government (Northern Rock was not at the time the run occurred).

How much do depositors have in the banks? (I'm not actually sure btw)
The key is that the deposits are guaranteed. These are a small fraction of the debt. It would be a lot cheaper than NAMA (I assume) to have the government pay back the deposits and let the debts go as opposed to trying to save all the toxic sludge along with the deposits. Basically we separate the banks between their deposits and their debts. The government pays the deposits and lets the debts go (which again I assume since I don't know the amount on deposit would be cheaper then NAMA)

I was only just responding to theghost on the aspect of.. what could happen when the guarantee runs out, could saving be lost? Northern Rock is an example of what can happen (would probably have been clearer if I quoted him rather than you)

woodseb

Liam Byrne wrote: »

I honestly cannot believe that you left out the fact that they could rise by 30% and still only be worth what we're paying for them!!! :eek: And the fact that the remainder needs to be recouped from developers who are effectively bankrupt!

i've read through your discussion with wealease and you both seem to have your facts muddled on NAMA

i don't know where you are getting that property prices have to rise by 30% to breakeven

NAMA is paying 54bln for assets that are held on the bank's books at 77bln - so we are paying a 30% discount to book value (not premium). Bare in mind that the banks have already written down the book value of these loans somewhat due to impairments.

Now, NAMA estimates that the actual current market market value of these loans may be around 15% less that the 54bln paid - therefore property prices do not have to recover substantially over a 10 year period to breakeven if estimates are correct.

We can debate all day though where the true market value of these loans are now - they will all be a matter of opinion and not fact until they are actual realised

thecretinhop

I posted this yesterday on another thread, see below, changed it slightly, by the way there was a protest against NAMA i was at it, fk all there but at least I can tell my kids i tried, here though seems more apt here.

NAMA is only one of many things that will sink us. NAMA will lose billions,all irish banks are dead, they are zombies been kept alive by money raised on the bond markets, the country is broke we are borrowing for everything, look at the tax figures yesterday! also the second wave is house defaults, we are trapped with this, if many cant pay back on house, the bank loses billions, if we have nama for the people, they still cant pay so the banks needs billions. There is no way out now just wait for the crash. By the way what if one of the rogue banks had CDS or CDOs hidden in their accounts... :eek:




FFS,, here is where we are in this country:

FF: Destroyed economy, default will happen sooner rather than later, massive property crash, huge corruption everyday, people dying in our hospitals, our roads are falling to pieces, polluted water system, carbon tax, road tax, vrt, etc.

Massive electricity costs, massive mobile costs, a pitiful broadband system, tens of billions going into banks that should be left fall, kids in rat infested portacabins at school, a bloated public sector draining the country dry with many not contributing anything, carers allowance under threat, the prisons, how much a night to look after thugs, people with ME been thrown into dirty hospital rooms, sweet deals with the church where we pay for their abuse, pathetic sentences for murderers, teens terrorizing estates all over the country, Gardai under staffed and many filling out reports instead of on street, junkies selling drugs right in the city centre. PR hacks spinning everything, they couldnt tell the truth if it bit them on the ass

Health insurance allowed to be pushed up when they feel like it, big players in the banks stock market, directors, committing fraud, no investigation, PS corruption, jail time? Pay off time more like. Media are part of government policy most of the time now, Gerry Ryan getting half a million a year? RTE? TV license one of most expensive in Europe. Corrupt county councils in deals with solicitors to carve up local people left, right and centre. Solicitors… Highest paid medical consultants in EU. FAS schemes... need I say anymore


Greens: they are utter fanatics I know many, they believe in social engineering, that they know better than you or I, on all, they will regulate everything, what you drink, what you eat, where you live, what speed you should drive, what you believe, they will never leave government they are determined to push through their narrow path, Tara, Shannon, banking enquiry?, they don’t give a damn! Water metres, stopping one of housing, speed limits, carbon tax, food tax id say coming, green energy, green policy, etc, remember: THEY VOTED FOR NAMA (never forget this)


Well people we are where we are, NAMA is just another brick in the wall as they say... are you going to keep taking this, grumbling, and then getting on with it, id say, "Yes we can?" more like "yes we will"


We are where we are, in the “only show in town” As a good man once said “what a great wee little country”

woodseb

thecretinhop wrote: »

I posted this yesterday on another thread, see below, changed it slightly, by the way there was a protest against NAMA i was at it, fk all there but at least I can tell my kids i tried, here though seems more apt here.

NAMA is only one of many things that will sink us. NAMA will lose billions,all irish banks are dead, they are zombies been kept alive by money raised on the bond markets, the country is broke we are borrowing for everything, look at the tax figures yesterday! also the second wave is house defaults, we are trapped with this, if many cant pay back on house, the bank loses billions, if we have nama for the people, they still cant pay so the banks needs billions. There is no way out now just wait for the crash. By the way what if one of the rogue banks had CDS or CDOs hidden in their accounts... :eek:

I'd be delighted if the banks suddenly found a load of CDS' hidden in their accounts

thecretinhop

Not if it was Anglo

see here

http://www.thepropertypin.com/viewtopic.php?f=46&t=27937

woodseb

thecretinhop wrote: »

Not if it was Anglo

see here

http://www.thepropertypin.com/viewtopic.php?f=46&t=27937

you don't know the difference between CDO and CDS then......

thecretinhop

Its the CDOS im on about, (sorry if above reads weird) anyhow your splitting hairs, it will all come out eventually, do you have anything to comment on the overall situation or are we "we are where we are

Can you explain how we get enough money to pay:

(1) Last years defecit
(2) This years likely defecit
(3) NAMA
(4) House defaults
(5) Irish bank borrowings over last few years from markets
etc
etc

woodseb

thecretinhop wrote: »

Its the CDOS im on about, (sorry if above reads weird) anyhow your splitting hairs, it will all come out eventually, do you have anything to comment on the overall situation or are we "we are where we are

Can you explain how we get enough money to pay:

(1) Last years defecit
(2) This years likely defecit
(3) NAMA
(4) House defaults
(5) Irish bank borrowings over last few years from markets
etc
etc

I'm not splitting hairs, you posted a rant about the finances of the country yet you don't know the difference between a CDS and a CDO - so its hard to take your opinion with much weight...

fwiw- if anglo had a portfolio of CDS it would have risen significantly in value.

to your other question, the answer is obviously govt borrowing and reducing expenditure. Whether you like it or not 'that is where we are' but we should grow our way out of it given the cyclical nature of economies.

I don't see the point of your post unless you are suggesting we all just retire to our bunkers and wait for armageddon - i, for one, have hope in ireland

PeakOutput

woodseb wrote: »

Now, NAMA estimates that the actual current market market value of these loans may be around 15% less that the 54bln paid - therefore property prices do not have to recover substantially over a 10 year period to breakeven if estimates are correct.

it is also worth noting that selling these properties in future is not the only method of getting money back

the people who took out the loans still owe the money they just owe it to the goverment not the banks. if nama does what they say they will do and chases these to the full extent of the law then alot of that money will be recouped long before we decide to sell them on

thecretinhop

Okay mate whatever you say a bit of light reading for ye:

http://www.ucd.ie/t4cms/wp09.32.pdf


Maybe he should "commit sucide" as a great leader once said, maybe we can be positive and that will pay those bills

PeakOutput

thecretinhop wrote: »

Okay mate whatever you say a bit of light reading for ye:

http://www.ucd.ie/t4cms/wp09.32.pdf


Maybe he should "commit sucide" as a great leader once said, maybe we can be positive and that will pay those bills

come on now at least quote the relevant parts

woodseb

thecretinhop wrote: »

Okay mate whatever you say a bit of light reading for ye:

http://www.ucd.ie/t4cms/wp09.32.pdf


Maybe he should "commit sucide" as a great leader once said, maybe we can be positive and that will pay those bills

i've read plenty of morgan kelly - he is one of the most bearish economists out there - as we have seen before, economists got it very wrong before, i don't necessarily agree with all his predictions.

thecretinhop

Gladly:)

8 Conclusions.

In the last decade, the Irish economy has experienced an unusually large credit bubble.
Lending as a fraction of GNP increased from 60% in 1997, to over 200% in 2008, twice the
level of other industrialized economies.
In the aftermath of this bubble, the Irish banking system faces three inter-related problems.
The first is that it has made large losses on loans to property developers. The second
is that it has large wholesale liabilities to international bond holders and, increasingly, to
the European Central Bank. The final problem is that it faces likely further large losses on
mortgages and business loans.
The Irish government’s policy response has been solely to address the first problem of
losses on developer loans by establishing a state institution to buy these loans. However, by
ignoring the second problem of the large wholesale liabilities of the Irish banks, this project
will inevitably end in expensive failure.
As Irish banks are forced to repay this wholesale borrowing and to shrink their balance
sheets to normal international levels, the sharply diminished supply of credit will lead inevitably
to continued sharp falls in property prices. These falls in property prices will result
in severe losses for the Irish taxpayer on the ill-conceived NAMA project.
Despite having pushed the Irish state close to, and quite possibly beyond, the limits of
its fiscal capacity with the NAMA scheme, the Irish banks remain as zombies whose only
priority is to reduce their debt, and who face complete destruction from mortgage losses.
The issue therefore is not whether the Irish bank bailout will restore the Irish banks so
that they can function as independent commercial entities: it cannot. Rather it is whether
the Irish government’s commitments to bank bond holders when added to its existing spending
commitments, will overwhelm the fiscal capacity of the Irish state, forcing outside entities

such as the IMF and EU to intervene and impose a resolution on the Irish banking system.

ballinatray

Brussels Sprout wrote: »

It's painfully obvious to anyone who takes the time to sift through the detail that the debt incurred through the sheer greed of a small group of people is being transferred onto the shoulders of the entire population of taxpayers. Why are we accepting this? If this was in one of many other countries there would be mass strikes, protests and probably riots. Is it our curse are Irish people that we love to complain about things but when it comes to action we're afraid to take that step(we won't even complain in restaurants!).

The public service have had a few marches and strike days but that was over their wages being cut. NAMA is far more disastrous then that yet nobody would consider taking to the streets to protest it apart from the usual fringe left wing groups (who most people ridicule).

It's no wonder the politicians, bankers, developers and top civil servants were able to ride roughshod over us because they knew that we'd take it lying down like the grumbling doormats that we are.

I agree throughly with you and I have similar views you can view it under the thread " Government responsible for collapse of the economy " in same section....I believe this to be the case but not being an expert I dont know the solution to NAMA, but feel a serious debate needs to take place before we let thse "criminals " off the hook...The ammount of money involved is the equivalent of one person winning the lotto twice a week every single week of the year for 500 years and yet so blithely referred to as 54 billion leke a road measurement!!!!!!!!

thecretinhop

woodseb wrote: »

i've read plenty of morgan kelly - he is one of the most bearish economists out there - as we have seen before, economists got it very wrong before, i don't necessarily agree with all his predictions.

One thing we agree on!

http://www.bankofireland.com/press_room/latest_releases/2005/press_releases_news_150447_6.html

ballinatray

Liam Byrne wrote: »

I don't honestly know. I wish I did.

But apparently - according to the weekend poll - shafting the country in the long-term and committing to an over-inflated future housing price model (the only way NAMA can "recoup" the "discounts" and "work" on some level) is OK by at least 25% of the population, with most of the rest of us too stunned and sickened to know how best to fight against this injustice.

Perhaps nationalising the banks is the way but not this way..NAMA's sole purpose will be to "coral " the vast swathes of empty property ( estimates of as much as 400,000 units idle ) to maintain unrealistic values...If that property were released in the normal flow of any normal capitalist economy then the rapid inflation we saw over the last 10 years would not have occurred..The market was criminally controlled with gradual release of properties to create the illusion of a shortage..Its not that long ago we had young people queing outside auctioneers offices for a scarce resource like a post x mas sale in Brown Thomas.. They were duped with the active connivance of a Fianna Fail led gand of carpet baggers, and I am not alligned with any party but there is no way will I ever again be responsible for putting one of that coterie of vipers into the Dail again.......80 Long years of economic advancement destroyed by a few...And it is destroyed...

ballinatray

Welease wrote: »

So what would be your plan to recapitalise the banks and free up credit etc. for the business that need it to survive?

(and I'm not trying to be an arse here.. but I hear everyone complaining about the plan, but I don't see anyone coming up with a watertight suggestion for an alternative... personally I'm undecided )

Whatever the solution will be, Lets not ensure that this government is not part of that, and get rid of them. They cannot be trusted..Read my thread under the title " Government for collapse of the economy "...

PeakOutput

ballinatray wrote: »

And it is destroyed...

ah its not really the right actions will bring it back in the medium term without a doubt. and it seems that the right actions are being taken(imo obviously). i do agree fianna fail need a large break form goverment say 30 years or so and i was disheartened to see that they moved up a few points in the opinion polls last week

the argument shouldnt really be about what we are doing now to save the country it should be what we are doing to prevent this happening again there needs to be serious serious discussions on regulation

ballinatray

PeakOutput wrote: »

because its the only course of action that will save the country probably

edit; and we are not the only putting money into the banks we are however the only one i know off getting something for our money that we can then sell in the long term

In whaT CENTURY DOES THIS GOV HOPE TO SEE nama RETURN A PROIFIT...400,000 estimated units lie idle..A criminally manipulated market created fear among young people to buy at inflated prices...Where was this gov. concern for competiveness in the last 10 years..Whatever the solution is this gov. should not be part of it they should suffer for dragging this economy back 50 years by their own lack of vision..Lemass and Whittaker must be weeping.......

thecretinhop

ballinatray wrote: »

Perhaps nationalising the banks is the way but not this way..NAMA's sole purpose will be to "coral " the vast swathes of empty property ( estimates of as much as 400,000 units idle ) to maintain unrealistic values...If that property were released in the normal flow of any normal capitalist economy then the rapid inflation we saw over the last 10 years would not have occurred..The market was criminally controlled with gradual release of properties to create the illusion of a shortage..Its not that long ago we had young people queing outside auctioneers offices for a scarce resource like a post x mas sale in Brown Thomas.. They were duped with the active connivance of a Fianna Fail led gand of carpet baggers, and I am not alligned with any party but there is no way will I ever again be responsible for putting one of that coterie of vipers into the Dail again.......80 Long years of economic advancement destroyed by a few...And it is destroyed...

Bang on!

PeakOutput

ballinatray wrote: »

In whaT CENTURY DOES THIS GOV HOPE TO SEE nama RETURN A PROIFIT

eh its not about making a profit(even though it probably will at least break even) its about saving the economy of the country

Whatever the solution is this gov. should not be part of it

i just said that but seen as you took that quote from page one i assume you have not gotten to that yet

edit; and under no circumstances should the banks be nationalised

ballinatray

fontanalis wrote: »

I do think it could happen again, not on the same level but some people just can't do basic maths. Anglo should have been left to the dogs and any high level person at BOI and AIB or anywhere that contributed to this clusterf**k of epic proportions should be doing a job where they might break a sweat.

Indeed, one wonders why Anglo was saved...How many of the current gov have interests or at least have loyalties..Whatever the solution this Gov should not be part of it.. It is their carelessness that added fuel to the fire...Read my thread under the title " Government responsible for collapse of the economy."

Liam Byrne

woodseb wrote: »

i've read through your discussion with wealease and you both seem to have your facts muddled on NAMA

i don't know where you are getting that property prices have to rise by 30% to breakeven

NAMA is paying 54bln for assets that are held on the bank's books at 77bln - so we are paying a 30% discount to book value (not premium). Bare in mind that the banks have already written down the book value of these loans somewhat due to impairments.

Now, NAMA estimates that the actual current market market value of these loans may be around 15% less that the 54bln paid - therefore property prices do not have to recover substantially over a 10 year period to breakeven if estimates are correct.

We can debate all day though where the true market value of these loans are now - they will all be a matter of opinion and not fact until they are actual realised

I'm not confused, and I love the way that you say "we can debate all day where the true market value is", considering that the overpayment is a key factor in this hair-brained gamble. You also re-issue the FF claim that paying more than something is worth is a "discount"; it is not.

Given that the Government even agreed to pay more than the market value, I would take NAMA's estimates with a pinch of salt, TBH.

The difference between the originally overpriced assets and the NAMA figure is 30%, true

But it is generally accepted that the assets are currently worth approximately 42 billion, and 130% of 42 billion is 54 billion, so the 54 billion represents an increase of 30% from the current market value.

So we are paying too much.

In fact, if you look at the NAMA figures, they even contradict themselves:

The NAMA figures are based on estimates that Irish property prices have fallen by an average of 50% since the loans concerned were given.

Source : http://www.rte.ie/business/2009/0916/nama2.html

However, Lenihan obviously can't do basic maths :

The Minister said that current market value of the loans was €47 billion

Source : http://www.rte.ie/business/2009/0916/nama.html

If our Minister for Finance reckons that 50% of €77 billion is €47 billion, then we're all screwed. He went on to use this €47 billion figure to "prove" that a rise of 1% per year would work, but if he'd used the 50%, it would have been €38 billion.

This would have required at least a 2% per year to break even, which is precisely what I said earlier, and I was even being generous by putting the current value halfway between 50% and €47 billion - at €42 billion.

Lets look at it this way:

Assume I'm as good as bankrupt and have a house that was supposedly "worth" €390,000 in the boom, and it's now worth €200,000.

Would you now buy it from me for €265,000 in the hope that you can sell it ten years later for €270,000?

Or would you demand to get it for the €200,000 ?

woodseb

ballinatray wrote: »

Perhaps nationalising the banks is the way but not this way..NAMA's sole purpose will be to "coral " the vast swathes of empty property ( estimates of as much as 400,000 units idle ) to maintain unrealistic values...If that property were released in the normal flow of any normal capitalist economy then the rapid inflation we saw over the last 10 years would not have occurred..The market was criminally controlled with gradual release of properties to create the illusion of a shortage..Its not that long ago we had young people queing outside auctioneers offices for a scarce resource like a post x mas sale in Brown Thomas.. They were duped with the active connivance of a Fianna Fail led gand of carpet baggers, and I am not alligned with any party but there is no way will I ever again be responsible for putting one of that coterie of vipers into the Dail again.......80 Long years of economic advancement destroyed by a few...And it is destroyed...

we never had 80 years of economic advancement (have you heard of the 1980s) - and GDP has fallen to around early 2000's level

no need for the hyperbole.....

PeakOutput

ballinatray wrote: »

Indeed, one wonders why Anglo was saved...How many of the current gov have interests or at least have loyalties..Whatever the solution this Gov should not be part of it.. It is their carelessness that added fuel to the fire...Read my thread under the title " Government responsible for collapse of the economy."

are you all blind? anglo wasnt saved it was nationalised thats not saved thats the worst possible outcome for its owners(the shareholders)

the reason it was nationalised is so there wasnt a massive run on the banks thus taking down all our banks instead of just one. it was nationalised so that everyone with money in anglo didnt lose it and so that the people who owe anglo money have to pay it back. it will be wound up in time.

also its easy to blame the goverment(and i do blame them to an extent) over and over again the majority of the country vited them in over and over again and then the majority of the country bought into the bubble so the majority of the country are to blame like it or not as are the leaders of the banks the developers etc

Liam Byrne

PeakOutput wrote: »

it is also worth noting that selling these properties in future is not the only method of getting money back

the now bankrupt people who took out the loans still owe the money they just owe it to the goverment not the banks. if nama does what they say they will do and chases these to the full extent of the law then alot of that money will be recouped long before we decide to sell them on

Where do you reckon this money is going to come from ?

I've said it already; the Government should pay the current market value, and the banks should be damn glad of that bailout to get them off their hands; by all means, share any future, notional "profit" from the sale 50/50 with the banks.

But relying on morally and financially bankrupt big developers to make up the difference is a joke!

PeakOutput

Liam Byrne wrote: »

I'm not confused, and I love the way that you say "we can debate all day where the true market value is", considering that the overpayment is a key factor in this hair-brained gamble. You also re-issue the FF claim that paying more than something is worth is a "discount"; it is not.

Given that the Government even agreed to pay more than the market value, I would take NAMA's estimates with a pinch of salt, TBH.

The difference between the originally overpriced assets and the NAMA figure is 30%, true

But it is generally accepted that the assets are currently worth approximately 42 billion, and 130% of 42 billion is 54 billion, so the 54 billion represents an increase of 30% from the current market value.

So we are paying too much.

In fact, if you look at the NAMA figures, they even contradict themselves:


Source : http://www.rte.ie/business/2009/0916/nama2.html

However, Lenihan obviously can't do basic maths :


Source : http://www.rte.ie/business/2009/0916/nama.html

If our Minister for Finance reckons that 50% of €77 billion is €47 billion, then we're all screwed. He went on to use this €47 billion figure to "prove" that a rise of 1% per year would work, but if he'd used the 50%, it would have been €38 billion.

This would have required at least a 2% per year to break even, which is precisely what I said earlier, and I was even being generous by putting the current value halfway between 50% and €47 billion - at €42 billion.

Lets look at it this way:

Assume I'm as good as bankrupt and have a house that was supposedly "worth" €390,000 in the boom, and it's now worth €200,000.

Would you now buy it from me for €265,000 in the hope that you can sell it ten years later for €270,000?

Or would you demand to get it for the €200,000 ?

when it comes down to it thats all irrelevant its not about making a profit its about saving the country. sure the goverment are ***** and they lie but lets say we make a loss on these in the long run and we only get 40 bn back we at least now have an economy to take taxes out of to pay back the difference so it actually cost us 14bn to save the country and not the 54bn you would like everyone to believe it is going to cost. even losing 50% of this to save the country is worth it imo

oh noes they are using our taxes to save the bankers. yes they are because its the only way to give you a future so you can earn money for the rest of your life.

Liam Byrne

PeakOutput wrote: »

oh noes they are using our taxes to save the bankers. yes they are because its the only way to give you a future so you can earn money for the rest of your life.

Correction : It's the only way that the Government were prepared to consider.

Like I said, if they took the unwanted properties off the banks at current market values (and the banks should have been damn grateful for that alone) then I'd feel less betrayed, and there would be no loss.

PeakOutput

Liam Byrne wrote: »

Where do you reckon this money is going to come from ?

I've said it already; the Government should pay the current market value, and the banks should be damn glad of that bailout to get them off their hands; by all means, share any future, notional "profit" from the sale 50/50 with the banks.

But relying on morally and financially bankrupt big developers to make up the difference is a joke!

your not relying on them to do it out of the goodness of their heart you force them to do it using the law.

Liam Byrne

PeakOutput wrote: »

your not relying on them to do it out of the goodness of their heart you force them to do it using the law.

The law doesn't matter if they don't have the money.

And given the lack of legal "forcing" in relation to the bank head's salaries and bonuses, and the internal appointments, I doubt that FF will protect us on this angle either.

woodseb

Liam Byrne wrote: »

In fact, if you look at the NAMA figures, they even contradict themselves:


Source : http://www.rte.ie/business/2009/0916/nama2.html

However, Lenihan obviously can't do basic maths :


Source : http://www.rte.ie/business/2009/0916/nama.html

If our Minister for Finance reckons that 50% of €77 billion is €47 billion, then we're all screwed. He went on to use this €47 billion figure to "prove" that a rise of 1% per year would work, but if he'd used the 50%, it would have been €38 billion.

This would have required at least a 2% per year to break even, which is precisely what I said earlier, and I was even being generous by putting the current value halfway between 50% and €47 billion - at €42 billion.

77bln refers to the book value of the assets as held on the most recent bank balance sheets - this is what the banks currently thought their assets were worth and had already been reduced through impairments etc - it is not the original value of the asset from which you would deduct a 50% fall in prices from peak as the banks had already written off alot of the value but not enough as we can see from their share prices over the last years

In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset

PeakOutput

Liam Byrne wrote: »

Correction : It's the only way that the Government were prepared to consider.

correction: its what their top (independant) economic advisors advised them to do.

the fact is you dont know if or by how much they over paid you just think you know. maybe they did maybe they didnt(they probably did but probably not by how much you claim). but again you dont know so there is little point debating it.

the only thing worth debating now is this

is nama the right thing to do in theory and should it in theory seriously help the economy recover. the answer is yes imo. i hate this goverment and im sure they will find a way to **** it up but the nama idea is a good one. if they actually do what they say they will do this time around then nama will be a success and you can doubt them all you want but you cant say yet either way

Liam Byrne

woodseb wrote: »

77bln refers to the book value of the assets as held on the most recent bank balance sheets

I can't see how it does, considering that the current value of the asset is way below that.

Did they just not update their balance sheets to fully reflect the crash, or what ?

woodseb

Liam Byrne wrote: »

I can't see how it does, considering that the current value of the asset is way below that.

Did they just not update their balance sheets to fully reflect the crash, or what ?

no, the banks were in denial all the way through - nobody believed their balance sheets - it happened in banks all over the world until the credit crunch made them come clean about assets such as subprime mortgages or in our case development loans

one of the benefits of nama is that it will finally give clarity on what the banks are worth

Liam Byrne

PeakOutput wrote: »

correction: its what their top (independant) economic advisors advised them to do.

Are those the same "top" economic advisors who missed the oncoming crash and made up the policies that fuelled the fire ?

Or are they the ones that warned the Government and were told to "f-off" ?

If it's the latter, then fair enough; but if it's the former, I wouldn't believe a word they say - they're incompetent and should have been fired.

Liam Byrne

woodseb wrote: »

no, the banks were in denial all the way through - nobody believed their balance sheets - it happened in banks all over the world until the credit crunch made them come clean about assets such as subprime mortgages or in our case development loans

So - without putting words in your mouth - you're agreeing that the "book value" that this whole thing is based on is pure fiction ?

thecretinhop

woodseb wrote: »

no, the banks were in denial all the way through - nobody believed their balance sheets - it happened in banks all over the world until the credit crunch made them come clean about assets such as subprime mortgages or in our case development loans

one of the benefits of nama is that it will finally give clarity on what the banks are worth

"Fair play to ye Woody" NAMA and clarity, lol:D

woodseb

Liam Byrne wrote: »

So - without putting words in your mouth - you're agreeing that the "book value" that this whole thing is based on is pure fiction ?

Bank balance sheets were based in fiction, NAMA has put a more realistic valuation on the whole thing....the book value is not relevant at all except for investors in the banks who now know what leaving the balance sheet, what they are getting in return and what capital needs to be replaced after that

PeakOutput

Liam Byrne wrote: »

Are those the same "top" economic advisors who missed the oncoming crash and made up the policies that fuelled the fire ?

Or are they the ones that warned the Government and were told to "f-off" ?

If it's the latter, then fair enough; but if it's the former, I wouldn't believe a word they say - they're incompetent and should have been fired.

from my knowledge of them they were the latter and also they cant be fired as they arent employed by the goverment hence why i said they are independant they are only contracted to give their opinion

Liam Byrne

woodseb wrote: »

Bank balance sheets were based in fiction, NAMA has put a more realistic valuation on the whole thing

So we're getting a "haircut" from a not even an old, but a fictional balance sheet amount ?

And FF still insist on calling it a "discount".

:rolleyes: