NAMA-Why do we take it lying down?

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:

woodseb

Liam Byrne wrote: »

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:

for the last time "discount to book value":rolleyes:

they may have been spinning it alright but i don't think they are hiding it

as it says in the link you provided before
http://www.rte.ie/business/2009/0916/nama.html

Finance Minister Brian Lenihan has told the Dáil that the National Asset Management Agency will pay an estimated €54 billion for loans with a book value of €77 billion from the banks. He said this represented a discount of almost 30%...........

The Minister said that current market value of the loans was €47 billion, and the estimate for the long-term economic value added another €7 billion. He said banks cannot be forced to sell assets at below rational prices.

It is clear that they are paying 54bln for something that is worth 47bln now and were held at 77bln on the books

ballinatray

Brussels Sprout wrote: »

So to answer my original question the consensus so far from the responses appears to be that in general people dislike NAMA but don't see any alternative. Ok I understand that (although I'm definitely not convinced that it's the correct way to go).

What absolutely kills me though is that the same people who steered us into this mess with their 'soft landing' talk are now charged with getting us out of it. I mean they've already shown that they couldn't manage a boom-shouldn't we be looking to an alternative to manage the bust?

Imagine if this had happened in France!

Lets hope the rest of the electorate think like you.....I certainly will not forget that this government with its cavalier economics without direction has destroyed the future for my children..!!!!This Gov should not be permitted to manage whatever solution is decided....

ballinatray

Welease wrote: »

No need to take that attitude..

You do realise a lot of the banks around the world were in exactly the same postion due to the sub prime issues in the US? So in all probability, no bank would have had the time, funds or bothered to come to a tiny market like Ireland.. So no, they wouldn't have just popped in to save us. Meanwhile more business's are going to the wall in Ireland because credit has dried up..

And its still dry out there....Whatever the solution will be this gov. should not be allowed to be part of the solution. I believe their cavalier economics made our situation worse....Read my thread under the title " Government responsible for collapse of economy "....Overall morgage borrowings here are 10 times higher than Germany and even with its so called sub-prime crisis we are still 4 times haevier in debt than the US..Government policy was seriouslu negligent...Lemass and Whittaker must be weeping..

So I ask again... if you don't do NAMA, then how do you get credit flowing to those who need it?

And its still dry out there....Whatever the solution will be this gov. should not be allowed to be part of the solution. I believe their cavalier economics made our situation worse....Read my thread under the title " Government responsible for collapse of economy "....Overall morgage borrowings here are 10 times higher than Germany and even with its so called sub-prime crisis we are still 4 times haevier in debt than the US..Government policy was seriouslu negligent...Lemass and Whittaker must be weeping..

ballinatray

MysticalRain wrote: »

I really despair for this country sometimes. At this point I consider FF to be nothing more than a bunch of traitors to their own country. I am becoming more and more convinced that we will always be a country of losers, except for a handful of well-connected insiders.

Vote with your feet next time as well as the head....It is my view that Gov policy exagerated our financial problems and yes we are or will soon be back to the 50's economically...Read my thread title " Gov responsible for collapse of the economy "....Lemass and Whittaker must be weeping...

ballinatray

Liam Byrne wrote: »

That's not strictly true.

Despite the hole that Ahern, Cowen & Lenihan have led us into, and despite the fact that there's now no choice but to do SOMETHING like NAMA, there are alternatives.

1) Buy the bank shares off the scheisters that are running them - AT CURRENT OR PRE-GUARANTEE PRICES; if they don't agree, tell them to f**k off and rot

2) Buy the loans at CURRENT PRICES - like I said, by all means put in a proviso that the bank gets some share of the "profit", but the current one - paying more than they're worth and charging the bank later if they make a loss - is a joke, considering that the banks don't have any money

I mean, no-one would conduct ANY business the way the Government have; bailing out without looking and "trusting" the corrupt shower of ***ks to do the right thing, with no legal obligations to do so, and no comeback if the developers and/or the banks go bust

There should be 3 million* people marching on Dail Eireann to object to this; those working in there are OUR EMPLOYEES; not our "masters".

* The 25% that answered a certain way to last Sunday's poll wouldn't march on Dail Eireann if FF fired a nuke dead straight upwards into the sky

Indeed sad really to see the increase in popularity at the polls....The fancifull Irish have short memories..Back in 2003 when the EU central warned Mc Greevy about overheating the economy he stuck his bombastic personality in the air and shouted back that our economy was the envy of Europe......Indeed it is the envy of the european elite who wonder how the gov got away with the profligacy and are looking for lessons on how to manipulate.....

ballinatray

Welease wrote: »

Well I'm not talking specifically about those, but yes they did.. I am talking about the average business around the country that need credit lines to purchase raw materials, services, capital costs, generate credit lines themselves for their suppliers/customers etc.. Business's need credit lines available in order to function, without those many healthy viable business's go bust.. Someone somewhere has to provide that credit so our economy can function.. NAMA is apparantly that solution (again, i don't know if i agree or disagree with it, but while so many condemn it they don't seem to offer a viable alternative, so in the absence of that we need to do NAMA)

Whatever the ultimate solution will be , it should not include this government at the table, !!!!!!!!ever.

Liam Byrne

woodseb wrote: »

for the last time "discount to book value":rolleyes:

I know exactly what you mean, so less of the patronising rolleyes, please. You can direct those at Mr Lenihan if you feel the need to use them.

woodseb wrote: »

they may have been spinning it alright but i don't think they are hiding it

It is clear that they are paying 54bln for something that is worth 47bln now and were held at 77bln on the books

I don't do bull**** or spin. I do facts.

That "held at 77 billion on the books" is fictional, and so there is no "discount". So why doesn't he come out and be honest ? At least I'd respect him on some level for that.

Using the word "discount" implies (to a less-informed person) that they are getting some sort of a deal, a discount from a real price.

The local dodgy car salesman might make up a price in order to con you into thinking that you're getting a discount, but banks and Government should not, especially when they're playing idiotic with our money.

And while I haven't fallen for their lies and bull, many people might; hence their bounce last weekend.

People should be highlighting this more - that the 77 billion was a fictional figure and therefore there is no discount.

Liam Byrne

PeakOutput wrote: »

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

Since when can you not fire an incompetent contractor ?

ballinatray

Brussels Sprout wrote: »

I'd be interested to hear what people have to say about David McWilliam's solution to the crisis.

He agreed that there was no easy way to solve the crisis but he advocated a big hit now in order that we could recover faster (like an amputation I guess)

He proposed not renewing the bank guarantee when it expires later this year and letting the banks sink or swim. In all likelihood they'd fail and the loss would be borne by the bond holders (who he claims are owed nothing since they are effectively gambling by buying irish bank bonds).

His second action would be to pull out of the euro so that we have control over our interest rates again and to then devalue our new currency in order that we can be immediately competitive.

Control of interest rates is always a solution to inflation true but whilst that was handled by Frankfurt then it was necessary for Gov here to remove the other obstacles to a stable economy ie. all the incentives given to landowners ( reductions in Capital gains tax ) and investors Section 23, urban renewal, many offering 100% tax allowances... The euro is not at fault for this Gov policy in the face of it is and therefore they should not be part of the solution....Throw them out the front door of the Dail and I am sure we will hear Lemass and Whittaker laughing from above and cheering too !!!!!!!

PeakOutput

Liam Byrne wrote: »

Since when can you not fire an incompetent contractor ?

sorry you can cancel the contract alright but i meant the economists wont lose their jobs as they are the smartest economic minds in the country and have way bigger contracts then the goverment

ballinatray

Welease wrote: »

Maybe, Maybe not Prices will rise over time... they always have they always will.. that's inflation... My parents house cost a fraction of the cost 40 years ago, and was worth 20 times that even before the boom started. So the prices that NAMA paid will in all likely over time exceed what they paid.. this is what i was attempting to explain earlier (where i missed the 30% ).. the real term profit will be decided on whether the increase in the value of those properties has increased more than we paid for them PLUS inflation in the years it took to reach that new level. The silly days were silly because of the quick explosion in prices.. sustained growth over years will happen.




Well that was the point of the thread, to get some suggestions and we can discuss the merits of each Whats the point of marching on the Dail complaining if people can't think of a better idea. You have provided a idea, and personally i think it interesting to discuss the merits.


Well exactly, i was merely attemping to discuss the scheme, and you took exception to that.. No offence was meant on my part.. But like everything else, if people are prepared to rip NAMA to shreds, then we should at least give due diligence to alternatives.


lol trust me, i have never voted FF (nor am i a particular supporter of NAMA as such).. I used to term to clarify we were talking about the same 30% which i had missed, and it was the common term used by NAMA and the media.


Well in fairness, i have seen only your and the McWilliams ones.. and all have their merits and failings.. So nothing jumps out as being so much better than the vilified NAMA (just my opinion)


It does.. But there are some parts that don't seem to add up (to me anyway).. again if we can pull apart NAMA we should subject alternatives to similar rigour.



Celtic Tigers over mate.. 200K is the most I'm paying

David Mc Williams produced these figures in 2007.....German morgage debt to GNP ratio...16%... US morgage debt to GNP ratio..48%..and wait for it Irelands morgage debt to GNP ratio ..198%... For F...Sake does that not show the carelessness and Gov is still at speculating with NAMA property...Whatever the solution will be this Gov should not be part of it...Read my thread titled " Go responsible for collapse of economy. I am not blaming the bankers entirely...Just like a dog will chase a cat so too will a banker chase money... There was no dog warden though ...for the banks...

ballinatray

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 am sure Bernard McNamara would love your estimated valuations particularly as his consortium paid 460 Million for the Glass Bottle site now valued by Lisneys at 60 million...If nama had been unfortunate to take it on board they would be paying 300 million or so ( 30% discounted... Wow!!!)...

fontanalis

At what valuation basis do the banks value the property, credit pyamid peak level or a bit after. Doesn't NAMA's success depends on prices reaching peak level, if property falls by 40%, then it will take an increase of 66% form that fall to reach peak values (if they fall by 50%, it will take a 100% increase).

ballinatray

PeakOutput wrote: »

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

I cannot disagree with you on Nama as I dont have an alternative...But I would pay for an alternative to this Gov being part of the solution...At least in fairness to Lenihan he was not in cabinet during all this time not having been too popular with Berties Babes.....Currently he is the only shining light in the dark hole of the fianna fail abyss!!!

fontanalis

ballinatray wrote: »

I cannot disagree with you on Nama as I dont have an alternative...But I would pay for an alternative to this Gov being part of the solution...At least in fairness to Lenihan he was not in cabinet during all this time not having been too popular with Berties Babes.....Currently he is the only shining light in the dark hole of the fianna fail abyss!!!

He's great at reading reports! Wasn't he also happy with the state of the banks when the ice berg was around the corner?

Liam Byrne

ballinatray wrote: »

.Currently he is the only shining light in the dark hole of the fianna fail abyss!!!

Don't sing Lenihan's praises too much, because he's the one that guaranteed the Anglo cesspit.

woodseb

Liam Byrne wrote: »

I don't do bull**** or spin. I do facts.

That "held at 77 billion on the books" is fictional, and so there is no "discount". So why doesn't he come out and be honest ? At least I'd respect him on some level for that.

.

The fact that 77bln was held on the banks books is true, that they were worth that is false as any investor in the banks knew over the last while

the facts were that it was a discount to book - that's they way it was announced to the public and that phrasing is technically correct and also relevant to those invested in the banks who were also interested in the news. In the run up to the announcement everyone was waiting for what discount to the book value the government would apply......

going on about whether discount to book is a discount or not is just semantics, if the general public misunderstood this its their fault, there is no need for linehan to come out and explain it when he clearly said he is paying 54bln for 47bln worth of loans

maybe its a job for the media or the opposition etc or the voters to inform themselves properly

woodseb

ballinatray wrote: »

I am sure Bernard McNamara would love your estimated valuations particularly as his consortium paid 460 Million for the Glass Bottle site now valued by Lisneys at 60 million...If nama had been unfortunate to take it on board they would be paying 300 million or so ( 30% discounted... Wow!!!)...

it's a 30% average discount.....hopefully i won't have to explain this further

Liam Byrne

woodseb wrote: »

going on about whether discount to book is a discount or not is just semantics, if the general public misunderstood this its their fault

Incorrect. The Government have repeatedly used the claim that they are getting a discount in order to mislead the public.

We should be able to trust a Government - our employees - to state the facts that are in our interest; instead, we have a corrupted "Freedom of Information" Act which involves paying fortunes to get anything remotely close to the truth.

So if we have untrustworthy employees, we should fire them.

woodseb wrote: »

there is no need for linehan to come out and explain it when he clearly said he is paying 54bln for 47bln worth of loans

And when everyone asks why, he claims that it's "a discount". That's deliberately misleading.

It's a 30% overpayment.

If they told it like it is, people might accept it. If they keep spinning, then I for one won't.

woodseb wrote: »

maybe its a job for the media or the opposition etc or the voters to inform themselves properly

No, it's the job of the Government to tell the truth and be honest for a change, and not hire expensive spin-doctors (again, using our money) to make themselves sound good.

woodseb wrote: »

it's a 30% average discount.....hopefully i won't have to explain this further

It's not a discount.....hopefully I won't have to explain this further.

woodseb

Liam Byrne wrote: »

It's not a discount.....hopefully I won't have to explain this further.

all i've done is explain where the confusion lies - you clearly did not understand fully at the beginning and are trying to cover this up by making it look like a government conspiracy to mislead the public....i don't think i'll bother anymore.....