NAMA-Why do we take it lying down?

oppenheimer1

Niall Keane wrote: »

Sorry guys, but we've already financed the banks, nationalised Anglo, and created levies, reduced benefits and relief etc. all to cope with the current crises we were told was 4-6 billion this year. If the billions put in the banks were used to address it we would have no shortfall.
So maybe this government is very good at taking from Joe to pay John to pay Peter to pay Tom, just so no one sees Tom take the cash, but really I think it comes down to who ultimately loses and who ultimately gains re. the transfer of wealth and the taxpaying PAYE worker is losing and the banks are gaining!
Re. expansion in Government spending etc.., all of this wealth was fuelled by debt passed around and lent by banks to Governments, companies and the ordinary Joe who trusted them and their unfathomably obscure system, so that no one could understand what was going on. Finance in the Tiger Years, not just in Ireland, was Masonicly secretive in its dealings. As such I hold banks wholly responsible for the current mess as I think most do. As an Architect if my structure was to fail and create havoc, I would be held responsible, no one would cry well lads you felt the effects of gravity and so you should have seen it coming! See I’m expected to be in control of my game, and if I F*&k up I go to jail!!! That’s called duty and responsibility, a concept neither Irish Banks nor Government have ever acknowledged.
Re. the NAMA properties, just watch, the property market is one thing, these properties are another, they fail on location, size and sustainability (insulation and ventilation etc.), they don’t meet current planning or building control standards, they will be the same as trying to sell a leaded petrol, non power-steering, no air-bags 1989 Lada in today’s automobile market. Let me spell it out the Automobile Industry will pick up again in a few years but no one will be selling Ladas, they don’t meet regulations and can’t be fuelled.
Likewise NAMA property will be carbon taxed to the hilt, inappropriately sized (e.g. “homes” designed for a housing market and not to live in) and they will be competing with newly built high spec future buildings built by future developers for that time and not for the Celtic Tiger’s madness. So they will be a demolition expense on viable urban sites and an eyesore in rural areas!
If the property is worth nothing or an expense then the companies paying for the loans to NAMA will out of commercial necessity default, or do you think that these developers are the patriotic kind to honour their debts and throw good money after bad!

No, you would pass the buck and blame your structural engineer. As an architect are you and your profession not responsible for ensuring the buildings of the boom years were not built to code? In any case buildings can be retrofitted to improve their thermal performance.

Niall Keane

Thanks oppenheimer1 you're the first person to actually consider and address this point, to expand they meet 2005 planning regs eg a three bed apartment is 70 sqm in 2007 this changed to 100sqm and this was the third time that decade the sizes were changed by DOE to encourage family units to be built. See the NAMA properties were built for one reason to act as profit generators they were not as the architect corbusier described living units "a machine for living in". To me given that many European family units are 200sqm and that when property becomes viable again developers will have to build to future standards which I expect will echo the European spatial model, the NAMA properties will fail to raise interest they will either become slums with a temporary population or perhaps could be doubled in size by knocking a party wall and making two 70sqm three beds say into one 140sqm family three bed. And so either NAMA residential becomes slums with costly social problems or halved in value immediatly bringing their spatial qualities up to scratch.
Now look at commercial yes as you pointed out they can have insulation applied but what about natural ventilation and associated passive cooling these technologies can not be "fitted" their dependant on maximum dimensions and specific layouts of fenstration which in NAMA properties due to cost efficient designs of the time cannot be now achieved. Eg many office spaces are single aspect built around lift stair cores etc. So bottom line these properties will be costly to ventilate cool and run probably suffering from carbon taxes etc while new offices will be built by in the future often the end occupiers who will be taking into account the life costs of their building. So once again NAMA fails. I don't think I really need to explain the failure of landbanks three hours commute from an urban centre?

ei.sdraob

to follow from above comment

http://www.independent.ie/national-news/devastating-pyrite-epidemic-hits-20000-newly-built-houses-2073508.html

how many of these 20,000 new homes fall under NAMA, and are now completely worthless :cool: (and lets not forget recent floods)

UP to 20,000 homeowners are facing the devastating "pyrite problem" which is destroying recently built houses.

The Irish Independent has learned that this many claims for pyrite-related damage, such as cracked floors and walls, have been made to the builders' insurance company HomeBond -- which may not have enough funds to cover the cost of all the claims.

Its cash reserves have dropped from €50m in 2007 to €26m, according to its latest accounts, due to declining stock market returns.

This means it would only be able to pay around €1,250 per household. The average cost of removing the pyrite from a house and repairing the damage is between €50,000 and €70,000.

they dont call them "toxic" assets for no reason...

woodseb

the pyrite problem relates to houses that were mainly built around 5 years ago that took material from a certain quarry. unfortunately for the owners these houses were sold before the problem manifested itself - the fact that homebond is dealing with the issue of 20,000 claims is evidence that these homes were already sold and would not be part of NAMA.

Niall Keane

Great example of will happen, under contract the builders ie the developers were responsible for workmanship and materials but most of these companies set up for these individual projects have ceased to exist and it turns out homebond doesn't have the cash to address the issue when NAMA seeks to recover payments on loans for negative equity they too will find the companies involved will have ceased to exist or been declared bankrupt while the shareholders of those companies will have moved on to the next profitable venture Probably abroad with plenty of capital to invest and a clean slate handed to them from the Irish tax payer.

RachPie

I suppose people take that attitude here - but sure, what can ya do? It's like "them" and "us" - the government and the population, which is not true, democracy is meant to be by the people, for the people. NAMA is definately what you just said, a way of transferring a whoopsa daisy slip up on the banks behalf onto the shoulders of the regular taxpayers. There's a lot more going on behind the scenes we don't know about.

jmayo

oppenheimer1 wrote: »

...
Both of you don't seem to realise that Anglo had to be saved, otherwise there wouldn't be a functioning banking system in the country at all. This is no joke without a functioning payments system, chaos would easily reign. One could argue that food shortages and rioting would have been the outcome if that actually happened.

Ah for fe**s sake, using that analogy no bank or financial institution should ever be allowed fail.
Capitalist free market principles will apply to everyone bar the banks it seems ? :rolleyes:
I don't remember many riots in Iceland or the US and they AFAIK had banks fail ?

oppenheimer1 wrote: »

It doesn't matter that Anglo only had a small number of well heeled individuals as customers, the bank was and is systemic. It has, like all other banks, borrowed from its competitors and its competitors would have funds on deposit within it too. Say the bank collapsed, all the other institutions are now left with huge holes in their balance sheets, which tips the next weakest institution over the edge. Another bank falls, and the same thing happens further weakening the other institutions. Throw into the mix the loss in confidence in Ireland in general, a flight of capital out of the country. Eventually they all fall. Its been explained to both of you this fairly simple principle, yet you can't seem to grasp it? Believe it or not, even before the bank was nationalised we all had money in Anglo (directly or indirectly).

Of course your funds on deposit were probably actually the quasi illegal ?? deposit that IL&P had with Anglo, you know the one that misled the markets as to the true position of the banks deposits.

I love your line where you claim the bank was and is systemic. :rolleyes:
It was a niche bank and if it was allowed fail then the taxpayers would not have to carry it's gigantic losses resulting from it's greedy incompetent short termed decisions made in favour of a particular well connected bunch of greedy developers and politicans.

As it is the taxpayer has pumped in 4 billion so far into a zombie bank, will have to underwrite the purchase of anything upto 20 odd billion of probably very toxic debt and probably have to pump in another tranche of capital down the road.

So you reckon that the lets say 20 billion wasted on Anglo couldn't be spent more wisely on keeping the other really systemic institutions afloat and by extesion keeping legitimate productive Irish business afloat ?

Lets ask the question how many people here, posters on boards have banked with Anglo ?
And if you did are you a developer or ff member ?

You think foreigjn investors have confidence in Ireland now, what with all the revelations primarily about Anglo ? :rolleyes:

oppenheimer1 wrote: »

I do think Brian Lenihan had been one of the best finance ministers Ireland has ever had. He's inherited a huge problem and has tackled it head on in a creative and mostly coherent manner. He has made mistakes like VAT, and I don't think he's been brave enough in other areas [he should have cut the old age pension in a similar manner to social welfare]. I don't expect NAMA to be finished for at least 20 years, and I expect it will break even at best or make a modest loss at worst. Property prices will rise again in future simply by inflation due to the increase in money supply (which doubles every 15 years roughly). It isn't a bailout for developers either, they all still owe the full borrowed amounts to NAMA, if they can't pay they will forfeit the assets the loans bere backed against.

Coherent manner ? He didn't take early decisive action with early budget to cut spending 2008/2009, then he brought budget forward autumn 2008 and then went back on his cuts.
He increased VAT which was lunacy that drove business north.

Yeah lets cut the old age pension, but not the top salaries of public servants including politicans, or payouts for incompetent disgraced public body ceos and chairmen. :rolleyes:

A modest loss my ass, have you seen some of the sites and lands that are the securities for the NAMA loans.
If you are in Dublin drive out to Sandyford and see the half finished holes in the ground, the skeleton tower blocks, drive down to Ringsend and see the septic Irish Glass bottle plant.
Then come back and tells us how the bankrupt developers are going to pay back these loans and when they don't how we will sell these sites to pay off the amount NAMA paid for the loans.
Then tell us how what precentage of the amount paid by NAMA for the loans will the sale of these properties realise, nevermind what precentage of the original book value of the loans the sales would realise.

Yeah property prices rose in Japan alright, that would be the Japan that was in the top three economies in the world. :rolleyes:

oppenheimer1 wrote: »

It is a horrible situation to be in, I agree, however credible alternatives are thin on the ground.

It was naivety and greed through all sectors of society compounded stupid decisions by young and old alike that have us where we are today. We have to pay for our collective excesses, and the unsustainable rise in living standards experienced during the boom, unfortunately.

And when all other arguments fail resort to the ff mantra of
"we are all at fault so suck it up"

I didn't get greedy, I wasn't naive in thinking that it was good value to buy and overpriced price of sh** in some commutter town to rent out to Ivan from Warsaw ?
It was the government's duty to protect the long term viability of the ecomony and the viability of the financial system of the country.
Instead they cheerled the property bubble, they encouraged investors/speculators into the market, which then forced even more FTBs to fear they had to get in now before it was too late.
They allowed the banks fund all of this through wreckless lending both to developers with massive loans and buyers with lifetime 100% mortgages.
Even worse they labelled anyone that sounded alarms bells as whingers and were told to go off and committ suicide.

Here is an idea why don't the ffers that created this whole mess through their policies do us all a favour and fu** off and follow their own advice.

oppenheimer1 wrote: »

I suspect the idea was Alan Ahearnes tbh.

I thought it was Peter Bacon, ex director of Sean Mulryan's property development company Ballymore, ex Managing Director of Goodbody Stockbrokers specialist insider dealers to AIB, ex Department of Finance, ex OECD and the World Bank.

AFAIK Alan Aherne was against NAMA initially until he got job in Dept of Finance or someone can maybe correct me on this ?

oppenheimer1

jmayo wrote: »

Ah for fe**s sake, using that analogy no bank or financial institution should ever be allowed fail.
Capitalist free market principles will apply to everyone bar the banks it seems ? :rolleyes:
I don't remember many riots in Iceland or the US and they AFAIK had banks fail ?



Of course your funds on deposit were probably actually the quasi illegal ?? deposit that IL&P had with Anglo, you know the one that misled the markets as to the true position of the banks deposits.

I love your line where you claim the bank was and is systemic. :rolleyes:
It was a niche bank and if it was allowed fail then the taxpayers would not have to carry it's gigantic losses resulting from it's greedy incompetent short termed decisions made in favour of a particular well connected bunch of greedy developers and politicans.

At the time of its nationalisation Anglo was Irelands third largest bank,with a balance sheet size of €100bn.

You may not have seen riots in Iceland yet, but wait until they are forced to pay back the overseas liabilities of their banks, or are made to give away their natural resources for a song.

I am fully aware what went on was wrong, yet you seem intent on drawing party politics into the debate. We need to move on, we have to move on!

Liam Byrne

oppenheimer1 wrote: »

At the time of its nationalisation Anglo was Irelands third largest bank,with a balance sheet size of €100bn.

Was that the real one or the fictional one ?

BrownianMotion

oppenheimer1 wrote: »

At the time of its nationalisation Anglo was Irelands third largest bank,with a balance sheet size of €100bn.

You may not have seen riots in Iceland yet, but wait until they are forced to pay back the overseas liabilities of their banks, or are made to give away their natural resources for a song.

I am fully aware what went on was wrong, yet you seem intent on drawing party politics into the debate. We need to move on, we have to move on!

The Anglo issue goes beyond the discussion of NAMA.

In fairness to jmayo I don't see any reference to party politics. Too often criticism of the Government is passed off as a parochial grudge rather than a genuine criticism. This is an often used excuse to avoid the issues raised.

oppenheimer1

jmayo wrote: »

Here is an idea why don't the ffers that created this whole mess through their policies do us all a favour and fu** off and follow their own advice.

BrownianMotion wrote: »

The Anglo issue goes beyond the discussion of NAMA.

In fairness to jmayo I don't see any reference to party politics. Too often criticism of the Government is passed off as a parochial grudge rather than a genuine criticism. This is an often used excuse to avoid the issues raised.

Well in every post jmayo makes a derisive reference to the Fianna Fail party. I find it hard to read constant criticism, without even bothering to even glance at the merits of what the government is trying.

Liam Byrne

oppenheimer1 wrote: »

I find it hard to read constant criticism, without even bothering to even glance at the merits of what the government is trying.

What the government is currently trying is largely irrelevant, as it doesn't take away from the fact that they are responsible for getting us into this mess.

And it also doesn't take away from the fact that they don't do accountability.

If O'Dea can lie through his teeth and get a vote of confidence, how can we trust this shower not to give a vote of confidence to the bankers and developers when they don't deserve it either ?

bottomdog

LIAM BYRNE

It is refreshing to read your comments. I am just back from the USA where the CEO of a bank explained in one sentence what NAMA was.

Quote

''A group of international banks based worldwide, lent €billions, to another group of International Banks based in Ireland, who in turn lent it primarily to property developers, and when the deal went sour they pulled the stroke of the century by talking the Irish government into taking the can, it was incredible that they bought it''.

I replied that AIB and BoI et-al are 'Irish' banks and if they fell we all would have lost our savings and the country would have been ruined?

He looked at me and replied, The so-called Irish banks were 90% owned by foreign banks and stockmarket investors. They were only Irish in name.So if your banks had failed it was mainly foreign money that would have been lost. As for your savings, well the government could have guaranteed them and the payout would have been a fraction of Nama. Lastly if your banks had failed they would have been instantly replaced by new banks taking up where the Irish bad banks left off.

The penny dropped and I asked were the banks systemic to our survival as our Minister told us.

Buddy, your government bailed out a group of international bankers, there is not a country in the world that would have fallen for it.

And now the Irish people must repay the debt....it's sick

MaceFace

bottomdog wrote: »

LIAM BYRNE

It is refreshing to read your comments. I am just back from the USA where the CEO of a bank explained in one sentence what NAMA was.

Quote

''A group of international banks based worldwide, lent €billions, to another group of International Banks based in Ireland, who in turn lent it primarily to property developers, and when the deal went sour they pulled the stroke of the century by talking the Irish government into taking the can, it was incredible that they bought it''.

I replied that AIB and BoI et-al are 'Irish' banks and if they fell we all would have lost our savings and the country would have been ruined?

He looked at me and replied, The so-called Irish banks were 90% owned by foreign banks and stockmarket investors. They were only Irish in name.So if your banks had failed it was mainly foreign money that would have been lost. As for your savings, well the government could have guaranteed them and the payout would have been a fraction of Nama. Lastly if your banks had failed they would have been instantly replaced by new banks taking up where the Irish bad banks left off.

The penny dropped and I asked were the banks systemic to our survival as our Minister told us.

Buddy, your government bailed out a group of international bankers, there is not a country in the world that would have fallen for it.

And now the Irish people must repay the debt....it's sick

I wonder if this guy honestly believes what he is saying or is just mischievous making, but how would he square the problem that we have now where international banks are actually pulling out of the country?

Does he not realise that we literally have two banks in this country that 90% of the country relies on. Look at the difficulty small business is having today with getting credit. Without BOI and AIB, the extremely limited credit would be absolute zero credit.

fontanalis

bottomdog wrote: »

LIAM BYRNE

It is refreshing to read your comments. I am just back from the USA where the CEO of a bank explained in one sentence what NAMA was.

Quote

''A group of international banks based worldwide, lent €billions, to another group of International Banks based in Ireland, who in turn lent it primarily to property developers, and when the deal went sour they pulled the stroke of the century by talking the Irish government into taking the can, it was incredible that they bought it''.

I replied that AIB and BoI et-al are 'Irish' banks and if they fell we all would have lost our savings and the country would have been ruined?

He looked at me and replied, The so-called Irish banks were 90% owned by foreign banks and stockmarket investors. They were only Irish in name.So if your banks had failed it was mainly foreign money that would have been lost. As for your savings, well the government could have guaranteed them and the payout would have been a fraction of Nama. Lastly if your banks had failed they would have been instantly replaced by new banks taking up where the Irish bad banks left off.

The penny dropped and I asked were the banks systemic to our survival as our Minister told us.

Buddy, your government bailed out a group of international bankers, there is not a country in the world that would have fallen for it.

And now the Irish people must repay the debt....it's sick

.

What bank was he CEO with?

bottomdog

MaceFace wrote: »

I wonder if this guy honestly believes what he is saying or is just mischievous making, but how would he square the problem that we have now where international banks are actually pulling out of the country?

Does he not realise that we literally have two banks in this country that 90% of the country relies on. Look at the difficulty small business is having today with getting credit. Without BOI and AIB, the extremely limited credit would be absolute zero credit.

Are you serious ?

The first thing is to understand this is not our debt or our problem. It's a wrangle between three parties.

1- Irish Developers
2 - International Banks based in Ireland ( aib and Bank of Ireland )
3 - International banks that lent to AIB and Bank et-al.

Not all Irish based banks lent poorly. Rabo is AAA rated to name one.

If the government announced that Nama was reversed. But deposits were protected. What would happen ?

The banks would not be able to pay back their international lenders and they would collapse.

You would take your money out.

All the loans would be sold into the international bank pool at a discount.

New banks would emerge and most likely move straight into the offices of the recently departed AIB and BoI.

Ireland is back in business, The international banks lick their wounds and curse the Irish for a few months.

And the Irish government no longer would need to cripple the Irish taxpayer with heavy taxes used to bail out banks. This influx of extra money would kickstart the economy again.

Other international banks recognising that the Irish people were no longer crippled with the Nama debt would lend to Irish businesses.

Can I honestly ask you can you not follow this, or is their something you can explain to me to show me how you could see this pan out?

bottomdog

fontanalis wrote: »

.

What bank was he CEO with?

He is Global CEO of a bank. I doubt very much that he'd repeat his private comment in public. But he is bang on the money

oppenheimer1

bottomdog wrote: »

He is Global CEO of a bank. I doubt very much that he'd repeat his private comment in public. But he is bang on the money

I doubt he can repeat his comment, because he doesn't exist. Too many anonymous "sources" on boards.ie.

oppenheimer1

bottomdog wrote: »

Are you serious ?

The first thing is to understand this is not our debt or our problem. It's a wrangle between three parties.

1- Irish Developers
2 - International Banks based in Ireland ( aib and Bank of Ireland )
3 - International banks that lent to AIB and Bank et-al.

Not all Irish based banks lent poorly. Rabo is AAA rated to name one.

If the government announced that Nama was reversed. But deposits were protected. What would happen ?

The banks would not be able to pay back their international lenders and they would collapse.

You would take your money out.

All the loans would be sold into the international bank pool at a discount.

New banks would emerge and most likely move straight into the offices of the recently departed AIB and BoI.

Ireland is back in business, The international banks lick their wounds and curse the Irish for a few months.

And the Irish government no longer would need to cripple the Irish taxpayer with heavy taxes used to bail out banks. This influx of extra money would kickstart the economy again.

Other international banks recognising that the Irish people were no longer crippled with the Nama debt would lend to Irish businesses.

Can I honestly ask you can you not follow this, or is their something you can explain to me to show me how you could see this pan out?

If the banks aren't able to pay out to their international lenders, with what money do you expect them to pay out to their deposit holders with?

And what would happen in the intervening months between the irish banks dying and the foreign banks moving in? The sale wouldn't be instant as due diligence would have to take place, assuming you could find someone interested.

In the mean time there is no functioning financial system. With cash frozen in accounts payroll cannot be made and people have no access to cash. Barter economy looms, riots, food shortages. To suggest wiping the slate clean and starting afresh is appealing but ultimately too symplistic. It would totally destroy out international reputation for decades and the country, whatever is left of it, afterwards.

The last person to leave the country wouldn't have to turn out the lights, because they wouldn't be on.

Cool Mo D

bottomdog wrote: »

The banks would not be able to pay back their international lenders and they would collapse.

You would take your money out.

If the banks collapsed, you would not get your money - it would not be there. You would have to wait - probably months, to try and get your money from the Government that insured you. In the meantime, there would be no money or lending for 90% of the population. Without access to cash, the country would probably collapse.

SkepticOne

Cool Mo D wrote: »

If the banks collapsed, you would not get your money - it would not be there. You would have to wait - probably months, to try and get your money from the Government that insured you. In the meantime, there would be no money or lending for 90% of the population. Without access to cash, the country would probably collapse.

Just wondering why did this not happen in Iceland, whose banking problem is proportionately far greater than ours, when their banks collapsed. There were initial queues at the ATM machines, but once people realised they could continue to get money out the panic died down.

dunsandin

I believe that I made much the same points as the "CEO", in an earlier post. I can't fully recollect, but did Argentina descend into chaos following the run on their Banks? A critic would probably say that if the banks had been allowed to fail, the pain to our economy would have been unbearable. If like me you own and operate a s.m.e , you are undoubtably feeling a lot of pain as it is, and if the situation regarding non-borrowing by banks, non-payment by cash hoarding creditors and widespread and destructive default on credit agreements i.e impending reposession of homes, widespread forceful reposession of financed assets eg machinery and vehicles, rocketing unemployment, a crazy need for our govt. to actually generate savings of 1 billion per month going forward(not per annum as they curently seem to be aiming for). The pseudo-legitimate holding of the expenditure on NAMA as an off-balance sheet figure, so as not to further impare our flagging national credit rating, the..... if you think letting the banks fail would have hurt, stick around for the next decade or two. Its a bit like the band-aid, either rip it off and have pain for a few seconds, or peel it bit by bit, for a lingering experience. I believe Nama will be a lingering experience.

WalterMitty

we should nationalise tha banks for the small market cap , cancel or slim down NAMA, recognise all loses and cut a deal with bond holders. Then sell the cleaned up banks to a large bank like santander that hasnt been seriously affected by credit crunch.

oppenheimer1

SkepticOne wrote: »

Just wondering why did this not happen in Iceland, whose banking problem is proportionately far greater than ours, when their banks collapsed. There were initial queues at the ATM machines, but once people realised they could continue to get money out the panic died down.

The banking system didn't collapse per se in Iceland the banks did. They were all nationalised in an emergency session, so essentially the Icelandic government is the banker for Iceland. What they also did was just cast aside the foreign parts of the icelandic banks business and use all their resources to keep the domestic system ticking over. Its the foreign liabilities which is what is causing them so much trouble now.

dunsandin

I'm not sure about the "selling" them bit, perhaps a better approach would be to offer them to any taker for a euro, and let them rationalise the debts as they see fit. Nama, as much as I think it will be a dissaster for us, is not going to be as big a problem as the fact that there will be no rational policy on credit here in Ireland for the forseeable future. Once bitten, twice shy, and the big bankers will feel as though they got a pass from nama on the mess they made of the Irish credit market, they will breath a quiet sigh of relief that the mugs bailed them out of their litter tray, and hoard as much cash as possible, until they forget(as they always do)in about ten years, and the game resumes normal rules. The real losers will be the Irish People.

Chuchoter

So whats your plan? Let all the banks collapse and all the savers lose their money? That money that the banks lent out didn't come from nowhere, thats peoples savings. You get rid of NAMA, the banks collapse and not only do all the savers lose their money; small businesses can't function, vital entrepreneurs can't start out businesses and the tax income just keeps plummeting. I can't stand listening to people talking about "oh NAMA, oh the evil bankers, oh the big developers" stop complaining and deal with the fact that the problem is here, EVERYONE BOUGHT INTO IT and now we need to do something about it. You let the bank collapse and the country collapses and we won't ever be able to fix it again.

oppenheimer1

WalterMitty wrote: »

we should nationalise tha banks for the small market cap , cancel or slim down NAMA, recognise all loses and cut a deal with bond holders. Then sell the cleaned up banks to a large bank like santander that hasnt been seriously affected by credit crunch.

No foreign bank would take on our banks at the moment as they have a large debt to capital ratio. We would have to pump in €25bn just to make them saleable for a nominal sum. We would never have a chance of seeing the €25bn again. This approach is the one suggested by Prof. Lucey.

Essentiall he thinks we should take the €25bn hit on the chin and just put it down to experience. At least with NAMA there is a chance we can get our money back, eventually.

dunsandin

Crayo,You are fundamentally wrong that the money lent out was peoples savings - the Irish banks leaveraged so highly that the proportion of deposits to the amount of money lent was tiny. The money lent out was borrowed on the international short-term money market and then borrowed out long term as property loans here at home. Which is nuts in itself. And I didnt buy into it, I didnt borrow a penny from anybody, told the banks to stuff it when they offered cheap credit, and have no mortgage with anybody. I went through all this in London at the end of the eighties, and foresaw a collapse. And yes, I do own property, and a business, so the economy matters to me very much. I do not want MY children paying for sombody elses mistake.

Chuchoter

dunsandin wrote: »

You are fundamentally wrong that the money lent out was peoples savings - the Irish banks leaveraged so highly that the proportion of deposits to the amount of money lent was tiny. The money lent out was borrowed on the international short-term money market and then borrowed out long term here as property loans here at home. Which is nuts in itself.

Savings are liabilities, debts are assets. The banks assets are not being paid, all theyre left with is liabilities, regardless of how much the overall percentage of loans came out of savings, how can the banks pay back savings with money they don't have? The banks can't keep borrowing forever or we'll have their creditors in on top of us.

dunsandin

Performing debts are assets. The Irish banks model was to borrow short, sell long, rebundle and sell as a package of performing debt, back to the international market.Sound a bit subprime to me. And if they don't pay it back, the money markets will not be coming for your TV and 3 seater, but they may well have been/will be a bit miffed at our bankers.

dunsandin

crayolastereo wrote: »

Savings are liabilities, debts are assets. The banks assets are not being paid, all theyre left with is liabilities, regardless of how much the overall percentage of loans came out of savings, how can the banks pay back savings with money they don't have? The banks can't keep borrowing forever or we'll have their creditors in on top of us.

But its grand if the taxpayer keeps borrowing forever then?

It is interesting to note that when AIB was posting record profits in the early noughties, they did not dish it around to all of us, but when they post losses, suddenly its our problem. I view supporters of nama with a harsh degree of scepticism, in light of the amount of vested interests involved. An uninvolved party would simply have to feel aggrieved by the whole farce. The rote answer of "well what would you do then" is moot - its not my problem, its the banks problem, let them do what they like, they didn't ask me what to do with their profits, did they?

BrownianMotion

oppenheimer1 wrote: »

No foreign bank would take on our banks at the moment as they have a large debt to capital ratio. We would have to pump in €25bn just to make them saleable for a nominal sum. We would never have a chance of seeing the €25bn again. This approach is the one suggested by Prof. Lucey.

Essentiall he thinks we should take the €25bn hit on the chin and just put it down to experience. At least with NAMA there is a chance we can get our money back, eventually.

Could be that 25bn would be a good deal.

11bn has been put into AIB,BOI and Anglo so far.
It is estimated another 13bn is required, bringing the total to 24bn.

Even if you are of the wildly optimistic view that a private bank which is currently valued at around 1bn will be in a position to ever repay these kind of figures, we will never recoup the capital put into Anglo. This accounts for 10bn of the 24bn total.

Then we come to NAMA. This is in effect a gamble on property prices no matter how it is dressed up. The figure we were given was paying 54bn for loans valued 47bn. Thats an immediate 7bn loss to claw back. If property prices do not rise considerably we will make a huge loss.

But shure don't we all love a good flutter on house prices.

oppenheimer1

dunsandin wrote: »

But its grand if the taxpayer keeps borrowing forever then?

Well in theory a nation can borrow as much as it likes as long as its able to meet the interest payments as they fall due and people are willing to lend to it. As a state never dies, it doesn't have to pay back the capital borrowed. This is what happens all the time infact. We borrow from peter to pay paul, or refinance our debt in other words.

Chuchoter

dunsandin

1. We need money
2. Therefore we need banks
3. If we have no banks, we have no money so we won't even be allowed to borrow because the IMF will get involved.

NAMA is unfair on the taxpayer. No its not fair we are now paying back the banks. However most people in Ireland bought into the Celtic Tiger. Everyone had to have the house and the car and the whatever else. My family were on the breadline during the boom, and we didn't go take out loans to live the high life. Although your average citizen did not contribute hugely to the banks current situation, most of us did in our own way. We don't have magic powers, and I think NAMA is the lesser of two evils. You can't just say something is unfair and then just ignore the problem it is trying to solve. It doesn't just disappear because its unfair.

dunsandin

Crayo, Banks are like car dealers, not car manufacturers, they are a shop selling a service. If a shop goes bust, and can no longer sell milk, milk does not vanish, the cows make more, and someone else will open up to sell it to us. Banks do not make money, they deal in it. If they deal well, they prosper, if they deal badly, they fail. They have no magic bullet over us all, that is an illusion.

oppenheimer1

BrownianMotion wrote: »

Could be that 25bn would be a good deal.

11bn has been put into AIB,BOI and Anglo so far.
It is estimated another 13bn is required, bringing the total to 24bn.

Even if you are of the wildly optimistic view that a private bank which is currently valued at around 1bn will be in a position to ever repay these kind of figures, we will never recoup the capital put into Anglo. This accounts for 10bn of the 24bn total.

Then we come to NAMA. This is in effect a gamble on property prices no matter how it is dressed up. The figure we were given was paying 54bn for loans valued 47bn. Thats an immediate 7bn loss to claw back. If property prices do not rise considerably we will make a huge loss.

But shure don't we all love a good flutter on house prices.

That was Luceys argument, better to crystalise our losses now and move on. But if there was a bounce, particularly in non performing foreign holdings this would be a huge mistake. It also assumes that a buyer could be found, the loan book might still scare them away. A further capital injection a purchaser might demand could drive the expense up even further.

At least with NAMA there is a chance it might come good for us and might work, rather than essentially paying a foreign bank to take our operationally profitable banks away from us.

dunsandin

AIB is currently "operationally profitable" to the tune of minus 2.8 billion. And I think "unfair" is a very charitable way to describe what's being done to the taxpayer. But I do now understand how the banks are getting away with it..................

oppenheimer1

dunsandin wrote: »

AIB is currently "operationally profitable" to the tune of minus 2.8 billion.

The bank made a loss of €2.8bn after making an allowance for bad loans of €5.38bn therefore operational profit of €2.5bn

BrownianMotion

oppenheimer1 wrote: »

That was Luceys argument, better to crystalise our losses now and move on. But if there was a bounce, particularly in non performing foreign holdings this would be a huge mistake. It also assumes that a buyer could be found, the loan book might still scare them away. A further capital injection a purchaser might demand could drive the expense up even further.

At least with NAMA there is a chance it might come good for us and might work, rather than essentially paying a foreign bank to take our operationally profitable banks away from us.

With NAMA there is also a huge exposure to the downside. I do understand your point that there is a possibility of breaking even, but in my opinion as a State we cannot afford a gamble on this scale.

Perhaps it is not possible to off-load the bank as you say but personally I think it is a much more agreeable situation than NAMA.

dunsandin

Thats excellent. Can I use the same logic in my business? I made a 280,000 loss after making provisions for my actual 560,000 loss, therefore I am actually profitable..... no, I've even stretched my own very flexible accountancy rules a bit far there. So, if I follow, AIB is doing well then? Sure why do we need to bail them out so?

oppenheimer1

dunsandin wrote: »

Thats excellent. Can I use the same logic in my business? I made a 280,000 loss after making provisions for my actual 560,000 loss, therefore I am actually profitable..... no, I've even stretched my own very flexible accountancy rules a bit far there. So, if I follow, AIB is doing well then? Sure why do we need to bail them out so?

You can of course use that for your own business, and large businesses do it all the time. The losses haven't occured yet, but these are losses they expect to occur so they've put this cash in a kitty to protect themselves. If they posted a profit without qualifying they expect losses in future, then the shareholders would be very annoyed that they haven't gotten a dividend.

Liam Byrne

crayolastereo wrote: »

EVERYONE BOUGHT INTO IT

INCORRECT and "SHOUTING" it won't make it any less false. :mad:

dunsandin

Oppenheimer, I fully take your point, and believe it or not, I am quite conversant with accountancy practice. The fly in the ointment is the injection of public capital to address the loss. Would you not agree that in the case of a corporation, that capital injection would have to be procurred from an issue of bond, debt or a dilution of shares, not an injection of taxpayers money(although that does sometimes happen as well, if not quite on the scale of nama).Or is it your case that AIB has assets to hand to address the loss from its own coffers(The provision), which leads again to my question, whats it to do with us?

oppenheimer1

Liam Byrne wrote: »

INCORRECT and "SHOUTING" it won't make it any less false. :mad:

You rejected the increase in living standards over the past 10 years?

Liam Byrne

oppenheimer1 wrote: »

You rejected the increase in living standards over the past 10 years?

Lovely......make it look like I had a choice. :rolleyes:

I worked at making a living, fair wage for fair work, and never bothered going mental either (a) ripping people off or (b) taking out massive loans.

I've already documented on boards how I "could have" borrowed beyond my means, having been offered it, so if that rejection of mine can be interpreted as rejecting "the increase in living standards", then I suppose you're right.

Mind you, I'd prefer to think of it as rejecting being stupid. I - in my naievity - thought that I'd be responsible for my own borrowings, and that by not borrowing too much that I'd be able to pay that back, not realising that mismanagement and bailouts for others would hammer my income by 30%.

Personally, I think I was earning the most and best off about 14 years ago.

Definitely true to say that I'm barely getting by at the moment.

oppenheimer1

dunsandin wrote: »

Oppenheimer, I fully take your point, and believe it or not, I am quite conversant with accountancy practice. The fly in the ointment is the injection of public capital to address the loss. Would you not agree that in the case of a corporation, that capital injection would have to be procurred from an issue of bond, debt or a dilution of shares, not an injection of taxpayers money(although that does sometimes happen as well, if not quite on the scale of nama).

Foreigners, touching irish banks and barge poles all come to mind. Raising the capital in the normal way for a corporation is of course preferable for private institutions, however the last time BoI and AIB tried this they failed to raise the required funds afaik. The confidence isn't there. Unfortunately for us we need a banking system in Ireland. I actually think its an awful shame they (the banks) weren't bought out at the start of the boom. One or two less banks for the government to deal with would have eased the burden massively.

dunsandin

the last time I checked, the banks were private institutions, their profits were deffo private.If no-one wants them, tough. As it stands, private profits, public losses, sums it up, and is irrefutable. The injection of a fresh 20 billion into a new bank would have gone a long way to address the capital needs of sme's and your average joe.

dunsandin

Liam Byrne wrote: »

Lovely......make it look like I had a choice. :rolleyes:

I worked at making a living, fair wage for fair work, and never bothered going mental either (a) ripping people off or (b) taking out massive loans.

I've already documented on boards how I "could have" borrowed beyond my means, having been offered it, so if that rejection of mine can be interpreted as rejecting "the increase in living standards", then I suppose you're right.

Mind you, I'd prefer to think of it as rejecting being stupid. I - in my naievity - thought that I'd be responsible for my own borrowings, and that by not borrowing too much that I'd be able to pay that back, not realising that mismanagement and bailouts for others would hammer my income by 30%.

Personally, I think I was earning the most and best off about 14 years ago.

Definitely true to say that I'm barely getting by at the moment.

This would sum up my personal experience and situation perfectly.

dunsandin

Could somebody please explain to me, in simple terms, how bankcrupting the taxpayer will "rescue" our economy in the long term. It is a total mystery to me. Or do we all believe that that field in Athenry, that was valued at €65,000,000, and mortgaged as such, and is now worth €65,000, will somehow recover its value through the passage of time? Even if the taxpayer buys the toxic loan via lala for €50,000,000(a snip), will it ever reach the dizzy(loopy) heights it attained during the boom, or is €65,000 the real long term value? I have a punto for sale, it cost €8500. I believe its long term value to be €8,000, the market says €200 - will nama give me what I want for it - it seems if my name was BOIAIBa, it would.

thebman

dunsandin wrote: »

Could somebody please explain to me, in simple terms, how bankcrupting the taxpayer will "rescue" our economy in the long term. It is a total mystery to me. Or do we all believe that that field in Athenry, that was valued at €65,000,000, and mortgaged as such, and is now worth €65,000, will somehow recover its value through the passage of time? Even if the taxpayer buys the toxic loan via lala for €50,000,000(a snip), will it ever reach the dizzy(loopy) heights it attained during the boom, or is €65,000 the real long term value? I have a punto for sale, it cost €8500. I believe its long term value to be €8,000, the market says €200 - will nama give me what I want for it - it seems if my name was BOIAIBa, it would.

Don't the banks pay back any losses nama makes?

And isn't nama funding not being added to our national debt?