You are the Taoiseach. What would you do?

D3PO

So I just thought It might be good to start a discussion here on possible policy ideas on how to tackle the current property situation in this country.

Obviously we have NAMA which will deal with the developmental sid eof the crisis with the hope it will end with a cleaning of the banks loan books.

But what else would you do ?

Perhaps a new detailed shared ownership scheme for struggling homeowners could be introduced ?

Rather than the government shelling out a mortgage interest relief suppliment Id much rather see the government buy a small portion of struggling homeowners properties off them at current market price - 30%

The homeowner would then have the option of buying back this share at some point in the future at the then market price or the value paid by the government whichever is more, or when they sell up the same clause would be invoked goverment get x % of the sale price or their investment back whichever is more

So heres an example

Couple A buys house for 250k

Couple A is struggling as 1 person has lost their job.

House is now valued at 130k couple A applies for share ownership scheme.

Government agree to purchase 25% of the property for current market value - 30% €22,750

This money allows couple A to get back into a good financial situation.

It prevents legal costs being attributed to the state in the guise of repo hearings, it prevents the need for some potential bank recapitalisation in the future.


It ensures the political system in this country is looking after its citizens

It creates a potential revenue stream in the future for the government.

Now clearly there would need to be some very detailed clauses in such a proposal, based on eligibility, and based on what would happen on any future mortgage default by the applicants, but I think if fleshed out and brainstormed it could be a decent proposal.

I would also be proposing overall reform off the planning system & the knocking down and rezoning to agri land where some developments are just never going to be viable (of course NAMA is politically independent so I couldnt actually do anything on this point )

What would you do in terms of policy to address the current housing issues ?

super_furry

Nothing, let the market find its own level without price fixing, intervention or throwing away more and more tax money into a ponzi scheme. Isn't that what free market capitalism is meant to be about? All this propping up and 'putting in a false floor' is only prolonging the agony.

quozl

Where would the money for this scheme come from?

We already have topped the EU budget deficit league, and we're talking >20% next year as the EU is refusing to let the chancers claim the money going into anglo will be coming back out.

Greece just called the IMF/ECB in, we have a bigger deficit than them, and a larger public debt as % of GDP thanks to NAMA.

We're quite likely to be calling them in as it is.

More profligate spending in an attempt to avoid the inevitable won't help.

In fact, as accomodation costs are such a large component of competitiveness we need them to return to more sane levels imo.

As to what I'd do, that's harder of course. I would NOT have brought in NAMA. I would not be trying to prop up a bubble. It won't work, and it's costing us an insane amount of money. It may even trigger the financial collapse of our state.

Idbatterim

I feel there are several main issues: tackling the collossal deficit, getting people back to work, the housing crisis, regaining competitiveness. How much € per annum goes to supporting all social welfare rent related schemes? anyone have an idea? Look at the problems the last few billions of cuts are creating, I reckon there is easier money to save.

quozl

TBH, things are so messed up I'm completely daunted as to suggestions on what to do.

I agree about looking at rent-allowance, it's a subsidy to landlords which people misunderstand as help for poor tenants. Without it the market would fall to where tenants could afford the same properties anyway.

That's only small change in the big picture of where we are though.

We should not be paying back the interbank loans of a private enterprise - Anglo.

It's not irish public debt, we should be forcing anglo creditors to re-negotiate for pence in the euro. This whole spin bull**** put about by FF about the bond markets spurning us if we do is ridiculous. They're not stupid they can tell the difference between private and public debt even if the people FF are spinning to can't - the dutch let a private bank go down without feeling the need to dump it's losses onto the public purse and they're infinitely more respected than we are currently.

TBH, what's really scaring the bond markets about us is the growing debt spiral which anglo is really compounding.

But, sadly, I feel that things may have gotten to the point where nobody will be able to save us from the same fate as greece. FF have stayed in long enough to really seal the deal via the bank bailout.

For an interesting look into the future check out http://ftalphaville.ft.com/blog/2010/04/23/210426/it-begins-greece-asks-for-eu-imf-aid/

Look at the changes the IMF is 'suggesting'. Scary stuff imo.

Idbatterim

[HTML]TBH, things are so messed up I'm completely daunted as to suggestions on what to do.[/HTML] Firstly I totally concur with that sentiment. Look I run a family business if one of my debtors doesnt pay, what am I going to do refuse all future business? and shut up shop? Not all investments yield a return! I.e Anglo shares! The figures involved in all bank bar Anglo, are huge but just about pallatable! The Anglo figures are incomprehensible!

Freddie59

Idbatterim wrote: »

[HTML]TBH, things are so messed up I'm completely daunted as to suggestions on what to do.[/HTML] Firstly I totally concur with that sentiment. Look I run a family business if one of my debtors doesnt pay, what am I going to do refuse all future business? and shut up shop? Not all investments yield a return! I.e Anglo shares! The figures involved in all bank bar Anglo, are huge but just about pallatable! The Anglo figures are incomprehensible!

have to disagree. It's all unpalatable. Disgusting. Scam. Call it what you like. They were ALL failed businesses that should have been left go to the wall. That bailout is truly the ugly face of capitalism.

Before this 'crisis' the Government couldn't 'intervene' because it would be 'anti-competitive' (a la Waterford Crsytal). A month later all the rule books go out the window. It is truly sickening.:mad:

And then the 'Government' fold their arms and tell us they can't 'intervene' when the banks go squandering OUR money and raise interest rates.

Surreal doesn't even cover it. Here in Waterford a number of new developments went back on the market recently, with 2008 prices being sought. At least the 2nd-hand market is still looking for a bottom. Thankfully.

OMD

Freddie59 wrote: »

And then the 'Government' fold their arms and tell us they can't 'intervene' when the banks go squandering OUR money and raise interest rates.
.

The banks are not "squandering OUR money" by raising interest rates. They would be squandering our money if they failed to raise interest rates

The_Conductor

The first thing on a long list that I would do- is reform of personal bankruptcy laws. We currently have developers running to the UK and other jurisdictions (notably the US) in order to escape their personal (as oppossed to business) liabilities in Ireland. We need to reform our Victorian laws, bring them into the 21st century, and then make sure people are aware of the new laws and how they may affect (and effect!) them.

The 'Jingle Mail' phenomena in the US cannot be allow to repeat itself here- there has to be a consequence for people's actions- however that consequence should not be indefinite penury (the 12 year rule was in good faith, but in the presence of far more lenient rules elsewhere- not relevant in the modern world).

We don't have money to spend on schemes- any schemes. We also cannot afford to sit idly by and allow all hell to break loose as mortgage defaults turn into an even larger problem than the developers mess.

At present schemes such as the various social welfare handouts- are setting an artificial floor on property price falls- we critically need to reaccess these.

Any action has to be seen to be fair and reasonable- someone who exercised due caution and diligence during the boom years, must not feel they are paying for the excesses of their neighbours........

ricman

Give 90 per cent of the nama property to charitys, threshold, local authoritys, reduce the housing list and rent allowance payments will be reduced.I know 1 single mother , she was paid around 70k in rent allowance before she got a corporation flat.I,D close down 90 per cent of quangos .Put into law strict limits on bank bonus,s and pensions, pay rises until they pay back 50billion.
EVERY bank,building society has to publish every 6 months ,details of all loans to bank board members or employees.But experts say the most serious matter is not nama, its the difference between government spending and tax income, which means we are borrowing x billion per year
just to pay for public service wages and services.

Freddie59

OMD wrote: »

The banks are not "squandering OUR money" by raising interest rates. They would be squandering our money if they failed to raise interest rates

Tosh. The banks have gotten away with, literally, murder. Preferential treatment for an industry rotten to the core. It is disgusting.

Freddie59

ricman wrote: »

Give 90 per cent of the nama property to charitys, threshold, local authoritys, reduce the housing list and rent allowance payments will be reduced.I know 1 single mother , she was paid around 70k in rent allowance before she got a corporation flat.I,D close down 90 per cent of quangos .Put into law strict limits on bank bonus,s and pensions, pay rises until they pay back 50billion.
EVERY bank,building society has to publish every 6 months ,details of all loans to bank board members or employees.But experts say the most serious matter is not nama, its the difference between government spending and tax income, which means we are borrowing x billion per year
just to pay for public service wages and services.

You're heading in the right direction somewhat.

* Gut the Social Welfare system, which is rife with fraud.

* How many people are on 'invalidity/disability'? How many are ACTUALLY disabled/invalided?

* Gut the HSE, a quango of unbelievable waste.

* Finally, when the politicians are governed by the same rules as the rest of us regarding pensions, conditions of employment, and holidays we might be getting somewhere.

Teddy Daniels

Goving the houses away although a lovley idea is not going to happen; it would crash the price of houses for a long time. in my opinion the jingle mail will ring in the next 3 years without them doing this.
The govt is going to knock and trickle houses out so the prices don't fall as much as they might, do I agree ? I don't know only time will tell.

ricman

The CHARITYS, or corpo would only be allowed to give the houses to people on the housing list as per the present system, or to use as community/youth centres , or to people on low wages.it might reduce the general level of rent ,which would be good for the economy overall.
Most of the nama property is outside the big citys anyway.

tenchi-fan

I think government intervention is what got us in the mess to begin with.

Tax breaks for property developers, anyone? And many of the housing developers simply rent the buildings back to councils costing the state even more.

Local councils are snapping up houses for immigrants and the unemployed while low paid workers cannot afford houses. And in an effort to help the low paid, the council bought houses for an affordable houses scheme which (after the market correction) cost the councils millions and didn't benefit a single soul ... a lot of people who bought them are actually in negative equity!

And all the admin involved in your scheme. It would cost millions in admin costs alone, and then all the public servants will go on strike and create backlogs. It will certainly not create revenue!

A lot of the people who are struggling now are the people who would be prospering if things went the other way and the economy improved. This is how the market works. We need to end government intervention.

OMD

Freddie59 wrote: »

Tosh. The banks have gotten away with, literally, murder. Preferential treatment for an industry rotten to the core. It is disgusting.

Banks need extra capital. I think it is best to get this money from their normal business activities ie increasing margins on mortgages to normal. At present the margins Irish banks charge on mortgages are very small by international standards.

If you believe banks should continue to give cheap mortgages on one hand while at the same time getting extra money from taxpayers then I think you have a very poor understanding of the situation this country is in.

Freddie59

OMD wrote: »

Banks need extra capital. I think it is best to get this money from their normal business activities ie increasing margins on mortgages to normal. At present the margins Irish banks charge on mortgages are very small by international standards.

If you believe banks should continue to give cheap mortgages on one hand while at the same time getting extra money from taxpayers then I think you have a very poor understanding of the situation this country is in.

I probably have a better understanding than some.:p Where, exactly, did I say that banks should give out 'cheap mortgages'?

The banks should NEVER have gotten ANY money from taxpayers, Full stop. It is preferential treatment for an industry which was badly managed (to put it mildly) from the top down.

Like any incompetent business they should have been left go to the wall. But I see YOU'RE advocating that they don't. And I'm the one without an understanding of the situation?:D Any particular reason, my friend?:)

Newaglish

Freddie59 wrote: »

Tosh. The banks have gotten away with, literally, murder. Preferential treatment for an industry rotten to the core. It is disgusting.

Do you mean figuratively or are you suggesting "the banks" actually had someone killed?

OMD

Freddie59 wrote: »

I probably have a better understanding than some.:p Where, exactly, did I say that banks should give out 'cheap mortgages'?

The banks should NEVER have gotten ANY money from taxpayers, Full stop. It is preferential treatment for an industry which was badly managed (to put it mildly) from the top down.

Like any incompetent business they should have been left go to the wall. But I see YOU'RE advocating that they don't. And I'm the one without an understanding of the situation?:D Any particular reason, my friend?:)

If you believe AIB and BoI should have been let go to the wall then you simply do not understand the situation.

On the point of cheap mortgages what did you mean by
"the banks go squandering OUR money and raise interest rates."?

How does raising interest rates squander our money? As I said before not raising rates would be squandering our money.

Connrang

Easy,

Resign, take your mates with you, apologise for the state of the country. And dont bother with the big fat TD's and Ministers pension.

Freddie59

OMD wrote: »

If you believe AIB and BoI should have been let go to the wall then you simply do not understand the situation.

On the point of cheap mortgages what did you mean by
"the banks go squandering OUR money and raise interest rates."?

How does raising interest rates squander our money? As I said before not raising rates would be squandering our money.

OK - simple misuse of the English language. But if you want to get pedantic.

1. Squandering of money: an inept, bankrupt organisation gives staff a 3.5% pay rise while the Government (the de facto owners) are trying to convince Public Sector workers (I'm not one BTW) that they have to take pay CUTS!:rolleyes: All the time the Government rolls out some lame contract excuse.

2. Now, as regarding 'not understanding the situation', it's quite clear cut. The banks took a gamble (on the property market and developers) which failed. If this were any other private company it would have meant instant liquidation. End of story. What happens here? They're PROTECTED.

Again, if these were any normal private enterprise, this would have been deemed 'anti-competitive' (Waterford Crystal again).

Whatever about ONE bank being saved - the whole lot of them? No way. This will impact on us economically for YEARS and generations to come.

It's hard to imagine how anyone can even contemplate defending this farce.

Freddie59

Newaglish wrote: »

Do you mean figuratively or are you suggesting "the banks" actually had someone killed?

Figuratively, of course!