David McWilliams on NAMA

[Purple]

From todays Indo;
[broken link removed].

 

[Duke of Marmalade]

Awful rubbish. I won't go thru it line by line but just single out one sentence:

This (letting the system collapse and snapping up all the land at firesale prices to be set to public use) will mean the orderly winding down of some banks over the course of the next year.

My bit in italics. The use of the term "some banks" suggests that we have hundreds of these and we can spare a few. In fact his proposal would certainly see the demise of the Big Two as well as most other domestic entities. Secondly there is no way this would be an orderly process stretching over a year.

 

[Slim]

McWilliams says that as depositors are guaranteed by government, they could let the bank(s) go to the wall and snap up the land/sites cheap! What I don't understand is how government can pay the depositors, which includes me so I'm grateful, and still not spend €40-60bn of taxpayers' money?

 

[bluemac]

We do have to stop NAMA its a big mistake in many many respects... we will all pay for it for a long time to come... My thoughts are let them discuss it for another 8-10 months then decide not to do it. The banks are holding on as it is, and really its not about dept its about confidence in the markets and banks and that confidence is returning in the US and UK and the rest will follow. It will be a lot slower here in ireland and credit may be harder to come by. Your average man should get his loan there just wont be money for big building projects which we dont want anyway.

My main worry is as an example a developer local to me bought a field 20 acres for 2 million to develop on he has no planning permission carnt pay the dept now as he never sold his last 20 house's. So Nama buys that off the bank for 30% of the orginal value 600k, the tax payer now owns a field that cost 600k thats worth about 200k today. No one will want to build on it for at least 10-20 years as the market is over supplied with houses. and so all we can do is wait for a farmer to buy it back as land. how long do we have to wait for the value to increase back to the price we all paid?

 

[Towger]

It is not NAMA I would worry about, at least we are getting something for our 60b and there is an end in sight, somewhere! But what about the 20b the government is borrowing just to pay for the day to day running of the country. Now, that can't keep going on, but there is no end in sight and no sign of the government making and hard decisions or cutbacks.

 

[TLC]

He does seem to be correct in that it does appear as if the government are still backing the people who got us into this in the first place (along with themselves of course) the bankers & developers. A case in point of the banks getting together to keep themselves in charge - is the current case in the courts re: appointing an examiner - the banks are willing to back those companies but are turning down "ordinary" punters looking for a mortgage. It's the same old cartels still operating.

 

[noelywire]

Given that this article is from 2005, doesn't it seem the man knows what he's talking about?

[broken link removed]

 

[foinse]

I heard him on RTE Drivetime radio show yesterday, and the tone of his voice scared me.
He sounded like someone who was just about to be pushed over a cliff.
Everything that he said made sense.
You can get a summary on his blog:
[broken link removed]

Some quotes from it:
"From the Swedish crisis of the early 1990s to the Asian Tiger collapse and the USA today, banks go bust and the countries recover." This was confirmed by a Swedish Ploicician on RTE morning Ireland this morning.
"the State wants to protect the people who got us into this mess so they can hold on to some gains in the chaos."
"When investors see that we are being ruled by financial fanatics, they stay miles away because they know investing is pointless."

I am worried and scared about this NAMA.
If I were younger and with no commitments I would certainly consider setting up in a different country if NAMA goes ahead as proposed.

 

[Duke of Marmalade]

"When investors see that we are being ruled by financial fanatics, they stay miles away because they know investing is pointless."

This is actually flying in the face of reality. Despite our huge problems (and in relative terms much worse than most) Ireland is still reasonably able to raise large funds internationally, and it needs to. We still have a AA rating and our spreads have fallen significantly from the panic days of Anglo nationalisation. Whatever the other merits of McWilliams "let them all collapse" proposal it is very difficult to see it improve our credit rating, as he implies.

 

[sunrock]

It is not NAMA I would worry about, at least we are getting something for our 60b and there is an end in sight, somewhere! But what about the 20b the government is borrowing just to pay for the day to day running of the country. Now, that can't keep going on, but there is no end in sight and no sign of the government making and hard decisions or cutbacks.

The 20 billion yearly deficit that the government is spending goes into everyones pockets in welfare, salaries etc.....The reason the government won`t reduce that deficit is the pain and political backlash it would unleash......so they are going to try hanging on as long as possible.
The 60 billion...actually its 80 billion + the government is going to give the banks is going to pay off the banks senior bond holders ( and no one has answered my question as to who these are but we can safely assume this money will be leaving the country).What are we getting for this....well the unsold houses and development land that comprise the property loan portfolio of the banks.The government will strive to keep the price of these houses high, even as the taxpayer who is going to be paying back the 80 billion+ ,will have much reduced spending power.

 

[brenr6]

I don't really understand NAMA nor any of the other complex economic arguments, nor, I suspect, do many of the people commenting on it.

But on the face of it this country looks bunched whichever way we go and as a previous contributor said if you were young and had no ties it would be time to go.

One thing is for sure this country was mismanaged. Many of the idividuals responsible have insulated themselves from the consequences of their excesses through their gathering of wealth during the good years. It will be ordinary people and their children who pay for it.

Its a never ending cycle - while our kids will have great difficulty attending college in years to come, the children of those responsible wont and a new elite will be created to do the same thing to another generation.

Im just an ordinary person with no political leanings whatsoever but I cant help feeling a bubbling rage inside at whats happened and that in other countries there would be a revolution.

 

[tiger]

In general I like DmW, decklanders and popes children aside.
I think what he's proposing here is a little extreme, but maybe closer to what we should be doing than NAMA in it's current form.

 

[darag]

I'm not a big fan of DMcW but I think it is worth reading the article linked to by noelywire which is shockingly prescient. I know the response will be that he has been predicting doom of some sort or other for quite a while and so people will argue that it was inevitable that he would eventually be proven correct. This would be unfair as, in this article, he uncannily describes the precise mechanism and the result of what has happened over the last year and a half.

In regard to his "Stalingrad" message, you can normally pick big holes in his arguments (one of the silliest was his call for Ireland to leave the euro) but I don't find anything ludicrous in this piece. Duke has a point but I'm not sure it's enough one to dismiss the substantive message of the piece.

 

[csirl]

McWilliams is opposed to our Eurozone membership in spite of our membership of it being a no-brainer. This makes me sceptical of his opinions on anything because if he was so far off the mark on the euro, he may also be with his other opinions.

 

[suemoo1]

+1 totally agree brenr6.. we are being punished for the sins of bankers, politicians, developers etcetc.......

 

[onekeano]

McWilliams is opposed to our Eurozone membership in spite of our membership of it being a no-brainer. This makes me sceptical of his opinions on anything because if he was so far off the mark on the euro, he may also be with his other opinions.

so CSIRL - would you be more inclined to support something that is being promoted by the people who have governed us for 23 out of the last 25 years. I'd go for McWilliams every time myself and I'll be on the march tomorrow....

Roy

 

[goosebump]

Im just an ordinary person with no political leanings whatsoever but I cant help feeling a bubbling rage inside at whats happened and that in other countries there would be a revolution.

What is happening in Ireland has happened in several countries, both in the recent and more distant past.

Its worth remembering that for all our outrage re. the property bubble and the reckless lending, there were few if any of us manning the barricades when the Government was spending hundreds of millions of stamp duty receipts on childrens allowance, pensions, early childhood supplement, €200 per week Jobseekers Benefit etc etc

 

[goosebump]

My main worry is as an example a developer local to me bought a field 20 acres for 2 million to develop on he has no planning permission carnt pay the dept now as he never sold his last 20 house's. So Nama buys that off the bank for 30% of the orginal value 600k, the tax payer now owns a field that cost 600k thats worth about 200k today. No one will want to build on it for at least 10-20 years as the market is over supplied with houses. and so all we can do is wait for a farmer to buy it back as land. how long do we have to wait for the value to increase back to the price we all paid?

That dilema exists in every solution other than letting the system collapse. The size of our insolvency hole is just too great to deal in (so called) market values.

 

[onekeano]

What is happening in Ireland has happened in several countries, both in the recent and more distant past.

Its worth remembering that for all our outrage re. the property bubble and the reckless lending, there were few if any of us manning the barricades when the Government was spending hundreds of millions of stamp duty receipts on childrens allowance, pensions, early childhood supplement, €200 per week Jobseekers Benefit etc etc

Classic Bertienomics.... throw money at everyone and everyone and slither away with a pension which costs the victims €7mn!

 

[smiley]

Classic Bertienomics.... throw money at everyone and everyone and slither away with a pension which costs the victims €7mn!

What you say is not rational. Im not a big fan of bertie but from what i can recollect bertie was forced to resign as taoiseach due to massive pressure from the mahon tribunal findings?

He was very lucky when it came to timing, but so was Tony Blair.