NAMA go-slow holding up payments

[onq]

[broken link removed]

There was a piece with Tom Parlon of the Construction Industry Federation n the six one news yesterday talking about the Pierse Group seeking Examinership in the High Court.

Parlon referred to the fact that Pierse was owed a lot of money and said that he was aware through his organization's members that Nama was holding up payments on monies due to developers - taking up to six weeks to process claims according to hm.

This was contested by Nama, in a direct message to the newsdesk while on air, stating that there was no matter that did not get dealt with after 1 week.

Parlon refuted their position stating that he knew as a fact that this was not the case immediately following hearing of their assertion from Brian Dobson.

My experience of such things is that we could be talking apples and oranges here - one persons "addressing something" might be opening a file and allocating a number, while another person's "dealing with a claim" might be actually paying out the money.

As a member of the architectural profession, if Parlon's Members are getting paid at all they are doing well, better than most.

But his other comments were more telling.

The construction industry back in 2006 accounted for 24% of GDP an unsustainable level - now its down to 6%, it should be around 12%.

It as seen 300,000 jobs lost at all levels.

Parlon also made the point that government departments have not spent their capital allocations for this year.

In my opinion we need that stimulus badly.

In Parlon's estimation, every Billion spent in Contruction is 50,000 jobs and we all know that despite the comments of others on AAM suggesting that many of these are largely foreign workers sending monies home, they have to live here, monies get spent here, tax and VAT are collected here, and so all boats rise.

Taken together with the artificial depression in indigenous industry caused by the banks not lending, the NAMA creature not paying out payments and Government Departments not spending their budget allocations, this country will destroy itself unless someone takes a big stick to these three groups and gets them moving.

Those reading this Forum with government connections need to impress on the Mandarins running the Banks, NAMA and these under-spending departments that they need to fulfil their obligations to the workforce and start spending on Irish jobs.

No-one is seems to be doing ANYTHING to get this country moving again and repair the hole in the finances left by the implosion of the construction industry.

Simply cutting spending is not enough, its never enough and lumping all likely investment into a €5 Billion LUAS line or Metro [much of which will go to foreign companies] - further disrupting high Street Business is going to destroy centre city businesses just to complete the job.

ONQ.

 

[Sunny]

Yes, because Tom Parlon is worth listening to! He is right up there with other Union leaders who should all be put in charge of the Country. They will sort us out.

 

[onq]

Yes, because Tom Parlon is worth listening to! He is right up there with other Union leaders who should all be put in charge of the Country. They will sort us out.

I didn't post this to praise or promote Tom Parlon.

He was a primary source that NAMA is following in the footsteps of our zombie banks in not paying money into the economy.

Address this issues raised in the post, don't reduce your reply to an ad hominem attack on the source of the confirmation that NAMA, just like our banks is failing to function.

Fast forward to next year when the IMF steps in because the institutions we have set up to address our problems have not functioned as intended and nobody told them to get to work!

ONQ.

 

[Sunny]

I would prefer NAMA took their time. It's taxpayers money. Pierse construction is owed money by another company that has ended up in NAMA. There is a reason it ended up in NAMA i.e. it has no money. That's not NAMA's fault.

 

[onq]

I didn't suggest it was, not am I specifically referring to Pierse's particular situation.

The point was that monies NAMA is supposed to be paying out aren't being paid out at a time when the Banks aren't lending AND the government isn't spending.

That is a recipe for a recessionary spiral that in time will come to affect everyone in the country.

There is a difference between gradually forcing down prices and destroying a market.

ONQ.

 

[DerKaiser]

I think ONQ makes some good points.

The last thing we need is government standing in the way of the flow of cash throughout the economy. If anything they should be speeding up cash flow to allow the solvent organisations get going again and not allowing zombie organisations survive simpy because they're not paying their bills.

The construction industry is on its knees with hundreds of thousands of experienced workers on the dole.

There are surely worthy infrastructural projects (schools/hospitals) that should be examined immediately. We don't need more apartments or offices for a few years at least but there must be worthwhile labour intensive projects whose net cost to the state would be negligible.

Tongue in cheek, 100,000 people with pick axes to build the metro north tunnel?

 

[onq]

Not so tongue in cheek, because with the public procurement nonsense the way it is we will see some mandarin fool award the job to some foreign company because it has a shiner toy with which to dig the hole - pick-axes will do. I'll wield one myself if it helps keep jobs in Ireland.

We need to assess what works need to be done to improve our infrastructure - all we've don in the past decade is roads and now we hear we may be in default to the toll companies because not enough cars are using the roads.

Why weren't Irish companies used to build the roads?

And lets not go mad with the standards we're supposed to build to either.

Modify "best practice" to "affordable best practice using Irish men and materials".

Considering we built half of London and ITS still standing, I'd say we know what we're doing... (slightly tongue in cheek)

ONQ.

 

[csirl]

The point was that monies NAMA is supposed to be paying out aren't being paid out at a time when the Banks aren't lending AND the government isn't spending.

I think this is a red herring. NAMA does not take over these businesses - it is just taking over the loan accounts. NAMA's purpose is to collect money owed on loans by these businesses. Its no different than one financial institution purchasing a loan from another. NAMA does not have any responsibility for paying these businesses bills to third parties.

 

[Towger]

I think this is a red herring.

True, but once Tom's gets his voice on the airways he is happy.

 

[Howitzer]

I think this is a red herring. NAMA does not take over these businesses - it is just taking over the loan accounts. NAMA's purpose is to collect money owed on loans by these businesses. Its no different than one financial institution purchasing a loan from another. NAMA does not have any responsibility for paying these businesses bills to third parties.

I too am confused. What money is NAMA supposed to be paying who? (Apart from the exhorbiant legal fees which a different matter alltogether)

 

[Chris]

The construction industry back in 2006 accounted for 24% of GDP an unsustainable level - now its down to 6%, it should be around 12%.

This seems like a completely arbitrary figure of 12%. Construction should make up as much of GDP, actually preferably GNP, as demand dictates. At the moment there is no demand, because there was artificially high demand for too many years, which is why construction has collapsed. You don't solve the problems of a bubble by reinflating it.

It as seen 300,000 jobs lost at all levels.

Parlon also made the point that government departments have not spent their capital allocations for this year.

In my opinion we need that stimulus badly.

In Parlon's estimation, every Billion spent in Contruction is 50,000 jobs and we all know that despite the comments of others on AAM suggesting that many of these are largely foreign workers sending monies home, they have to live here, monies get spent here, tax and VAT are collected here, and so all boats rise.

This is a very common misconception that is loved by politicians and those in receipt of stimulus money. Governments cannot create jobs, they can only provide an environment that favours investment resulting in job creation. This environment is improved through easier access to the market and lower taxation and costs.
The statement that a suggested stimulus amount will create x amount of jobs, completely ignores where the stimulus money comes from. Let's take the €1b mentioned and assume that it would actually create 50000 jobs. That €1b has to be taxed out of the economy, resulting in €1b less available for investment, meaning that 50000 less jobs would be created by the private sector. The net gain is at best zero. And when the proposed project is compelted the workers will be unemployed again, so you end up at square 1. If it was that simple to revive an economy, then all the government would have to do is employ one half of the unemployed to dig ditches and the other half to fill them up again.
Bottom line is that economic growth comes out of increased productivity, and governments cannot increase productivity without destroying it at the same time.

Taken together with the artificial depression in indigenous industry caused by the banks not lending, the NAMA creature not paying out payments and Government Departments not spending their budget allocations, this country will destroy itself unless someone takes a big stick to these three groups and gets them moving.

Actually, I do not believe we are in an artificial depression. Banks are now doing what they should have been doing all along, i.e. only make loans to those that can prove they will be able to repay even in bad times. The problem is that through the artificial boom too many businesses came into existence. Unfortunately quite a lot of them will have to be liquidated. This liquidation process results in capital being freed up that is now tied into unviable businesses. This is called creative destruction in economics and is what a recession is all about, i.e. correcting the mistakes of the artificail boom. The recession is the cure not the desease, its like a cancer patient stopping chemo therapy because it is making them sick.
Again, government cannot make up for lack of spending in the public, because any money it spends has to be taxed out of the economy in the first place. The Keynesian idea of government making up for lack of "aggregate demand" has never worked and will never work.
Germany is a great example. While they did "stimulate" the car industry through a scrappage scheme, this scheme didn't work (the car industry got back off its feet through demand from emerging markets, not the domestic market). What did work was intruducing spending cuts and working on simplifying and reducing the tax system, i.e. they encouraged (not stimulated) investment in production while at the same time spending less.

Those reading this Forum with government connections need to impress on the Mandarins running the Banks, NAMA and these under-spending departments that they need to fulfil their obligations to the workforce and start spending on Irish jobs.

No-one is seems to be doing ANYTHING to get this country moving again and repair the hole in the finances left by the implosion of the construction industry.

Simply cutting spending is not enough, its never enough and lumping all likely investment into a €5 Billion LUAS line or Metro [much of which will go to foreign companies] - further disrupting high Street Business is going to destroy centre city businesses just to complete the job.

I agree, just cutting spending is not enough, that only solves one part of the problem, i.e. the budget deficit. In order to attract more investment in the economy the government needs to address the cost of doing business here, i.e. minimum wage, taxation, PRSI, etc. Some of the biggest employers are leaving this country because despite the low corporate tax rate, the cost of doing business here is too high.

 

[ontour]

This appeared to be very poor and confusing reporting by RTE. My understanding, which is open to correction, is that NAMA will make funds available to developers to facilitate completion of developments and maximize the return that NAMA will get.

The developers have not gone in to NAMA. Some or all of their loans have. Contrary to some perception, including Tom Parlon's, NAMA is not there to ensure the survival of builders or developers. If a developer has unpaid creditors that was supposed to form part of the business plan for their survival that was presented to NAMA so that NAMA could decide whether there was any point in working with the developer to try to 'work-out' the developments to potentially mutual benefits.

If Pierse did €17m of work for Gannon homes without getting paid, it is not for the state to fund that stupidity. They took a risk by doing all that work before getting paid, if it busts the company then so be it.