David McWilliams on NAMA

[onekeano]

Benchmarking, all the union guys on the board of FAS, Joe Burke Chair of Dublin Port, no redundancies when the HSE was set up etc etc ...... Bertie was throwing favours all over the place and Cowan wasn't strong enough to speak up because he had done the Blair / Brown deal with Bertie so he was afraid to make a stand. He's paying for it now.

Roy

 

[onq]

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.

I'm getting tired of hearing "the rats leaving the sinking ship" pocket philosophy.
Instead we have to buckle down the lot of us and get working!

Develop new products and sell them abroad.
Channel the anger into useful pursuits.
Get elected and make a difference.

Support your country by what YOU do, and don't look for others to do it.
Nama is just a stop gap until we get on our feet again next year.
So fer gawds sake let's stop whinging and simply perform.
Lets see some home grown enterprise here guys!

Thanks.

ONQ.

PS With reference to other comments, don't let us forget that ONE OF David McWilliams jobs is to help sell newspapers.
Two years ago on his mini series on TV he told us credit "would become dearer" because the Germans were going to stop saving and start spending.
He DID NOT predict the current Global Financial Meltdown - so much for McWilliams foresight!

 

[Shawady]

[broken link removed]

Dermot Desmond isn't a fan either. He seems to be suggesting loaning the 60 billion to the banks but letting each bank look after their own bad property loans.

 

[Latrade]

[broken link removed]

Dermot Desmond isn't a fan either. He seems to be suggesting loaning the 60 billion to the banks but letting each bank look after their own bad property loans.

Mr Desmond has a considerable property portfolio. When the details are published, the rates paid by the state will effectivley create the market value and Mr Desmond will see a considerable loss immediately. I think that's why he's not a fan.

 

[censuspro]

Those in favour of NAMA can they please outline the benefits of NAMA for the Irish taxpayer, because I cant see any!

I think McWilliams has hit the nail on the head with this. It's absolute beggars belief to think that you should pay over the odds for anything on the basis that it might be more valuable in 10 years time.

Lets say NAMA goes ahead and buys the loans from the banks, then what happens, there is no guarantee that the banks will start lending again?

We should just let the banks fall, what is so wrong with that. McWilliams pointed out it happens in all around the world but for some reason in Ireland we tend to think that things are different here just like we were told that the property boom would go on forever. Now we're being told that it will damage our reputation, international debt will become more expensive.

No NAMA, No Fine Gael alternative, No Nationalisation. Just let them go.

 

[canicemcavoy]

Those in favour of NAMA can they please outline the benefits of NAMA for the Irish taxpayer, because I cant see any!

I suggest the best thing to do is go on the protest and write letters to your TDs. Probably won't do any good, but at least my conscience will be clear when I emigrate.

 

[Complainer]

[broken link removed]

Dermot Desmond isn't a fan either. He seems to be suggesting loaning the 60 billion to the banks but letting each bank look after their own bad property loans.

Given that his right-hand man Dr Michael Walsh presided over Irish Nationwide as Chairman for the period where they ran up their dodgy loans, I don't think Desmond and his cronies have much credibility here.

 

[onq]

Those in favour of NAMA can they please outline the benefits of NAMA for the Irish taxpayer, because I cant see any!

<negative stuff snipped>

Its very simple.

NAMA allows the Government to buy bad debts at a discount using Government Bonds - not "money", so thus far it has cost the taxpayer no money, as I understand it.
There is no downside unless the property market remains stagnant - with the EU moving forward this is unlikely.

This suggests a break even scenario is possible, even likely, and the real possibility exists of a small profit.

A mechanism binds the Banks into paying for non-performing debts, further reducing the risk to the taxpayer, again at no immediate cost.
It is a masterful use of futures marketeering principles and Bond issue practices which are known to work.
There is no bail-out in this for the builders.

NAMA actually scored a coup by keeping said debt in the control of the state, while supporting the banks just enough to prevent them from being either taken over by foreign interests OR becoming a huge immediate burden on the taxpayer by becoming nationalised.

Because they remain independent, any further "hits" on the Banks can be taken initially by them, with the "let them go bankrupt" option still being held in abeyance should even more merde hit the fan.
So matters I think will be dealt with professionally and to Lenihan's credit, quite cleverly, in relation to the builders bad debts.
As a benefit, the increased indebtedness of the Banks to NAMA will allow the Government to control and oversee an orderly clean out of the top management which got them into this mess.

I have some sympathy with the people involved, particularly in AIB, when it seemed they were just following the market leader Anglo-Irish, at a time when it seemed the right thing to do.

HOWEVER...

The major outstanding debt is the Derivatives Portfolio debt.

This resulted from - as I understand it, and I may stand corrected - unwise trading in the futures markets.
This debt has the potential to bankrupt the entire world economy if allowed to.
This has been commented on in these forums and it dwarfs the bad debts arising from the construction industry
Personally I think we need to legislate this problem out of existence by declaring it to be a form of unauthorised gambling and simply not honouring the debt.
The entire world needs to do this in a concerted move, or servicing the debt will cripple us for decades.

FWIW

ONQ.

 

[Bronte]

<negative stuff snipped>


I have some sympathy with the people involved, particularly in AIB, when it seemed they were just following the market leader Anglo-Irish, at a time when it seemed the right thing to do.


ONQ.

You are kidding right? Just because someone walks into a fire doesn't mean one should follow. That's riduculous.

 

[Kine]

You are kidding right? Just because someone walks into a fire doesn't mean one should follow. That's riduculous.

Bronte, to most people your reaction would seem to be the correct one. However, Anglo Irish only came about as a result of an area of the market AIB and BoI were not lending too. As a consequence, Anglo built up a huge business in a relatively short space of time and if memory serves me correctly Anglo were the main lenders to about the top 60% or so of developers. All the other banks decided they wanted a piece of what was, at the time, a very lucrative pie. Some (such as AIB) pursued market share more aggressively than otehrs and as a result, will get burnt slightly worse.

Remember, when BoI and AIB's shareholders are shouting at the CEO at every AGM up to the bubble about how Anglo's share price was going up and up and up and why they weren't making the returns, most shareholders don't want to hear about conservative lending (back then). Perceptions will change for a while, but in the end, we'll end up right back where we were a few years ago.

 

[Complainer]

There is no downside unless the property market remains stagnant - with the EU moving forward this is unlikely.

There is the very real possibility that the 'remaining stagnant' is a pipe dream, and that property still has a long way to drop before prices become realistic. Leninhan's line of 'only 10% needed over 10 years' sounds like a bit of a pipe dream, and worse, it incentivises everybody in the system (banks, developers, Dept Finance) to create another property bubble.

Because they remain independent, any further "hits" on the Banks can be taken initially by them, with the "let them go bankrupt" option still being held in abeyance should even more merde hit the fan.

This is fiction. The banks have been told in words and in deeds that they will not be let go bankrupt in any circumstances. So do you really think they will be worried about reckless lending when they get their fresh funding?

 

[censuspro]

This is fiction. The banks have been told in words and in deeds that they will not be let go bankrupt in any circumstances. So do you really think they will be worried about reckless lending when they get their fresh funding?

Correct, Lenihan and Cowen have stated that they will not let these banks fail.

 

[onq]

Correct, Lenihan and Cowen have stated that they will not let these banks fail.

<chuckle>

First you're complaining when the bubble we were all chasing burst - now you're believing what politicians say - you guys never learn, do you?



ONQ.

 

[Purple]

There is the very real possibility that the 'remaining stagnant' is a pipe dream, and that property still has a long way to drop before prices become realistic. Leninhan's line of 'only 10% needed over 10 years' sounds like a bit of a pipe dream, and worse, it incentivises everybody in the system (banks, developers, Dept Finance) to create another property bubble.

The correct way to value property is to look at yields. Property yields in Dublin are quite high at the moment. Prices based on yields rather than capital appreciation are far healthier for an economy so this whole crash is, in the long run, a good thing. Capital investment in the productive, export focused part of the economy is what the government should be aiming for (rather than interfering in the market to look after their mates and produce a property bubble). Therefore in the long run (over the next 10 years) I would be happy if there was no appreciation in property prices. This would keep speculative investor landlords out of the market and keep costs down for business and the populace generally. The government now has a key opportunity to put proper financial regulation in place ( the light touch/ heave hand argument is a red herring; the real requirement is competence and teeth) and the boards of the banks will be under more scrutiny than ever.

This is fiction. The banks have been told in words and in deeds that they will not be let go bankrupt in any circumstances. So do you really think they will be worried about reckless lending when they get their fresh funding?

The state, through NAMA, has a lean on all of the major banks. I don’t think they can afford to let that happen.

 

[canicemcavoy]

I don’t think they can afford to let that happen.

They couldn't afford to have a bubble in the first place, but they let _that_ happen.

 

[Purple]

They couldn't afford to have a bubble in the first place, but they let _that_ happen.

Nice sound bite.
We couldn't afford the bubble but the polit-bureau that’s been carving up the country for the last 10 years (er, sorry; the social partners) could afford it. In fact they made a fortune out of it (developers, bankers and public sector employees).
Now that democracy has been re-established it is not unreasonable to expect things to change for the better.

 

[Complainer]

- now you're believing what politicians say - you guys never learn, do you?

It's a nice diversion attempt, but it's not going to work. It's not just a matter of what they say, it is a matter of the €54 billion of our money that they are handing over. Money talks.

Are you seriously suggesting that you think AIB or BOI would be let fail at any stage in the future?

 

[canicemcavoy]

Nice sound bite.
We couldn't afford the bubble but the polit-bureau that’s been carving up the country for the last 10 years (er, sorry; the social partners) could afford it. In fact they made a fortune out of it (developers, bankers and public sector employees).
Now that democracy has been re-established it is not unreasonable to expect things to change for the better.

Sorry, but the last person I heard say _they_ can't afford to let something happen, was Liz O'Kane in relation to negative equity:

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Mary: Do you think that the property market could crash?
Liz: No... I don't think any government can afford to let that happen. A levelling off is what we are seeing.

Needless to say, our national TV channel's property expert got quite a surprise when, oops, they did let it happen.

 

[Bronte]

Now that democracy has been re-established

Where do you see this? You're very optimistic I hope you are right but I'm too pessimistic to believe you are.

 

[Purple]

Sorry, but the last person I heard say _they_ can't afford to let something happen, was Liz O'Kane in relation to negative equity:

[broken link removed]

Mary: Do you think that the property market could crash?
Liz: No... I don't think any government can afford to let that happen. A levelling off is what we are seeing.

Needless to say, our national TV channel's property expert got quite a surprise when, oops, they did let it happen.

My granny once said that she couldn't afford to get her windows replaced but it turned out she could... since we are introducing utterly irrelevant topics.