Hurray for accBank?

mercman said:
It is fairly evident that in LCs case there was no personal gain whatsoever.
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I must be misunderstanding you. LC was investing €1bn for no personal gain?

mercman said:
This is pure fact cos I know, but luckily I personally steered away from it.
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Luckily? You are still trying to slant it in sort of some sort of exploitation which you just dodged by the grace of the gods.
 

All noble and correct, just don't attempt to pull the most outrageous fraud on the Irish people by making us pick up the bill for the difference.

I applaud the actions of ACC bank, even though their actions are self motivated. It is not for nothing that the Dutch are known as the Scots of Europe (for their pecuniary tact). They are only doing the best for themselves.
 
Yes hurray for ACC bank, I wonder why they are the only bank not playing ball? What is the logic behind their actions? Logically if they wait for NAMA they will get more of their money back than if there is a forced sale of Carroll's property.

If there is a forced sale of his property that will surely set a real market value.

My opinion now of this whole mess is that the banks should be allowed to fail. Instead we will have NAMA making a totally false high value on assets that are impossible to value, then the price they will set will drop further for years to come and NAMA will then sell them to the current lot of failed developers who will be loaned the money to buy them back from surprise surprise the current corrupt bankers. What a nice cosy circle. The bankers, developers and bank shareholders will be the net gainers along with FF, all the best of friends. Hurray. A lovely merry go round and everyone back in the FF Galway tent in 20 years time.
 

Hi,
Nobody enjoys the fact that the country is run by a cartel, but allowing the banks to fail is in nobody's interest. Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.

It is true that in 2006/2007, house prices were crazily high, but the current valuations are similarly crazy. Any house that is selling at the moment is at a price determined not by any measure of intrinsic value, but by the constricted credit supply.

At the bottom of the American property crash, you could buy a house in Detroit for $10,000. This is no more a real- world valuation than €400,000 for a semi- d in Balbriggan.

Let's not forget that house prices and consumer spending are two sides of the same coin. If the developers assetes were fire- sold, house prices would really collapse. As home owners we will all have to claw back our personal equity at a rate of 3% per annum, and it's quicker to claw back a 30% drop than 80%.

Every percentage drop in house prices is another period of time it will take individual Irish people to recover from this crisis. Some young civil servants may get a cheap house out of the scenario, but I think only a very small pool of us possibly could benefit relative to the potential damage to the business community who tend to be more endebted.

As a relatively young homeowner I'm already in serious negaive equity. What ACC bank want to do to our economy will flood our property market with under- priced houses and we will all suffer. I want to borrow in the future, I want to develop my small business and employ people. How will I do this if I am in even deeper negative equity.

The NAMA recipe is flawed, and it protects the same panel of favourites who helped cause the problem, but I really don't see a real alternative. This is an Irish problem, and the Government have cooked up an Irish solutution which deserves a chance to work.

Of course the Banks, foreign and domestic, deserve their money back; but not at the expense of our government's ability to effectively implement a solution to this situation.
 
Concerned, a well thought out and lucid post. This is your first post -- welcome to AAM.
 

Interesting but flawed post. The flaw is that it assumes that large number of residential property owners are in or near negative equity. The reality is that a relatively small number of people (those who purchased from 2006/2007 onwards) are in negative equity, plus those who remortgaged to support other investments.

For those of us who are not in negative equity, it doesn't make a whole lot of difference whether our house is valued at €820k or €520k. It's still just a paper figure.
 
Perhaps, but the most vulnerable at the top or the bottom of the spectrum are in serious disarray. Couple with this the equity portion of properties was used for further lending. And now the LTVs are wreaking Havoce as the Banks are calling in time to justify their own inability to manage correct lending.
 
Everyone is saying we should get our costs down.Now if these 3 bed semis were put on the market at todays cost of constructon and add about 10k for the site...I think 120k would be about right for a house in a town or city suburb. Irish workers wouldn`t need sky high wages to afford ahouse and then our whole cost structure could be more competitive.It is human nature for those who bought expensive houses back in 2007 to want houseprices to remain high. Also our gov.and banks and developers want house prices to remain sky high and to make workers pay these exorbitant prices.....which they now can`t so we have a standoff.
 

I'm still not convinced that the banks failing would not be a good thing. Similarly I'm not convinced that a massive property devaluation would be a bad thing. Anyone not in negative equity or who is near the end or the mortgage would not have any problem. Those in negative equity who have lost their jobs might be better off if the bank took the house off them. In many cases they would be able to walk away from debt of 100 or 200k and start again and now be able to save and buy a house at a much more realistic price. Maybe someone can point out the benefits of a young couple on a 35 year mortgage, with job losses, wage cuts and tax increases spending the next 20 years struggling to just get back the negative equity?

In relation to your example 10K for a house in Detroit is it's real value at that time as is 400K for the 3 bed semi d in Dublin. Real value is what a property can be bought for at any given time.
 

Tell me how someone in this Country can walk away from debt of €100 or €200k? Look up the draconian personal bankruptcy laws in this Country and see why even going down that road is probably not an option.
 
If you lose your job and have no assets what have you to lose? The banks cannot get blood from a stone.
 
Concerned said:
Hi,
Similarly, allowing the developers' assets to be fire- sold would be an unqualified disaster for the average home owner and for the future of consumer spending in Ireland.
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Absolutely not. If something is worth €100k, then pretending it's worth €200k for the next 15 years does not make sense unless you want to put Ireland through a Japan styled Lost Decade (which in reality is still ongoing).
 
I see the Supreme Court has upheld Judge Kelly's decision. What is the next step now for Zoe Developments?
 
Bronte said:
I see the Supreme Court has upheld Judge Kelly's decision. What is the next step now for Zoe Developments?
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Can a deal be done between Zoe's creditor banks where ACC has first call on it's loan to Zoe and only after this has been paid in full the other banks start getting their loans repaid. The last thing the AIB,BOI and other creditor banks is a firesale of Zoes properties.

The question is who is next in line?
 
What gets me about the whole thing is the incredible arrogance of Carroll (and by extension all the other big developers) in that he can go to the Supreme Court (the SUPREME court!!) with absolutely NO evidence supporting his case, refuse to give details of valuations, and provide no supportive bank witnesses and try to bully the court into submission by stating only that if he doesent get what he wants then the repercussions will be disastrous!! Who do these guys think they are!!

As someone on Newstalk eloquently said this morning, the court's verdict was a very long winded way of saying: "You want us to do what, now?!?"
 
I believe Carroll did not give up to date valuations because of what Kelly said about the link between the estate agents and Kelly. Probably the estate agents would not play ball now and give an up to date valuation that would suit Kelly.

I am wondering if the other banks will pay off ACC?
 

There's nothing "crazy" about current evaluations; they're still overpriced. Comparing rents and purchase prices of houses, you still cannot make even a small yield.

As VOR says, we have two contradictory ideas being held by people: the idea that we can become more affordable and competitive by lowering salaries, while simultaneously bailing out banks and developers and artificially propping up property prices. Irresistable force meets immovable object.
 
diarmuidc said:
Absolutely not. If something is worth €100k, then pretending it's worth €200k for the next 15 years does not make sense unless you want to put Ireland through a Japan styled Lost Decade (which in reality is still ongoing).
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Agreed. I am delighted with the actions of ACC. If there is a fire sale it will devalue all property. That much is true. However, this will also help to bring a sense of reality back to the market.
Is it not better to have c.40% (just a guess) of mortgage holders in negative equity than have 100% of property owners and potential property owners sitting on overpriced homes. A correction had to happen and this is a natural part of it.

Secondly, as there is no demand the market is being artificially propped up by a slow down in supply. This trickle trickle focus of the banks is unhelpful to our economy in the short and long term.

The faster we get to the bottom of the housing market, the less pressure we will have on salaries which in turn will lead to the country returning to a more competitive position.

If you are in doubt, have one look at the commercial prices in Berlin vs Dublin where Dublin is 33 times more expensive. Or even New York v Dublin (36% more expensive). http://www.finfacts.ie/irishfinancenews/article_1017361.shtml
You might argue that commercial and residential are two different markets but they essentially are linked by the cost of acquisition of land, the cost of labour and the cost of material.

So I for one will take a long term view of this whole mess and say that we should applaud any action that reduces the cost of land and property in general. You might say that many hundreds of thousands of people will be stuck in negative equity and unable to spend. Well, so be it. If they had put their money in tulips and the bottom fell out of that, would you hold the same concerns for them? Probably not. Imagine if they had borrowed at 5 and 6 times their salary to purchase the tulips?

The rest of us may now be able to buy a reasonably priced bunch of flowers for the wife!!!
 
VOR said:
If you are in doubt, have one look at the commercial prices in Berlin vs Dublin where Dublin is 33 times more expensive.
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I found that hard to believe and I was right. The link refers to rents in Dublin being 760 per annum whilst those in Berlin are 23 per annum, that's 33 times alright, except if you download the actual report, page 17 shows that Berlin's rate is in fact per month.
 

So it's only 3 times? Phew.
 
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