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15-02-2012, 10:23   #61
swampgas
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Originally Posted by Scofflaw View Post
[snip]

There is no difference there between a developer and any other business there, though - you borrow to expand. If you borrow to expand and a downturn hits, you go out of business and you owe money. Why are developers somehow evil whereas those who, say, borrowed to expand their tech company in 2000, and were wiped out in the dotcom crash in 2001, aren't?

There's a clear consensus here and elsewhere that developers are somehow "bad" - yet we've established that wanting to make money isn't intrinsically bad, that taking risks is not just not bad but usually admirable, and that borrowing money is just part of doing business. So where's the bit that makes developers "bad"?
I'd agree completely except to say that the close relationship between the big developers and FF / government during the boom means that the developers - the bigger ones anyway - are not seen as ordinary hard-working businessmen and entrepreneurs but as corrupt insiders - "bad", in other words.
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15-02-2012, 11:11   #62
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Ipod comparison is totally irrelevant. There is no housing equivalent of an ipod so not sure why you are using it
Okay, the position that a lot of people seem to have taken is that the credit bubble and supply of dwellings generated the demand.

The ipod market isn't a new one it's an evolution of the walkman/diskman markets. Did you have a walkman/portable cd player - they do the same function as an mp3 player, albeit in a different fashion.

The ipod comparison is valid because in both cases the demand was already there (there was a demand for housing and a demand for music players).

You, as well as may others, seem to be under the impression that there was no demand for housing before the boom - there was.

What changed:
more people started earning more
credit became cheaper

These two items, which happened almost simultaneously in the mid-late 90's, is what started it. People asked what can I do - buy a house/car is the first two items on many people's lists

After that came the reckless lending (which was seen as normal by almost all concerned until it was way too late).

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I am referring to debts of developers which was brought about by speculation.

They would have still wanted to buy if the prices were alot less also - the government / regulator did not take cognisance of underlying market / economics
No idea what you're getting at here. What I'm reading out of it is that the developers purposely drover up their own costs (i.e. land, wages, materials), trying to benefit from it. That wouldn't be in the best interests of a company or homeowner.

Yeah the regulators failed, but so did everyone else, the whole way along the chain to the consumer (who wre crazy enough to buy off the plans before any concrete was poured).

When the consumer eventually started to feel the pinch (which wasn't predicted either) the whole thing came to a shuddering halt. Failing to see this coming is what I'd blame the developers for, not trying to do their jobs.

Oh, btw, I'd crucify any developer that used pyrite (intentionally or not doesn't matter) or out up shoddy buildings like priory hall, they definitely did not do their jobs.
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15-02-2012, 13:55   #63
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Originally Posted by antoobrien View Post

What changed:
more people started earning more
credit became cheaper
You missed a big portion of the jigsaw.
What changed:
more people started earning more
credit became cheaper

Banks relaxed lending rules and incentivised staff massively to sell mortgages up to 110% - they could not slow down even when it was apparent the party was over.
FF gifted developers tax breaks to built high profit apartment complexes
County Councils saw how much money they could pull in Development Levies through granting stupid levels of planning permisions (you should see what ABP turned down during the boom - we would be in more sh1t were it not for them and An An Taisce bringing appeals)
The media whipped up a property ladder frenzy based on advertising sales and 'property porn' shows
Anyone with a modest land holding suddenly got money fever at what it was potentially worth and badgered councillors for rezoning.


End result, anyone who saw right through the whole circus and sat it out and rented now faces two choices, pay up or emigrate. Meanwhile developers and bankers have either fled or have 200k jobs with NAMA.

Last edited by MadsL; 15-02-2012 at 14:00.
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15-02-2012, 14:19   #64
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You missed a big portion of the jigsaw.
Nah, just don't think it's the cause. It made it worse but did not cause the property bubble.

I notice you totally ignored the next line, about this happening in the 90's before the banks got out of hand. But hey, lets not let facts get in the way.
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15-02-2012, 14:40   #65
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Nah, just don't think it's the cause. It made it worse but did not cause the property bubble.

I notice you totally ignored the next line, about this happening in the 90's before the banks got out of hand. But hey, lets not let facts get in the way.
Hmm... FF Section 23 type incentive schemes started in 91 with Temple Bar, Customs House. We then had Urban renewal in 94-97, Seasides and Islands, then Rural Renewal, Town renewal and Integrated Area Renewal 98-2008

But hey, lets not let facts get in the way.
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18-02-2012, 11:06   #66
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Originally Posted by MadsL View Post
Hmm... FF Section 23 type incentive schemes started in 91 with Temple Bar, Customs House. We then had Urban renewal in 94-97, Seasides and Islands, then Rural Renewal, Town renewal and Integrated Area Renewal 98-2008

But hey, lets not let facts get in the way.
I agree with your facts (!), but antoobrien is quite right that none of those incentives would have made much difference without the original demand for houses and the easy access to credit.

While the initial demand for houses was a demand for houses to live in, that steady demand, coupled with easy credit access, allowed people to bid more for a preferred house than they otherwise would/could have done, and increasingly made buying and selling houses as a speculative asset a money-making proposition. The various tax breaks etc certainly made the bubble even worse, and the media and political cheerleading made it both more difficult for individuals to resist joining in and harder for Ireland as a whole to call a halt to it.

cordially,
Scofflaw
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18-02-2012, 23:56   #67
Liam Byrne
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I disagree there: I think that 'poor optics' is not the reason why people object to a culture like this in giving out public monies. I also believe that people have a credible past history to work on from government, this one and the previous one, in making the mental leap that NAMA might be benefiting a select few.

Optics is not the reason why people have a problem with this. It's the pervasive culture among those who should be spending our money wisely.
The reason I say they're comments on the optics is because we haven't actually established any reason for developers being bad people. I'd accept the idea that developers who didn't see the of the bubble probably shouldn't be hired as economic consultants, but that's not what's happening - your reasoning above essentially says that NAMA shouldn't employ developers because they should be being punished.

Punished for what, exactly? Losing a lot of money? If they haven't declared bankruptcy, then they're repaying that money - and under current circumstances, not with any real hope of profit.

Developers borrowed from the banks large sums to build the properties which Irish people wanted to buy. If they didn't foresee the end of the bubble, they were left with large amounts of debt, and a reduced ability to pay. They may, as a result, have had their loans transferred into NAMA. They didn't choose to have their loans transferred into NAMA, and indeed several of them fought the process. NAMA may make a loss - or a profit - but it's not a "bailout" for the developers. They're not being saved from their debts - that idea seems to be based on a complete misunderstanding of who the NAMA haircut applies to!

There is no difference there between a developer and any other business there, though - you borrow to expand. If you borrow to expand and a downturn hits, you go out of business and you owe money. Why are developers somehow evil whereas those who, say, borrowed to expand their tech company in 2000, and were wiped out in the dotcom crash in 2001, aren't?

There's a clear consensus here and elsewhere that developers are somehow "bad" - yet we've established that wanting to make money isn't intrinsically bad, that taking risks is not just not bad but usually admirable, and that borrowing money is just part of doing business. So where's the bit that makes developers "bad"?

cordially,
Scofflaw
Where is the argument that they should be "punished" ?

I have 2 requirements

1) That they pay their own debts
2) That we not pay them as if they had some "expertise" worth the astronomical €200,000 a year - because their track record shows that they don't have expertise worth anywhere near that

Neither of those is "punishment" - it's just the facts of the matter
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09-01-2014, 08:50   #68
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Thread topic touched on here, fears confirmed:


Richard Curran: Tears over money gone up in smoke -- but it's time to move on
http://www.independent.ie/business/i...ove-on-2990023
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11-01-2014, 12:50   #69
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Originally Posted by Victor View Post
Let us say a developer borrowed €100m from a bank.

NAMA has bought that debt from the bank for say €50m.

To pay the bank, NAMA/NTMA has borrowed €50m.

The developer still owes NAMA €100m, but NAMA realises that it is likely to only be able to recover a smaller number.
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Originally Posted by Scofflaw View Post
So in this case, say the amount the developer defaults on is €75m of the €100m.

I think the OP might reflect the idea that when NAMA paid €50m for the loan, the state somehow acquired the balance of the developer's debt as public debt. That's not the case.
Getting back to post 2 and Scofflaw's responce:
Q. Does anyone actually have to account for this written off debt ?
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12-01-2014, 00:02   #70
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Originally Posted by Slideshowbob View Post
Thread topic touched on here, fears confirmed:


Richard Curran: Tears over money gone up in smoke -- but it's time to move on
http://www.independent.ie/business/i...ove-on-2990023
Link not working, try this: http://www.independent.ie/business/i...-29900236.html

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Getting back to post 2 and Scofflaw's responce:
Q. Does anyone actually have to account for this written off debt ?
I'm not sure what you mean. The developer is bankrupt, with all the implications that brings.
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13-01-2014, 14:39   #71
antoobrien
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Q. Does anyone actually have to account for this written off debt ?
The creditor (usually banks) that loaned the money has to account for the money lost. The effects include writedowns of values of the assets (balance sheet) as well as loss of income (profit & loss).

I suspect you mean will anybody be held accountable for the losses. Any developers that have been bankrupted have been held accountable (as Victor said there are implications to being declared bankrupt), so it's a question of whether or not bank employees been held accountable for their parts in the losses.
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13-01-2014, 14:50   #72
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Originally Posted by antoobrien View Post
The creditor (usually banks) that loaned the money has to account for the money lost. The effects include writedowns of values of the assets (balance sheet) as well as loss of income (profit & loss).

I suspect you mean will anybody be held accountable for the losses. Any developers that have been bankrupted have been held accountable (as Victor said there are implications to being declared bankrupt), so it's a question of whether or not bank employees been held accountable for their parts in the losses.

That a good point are the banks client relationship staff going to be held accountable for lending the developers money.
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13-01-2014, 15:04   #73
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That a good point are the banks client relationship staff going to be held accountable for lending the developers money.
I wouldn't stop there, there'd be multiple levels of oversight (at least as far as risk managers) that I'd be asking questions of.
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