A NAMA for ordinary people not developers.

SkepticOne

I was listening to the the radio this morning and a developer was on complaining about the length of time it would take to get NAMA up and running and that the government should start helping developers now as they needed the money to complete projects and so on.

But the banks are in a bad way not simply because developers who took huge risks and lost are now holding the country to ransom. The banks are also in trouble because many ordinary people took out loans fully intending to pay them back, not with a view to great profits but simply for a place to live. These people are a problem for the banks because many of them are losing their jobs through no fault of their own and will not be able pay back their loans.

Why not have NAMA buy the mortgages from the idiot banks and instead of borrowing further money to help the developers, use that money to help these people who have lost their jobs retrain in industries that are likely to be of benefit to the country in the future.

Advantages:
1. We are not keeping people in development jobs that are ultimately doomed.

2. We don't need any more housing estates in the middle of nowhere that will be worth next to nothing even when they are completed.
3. We will create genuine value in the economy through having a skilled workforce rather than throw people on the scrap heap.
4. The banks may well buy back those mortgages once people are back in jobs.

Sand

It will never happen to be honest, for pretty much the same reason as the why the bank bailout shouldnt go ahead - moral hazard, cost, difficulty in managing the loans and so on. And on top of all that the banks and the developers have good links with Fianna Fail, whereas faceless nobodies locked into some housing estate 20 miles outside Mullingar do not.

Somehow relieving the impact of negative equity on hundreds of thousands of consumers would do more to improve Irelands economic prospects (one of the major threats to Ireland in the next two years is rising ECB interest rates - it will murder us), but the banks are the priority, above any other consideration. And I stress the banks, seperate to the economy.

jdivision

who's going to pay for the Nama for individuals? The people who showed fiscal responsibility while all around them put money on credit cards, bought houses they shouldn't have and generally lived beyond their names. It's bad enough the bailouts we have coming now, I'm not in favour of bailing out individuals who made bad choices. And believe me I have plenty of problems with both nama and not nationalising the banks

Villain

OP, you do realise that the Developers will still owe the FULL amount after NAMA buys the loans at discounted values?

Nordie Loyalist

Villain wrote: »

OP, you do realise that the Developers will still owe the FULL amount after NAMA buys the loans at discounted values?

Very true but will they have to actually pay it or their personal guarantees envoked to help with the payments?

Seems unlikely. :mad:

Sand

4th poster you do indeed realise that the taxpayer will be the proud owner of worthless debts from these developers who will simply declare bankruptcy if they are pushed to repay?

Villain

Of course Sand and I don't like the plan at all but its just a lot of people seem to think that loans are been reduced by NAMA, i.e. the owner's debt is reduced which isn't the case.

SkepticOne

Thanks for the responses. I will try to deal with each of them.

Sand wrote:

It will never happen to be honest, for pretty much the same reason as the why the bank bailout shouldnt go ahead - moral hazard, cost, difficulty in managing the loans and so on. And on top of all that the banks and the developers have good links with Fianna Fail, whereas faceless nobodies locked into some housing estate 20 miles outside Mullingar do not.

Somehow relieving the impact of negative equity on hundreds of thousands of consumers would do more to improve Ireland's economic prospects (one of the major threats to Ireland in the next two years is rising ECB interest rates - it will murder us), but the banks are the priority, above any other consideration. And I stress the banks, seperate to the economy.

To be honest, I would rather neither scheme went ahead. I agree that a lot of the same problems apply to both.

But if it was a choice between what I am suggesting or the existing developer bailout then even from a pure value for money basis for the tax payer, what I'm suggesting should win.

As to moral hazard, I would not offer this scheme without strings attached. They would only get help on condition they retrain. I think very few people would quit (in reality they would have to be made redundant) their jobs in order to go on a training course. They would be helped with their mortgage but their overall income would be reduced.

who's going to pay for the Nama for individuals? The people who showed fiscal responsibility while all around them put money on credit cards, bought houses they shouldn't have and generally lived beyond their names. It's bad enough the bailouts we have coming now, I'm not in favour of bailing out individuals who made bad choices. And believe me I have plenty of problems with both nama and not nationalising the banks

This is also true. But for the most part, although there may be some greed involved, people were just looking for a home. Very different from developers who were hoping to make millions if not billions from their deals. Also again, in pure terms of getting some sort of return, a loan belonging to someone who's being retrained is worth more than someone who is simply vegetating on the dole and if they fail to find a job, their house is dumped on the market and a loss is realised. Better to help that person find another job and for the most part they will continue to pay that mortgage even in the depressed market.

OP, you do realise that the Developers will still owe the FULL amount after NAMA buys the loans at discounted values?

This has already been answered, but I would also argue that one of the goals of NAMA is to help developers with finance (note I did not say free money). By that I mean not foreclosing on developers that are having trouble paying, and in some cases raising further money to lend to them. What I am suggesting here is that this sort of help be extended to ordinary people. For the most part they would still owe their loans but they would not be turfed out while they are retraining in skills deemed necessary for future prosperity.

SkepticOne

Villain wrote: »

OP, you do realise that the Developers will still owe the FULL amount after NAMA buys the loans at discounted values?

Yes, I have always been aware of this. But I think you will agree that developers will get a much better deal out of NAMA than they would on a purely commercial basis. As such they are being helped and we, the taxpayer, are paying. Our money would be better invested elsewhere.

Sand

Of course Sand and I don't like the plan at all but its just a lot of people seem to think that loans are been reduced by NAMA, i.e. the owner's debt is reduced which isn't the case.

All other things being equal, would you prefer to have a massive mortgage owed to heartless, bloodsucking monster ( a bank) or would you like it better if you owed the money to a mate who wasnt too bothered if you paid it back or not? Whats a few quid between mates? And its not even your mates money in the first place? He stole it off some ****ing idiots. Win win right?

This is a bailout of the developers. It isnt as blatant or measureable as the bank bailout, but it is a bailout.

dresden8

Villain wrote: »

OP, you do realise that the Developers will still owe the FULL amount after NAMA buys the loans at discounted values?

I think you will find that NAMA will not be in the business of bankrupting developers and fncking them out of their houses, the way the little people will be fncked out of their houses by the banks.

Rest assured they will not be in need of a soup-run from the Simon Community, unlike a lot of people who are contributing to NAMA et al.

P. Breathnach

NAMA is not being set up to help developers, as Villain indicated. It is being set up to rescue the banks.

Sand

NAMA is not being set up to help developers, as Villain indicated. It is being set up to rescue the banks.

Its primarily set up to help banks. Its set up to help developers too - providing them with finance when no one else would, not forclosing even when they cant and will never be able to repay the loan and so on.

Why do you think all the talk of developers sinking NAMA with lawsuits has stopped? They know NAMA will be good for them. Theyve been called aside by the boys and it was let known that all the tough talk was just for the plebs.

Why do you think Fianna Fail and the banks and all their mates are throwing everything including the kitchen sink to try and stop Liam Carroll being declared bankrupt? NAMA is the biggest scam ever perpetuated on the Irish people, especially this nonsense that the developers are fearing the dreaded call from NAMA.

If NAMA goes through, you can be sure the developers will celebrate with delight along with the banks and Fianna Fail.

Carawaystick

SkepticOne wrote: »

But the banks are in a bad way not simply because developers who took huge risks and lost are now holding the country to ransom. The banks are also in trouble because many ordinary people took out loans fully intending to pay them back, not with a view to great profits but simply for a place to live. These people are a problem for the banks because many of them are losing their jobs through no fault of their own and will not be able pay back their loans.

Evidence of this?

AlekSmart

Its primarily set up to help banks. Its set up to help developers too - providing them with finance when no one else would, not forclosing even when they cant and will never be able to repay the loan and so on.

It looks like Sand astutely spots the rather uniquely Irish element to the Depression (as Gailge)....the reality that in Modern Ireland Mainstream Banking and Property Developing/Speculating had become one....:o

Two divine persons in the one God.....and that God is PROPERTY .....or at least the totally unsustainable notion that every post pubescent Irish person MUST own a bit of an oul house.....or they are doomed to burn in hell !

Even now,after all that has been revealed about the mess we`ve engineered,a major element of the Government`s "rescue" package is getting the Property "Market" restarted.......FFS.

Not so much as a peep about using Governmental Policy to realign the Irish housing market to at least establish RENTAL as a viable,sustainable and desirable means of setting up a home environment...thus allowing the RENTER to divert their money into other areas of existance....such as enjoying life !!!!

amacca

SkepticOne wrote: »

This is also true. But for the most part, although there may be some greed involved, people were just looking for a home.

I think there was some greed involved and definitely a hell of a lot of reckless irresponsibility with some of these borrowers.

I know of one couple, wife in her thirties. who bought house (with 100%) mortgage and then borrowed from credit union and on multiple credit cards to have the house fully furnished before they moved in......and I'm not talking bare minimum here, eg 3 large flat panel tvs (massive one in sitting room, one in bedroom, fully fitted kitchen complete with american style fridge freezer, marble top counters, 2 bathrooms fully fitted une avec jacuzzi etc etc (you get the picture)....all on a carers pay and the husband who works/worked in construction.

Cant help feeling that something like this is not as isolated as some believe given the levels of personal debt out there.

Call it begrudgery...and maybe it is, but I think that reckless borrowers like the above should not get any bailouts.....they wanted everything immediately...they should accept the risk that comes with this attitude and someone who tried to live within their means should not have to contribute to this type of bailout either....Its hard to know with NAMA, think Im not in favour of it at all after reading posts in other forums and articles in the national newspapers...would think that temporary nationalisation and recapitalisation is the way to go and would find it sickening too if borrowers like the above were bailed out in some sort of nama like scheme for household debt....

Im not saying crucify the buyer who bought out of necessity or near necessity or because they were herded like lemmings over a cliff into buying by all sorts of commentators but I am saying crucify the ones that clearly turned into credit junkies and had completely unsustainable in the extreme household finances (these borrowers should get a harsh dose of reality) .....and then the problem becomes how to distinguish between who deserves help from NAMA lite and who does not, cue massive administration costs, sleveen politicians arguing for certain people to be granted aid etc sounds like a nightmare, cant see it happening and Im not sure it should, when you borrow you sign a contract and you take a certain risk its up to you to ensure you have reasonable prospects to service the debt and a reserves to fall back on in hard times.

Seems to me the only two ways to ensure people approach borrowing with respect and a bit of cop on are.. 1) is if there are consequences to bad borrowing, I would never be in favour of removing or diluting these, if you as a borrower mess up badly then you should clean up after yourself and dont be expecting someone else to do it for you (not a get out of jail free card or even get temporary release) 2) if there was more financial education of some sort..so you have some basic level of understanding of the financial products out there and the consequences for misusing them but in fairness youre supposed to be an adult when you're taking out mortgages etc and presumably you can read the terms and conditions + factor in at least some sort of prospect of interest rate rising + wages declining and give yourself a cushion, too many people did not do this it seems.

Unfortunately it is a whole other story for those who borrowed within their means and through unfortunate circumstances find that both incomes are gone etc and they had no reasonable way of knowing this was going to happen or factoring this into their calculations but its hard to know how to go about identifying these unfortuante people without massive costs and political chicanery intervening.

SkepticOne

Carawaystick wrote: »

Evidence of this?

I think it is fairly well established that there's large numbers of people losing their jobs. It is also well established that houses have lost a lot of value since the peak and still a lot further to go. We can infer why the combination of these two things might be a problem for the banks.

SkepticOne

amacca wrote: »

Seems to me the only two ways to ensure people approach borrowing with respect and a bit of cop on are.. 1) is if there are consequences to bad borrowing, I would never be in favour of removing or diluting these, if you as a borrower mess up badly then you should clean up after yourself and dont be expecting someone else to do it for you (not a get out of jail free card or even get temporary release) 2) if there was more financial education of some sort..so you have some basic level of understanding of the financial products out there and the consequences for misusing them but in fairness youre supposed to be an adult when you're taking out mortgages etc and presumably you can read the terms and conditions + factor in at least some sort of prospect of interest rate rising + wages declining and give yourself a cushion, too many people did not do this it seems.

Unfortunately it is a whole other story for those who borrowed within their means and through unfortunate circumstances find that both incomes are gone etc and they had no reasonable way of knowing this was going to happen or factoring this into their calculations but its hard to know how to go about identifying these unfortuante people without massive costs and political chicanery intervening.

I would fully accept that the downside of a NAMA for ordinary borrowers is that a certain moral hazard is introduced (though of course a huge one is removed from developers). We are talking about easing the burden on those who have lost their job while helping them reskill appropriately. But like I said earlier, a) this moral hazard is probably much less than it would be for developers and b) if someone is financially ruined, what is the good (either for that person or the country) of learning from their mistakes? They may never get to put that learning into practice.

The key question here is whether a bailout of distressed borrowers is better than a bailout of developers from a) a social point of view and b) from the point of view of getting a return for the taxpayer.

I think most people responding here are against bailouts in general. What I'd like to hear from is someone who believes that it has to be a developer bailout over any other sort.

transylman

If you want to know who the taxpayers money is going to help just read this article.

http://www.irishtimes.com/newspaper/opinion/2009/0818/1224252768992.html

Massive tax evasion, bribery, lying under oath, and good friends of FF of course.

Villain

transylman wrote: »

If you want to know who the taxpayers money is going to help just read this article.

http://www.irishtimes.com/newspaper/opinion/2009/0818/1224252768992.html

Massive tax evasion, bribery, lying under oath, and good friends of FF of course.

Everyone seems to forget that its the electorate that voted FF though

Boskowski

So basically what you're saying is that the taxpayers should continue to pay the mortgages for a) the people who were foolish enough to buy houses they couldn't afford b) people who lost employment and can no longer afford their mortgages.

I think (b) is already happening to a certain extent. (a) is outright ridiculous and also (b) has to stop at some point.

And don't get me wrong. I also think the 'real' NAMA shouldn't happen in the first place. It's the biggest scam in history right before our eyes.

But I also believe your logic is flawed, I think you believe this should be an escape hatch for people who are about to lose their homes. But these people would still owe the money and they would still be at risk to lose their homes. It's just taking more risk off the banks which doesn't make sense.

I also think you believe that the developers are provided an escape hatch with NAMA. I think that holds true only to a certain extent. It's mostly an escape hatch for the banks. For the developers it will be one because they will have the ability throw a bunch of lawyers at the entire process.

Thats why I believe this is such a scam.
The banks are bailed out full stop. Which is ridiculous. It's the principle of privatizing profits and socializing losses on the highest order. Wrapped in pink curtains and justified with some rabble about the entire country is going to down the swanny if we don't. Just put some legalese & economese around this core message and eventually enough stupid people will repeat it in the news, press and on forums like this and the plebs will buy it. How convenient that economy is such a thing where there isn't a real truth and even the experts differ on things. Perfect. When in fact it's all rather simple. We're being scammed. And on top this should be perfect to cream more of the top for 'the boys' in terms of legal battles, tribunals and all sorts of professional services that will be required around that quagmire that's going to unfold. It's actually a stroke of genius.

But back to your proposal. It's as stupid as the real thing, the actual NAMA. And for sure, it ain't going to happen because that would go against the eternal principle of (see above) privatizing profits and socializing losses. Escape hatches only for people with money for lawyers. Not for you and me.

SkepticOne

realcam wrote: »

I also think you believe that the developers are provided an escape hatch with NAMA. I think that holds true only to a certain extent. It's mostly an escape hatch for the banks. For the developers it will be one because they will have the ability throw a bunch of lawyers at the entire process.

The reason I think NAMA will be going easy on developers is not simply that the developers have lawyers, which they do and will be using, but also because to go hard on them would be to go against the flawed logic upon which NAMA is based in the first place.

Unfortunately there is very little discussion about this. Most commentary centres around the price the banks will be paid for the distressed assets. But the insidious thing and the thing that will do the most damage to the economy, is the real work of NAMA as an asset management agency over the next 15 to 20 years, the assets being the loans themselves and the underlying security.

What has been happening with the banks is that they have grossly overlent to the extent that any attempt to call in loans and force half built developments onto the market will bring the whole house of cards down. So they have been forced to roll over interest into the loans of developments that the banks themselves know are doomed.

The taxpayer in the form of NAMA will be taking over that role of keeping developers going when they should be allowed to fail. If a developer still fails despite this, then NAMA will take over the underlying security, but will refrain from putting it on the market. NAMA can't afford to have a half-built shopping centre in the middle of nowhere attract no bidders thus valuing it (and by extension a whole class of assets owned by NAMA and their developers) at zero.

Developers themselves know that their companies ultimately are doomed, but sure why not get as much out of the taxpayer as possible. It is as easy not to pay back 10 billion as it is not to pay back 1 billion.

Of course it is all doomed to failure, but Brian Lenihan, Cowen and the likes will be long gone and drawing their ministerial pension. The rest of us will still be there to pick up the pieces.

Boskowski

SkepticOne wrote: »

The reason I think NAMA will be going easy on developers is ... the flawed logic upon which NAMA is based in the first place.

I couldn't agree more with what you say. Just another aspect of it. It's just going to work out perfectly for a certain clientele. Funny how they don't seem to be able to tell their nose from their arse when it comes to actually running a country, but they always get the 'screwing the working people' thing right.

amacca

SkepticOne wrote: »

I would fully accept that the downside of a NAMA for ordinary borrowers is that a certain moral hazard is introduced (though of course a huge one is removed from developers). We are talking about easing the burden on those who have lost their job while helping them reskill appropriately. But like I said earlier, a) this moral hazard is probably much less than it would be for developers

I suppose that's where we differ. My gut instinct is that this moral hazard is not much less because it applies to such a large number of people when you start bailing out individual borrowers.

People lost the run of themselves entirely during our bubble and borrowed very recklessly (and I believe its a significantly large amount of people in this boat) start removing or ameliorating consequences and you will have more reckless behaviour in the future as people could start to view housebuying as a gamble...ah sure ill take a punt and if it doesn't work out they'll have to bail me out sure thats what happened before.....I think its a slippery slope.

I take your point though that having individuals who are broke and jobless and houseless are not much use from an economic point of view to the country, I just think that any benefit you gain from supporting them results in an even bigger negative economic consequences down the line. Although maybe the posters over in the economics forum would have something to say about that.

Also when these borrowers re skill I believe that there is high likelihood of no job presenting itself for a significantly large percentage of them in the medium term meaning the this NAMA for individuals might not be worth it from an economic point of view...no job, no repayment, borrowings pile up even more, repossession delayed, market kept artificially high etc unless this scheme proposes to ease the burden by reducing the individuals borrowings for good? ----now that is something I would object to as strenuously as bailing out our developers.

If you take a risk you should be free to enjoy the rewards or you should have to put up with the pain afterward. Certain people need to develop a spine, stand on their own two feet and put some thought into important decisions like taking out a mortgage and imo when you start removing consequences all you seem to get in this life is more childish behaviour rather than gratitude and efforts being made not to make the same mistake twice/improve the system.

Drumpot

I agree with the principle behind alot of whats being said here. The idea of bailing out banks is gut wrenching, letting developers off the hook is criminal and the thought of the average Joe having to Schtum up for this all is simply horrifying.

Ive argued with people over the phrase "bailing out developers or banks" as its certainly not that simple.

I am one of the biggest cynics I know. I dont doubt that people in politics and high positions look out for each other. Afterall this is capitalism and money makes the world go round.. .

That said, for all the complaints and theories on why exactly the government are doing what they are doing , I have never read a better alternative . .

The idea behind NAMA is sound (irrespective of the intricate details of the body itself). Its sole purpose is not to simply "bail out the banks" to save FF's buddys or developers. Its to release money into the economy for business to continue.

What are everybody else in the world doing ?

As part of the EU, what do our brothers in Brussels think of NAMA ?

Why have they not suggested a better alternative ?

If we let the banks go under (which I believe in principle should of happened) I honestly dont know how it would affect our country (as I am not an economist). I do wonder how we would trade and import goods (without money). I also wonder how such a small country would recover from such a radical Collapse (again I will be corrected on this by more educated economists).

Irrespective of whether or not there are other alternatives, I really find it grossly ignorant to say that FF are mainly doing NAMA to Bail out their mates. I also find it disgusting that 25% of people still voted for FF in the local elections, despite their obvious failings.

Questions should be asked about NAMA (none of this bailing out mates crap), but I fear our opposition partys are no better then the guys in power.

We have voted in T.D's that mirror its electorate. Reactive, not proactive. Short term goals, looking for quick solutions to long term problems. Out for themselves, all about what we can get from the country at the expense of collective prosperity.

As much as we despise the developers that mugged the country or the Banks that geared us all out of existance, the truth is that we voted for everything. I never voted for FF, but I didnt march on the streets when I felt they were pissing away the nations wealth. But a simple pensions levy will get thousands up in arms, ready to stop the city for their cause.

If you didnt demand more from the government and kept quiet while the times were good, you have no real moral ground to take in this debate.

SkepticOne

Drumpot wrote: »

Ive argued with people over the phrase "bailing out developers or banks" as its certainly not that simple.

It is not a simple straight bailout and a bailout is certainly not the official stated aim, but I think it is fairly easy to see that that is what it will effectively end up as, and this is even without factoring in cronyism and corruption.

Drumpot

SkepticOne wrote: »

It is not a simple straight bailout and a bailout is certainly not the official stated aim, but I think it is fairly easy to see that that is what it will effectively end up as, and this is even without factoring in cronyism and corruption.

Im not dismissing the theory that there is an element of that going on.

While I wouldnt put anything past any government we have had (particularly a FF govt) I believe that this is just too big a gamble to take "for the sake of your mates".

the way they have handled the public service and their own wages, bonuses etc is cronyism and corruption of the highest order. The way they havent made people accountable for whats happened is unforgivable.

But I honestly dont believe NAMA is in anyway about protecting their mates. I really believe that there are many things that the govt are doing thats morally corrupt, but I do not believe that NAMA is intentionally one of them. Thats just my opinion of course, but i find it difficult to see so many foreign investors snapping up our Government Bond issues so quickly if they felt that our government was completely inept and looking after their own interests. Anytime we have issued bonds recently they have been gobbled up. Sometimes people outside of the country can see your government and economy for what it is.

SkepticOne

Drumpot wrote: »

Im not dismissing the theory that there is an element of that going on.

While I wouldnt put anything past any government we have had (particularly a FF govt) I believe that this is just too big a gamble to take "for the sake of your mates".

the way they have handled the public service and their own wages, bonuses etc is cronyism and corruption of the highest order. The way they havent made people accountable for whats happened is unforgivable.

But I honestly dont believe NAMA is in anyway about protecting their mates. I really believe that there are many things that the govt are doing thats morally corrupt, but I do not believe that NAMA is intentionally one of them.

Note that I haven't argued cronyism or corruption in my posts. My main argument here is that it is based on flawed reasoning, the same flawed reasoning and lack of understanding of the market that led to the current problems. For the most part the problems will be caused by people thinking they are acting in the public interest.

Drumpot

SkepticOne wrote: »

Note that I haven't argued cronyism or corruption in my posts. My main argument here is that it is based on flawed reasoning, the same flawed reasoning and lack of understanding of the market that led to the current problems. For the most part the problems will be caused by people thinking they are acting in the public interest.

With that , I agree . .:(

Rybka

From my point of view the worst thing about Nama is the attempt to keep property prices artificially high.

The people who suffer most are the ones who saw the bubble for what it was and kept well away - but were still hit with exorbitant rents- they will now be taxed excessicely for that prudence. The next generation of buyers will also be kept of the 'ladder'. People who bought during the bubble should (unhapily) face the consequence of their own decision.

Nama in its current form where we buy loans at a valuation based on future (potential) values is a rip off to every taxpayer. We should take the the hit - even if it means the banks have to be nationalised and our pensions lose even more.

Drumpot

Rybka wrote: »

From my point of view the worst thing about Nama is the attempt to keep property prices artificially high.

The people who suffer most are the ones who saw the bubble for what it was and kept well away - but were still hit with exorbitant rents- they will now be taxed excessicely for that prudence. The next generation of buyers will also be kept of the 'ladder'. People who bought during the bubble should (unhapily) face the consequence of their own decision.

Nama in its current form where we buy loans at a valuation based on future (potential) values is a rip off to every taxpayer. We should take the the hit - even if it means the banks have to be nationalised and our pensions lose even more.

I agree and disagree with some of your statements.

People should be held accountable for their decisions. Im in negative equity and I am quite happy to service loans that I take out at any stage.

The problem people are having with the Idea behind NAMA is it looks like its taking accountability and the worries of dealing with the problem off the Banks and Builders hands.

To suggest that many people were prudent by renting is laughable to be honest. I dont know one person who can honestly say they didnt buy because they saw a crash down the road (and I know alot of people). They simply couldnt afford to.

SkepticOne

Drumpot wrote:

People should be held accountable for their decisions. Im in negative equity and I am quite happy to service loans that I take out at any stage.

This is why I think that if assistance is to occur, it should be to individuals rather than developer businesses. For the most part most people, even those in negative equity, will strive to continue to pay their mortgage. Although much is made of people posting their keys back to their lender ("jingle mail"), it is in reality comparatively rare.

Compare this to developers who have structured their businesses deliberately to allow the equivalent of handing back the keys while minimising damage to the overall business itself. Hence, the hundreds of companies that individual developers set up.

amacca wrote: »

Also when these borrowers re skill I believe that there is high likelihood of no job presenting itself for a significantly large percentage of them in the medium term meaning the this NAMA for individuals might not be worth it from an economic point of view...no job, no repayment, borrowings pile up even more, repossession delayed, market kept artificially high etc unless this scheme proposes to ease the burden by reducing the individuals borrowings for good? ----now that is something I would object to as strenuously as bailing out our developers.

If you take a risk you should be free to enjoy the rewards or you should have to put up with the pain afterward. Certain people need to develop a spine, stand on their own two feet and put some thought into important decisions like taking out a mortgage and imo when you start removing consequences all you seem to get in this life is more childish behaviour rather than gratitude and efforts being made not to make the same mistake twice/improve the system.

I don't think anyone has a problem with the idea that people should take full responsibility for their actions. What I would question is whether this is the priority right now when people are losing their jobs. There will be a lot of people realising that, yes, they should not have bought that house at the top of the market, but now having understood this, they are unable to do anything about it. There's no point in learning from your mistakes if you can't then use that learning to rectify the situation.

The reason any of this is an issue is that when the government extended the guarantee scheme to bond holders, the banks' problems became the country's problems. The banks' reckless lending is the country's reckless lending. In a sense, the bailout has already occurred. We are paying for this bailout through higher costs of borrowing for the government.

Thus if you or anyone can't pay their mortgage through redundancy it is now my problem whether I like it or not. The fact that the underlying security, the house, is now worth a lot less is also my problem, much as I don't like that either.

I don't think any politician of any party right now would contemplate lifting this guarantee as it would immediately trigger a run on the banks and be the end of them politically.

This is why sentiments about people taking personal responsibility are not really relevant to the options available at this point in time. What I'm looking for here is politically realistic alternatives to the current NAMA plan that have some chance of being adopted by some government.

SLUSK

Don't bail out "ordinary" people who bought a house they could not afford. They deserve to end up in the streets. That will teach them a lesson. They can live in tent cities and think about their mistakes.

jmayo

FFS where do some people get their ideas from ?

It is one thing to have to bail out the banks whose demise would have huge widespread consequences for the entire economy, but why the f*** should we bailout individuals some of whom showed no fiscal responsibility whilst they blew borrowed money on hosues they couldn't afford, brand new cars, foreign holidays, flash parties for their kids.

I know one individual who built a beautiful huge house, but borrowed extra to buy a sports car and boat for himself and a big jeep for the wife.
Now he can't get rid of the house and he can't afford the mortgage.
Can someone please tell me why he deserves a bailout ?

Drumpot

jmayo wrote: »

FFS where do some people get their ideas from ?

It is one thing to have to bail out the banks whose demise would have huge widespread consequences for the entire economy, but why the f*** should we bailout individuals some of whom showed no fiscal responsibility whilst they blew borrowed money on hosues they couldn't afford, brand new cars, foreign holidays, flash parties for their kids.

I know one individual who built a beautiful huge house, but borrowed extra to buy a sports car and boat for himself and a big jeep for the wife.
Now he can't get rid of the house and he can't afford the mortgage.
Can someone please tell me why he deserves a bailout ?

I agree and disagree.

I agree with what you are saying in that bailing out Individuals does the economy no good and bailing out the banks is a necessary evil that SHOULD hopefully benefit the economy overall.

But .

I disagree with your comments on individuals "blowing loans". Individuals in trouble are no less entitled to be looking for state subsidy then the banks. The ONLY differance is that bailing individuals out does not serve the greater good of the economy. .

And I dont believe people that took out mortgages that they cannot afford now should automatically be castigated. While there is personal responsibility on peoples part to be prudent, you cant expect everybody to know how much a bank should loan them, or how house prices will go.

SkepticOne

jmayo wrote: »

FFS where do some people get their ideas from ?

It is one thing to have to bail out the banks whose demise would have huge widespread consequences for the entire economy, but why the f*** should we bailout individuals some of whom showed no fiscal responsibility whilst they blew borrowed money on hosues they couldn't afford, brand new cars, foreign holidays, flash parties for their kids.

I know one individual who built a beautiful huge house, but borrowed extra to buy a sports car and boat for himself and a big jeep for the wife.
Now he can't get rid of the house and he can't afford the mortgage.
Can someone please tell me why he deserves a bailout ?

This is a largely repeat of other posts in the thread which I have tried to address.

Sand

And I dont believe people that took out mortgages that they cannot afford now should automatically be castigated. While there is personal responsibility on peoples part to be prudent, you cant expect everybody to know how much a bank should loan them, or how house prices will go.

Id agree to a certain extent. People who bought at stupid prices in the last 3-4 years would have borrowed at pretty high interest rates relative to what currently exists. If they could manage it then, they can surely manage it now. I know my own mortgage has dropped by a quarter. So all other things considered I have relatively more disposable income than 3 years ago.

So why are others in trouble now, at a time of low interest rates? 15% unemployment rates might explain it. If you are employed, you can service a mortgage. If you are not, you cannot. I dont blame someone who was made unemployed for running into difficulties with servicing a mortgage. Others clearly do as apparently, no one should borrow more than they could repay on the dole...

couerdelion

Sand wrote: »

Id agree to a certain extent. People who bought at stupid prices in the last 3-4 years would have borrowed at pretty high interest rates relative to what currently exists. If they could manage it then, they can surely manage it now. I know my own mortgage has dropped by a quarter. So all other things considered I have relatively more disposable income than 3 years ago.

So why are others in trouble now, at a time of low interest rates? 15% unemployment rates might explain it. If you are employed, you can service a mortgage. If you are not, you cannot. I dont blame someone who was made unemployed for running into difficulties with servicing a mortgage. Others clearly do as apparently, no one should borrow more than they could repay on the dole...

It's not quite as simple though as 'the mortgage interest rates have dropped so it should be more affordable'. Mine and many of my friends circumstances have changed too. Wage cuts at work (I've had to take 10% my partner 50%) plus tax increases mean that I'm worse off now than ever. If the interest rates hadn't come down then I would more than likely have defaulted on my mortgage.

Sand

Thats what I am saying - if people are having difficulties with their mortgage now, in a time of lower interest rates, its more than likely down to them losing their jobs or having to accept pay cuts.

Hence I find the sorrowful shaking of the head and comments about borrowing more than you can afford on the dole to be a bit shortsighted. Sure, if someone borrowed in excess of their income...their problem. If they borrowed within their income, and then their income was taken away from them due to redundancy or wage cuts...its hard to argue they were exceptionally reckless in their borrowing.

couerdelion

Sand wrote: »

Thats what I am saying - if people are having difficulties with their mortgage now, in a time of lower interest rates, its more than likely down to them losing their jobs or having to accept pay cuts.

Hence I find the sorrowful shaking of the head and comments about borrowing more than you can afford on the dole to be a bit shortsighted. Sure, if someone borrowed in excess of their income...their problem. If they borrowed within their income, and then their income was taken away from them due to redundancy or wage cuts...its hard to argue they were exceptionally reckless in their borrowing.

Ah ok, sorry mis-read you.

I do get fed up with all the 'borrowed beyond your means' rubbish that gets spouted. The banks obviously agreed that people weren't borrowing beyond their means at the time and the problem is the economic decline.
Nobody foresaw that when borrowing money, or envisaged wage cuts.

amacca

SkepticOne wrote: »

This is why I think that if assistance is to occur, it should be to individuals rather than developer businesses. For the most part most people, even those in negative equity, will strive to continue to pay their mortgage. Although much is made of people posting their keys back to their lender ("jingle mail"), it is in reality comparatively rare.

Compare this to developers who have structured their businesses deliberately to allow the equivalent of handing back the keys while minimising damage to the overall business itself. Hence, the hundreds of companies that individual developers set up.I don't think anyone has a problem with the idea that people should take full responsibility for their actions. What I would question is whether this is the priority right now when people are losing their jobs. There will be a lot of people realising that, yes, they should not have bought that house at the top of the market, but now having understood this, they are unable to do anything about it. There's no point in learning from your mistakes if you can't then use that learning to rectify the situation.
.
.
.
.

Thus if you or anyone can't pay their mortgage through redundancy it is now my problem whether I like it or not. The fact that the underlying security, the house, is now worth a lot less is also my problem, much as I don't like that either.

I don't think any politician of any party right now would contemplate lifting this guarantee as it would immediately trigger a run on the banks and be the end of them politically.

This is why sentiments about people taking personal responsibility are not really relevant to the options available at this point in time. What I'm looking for here is politically realistic alternatives to the current NAMA plan that have some chance of being adopted by some government.

Snipped a bit out, I suppose its easy to see from my previous posts that they are partly fueled by some begrudgery and a certain amount of desire to see people who borrowed recklessly pay the price.

Just some points on this before I continue, I dont consider people who borrowed with a reasonable prospect of paying back and had a reasonable prospect of keeping their job/income getting into difficulty reckless borrowers, neither do I consider those that took out sensible multiples of their income as borrowings reckless so I would not like to see these people hard done by, so Im not an utter hardliner who believes those who borrowed and could'nt pay back should be dealt with harshly......but part of setting up a politically realistic alternative to NAMA that involves aiding those individual borrowers in default or danger of default does however have to deal with sorting out those borrowers considered to be reckless from those considered to be just unfortunate - I believe that drawing this line would be as fraught with controversy and liable cause uproar as NAMA currently is/will be.

But thats an aside to my main point, you say above that you would question whether people taking full responsibility for their actions should be a priority right now given that people are losing their jobs. In response I would say that the only way to resolve this mess quickly and not prolong and increase the damage caused is for both developers and individuals to be made take full responsibility for their actions right now and take the hits. Its hugely unfortunate but I believe that ultimately the only way a system/society works smoothly and efficiently is if individuals have to take responsibilty for their actions either voluntarily or because society sees to it that they have to....

You also say that the idea of people taking personal responsibility are not really relevant at this point in time......completely disagree, I think its very relevant (at the heart of this debate actually) because lack of responsibilty is what got us into this mess, ameliorating personal responsibilty is imo making things worse right now and if we continue to do this will disimprove things even more in the future.

Its hard to back up what Im saying as its partly gut instinct (which of course can be wrong but Ive learned to trust it), partly a sense of not wanting others to get away with borrowing too much and holding on to a house when I firstly was'nt able to and subsequently chose not to becuase I didnt want to be in debt the rest of my life. That might be an ugly sentiment but I got lucky/made the right choice and want to benefit from it and it feels wrong if I dont benefit fully. Sort of like having the best hand in poker and someone changing the rules to allow the player with a pair of twos take the pot....you may have got the hand through luck but you stayed in the game up till this point and played conservatively by the rules, kept an eye on the probabilities and now when youre in the driving seat someone changes the rules.....very disappointing. Makes you think that being a productive, hard working member of society just isnt worth it....makes you think that if enough people do something foolish/criminal they get away with it...creates a disincentive for behaving responsibly etc

Having said that, its hard to back it up but not necessarily impossible......Something similar to a NAMA (albeit administered by the banks) for individual borrowers is already being tried in the states with less than favourable results. I think this shows that bailing out the individual borrower is no more a good idea than bailing out the developer (albeit indirectly) with his labyrinthine mass of companies. And if it doesnt show this then it definitely shows how a well meaning piece of legislation of this type is fraught with unintended negative consequences that are very hard to eliminate no matter what you try.

They call it Mortgage Modification The US annonced it in February and it was a mortgage modification programme targetted at loans backed by fannie mae and freddie mac designed to stop the surge in foreclosures over there, give avg joe from the US OF A a chance and thus get the economy back on track which is what I believe your ultimate motivation for suggesting an individual bailout scheme is.

In theory it was supposed to be a good thing. Banks have an incentive to save a mortgage rather than have it foreclose and on top of this they were offered $4,000 for every successfully modified mortgage. This was a type of bailout for individual borrowers which seems to have been very unsuccessful (to date anyway - i suppose it still has time to turn things around but Im not holding my breath)

1. Modifying mortgages costs banks money, by reducing current payments or overall debt the bank loses money and the individual wins. Unfortunately but predictably this means that there is a huge incentive to cheat.

homeowners in the states have started intentionally skipping payments on their mortgages to qualify for this scheme and housing counselling services have started advising their customers to do this.

This ultimately means more losses for the banks which if a similar scheme were introduced here would hit our taxpaying pockets because of our guarantee. worse economically than just foreclosing in the first place.

also btw, the boston fed also stated that 30% of seriously delinquent mortages cure (return to health - payments restart, debt is cleared) which means (at least over there) that 30% of the money you put into bailing out individuals is wasted as they would have found a way to pay it off anyway...i believe this would probably be a higher figure over here because if theres one thing we can do its hang on to a house by hook or by crook.


2. The redefault rate on these modifications was horrific, 90 days after being modified, over half the mortgages were in default again making their scheme nothing more than delaying the inevitable. From a banks point of view over there it can foreclose right now and sell house at todays price or foreclose in 90 days time and more than likely make less money as the price of the house will likely have declined.

This ultimately means its more profitable for the banks to foreclose and if a similar scheme were introduced here would hit our taxpaying pockets even more becuase the banks would make less from such a scheme.

It also would seem to back up my earlier point that bailing out individuals and helping them retrain may not be such a great idea. they still might not be able to pay their mortgages as the jobs they retrain for may not exist so you would just be prolonging the inevitable and making a bigger mess with such a scheme. Borrowings could actually increase leaving borrowers in a bigger hole..banks make less money etc while those that could have paid (the by hook or by hook crowd - good for your pocket) get away if you are suggesting the scheme would reduce the overall amount owed.


Now im not saying that we could not come up with a better scheme over here but I dont just think, I believe that any attempt to reduce the debt owed by a person will ultimately be a bad thing...and not just becuase it might upset someone like me but a bad thing from an economic and political and social perspective.

It would also be horrifically hard to implement in any fair way without serious unintended consequences (see above). I also would think that if we did embark upon a mortgage modification scheme a lot of developer loans would magically qualify for modification down the road making it an even bigger developer bailout in the long run. The more I think about the more Im not in favour of NAMA in its current form either. Removing consequences for any form of bad behaviour is imo ultimately a bad idea as it just leads to a bigger mess down the road.It may look like a good idea now, it may look fine in 10/20/30 years time but ultimately its just storing up trouble imo.

No omlette without shells being broken and Im fond of a good omlette etc etc!

AlekSmart

Good piece by Gene Kerrigan in todays Indo....

http://www.independent.ie/opinion/columnists/gene-kerrigan/namas-nothing-to-worry-about-as-such-1867235.html

I was particularly taken by one of his final paragraphs.....

On Wednesday, Nama advertised for tenders for the position of "Derivatives Valuation Service Provider", that is, an expert in the valuation of "derivatives". These are financial instruments with a controversial record. It could be this is a necessary move, for unspectacular technical reasons. It could also suggest that some loans being bought by Nama are not so much toxic as radioactive.

We don't know and won't know, it's none of our business. "Commercial sensitivities", y'know. We just pay up and shut up.

The issue of just how little ,we the shareholders of NAMA,are being told about it`s workings is of huge significance.

Any mention of the term "Derivatives" SHOULD be of immense interest to us all in the wake of the U.S experience...bottles of coloured smoke...snake-oil.....and WE need a valuer for them...didng ding ding went the alarm bells !!!

There appears to be a Government consensus that this Financial Stuff is waay beyond the ken of ordinary mortals and best left to the Colm McCarthy`s,Peter Bacon`s and God between us and all harm....the Seanie Fitzpatrick`s.....

Nothing to do with NAMA should be concealed from the Public at this stage...and for sure the 5 year review period should be removed NOW and replaced by an annual PUBLIC inspection of it`s operations.

To once again quote Gene Kerrigan....

Establishment cheerleaders repeatedly tell us there's "no alternative". And, of course, it's not a bank bailout, or a builder bailout. (I love Colm McCarthy's careful wording: "There will be no bailout of the banks as such, unless the Government overpays for the loans." Ah, what a wonderful cover-me-arse phrase -- "As such". And, since it's stated government policy to overpay for those loans . . . oh, well.)

The expensive after-shave,deep tans and smooth silk-kerchief brigade appear to have won the day alright,leaving the sans-culottes to drink brackish water in the gutter. :mad:

ART6

If I understand many of the posts in this thread, people who took out mortgages they couldn't afford in bad times were reckless. Bankers who lent excessively on wildly overvalued security were not. Individuals facing repossession should not be bailed out. They are not essential to the national economy. Banks should be bailed out because they are essential to the economy.

There are however other significant differences:

The individuals who committed themselves to unaffordable mortgages probably didn't claim to be financial experts. The banks did so claim. The common man has little qualification for financial forecasting. Bankers are supposed to be (and claim to be) experts.

Individuals based their investments on single properties that they believed they knew the value of since that was what they paid for them. Banks based their investments on future asset values suggested to them by others.

Individuals had, in my view at least, every right to rely upon the advice of bankers and mortgage advisers who would apply professional experience to that advice. In the financial industry it is called "Due Dilligence". If it was not applied in the case of individual mortgages, it certainly doesn't seem to have been in the outlandish lending to developers.

So who was the more reckless? The individual who took out a €300k loan to buy a house of known value, or the bank who lent €30m to a developer who said he wanted to build a skyscraper in New York? Would I bail out the individual? No. I wouldn't. In the days when I had a morgage I also bought mortgage protection insurance in case I got sick or lost my job. Would I bail out the bankers? No I wouldn't. I would either nationalise and properly capitalise one of them or I would set up a national "good" bank and either way let the rest of them stew in the juice of their own making. If investors in the banks lost their shirts, tough. The fundamental and accepted rule in investment is if you can't afford to lose it, don't do it.

So what about the pension funds that invested in bank shares? Their fund members will lose their pensions if the banks are allowed to go bust. OK, pursuade the funds to sell their bank shares to the good bank at pre-collapse values and to then require them to use the money to buy shares in the good bank. If any of the banks survive, then profit for the taxpayer. If they don't, then at least no loss.

If the commercial banks were allowed to fail, would it destroy the Irish economy? Why should it? If Ireland is perceived to have a sound economy and a good national bank with a sound balance sheet guaranteed by the state, then there is no reason to believe that other financial institutions would not simply move in to fill the void. In my view there is much more risk in the state taking on massive debts of unknown value to a level several times that of the GNP and many times greater than any possible tax income to fund them.

Liam Byrne

couerdelion wrote: »

The banks obviously agreed that people weren't borrowing beyond their means at the time and the problem is the economic decline.

Not entirely true. I remember going into a bank and telling them I'd done the maths based on their rates and reckoned I could borrow €X, repaying €Z per month without major hassle.

In passing, I mentioned an extra amount €Y, but said that I reckoned that would have to wait because I could only afford to repay €Z per month.

Yer wan logged onto a computer and said "We can give you €X+Y, at €Z+400 per month"

I nearly fainted, and said "What part of 'I can comfortably repay €Z per month' didn't come across ? I've done the maths and definitely could not justify an extra €400 outgoing per month"

So basically, they'd have let me hang myself, and only my own sense stopped that from happening, or I'd be rightly screwed now.

Rybka

Jees, When will this country cop on.

I had a look at BOI website - they were prepared to offer me 5x my wage for a mortgage. Even in these conditions.

No person should be allowed over 3.5x their basic wage for a mortgage. No mortgage should be allowed over a period of more than 25 years.

I am not Irish, but this country has not yet accepted what is coming - In my opionion we are looking at house prices at 50% less than now - not peak. If Nama gets off the ground it could in the long run make things even worse - but delayed for a few years - at every PAYE persons expense.

Rybka

Drumpot wrote: »

To suggest that many people were prudent by renting is laughable to be honest. I dont know one person who can honestly say they didnt buy because they saw a crash down the road (and I know alot of people). They simply couldnt afford to.

Perhaps that is true, every Irish person I knew was clambering to get on the ladder.

I however came from Scotland, I had (still have) a mortgage on a very nice apartment in Ayr, Scotland bought in 1998 for 32,000. A comparabile place would fetch minimum 100,000 even in1999. At peak in Ireland it would be worth 300,000. That is simply madnesss.

It is time to let market forces get to work, we let the market work when prices were going up, let it work on the way down.

As a Scotsman I also fail to understand Nama - every taxpayer should be going crazy over this - In Ireland it seems like there is a reluctant acceptance. This is in my opinion an issue worth revolution - why should the taxpayer pay the bill of developers, FF, and bankers?

Diarmuid

couerdelion wrote: »

Nobody foresaw that when borrowing money, or envisaged wage cuts.

That's blatantly false. If you don't forsee any wage cuts or potential job losses over the life of a 40 year mortgage, you have no one to blame except yourself.

Stress testing of a mortgage repayment and strict loan values should mitigate this risk. (For instance in France the rule is "Only one third of your monthly income can be used to service a mortgage on your main home (or rent payments if you are a tenant), any other mortgages, any loans, credit card repayments, and if applicable maintenance payments. The monthly cost of your proposed French mortgage plus the life assurance cover must be included as well.")

Unfortunately the Irish banks were too "smart" for that and the Irish public were too willing to go along with their irresponsible lending.

ART6

Diarmuid wrote: »

That's blatantly false. If you don't forsee any wage cuts or potential job losses over the life of a 40 year mortgage, you have no one to blame except yourself.

Stress testing of a mortgage repayment and strict loan values should mitigate this risk. (For instance in France the rule is "Only one third of your monthly income can be used to service a mortgage on your main home (or rent payments if you are a tenant), any other mortgages, any loans, credit card repayments, and if applicable maintenance payments. The monthly cost of your proposed French mortgage plus the life assurance cover must be included as well.")

Unfortunately the Irish banks were too "smart" for that and the Irish public were too willing to go along with their irresponsible lending.

Totally agree. If bank lending for mortgages had been restricted in the same way here, perhaps house prices wouldn't have gone through the roof in the first place, so leading to the bubble. That, however, would have required regulation, and given the stamp duty receipts the government had no incentive to do so. Typical FF approach. Grab the ready money and spend it without any long term strategy.

jmayo

Drumpot wrote: »

I agree and disagree.
...
disagree with your comments on individuals "blowing loans". Individuals in trouble are no less entitled to be looking for state subsidy then the banks. The ONLY differance is that bailing individuals out does not serve the greater good of the economy. .

And I dont believe people that took out mortgages that they cannot afford now should automatically be castigated. While there is personal responsibility on peoples part to be prudent, you cant expect everybody to know how much a bank should loan them, or how house prices will go.

I am not catisgating the unlucky who borrowed reasonable amount to buy a home they needed and have now lost their jobs.
But a lot of people were completly wreckless and saying it is the banks fault for lending it to them is a cop out.

SkepticOne wrote: »

This is a largely repeat of other posts in the thread which I have tried to address.

Sorry but I am just trying to reinforce the opinion that it is a bad idea to start bailing out individuals.
OK.

couerdelion wrote: »

Ah ok, sorry mis-read you.

I do get fed up with all the 'borrowed beyond your means' rubbish that gets spouted. The banks obviously agreed that people weren't borrowing beyond their means at the time and the problem is the economic decline.
Nobody foresaw that when borrowing money, or envisaged wage cuts.

Ever heard of personal responsibility for ones actions :rolleyes:
When did we start always trying to blame someone else for our bad decisions.

We all know how well run the banks were.
The ones controlling lending in the banks were on commission, thus it was in their own interest to push as many loans as possible.

Fine if you lost your job and now have problems paying, you deserve leeway. But what of the ones that borrowed 100%, plus used the credit card and credit union to furnish the place ?
What of the ones that did not have job security, what of the ones who had to rent a room in order to make repayments ?
A lot of people jumped on the much hyped property ladder, because they believed the myth that they had to buy because it was only going to increase.

A fair few people could see that Irish property prices were completely askew and vastly overvalued, thus did not buy.
Of course we were the idiots back in 2006 and now we are expected to pick up the pieces for those wise switched on ones of 2002-2007.

It is bad enough having to bail out the banks and the f***ing idiots that ran them into the ground, without having to bailout every tom dick and mary that chose to buy between 2000 and 2008.
Where do we draw the line ?

akkadian

jdivision wrote: »

who's going to pay for the Nama for individuals? The people who showed fiscal responsibility while all around them put money on credit cards, bought houses they shouldn't have and generally lived beyond their names. It's bad enough the bailouts we have coming now, I'm not in favour of bailing out individuals who made bad choices. And believe me I have plenty of problems with both nama and not nationalising the banks

I agree. It's very hard on those who lost jobs but it's ultimately a choice of bailing out the the conservative spending Irish people (those that DIDN'T buy overpriced houses and cars..) OR the liberal spenders (those that were too happy to spend spend spend on overpriced things. Constantine Georgiev (name might be spelled wrong) had it right I think, in his editorial in the Tribune or Independent. He basically said:

1) NAMA need to be properly regulated i.e no banking or property types (with vested interests) should dominate the comity. It needs to be a balanced comity that is responsible for helping to raise asset value responsibly, and sell off assets in auctions only when necessary and in the optimal possible manner.

2) The Irish tax-payer (in general - BOTH home owners with no job and negative equity, AND non mortgage holders) should have some guaranteed slice of any reduction in repayment on NAMA toxic debts.


Anyway, it's all a moot point ultimately. The obvious answer is huge cuts that are OPTIMIZED to be in areas that are not performing, and most importantly! NOT LIKELY TO START PERFORMING.
That is where the real trimming and sacrifice must be made.

For example, the cross border institutions (aimed at bridging the hate between protestants/catholics/unionists/loyalists/Republicans etc. etc. ) projects are very important to me out of respect for everyone in the North BUT, I think the UK needs to help with money for that now as their economy is in better condition and big enough to do so.

Inevitably, there needs to be public sector wage cuts and even redundancies (not preferable) if necessary. Reuductions in positions would have to be weighed against social welfare payout and severance of course.
If the economy fails, we all lose. Better to be poorer for a few years than poorer for many years.

However, I don't believe in cuts in the green energy sector. Subsisdies for students studying green energy postgrads etc. (the green energy area is performing) is a good idea and not hugely expensive, and the agriculture and fisheries sectors need to be maintained too.


Obviously, people have to expect wage cuts. How can this be made any clearer?
Heavy recession -> _DE_flation, peole are spending less money for goods and services AND can afford to be more competivie -> wage cuts across the board are logical. To not do that would be gross incompetance. Ireland needs to improve competitiveness. It's as simple as that. Sustainability of jobs is very important and at least the government is making progress with that -> i.e. subsidies for companies that employ Irish workers *subject to the usual condidtions.

I beleive puble sector wage spending cuts should figure hugely. And as I said, it's only logical to index wage cuts inline with the deflation, and even lower. The salary hikes from the boom times shoul to be UNDONE IMO. Please don't cut nurses wages though. They desserve mnore not less.

Capital projects like the new terminal 2 for the airport in Dublin should not be cut, as labor is cheap for that now. How many construction workers are out of work now??


I also want to say that I respect out trade unions. They are a symbol of integrity and respect for the worker as they fight for decent standards, but I would HOPE that they won't resist public sector wage cuts too much. These cuts are ESSENTIAL and logical.

Social welfare should be cut by 20 % at least I think. -Deflation/lower rents ......

The minimum wage needs to be lowered. Again, only logical given the deflation and lower rents.


Finally, and most importantly, there needs to be big cuts for those at the top - those that didn't guard us from the wolf (bad/corrupt banking practices)

As for blame! That's the easy part. It goes in the same order as any sailing ship. Captain on down..

Government ->Banks -> Property tycoons -> public

(in decreasing order of blame)

Yes SOME of the public are partly to blame. Some people really did spend too much and help inflate the bubble. It was naiive.
However, many did not and the ones that did not should be allocated shares in NAMA assets also. It's only fair.

I want to close by saying, it's better everyone eat their humbe pie for a few years than become third world citizens.

This is why we cant have a NAMA for people not developers:

http://www.thepropertypin.com/viewtopic.php?f=4&t=1859

Check out the range of incomes of borrowers!

and
http://www.thepropertypin.com/viewtopic.php?f=4&t=2132

40% of the demand in 2006 were investors.

These are the people you would be bailing out