Richard Bruton's rebuttal

DarkRaven

I was looking over the Oireachtas report after the Budget was announced earlier this month (at which point I did not have an account here) and it seems to me that Richard Bruton's rebuttal was rather week and wishy washy. I seriously thought that the Finance Spokesperson for the second largest party in the Dáil would do better than that.

At the moment, I'm being drawn more and more to Fianna Fáil's side of the fence...

Any thoughts on this?

FunnyStuff

if thats what draws ya to FF then what hope is there for the country

me_right_one

FF's side of the fence is the only way. It's painful, but nescessary. Anyone who disagrees is only deluding themselves. Chow-chess-ku (dunno how to spell it) got Romania out of a recession, and 4 billion dollars debt, which was massive money for an eastern bloc country, AND it was 1989, all in one year. It was so painful for the country that it caused a revolution. Fecked up Romania permanently. They should have been the new Poland or East Germany. Even now, 20 years on, people still dont rate Romania with either of those countries.

If FG, or anyone else, thinks they could fix things with less pain, they're wrong. I'm not a FF man, I detest them, but this time the whole country has been caught with our trousers down, and we just need to row in behind the FFcukers this time to get back on the straight and narrow. I think they have the budget balanced just right under the circumstances.

Richard Brutons rebuttal was weak because in reality, he can't fault the budget, and he knows it. Its like choosing between eating dog poo or human poo when you're a minute away from starving to death. And FF chose the human.

FunnyStuff

Ok so let me see... FF **** up the country, then try to fix it.............. should they now be forgiven for ****in it up in the first place???

I hate this crap, they ran the place like their own personal circus for years. This **** storm is their own making, and them making some "tough decisions" doesnt quite fix it for me. If they made these decisions earlier then maybe the country wouldnt be in the state it is now.

DarkRaven

FunnyStuff wrote: »

Ok so let me see... FF **** up the country, then try to fix it.............. should they now be forgiven for ****in it up in the first place???

I hate this crap, they ran the place like their own personal circus for years. This **** storm is their own making, and them making some "tough decisions" doesnt quite fix it for me. If they made these decisions earlier then maybe the country wouldnt be in the state it is now.

You see it's closed minded individuals like you that are going to ruin the country. Your fault is that you keep looking back at what is done and dead and aren't pragmatic enough to look at the present.

Fianna Fáil destroyed the country's economy, I can accept that. But Fianna Fáil are in power now still. There will not be an election for some time still, they have quite some time yet in power.

Individuals like you have to accept that the country is in a difficult period and tough decisions have to be made to fix it. If you continue to resist their every move it will get worse and worse. Then Fine Gael and Labour will go into a coalition government and will have to take even tougher decisions to fix the mess.

/thread

Nate--IRL--

What tough decisions? FF have done **** all to fix the situation.

Nate

Edit:- A Small example

DarkRaven

Nate--IRL-- wrote: »

What tough decisions? FF have done **** all to fix the situation.

Nate

Come on man, give us a bit more than this. Tell us what exactly Fianna Fáil did or didn't do to fix the economic condition.

NAMA: Not only was NAMA approved by the EU, it was also approved by two former leaders of Fine Gael - Garret Fitzgerald and Alan Dukes. That I think is testiment to how good an idea it is. As you can see, businesses need credit which the banks cannot provide given the amount of toxic debt. NAMA is a great way to get the banks lending again.

Getting the Budget Deficit Under Control: Tax increases were impossible in this budget as they would stagnate the economy even further. The tough decision that had to be made was cutting public service pay. I'm not a particular fan of this decision as my father is a public servant, but there.

Stopping People from Shopping in Northern Ireland: VAT was reduced to it's former level of 21%. Excised duties in alcohol were lowered.

I could go on all day...

Nesie

me_right_one wrote: »

FF's side of the fence is the only way. It's painful, but nescessary. Anyone who disagrees is only deluding themselves.

Are you nuts? FF's way is the only way? I don't think so. Hospital consultants agreed a 15% pay increase a while back. This after the recession had started. Who agreed this? The FF led govermnent. Brendan Drumm is paid over half a million a year. who agreed this? The FF led government. The FF led government got us into this mess with poor planning and decision making the entire time they were in government. Got a problem? Lets throw money at it.

When the building sector looked like it was slowing down a bit, they played with stamp duty reliefs to keep it going. They pushed the economy up and up and up so their builder-developer buddies could make their millions. The higher the economy went the harder it was going to fall.

FF cannot plan. They have shown this and ppl seem to be blind to it.

Nate--IRL--

DarkRaven wrote: »

Come on man, give us a bit more than this. Tell us what exactly Fianna Fáil did or didn't do to fix the economic condition.

NAMA: Not only was NAMA approved by the EU, it was also approved by two former leaders of Fine Gael - Garret Fitzgerald and Alan Dukes. That I think is testiment to how good an idea it is. As you can see, businesses need credit which the banks cannot provide given the amount of toxic debt. NAMA is a great way to get the banks lending again.

Getting the Budget Deficit Under Control: Tax increases were impossible in this budget as they would stagnate the economy even further. The tough decision that had to be made was cutting public service pay. I'm not a particular fan of this decision as my father is a public servant, but there.

Stopping People from Shopping in Northern Ireland: VAT was reduced to it's former level of 21%. Excised duties in alcohol were lowered.

I could go on all day...

I don't care if all of FG support NAMA, is still a bad bad Idea. As for getting the Banks lending again, don't expect that in a hurry.

Eugene Sheehy AIB chief executive wrote:

If people think the day after NAMA the country is going to be awash with money, that's not going to happen. The banks’ balance sheets will be stronger. That will help the banks fund their long term funding cheaper and I think there will be a trickle down effect.

And Nama does not concern itself with non-performing Mortgages that currently exist and will grow as we continue through into this brave new decade. It will take either a NAMA 2 or nationalisation to deal with this time-bomb. This has been put on the long finger by FF in the hope the economy will magically fix itself.

Getting the budget deficit under control, really? So a deficit of 22bn is now a good thing? And still the ****s in the upper civil service manage to weasel out of any cuts (Linked again in case you missed it). It didn't go far enough and didn't address any structural problems or structural efficiencies in any of the departments. But then again next year will require the budget from hell, it's just the hard decisions have been delayed while FF figure out how trigger a GE whilst saving face.

The Vat U-turn from Last year is no surprise, stupid decision to raise it in the first place. Wasn't it the very same people telling everybody to shop around previously? Then again it very much a case of Do as I say, not as I do

Nate

me_right_one

@ Nessie and Funnystuff: I know. Everybody knows. FF screwed us, and now we're up the creek. We all agree on that.

But what are we supposed to do? We're stuck with them for the next while at least. They will prob get hammered in the next general anyway. In the meantime, we have to put our shoulders to the wheel, get out of this rut, and sort out whose fault it was afterwards. Complaining and whinging now is not helping.

Options:

A) Take our arse raping. Kill FF when we eventually get loose.
Resist our arse raping, thus prolonging the agony and injuring ourselves further. Then kill FF when we eventually get loose.
C) Go mad, assasinate Cowen, have a revolution and lose 100+ lives, completely destabilise what remains of our fragile economy, and permanently put Ireland in the nut-nation category along with North Korea and Rwanda.

Its sh1t, but we've had worse things happen to the country before, and we got through it!

FunnyStuff

me_right_one wrote: »

@ Nessie and Funnystuff: I know. Everybody knows. FF screwed us, and now we're up the creek. We all agree on that.

But what are we supposed to do? We're stuck with them for the next while at least. They will prob get hammered in the next general anyway. In the meantime, we have to put our shoulders to the wheel, get out of this rut, and sort out whose fault it was afterwards. Complaining and whinging now is not helping.

Options:

A) Take our arse raping. Kill FF when we eventually get loose.
Resist our arse raping, thus prolonging the agony and injuring ourselves further. Then kill FF when we eventually get loose.
C) Go mad, assasinate Cowen, have a revolution and lose 100+ lives, completely destabilise what remains of our fragile economy, and permanently put Ireland in the nut-nation category along with North Korea and Rwanda.

Its sh1t, but we've had worse things happen to the country before, and we got through it!

my god thats a some load of crap to spout in one breath.

Nesie

me_right_one wrote: »

@ Nessie and Funnystuff: I know. Everybody knows. FF screwed us, and now we're up the creek. We all agree on that.

But what are we supposed to do? We're stuck with them for the next while at least. They will prob get hammered in the next general anyway. In the meantime, we have to put our shoulders to the wheel, get out of this rut, and sort out whose fault it was afterwards. Complaining and whinging now is not helping.

Options:

A) Take our arse raping. Kill FF when we eventually get loose.
Resist our arse raping, thus prolonging the agony and injuring ourselves further. Then kill FF when we eventually get loose.
C) Go mad, assasinate Cowen, have a revolution and lose 100+ lives, completely destabilise what remains of our fragile economy, and permanently put Ireland in the nut-nation category along with North Korea and Rwanda.

Its sh1t, but we've had worse things happen to the country before, and we got through it!

personal question ..but how do you plan on voting in the next general election? will FF feature on your ballot paper at all?

me_right_one

Nesie wrote: »

personal question ..but how do you plan on voting in the next general election? will FF feature on your ballot paper at all?

No they will not. Definarely not. There isn't much choice there, but thats when to administer payback, not now. I will choose whoever I think is the best of the remaining bunch when the time comes. Whoever it will be, they would have a difficult job to fcuk things up any more than they already are.

@ Funnystuff, grow up and contribute, or just dont bother:mad:

DarkRaven

FunnyStuff wrote: »

my god thats a some load of crap to spout in one breath.

Talk about a useless post. Care to explain how exactly that was a ''load of crap.'' If you don't want to back up your statements, then don't bother posting.

I agree with me_right_one here. I mean, let's face it, Fianna Fáil has mismanaged our economy. The fact that they are taking the right measures to fix it does not remove from the fact. In the next general election, my vote will be going to Alan Shatter or Alex White. (Yeah, you guys now know roughly where I live) However, my opinion of Labour has fallen tremendously in the past few months. FG will probably get my vote.

Count Dooku

me_right_one wrote: »

C) Go mad, assasinate Cowen, have a revolution and lose 100+ lives, completely destabilise what remains of our fragile economy, and permanently put Ireland in the nut-nation category along with North Korea and Rwanda.

BTW, main problem with Rwanda and North Korea is that people in those countries never tried to overthrow ruling class.
“Stability” and absence of resistance is only chance to survive for incompetent politicians and greedy developers, bankers and public servants.
The only reason against revolution is absence of alternative to FF. Opposition is much worse and more incompetent

johnnyskeleton

DarkRaven wrote: »

NAMA: Not only was NAMA approved by the EU, it was also approved by two former leaders of Fine Gael - Garret Fitzgerald and Alan Dukes. That I think is testiment to how good an idea it is. As you can see, businesses need credit which the banks cannot provide given the amount of toxic debt. NAMA is a great way to get the banks lending again.

I'd be cautious of using Garret Fitzgerald and Alan Dukes' approval as evidence that something is a good idea. If anything, their approval is evidence of how bad an idea it is.

As for NAMA getting the banks lending again, apparently the banks still approve 4 out of 5 loan applications at the moment. This seems to me like prudent lending and this is before NAMA. I also note that some of the banks have made press statements to the effect that NAMA will not increase credit availability.

DarkRaven

johnnyskeleton wrote: »

I'd be cautious of using Garret Fitzgerald and Alan Dukes' approval as evidence that something is a good idea. If anything, their approval is evidence of how bad an idea it is.

Explain. I was of the opinion that Garret Fitz was one of the best leaders Fine Gael had since WT. Cosgrave? Feel free to prove me wrong.

As for NAMA getting the banks lending again, apparently the banks still approve 4 out of 5 loan applications at the moment. This seems to me like prudent lending and this is before NAMA. I also note that some of the banks have made press statements to the effect that NAMA will not increase credit availability.

I've heard of that all right, but honestly, I'm inclined to disregard it. If the banks have a ton of toxic debt on their balance sheets, then how are they supposed to be able to keep lending. They may be lending now, but with that toxic debt there, there is always a risk of the financial system collapsing.

Nate--IRL--

DarkRaven wrote: »

Explain. I was of the opinion that Garret Fitz was one of the best leaders Fine Gael had since WT. Cosgrave? Feel free to prove me wrong.

Who Cares about FG? Nama is still a monumentally bad idea. It passes private debt to public debt, and still mamnged not to adress the whole situation. As I said previously expect the Govt to proceed with Nama 2 or Nationalisation to deal with all the stuff Nama has neglected.

Nate

old boy

johnnyskeleton wrote: »

I'd be cautious of using Garret Fitzgerald and Alan Dukes' approval as evidence that something is a good idea. If anything, their approval is evidence of how bad an idea it is.

As for NAMA getting the banks lending again, apparently the banks still approve 4 out of 5 loan applications at the moment. This seems to me like prudent lending and this is before NAMA. I also note that some of the banks have made press statements to the effect that NAMA will not increase credit availability.

1st alan dukes was / is on the board of anglo
2nd garret the good son runs sherry fitzgerald the largest auctioneering firm in the land.
the cynic in me is wondering how reliable them guys points of view are.

me_right_one

Count Dooku wrote: »

BTW, main problem with Rwanda and North Korea is that people in those countries never tried to overthrow ruling class.
“Stability” and absence of resistance is only chance to survive for incompetent politicians and greedy developers, bankers and public servants.
The only reason against revolution is absence of alternative to FF. Opposition is much worse and more incompetent

Well, as bad as things are, I'd rather stay like this until things eventually improve, than have martial law and food rationing on top of my mortgage problems:rolleyes:

Diarmuid

old boy wrote: »

1st alan dukes was / is on the board of anglo
2nd garret the good son runs sherry fitzgerald the largest auctioneering firm in the land.
the cynic in me is wondering how reliable them guys points of view are.

Not to mention that Garret was Taoiseach of one of the disastrous governments we have had. (and I will be an FG voter in the next election)

DarkRaven

Diarmuid wrote: »

Not to mention that Garret was Taoiseach of one of the disastrous governments we have had. (and I will be an FG voter in the next election)

Remember that most of that came from Labour, not FG. Every time Garret tried to cut back, his nice pals in Labour threatened to pull out of government with him.

me_right_one

DarkRaven wrote: »

Remember that most of that came from Labour, not FG. Every time Garret tried to cut back, his nice pals in Labour threatened to pull out of government with him.

I wonder would a present day FG / Lab mutant be the same?

Amhran Nua

DarkRaven wrote: »

Fianna Fáil destroyed the country's economy, I can accept that. But Fianna Fáil are in power now still. There will not be an election for some time still, they have quite some time yet in power.

Yes, I believe that blasphemy law came into effect yesterday. Tell me, is that likely to increase or decrease the amount of FDI Ireland receives?

DarkRaven wrote: »

NAMA: Not only was NAMA approved by the EU, it was also approved by two former leaders of Fine Gael - Garret Fitzgerald and Alan Dukes. That I think is testiment to how good an idea it is.

Nobel prize winning economist Stiglitz has gone on record as saying it is a criminally bad idea. Lets examine that a bit further - a Nobel prize winner, the equivalent of an Olympic gold medallist in his field, has said that NAMA is so bad that it and anybody proposing it should be locked away for the public good, which is what criminal means.

I'll take his opinion before most others, if its all the same.

johnnyskeleton

DarkRaven wrote: »

Explain. I was of the opinion that Garret Fitz was one of the best leaders Fine Gael had since WT. Cosgrave? Feel free to prove me wrong.

He's completely lost his marbles:

http://www.thepropertypin.com/viewtopic.php?f=4&t=27042

DarkRaven wrote: »

I've heard of that all right, but honestly, I'm inclined to disregard it. If the banks have a ton of toxic debt on their balance sheets, then how are they supposed to be able to keep lending. They may be lending now, but with that toxic debt there, there is always a risk of the financial system collapsing.

The idea behind NAMA is that they remove the toxic loans and replace them with good loans to businesses and professional first time buyers. The reality (as discussed in this thread) will IMO be that the banks will take the bailout money and sit on it i.e. reducing their overall loan book rather than writing new loans on it. I also think that a rejection rate of 1 in 5 is not particularly prudent lending either, so the only way in which the banks will lend more post NAMA is if they approve every single loan application regardless of whether it can be repaid or not. Then we have NAMA II in a few years time to pay for those toxic loans.

You have hit upon the central issue though, NAMA is not designed to increase credit - it is designed to prevent insolvent banks from collapsing the financial system as it is. However, no thought was ever given to allowing the current players in the financial system to fail and allowing new players to take their place. The latter would not only be cheaper on the government spending side, but it would also give us a much more robust banking system. The moral hazard of bailling out the banks is that they are going to make the exact same mistakes again, particularly if the government insists on them increasing their lending.

amymac2010

im thinking of moving over to holland,im recieving job seekers allowence can i still claim that in holland until i get a job????????

DarkRaven

me_right_one wrote: »

I wonder would a present day FG / Lab mutant be the same?

That's something I'm very much afraid of now. Actually my opinion of Labour has plummeted somewhat. I'll keep the reason why to myself for now (liable).

Amhran Nua wrote: »

Yes, I believe that blasphemy law came into effect yesterday. Tell me, is that likely to increase or decrease the amount of FDI Ireland receives?

Eh, that was somewhat a bad idea. On one hand the Supreme Court was pushing them to bring this in for years, but on the other hand it's anti free speech. I hope to God that we can have a referendum soon to facilitate the abolition of this law.

But what does this have to do with the economy whatsoever?

Nobel prize winning economist Stiglitz has gone on record as saying it is a criminally bad idea. Lets examine that a bit further - a Nobel prize winner, the equivalent of an Olympic gold medallist in his field, has said that NAMA is so bad that it and anybody proposing it should be locked away for the public good, which is what criminal means.

I'll take his opinion before most others, if its all the same.

Yes, and Obama got the nobel peace prize when he has two international wars going on... You see what I mean? Am I supposed to take this fellows word for it over the top economists in the EU who backed NAMA?

johnnyskeleton wrote: »

He's completely lost his marbles:

http://www.thepropertypin.com/viewtopic.php?f=4&t=27042

Thanks for explaining that.

The idea behind NAMA is that they remove the toxic loans and replace them with good loans to businesses and professional first time buyers. The reality (as discussed in this thread) will IMO be that the banks will take the bailout money and sit on it i.e. reducing their overall loan book rather than writing new loans on it. I also think that a rejection rate of 1 in 5 is not particularly prudent lending either, so the only way in which the banks will lend more post NAMA is if they approve every single loan application regardless of whether it can be repaid or not. Then we have NAMA II in a few years time to pay for those toxic loans.

You have hit upon the central issue though, NAMA is not designed to increase credit - it is designed to prevent insolvent banks from collapsing the financial system as it is. However, no thought was ever given to allowing the current players in the financial system to fail and allowing new players to take their place. The latter would not only be cheaper on the government spending side, but it would also give us a much more robust banking system. The moral hazard of bailling out the banks is that they are going to make the exact same mistakes again, particularly if the government insists on them increasing their lending.

The problem that we had before was that their was plenty of good regulatory laws in place, they weren't actually enforced. We had a situation where the financial regulator was in bed with the guys he was supposed to be regulating.

The thing that has been ignored here is that NAMA is actually profitable! If this goes right, we will not actually lose a penny on it. We may actually make some. Also it's gotten full backing from the top economists in the EU.

And if we are to let them fall, we will still have to bail them out! Why? Because of the amount of money that the banks have saved at the moment. Banks are only required to keep ten per cent of the amount deposited in them inside the banks at any one time. I honestly doubt that they can give everyone their money back given the toxic debts that they have. I can't verify that though. If I'm wrong on this, please correct me.

I'm also highly sceptical about the one in five loans approval rate as it only measures the rate of formal applications. My father was denied loans several before he could even fill out the form. I'd imagine that the actual figure is much higher.

Nate--IRL--

DarkRaven wrote: »

NAMA PR Stuff

Wow! NAMA making a profit......... Jesus H Christ.

Nate

DarkRaven

Nate--IRL-- wrote: »

Wow! NAMA making a profit......... Jesus H Christ.

Nate

Come on dude, you can do better than that. It's no fun debating with you if you won't provide any proper counter argument.

Nate--IRL--

DarkRaven wrote: »

Come on dude, you can do better than that. It's no fun debating with you if you won't provide any proper counter argument.

You are correct, I can do better than that. I just don't see the point.

Nate

Count Dooku

DarkRaven wrote: »

Am I supposed to take this fellows word for it over the top economists in the EU who backed NAMA?

Names, please

EU didn’t object much to NAMA mostly because a lot pension funds in Europe would lose money in Irish bank bonds and a lot of influential people in management of those funds could lose their jobs
As soon as taxpayers will pay bonds, those fat cats are safe

DarkRaven wrote: »

The thing that has been ignored here is that NAMA is actually profitable! If this goes right, we will not actually lose a penny on it.

NAMA can be profitable only if economy and population will start to grow as it was 5 years ago
Otherwise, those assets never will find customers

DarkRaven wrote: »

And if we are to let them fall, we will still have to bail them out! Why? Because of the amount of money that the banks have saved at the moment. Banks are only required to keep ten per cent of the amount deposited in them inside the banks at any one time. I honestly doubt that they can give everyone their money back given the toxic debts that they have. I can't verify that though. If I'm wrong on this, please correct me.

Year ago banks had enough good assets to cover current accounts and deposits below 100K
Now those deposits sold to pay money back to bondholders, banks are insolvent and government will have to nationalize them soon

DarkRaven

Count Dooku wrote: »

Names, please

Do I have to name every single economist in the European Central bank?

EU didn’t object much to NAMA mostly because a lot pension funds in Europe would lose money in Irish bank bonds and a lot of influential people in management of those funds could lose their jobs
As soon as taxpayers will pay bonds, those fat cats are safe


NAMA can be profitable only if economy and population will start to grow as it was 5 years ago
Otherwise, those assets never will find customers

The ECB is funding it. If the property prices don't rise to the levels they used to, then they will find themselves with a lot of worthless land. Their loss, not ours.

Year ago banks had enough good assets to cover current accounts and deposits below 100K
Now those deposits sold to pay money back to bondholders, banks are insolvent and government will have to nationalize them soon

You are a labour man then? This is the very thing that NAMA is supposed to prevent.


And Nate: If you can't be bothered to post something constructive, don't bother. Seriously.

Count Dooku

DarkRaven wrote: »

Do I have to name every single economist in the European Central bank?

Definitely they are not the smartest economist on the planet, because they didn’t do anything to stop bubble here

DarkRaven wrote: »

The ECB is funding it. If the property prices don't rise to the levels they used to, then they will find themselves with a lot of worthless land. Their loss, not ours.

You forgot to mention that Irish taxpayer can be asked to pay back IOU anytime, if NAMA fail

DarkRaven wrote: »

You are a labour man then?

No, absolutely opposite

DarkRaven wrote: »

This is the very thing that NAMA is supposed to prevent.

Really? :rolleyes:
You forgot that NAMA can save only from first wave of developers defaults, but cannot do anything when second wave of defaults will hit banks
I mean defaults from property investors, who bought property to let
Very soon they will be hit by lower demand due emigration, property taxes and increased interest rates
Too much for them

DarkRaven wrote: »

And Nate: If you can't be bothered to post something constructive, don't bother.

Do you mean repeating FF propaganda NAMA advertisement is constructive?

DarkRaven

Count Dooku wrote: »

Definitely they are not the smartest economist on the planet, because they didn’t do anything to stop bubble here

Seriously what? Ireland is one small part of the European economy. The low interest rate was to facilitate larger economies like France and Germany. If the interest rates were hiked to slow down our economy when it was needed, it would have caused the French and German economies to grind to a halt - the ECB didn't want that.

You forgot to mention that Irish taxpayer can be asked to pay back IOU anytime, if NAMA fail.

That's right. Just listen to Joan Burton... Do the guarantees that Lenihan got off the ECB mean nothing to you?

No, absolutely opposite

Then why are you reiterating the exact same message that I get on the radio every second day from Joan Burton?

Really? :rolleyes:
You forgot that NAMA can save only from first wave of developers defaults, but cannot do anything when second wave of defaults will hit banks
I mean defaults from property investors, who bought property to let
Very soon they will be hit by lower demand due emigration, property taxes and increased interest rates
Too much for them

Break that up in sentences and put in full stops so that it is readable - then I will respond.

Do you mean repeating FF propaganda NAMA advertisement is constructive?

This is a debate - people share their views. Some make an effort to back it up with a half decent argument - others like Nate refuse. I'm here to have a political debate because it's fun and mentally stimulating. People like Nate just ruin that. I'm also taking FF's side in this, probably because it's the most unpopular one (ie. the most challenging one to defend).

Économiste Monétaire

DarkRaven wrote: »

Also it's gotten full backing from the top economists in the EU.

And they are? The ECB opinion was a legal one based on the draft legislation, and, if you had read it, does not constitute 'full backing'. Also, what guarantees from the ECB are you talking about? The ECB doesn't own the NAMA bonds, do you know how collateral in ECB monetary policy operations work?

Count Dooku

DarkRaven wrote: »

Seriously what? Ireland is one small part of the European economy. The low interest rate was to facilitate larger economies like France and Germany. If the interest rates were hiked to slow down our economy when it was needed, it would have caused the French and German economies to grind to a halt - the ECB didn't want that.

ECB could stop property bubble here without changing interest rates.
Trichet could clearly mention to all world that Ireland is experiencing property bubble and everybody, who lend money to Irish banks, will do it on own risk.
In few days interest rates for Irish banks would skyrocket without any effect on German and French economics.
Just as example of incompetence of ECB economists

DarkRaven wrote: »

Do the guarantees that Lenihan got off the ECB mean nothing to you?

Do you have text of those guarantees?
Lenihan word is not enough for me

DarkRaven wrote: »

Then why are you reiterating the exact same message that I get on the radio every second day from Joan Burton?

NAMA is so obvious scam that even Joan Burton can see it.

BTW, LP doesn’t have so much connections with banks as FG or FF

DarkRaven wrote: »

Break that up in sentences and put in full stops so that it is readable - then I will respond.

Does it means that you don’t have any arguments against my statement that NAMA will not save banks from personal defaults on mortgages when property investors will be hit by lower rents demand due emigration, property taxes and increased interest rates?

DarkRaven wrote: »

I'm here to have a political debate because it's fun and mentally stimulating. People like Nate just ruin that. I'm also taking FF's side in this, probably because it's the most unpopular one (ie. the most challenging one to defend).

Lets have some fun

DarkRaven

Économiste Monétaire wrote: »

And they are? The ECB opinion was a legal one based on the draft legislation, and, if you had read it, does not constitute 'full backing'. Also, what guarantees from the ECB are you talking about? The ECB doesn't own the NAMA bonds, do you know how collateral in ECB monetary policy operations work?

According to a friend of mine who is doing a masters in the London School of Economics, the property acts as collateral. Maybe I'm misinformed. But there. That property does have value though. Even if we do not make a profit, we will not make a total loss.

Count Dooku wrote: »

ECB could stop property bubble here without changing interest rates.
Trichet could clearly mention to all world that Ireland is experiencing property bubble and everybody, who lend money to Irish banks, will do it on own risk.
In few days interest rates for Irish banks would skyrocket without any effect on German and French economics.
Just as example of incompetence of ECB economists

Dude. I knew we were in a bubble as far back as 2006. It was sort of obvious, jeez. We all bought into it. Don't go blaming it on the ECB.

Do you have text of those guarantees?
Lenihan word is not enough for me.

Ok, you don't trust politicians. I get it.

NAMA is so obvious scam that even Joan Burton can see it.

BTW, LP doesn’t have so much connections with banks as FG or FF

Dude, the Labour Party are oposition. Of course they are against NAMA.

Does it means that you don’t have any arguments against my statement that NAMA will not save banks from personal defaults on mortgages when property investors will be hit by lower rents demand due emigration, property taxes and increased interest rates?

I have better things to do than read run on sentences with poor punctuation. Now the thing is that the main problem facing the banks are those massive loan defaults from developers. The effects of the personal defaults are not really worth taking into account. They are tiny in comparison to the toxic debt from developers.

Lets have some fun

Yes, let's!

me_right_one

Maybe I'm missing something here, but is NAMA not a much better idea than nationalisation? Its basically nationalisation in lambs clothing anyway, but the taxpayer will also get whatever those assets eventually sell for. And they will sell, everything has its price!

Aswell as that, is nationisation not extremely risky? If the banks fail, the tiny banking system of Ireland fails. Nobody would dream of lending to us, people's savings would vanish, and we'd be back to Eastern European living standards. If NAMA fails, well sure its only another govt. scheme. Bring on NAMA 2. At least it buys time. Its an obstacle between our current situation and our being forced to nationalise.

DarkRaven

me_right_one wrote: »

Maybe I'm missing something here, but is NAMA not a much better idea than nationalisation? Its basically nationalisation in lambs clothing anyway, but the taxpayer will also get whatever those assets eventually sell for. And they will sell, everything has its price!

To add to that, NAMA does not go on our ballance sheet in Brussels. If we nationalised the banks, the debt we would incur would be so great that no one would lend to us. In the absence of lenders, we'd go bust. Think about it. The state would no longer have the money to function. Economy collapses, country goes down the tube.

me_right_one

DarkRaven wrote: »

To add to that, NAMA does not go on our ballance sheet in Brussels. If we nationalised the banks, the debt we would incur would be so great that no one would lend to us. In the absence of lenders, we'd go bust. Think about it. The state would no longer have the money to function. Economy collapses, country goes down the tube.

Exactly! Why cant people see that? I know its sh1t, but I'd rather have a lower wage or lower dole than none at all! It is FF's fault, but we cant really complain, we elected them in! Won't be making that mistake again I can tell you!

Économiste Monétaire

DarkRaven wrote: »

According to a friend of mine who is doing a masters in the London School of Economics, the property acts as collateral. Maybe I'm misinformed. But there. That property does have value though. Even if we do not make a profit, we will not make a total loss.

The 'NAMA bonds' are not a CDO on an income stream of the NAMA portfolio. The 'NAMA bonds' are government bonds and are funded by the tax-payer; the very same type of bonds we're issuing to cover the budget deficit with a minor change in that they're floating rate notes. The ECB's opinion even refers to them as 'government bonds', as does the NAMA business plan, and this is why the banks can use them in MPOs. There's zero chance a body like the ECB will accept collateral in the form of CDOs on an assortment of garbage.

When banks borrow from Eurosystem central banks, the collateral acts as a protection against default, i.e. if a bank borrows and fails to return the funds they have something cover the loss. Only in a case of default would the central bank exercise its right to take ownership of the collateral—the government bonds, a.k.a NAMA bonds. Until that point, the bonds are a liability of the central bank because they are owned by AIB/BOI in their securities account.

The property, and €14bn in interest rate swaps attached to them, are probably worth something in the future. For the persons holding these 'NAMA bonds', this is only a tangential issue because the NAMA portfolio is not directly paying the interest on the NAMA bonds, the tax-payer is. Whether the tax-payer recoups the cost of the NAMA bonds is dependent on the the final wind-up of NAMA, the banks get paid either way (minus some 5% risk sharing that has yet to be clarified). Whether we, the tax-payers, make a profit is something no-one really knows, but it's entirely incorrect to state that the ECB is left with the losses. We are.

DarkRaven

Économiste Monétaire wrote: »

The 'NAMA bonds' are not a CDO on an income stream of the NAMA portfolio. The 'NAMA bonds' are government bonds and are funded by the tax-payer; the very same type of bonds we're issuing to cover the budget deficit with a minor change in that they're floating rate notes. The ECB's opinion even refers to them as 'government bonds', as does the NAMA business plan, and this is why the banks can use them in MPOs. There's zero chance a body like the ECB will accept collateral in the form of CDOs on an assortment of garbage.

When banks borrow from Eurosystem central banks, the collateral acts as a protection against default, i.e. if a bank borrows and fails to return the funds they have something cover the loss. Only in a case of default would the central bank exercise its right to take ownership of the collateral—the government bonds, a.k.a NAMA bonds. Until that point, the bonds are a liability of the central bank because they are owned by AIB/BOI in their securities account.

The property, and €14bn in interest rate swaps attached to them, are probably worth something in the future. For the persons holding these 'NAMA bonds', this is only a tangential issue because the NAMA portfolio is not directly paying the interest on the NAMA bonds, the tax-payer is. Whether the tax-payer recoups the cost of the NAMA bonds is dependent on the the final wind-up of NAMA, the banks get paid either way (minus some 5% risk sharing that has yet to be clarified). Whether we, the tax-payers, make a profit is something no-one really knows, but it's entirely incorrect to state that the ECB is left with the losses. We are.

Interesting, thank you for clarifying that. What do you think of the NAMA proposal vs the Nationalisation proposal? Also, do you think it is an effective way of stabilising the financial system?

imme

me_right_one wrote: »

FF's side of the fence is the only way. It's painful, but nescessary. Anyone who disagrees is only deluding themselves. Chow-chess-ku (dunno how to spell it) got Romania out of a recession, and 4 billion dollars debt, which was massive money for an eastern bloc country, AND it was 1989, all in one year. It was so painful for the country that it caused a revolution. Fecked up Romania permanently. They should have been the new Poland or East Germany. Even now, 20 years on, people still dont rate Romania with either of those countries.

If FG, or anyone else, thinks they could fix things with less pain, they're wrong. I'm not a FF man, I detest them, but this time the whole country has been caught with our trousers down, and we just need to row in behind the FFcukers this time to get back on the straight and narrow. I think they have the budget balanced just right under the circumstances.

Richard Brutons rebuttal was weak because in reality, he can't fault the budget, and he knows it. Its like choosing between eating dog poo or human poo when you're a minute away from starving to death. And FF chose the human.

1. did you actually listen to/look at Bruton's speech? in case you didn't see it here you go http://www.youtube.com/watch?v=behl53TrO1Y

Between Bruton and Lenihan which has an economics qualificaltion, Bruton. Bruton knows what he's talking about, whereas Lenihan has had to do the lawyer bit of reading up and trying to be up to speed on what he's dealing with.

2. why do you bring up Ceaucescu? what's all that about? what are you trying to say or prove about an evil dictator, who ran Romania through fear, created orphanages for the unwanted children that he through his policies encouraged.

Sand

@DarkRaven

To add to that, NAMA does not go on our ballance sheet in Brussels. If we nationalised the banks, the debt we would incur would be so great that no one would lend to us. In the absence of lenders, we'd go bust.

Do you think the markets are somehow fooled by NAMA being kept in an SPV? Our states credit rating has taken a beating in the recent past and retains a negative outlook. The markets are very much aware of the liabilities to the state from NAMA, and they wont blindly ignore it. It is their money they will be lending, and funnily enough they do tend to be a little more careful with their own money than the government is with our money.

@me_right_one

Maybe I'm missing something here, but is NAMA not a much better idea than nationalisation? Its basically nationalisation in lambs clothing anyway, but the taxpayer will also get whatever those assets eventually sell for. And they will sell, everything has its price!

No, its much worse than nationalisation.

Ireland has guaranteed all deposits and bank bonds, so its already on the hook for the whole thing. It has taken the 40-50 billion loss were going to see on the commercial property loan books and forced the taxpayer to take the loss. It has ensured the bank shareholders, executives and bank bondholders retain all the upside. The state has already attempted to recapitlise the banks, and will have to recapitalise them again in 2010.

So, taxpayer can only lose, and shareholders get all the benefit of any upswing.

Oh and the whole thing is pointless: when the ECB rates go up and our unemployed/salary reduced/higher tax paying mortgage holders start defaulting on the silly loans taken out in the boom, the banks are going to take another mortal blow.

And this time, the government wont have anything left in the tank to save them, nationalisation or otherwise.

Économiste Monétaire

DarkRaven wrote: »

Interesting, thank you for clarifying that. What do you think of the NAMA proposal vs the Nationalisation proposal? Also, do you think it is an effective way of stabilising the financial system?

I'd prefer the risk sharing aspect to increase, with NAMA funded by an assortment of government bonds and CDOs issued on the worst, say, quartile of NAMA's portfolio, which wouldn't be that difficult to structure given that NAMA will be a collection of mini asset management companies. There's a balance that needs to be struck there, otherwise the whole process is pointless for the banks, but touting risk sharing as a cornerstone of NAMA when it's only 5% of the total being paid to the banks, doesn't seem very good to me. Let's get a little creative .

Both NAMA in its current incarnation, and nationalisation à la Sweden, involve further (probably large) capital injections by the state—after loans are re-valued, losses realised, and the junk placed into AMCs—so we may end up with de facto nationalisation yet. If the banks have about 8% core tier 1 capital after the transfer to NAMA, then we have a banking system in a position to lend. We've already guaranteed senior and (non-perpetual based) subordinated bond holders, so we're liable for their losses already; moving to nationalisation doesn't change that. I would prefer nationalisation to what we're doing now.

BrownianMotion

me_right_one wrote: »

FF's side of the fence is the only way. It's painful, but nescessary. Anyone who disagrees is only deluding themselves. Chow-chess-ku (dunno how to spell it) got Romania out of a recession, and 4 billion dollars debt, which was massive money for an eastern bloc country, AND it was 1989, all in one year. It was so painful for the country that it caused a revolution. Fecked up Romania permanently. They should have been the new Poland or East Germany. Even now, 20 years on, people still dont rate Romania with either of those countries.

If FG, or anyone else, thinks they could fix things with less pain, they're wrong. I'm not a FF man, I detest them, but this time the whole country has been caught with our trousers down, and we just need to row in behind the FFcukers this time to get back on the straight and narrow. I think they have the budget balanced just right under the circumstances.

Richard Brutons rebuttal was weak because in reality, he can't fault the budget, and he knows it. Its like choosing between eating dog poo or human poo when you're a minute away from starving to death. And FF chose the human.

Sorry to go off topic here but did this guy seriously say that Ceausescu's rule of Romania was great and that the only reason things were fcuked up was because the people rebelled??

And two people thanked him. I've got to be reading this wrong.

johnnyskeleton

DarkRaven wrote: »

The thing that has been ignored here is that NAMA is actually profitable!

Since it hasn't actually come into operation yet, it is far to early to suggest that it is profitable.

DarkRaven wrote: »

If this goes right, we will not actually lose a penny on it. We may actually make some.

For it to go right, the government is relying on:

1) many of the NAMA borrowers to make more repayments than they are now. Realistically, once in NAMA more payments will stop;

2) the arbitrary valuations they put on the loans i.e. the 54bn from 77bn to be correct. Recently it has appeared that the valuations will be a lot less (http://www.thepropertypin.com/viewtopic.php?f=50&t=26683)

3) house prices to go up 10% in the next few years. More likely, they will decrease another 15-30%;

4) interest repayments (i.e. the 4% NAMA bonds) are not included in their calculations;

5) inflation to be medium-high, or at the very least not negative. We are likely to be in for further deflation over the coming years.

None of the underlying assumptions for NAMA are realistic, and have a very slim chance of coming through. It is entirely reliant on the economy going back to the way things were in 2006 when the boom was at its height. Yet ironically, even BL & BC would admit that we are not going back to those times. So the plan is based on a fiction that they know cannot become a reality.

DarkRaven wrote: »

Also it's gotten full backing from the top economists in the EU.

It has the backing of economists in the European Union area, some of them are well placed. That does not mean that the EU has approved it. Far from it, they are raising concerns about the German Government's bailout for Hypo Real which is a much more straight forward bailout. So it's a case of the EU being our only hope (to defeat NAMA before it bankrupts the country).

DarkRaven wrote: »

And if we are to let them fall, we will still have to bail them out! Why? Because of the amount of money that the banks have saved at the moment.

First of all, we don't have to bail out anyone. We can let them fail just like any other business, and let a better bank come in to take their place. But aside from that, it looks like the banks will be bailed out again next year in the form of recapitalisation/partial nationalisation. So NAMA is not the end of it by any standard.

DarkRaven wrote: »

Banks are only required to keep ten per cent of the amount deposited in them inside the banks at any one time. I honestly doubt that they can give everyone their money back given the toxic debts that they have. I can't verify that though. If I'm wrong on this, please correct me.

If a car dealership goes under with more debts than assets, they can't give everyone their money back either.

DarkRaven wrote: »

I'm also highly sceptical about the one in five loans approval rate as it only measures the rate of formal applications. My father was denied loans several before he could even fill out the form. I'd imagine that the actual figure is much higher.

You misunderstand what that article is about, sorry if I didn't post a link. Here it is. The original claim was that 14% of loan applications were rejected for SMEs, but this was increased to 18% when "limitations" on reporting i.e. loans refused before the formal application was made were taken into account. To my mind, this is quite a low figure for refusing business loans and even the 28% claimed by the SME representative association is not to my mind too high a rejection rate during a recession. As for personal borrowing, I don't know what the story is with your father so can't possibly comment. But I could equally say that if I wanted a personal loan tomorrow I could get one.

johnnyskeleton

Économiste Monétaire wrote: »

The 'NAMA bonds' are not a CDO on an income stream of the NAMA portfolio. The 'NAMA bonds' are government bonds and are funded by the tax-payer; the very same type of bonds we're issuing to cover the budget deficit with a minor change in that they're floating rate notes. The ECB's opinion even refers to them as 'government bonds', as does the NAMA business plan, and this is why the banks can use them in MPOs. There's zero chance a body like the ECB will accept collateral in the form of CDOs on an assortment of garbage.

As I understand it, the NAMA bonds could possibly be accepted by the ECB as collateral for loans, but there is nothing to guarantee that they will provide such services.

Indeed, JCT has indicated that the ECB will withdraw emergency funding from banks, believed to begin in early 2010 (though it seems hard to pin the ECB down on this). If they are withdrawing the emergency funding which had to be dragged out of them in the first place, it seems even less likely that they will provide funding backed by government bonds, which are very close to the bailouts and quantitive easing that the ECB are sworn against.

So the banks are likely to have to look for private funding. The idea behind these bonds in blunt terms is that bank X gets €10bn NAMA bonds from the government which have a coupon of c. 4%. The banks then borrow €10bn from the ECB (or whoever) at 2%, thus giving the banks a steady net income stream of 2% on that €10bn and thus they are slightly less insolvent than they were. However, if they go to international markets and the lowest rate they can borrow is say 5%, they will either have a guaranteed loss of 1% or, more likely, the government will have to increase their rates to 7%. It would be funny though if NAMA actually made the banks less solvent than they are now.

However, all this is premised by the usual NAMA caveat - there is so much uncertainty as to NAMAs terms and so little clear information available outside of the DoF that the above may be completely wrong.


http://www.ecb.int/press/key/date/2009/html/sp091211_2.en.html

BrownianMotion wrote:

Sorry to go off topic here but did this guy seriously say that Ceausescu's rule of Romania was great and that the only reason things were fcuked up was because the people rebelled??

I think what he meant is that if all the cuts are done in one year it will have similar effects as happened in Romania - revolution and 20 years of economic decline. So all that can be done is take small cuts and slowly deflate.

Amhran Nua

DarkRaven wrote: »

Eh, that was somewhat a bad idea.

Bit of an understatement there - I would have thought it was tricky to come up with a way that the government could make the country less attractive to inwards investment, but they managed it alright. Come to Ireland, ten thousand welcomes and we'll slap you with twenty five thousand in fines if you badmouth any religion anywhere.