NAMA - figures are not adding up

Nate--IRL--

Scofflaw wrote: »

Even the money being used to buy the loans is being loaned to us by the ECB - and while that needs to be paid back, it's nowhere near as costly as bailing the banks out to the same degree with government-funded debt, quite aside from what that would do to our debt-GDP ratio.

Like I said, I'm open to persuasion, but I'm not persuaded by people milling about panicking.

cordially,
Scofflaw

I'm not sure you are open to persuasion Scofflaw.

I could point out that the above part I've quoted about debt, illustrates an accounting device to keep State Debt below set legal requirements and maintain the fiction of our current debt-GDP ratio.

It is government funded debt either way. It does not matter who the loan is from, it is debt and the cost of that debt that has to be serviced. How this money is channeled to the banks does not matter, it still has to plug that same hole in the balance sheets, it will still cost the same.

If you cant see that, or even grasp the concept, then you have little hope of understanding what Nama is, and what its ultimate aims are.

Nate

SkepticOne

Scofflaw wrote: »

Again, though - and forgive me being cautious - but while the economy has absolutely undergone a vicious contraction, I don't see any real evidence that we're in some kind of economic freefall situation. What I see is people drawing a line extrapolated out from our current contraction as far into the future as they feel they can 'reasonably' do, and calling it our economic future. Two years ago people were doing exactly the same thing, and the chorus of doom now looks exactly like the chorus of boom then.

I was contrarian then, which is why I've stayed away from property since 2000, and while I borrowed, I've paid back as far as I could - and I can see myself becoming a contrarian now, too. It's bad all right, but it just doesn't look like the end of the world to me. I don't think that's optimism - I think it's the same realism that looked like pessimism a couple of years ago.

No one said freefall. What we're doing is comparing our situation now with Britain in the 90's. I have pointed out relevant differences. We are simply in a worse situation. You are not addressing the points made. The points were a) unemployment higher and rising, b) can't lower interest rates which will likely rise, c) oversupply. Never mind that this is or isn't part of a doom chorus.

K-9

Nate--IRL-- wrote: »

I'm not sure you are open to persuasion Scofflaw.

I could point out that the above part I've quoted about debt, illustrates an accounting device to keep State Debt below set legal requirements and maintain the fiction of our current debt-GDP ratio.

It is government funded debt either way. It does not matter who the loan is from, it is debt and the cost of that debt that has to be serviced. How this money is channeled to the banks does not matter, it still has to plug that same hole in the balance sheets, it will still cost the same.

If you cant see that, or even grasp the concept, then you have little hope of understanding what Nama is, and what its ultimate aims are.

Nate

Yes, but he is correct in what he says.

It is far cheaper to raise the money through the ECB, rather than through the normal mechanisms. With an Interest Bill of €3-4 Billion this year and rising, it's an important point.

Basically, borrowing money from the ECB is far cheaper than through the markets.

So, the less loans we put through NAMA, means more capitalisation which means more borrowing, which means far higher interest payments on the debt required.

dunsandin

Please, Please do not include me in any doom chorus. The nature of my business thrives in a recession, My concerns are moral and ethical, not panic and milling. I resent what is going to happen to the taxpayer-myself included, but I am realistic enough to believe that nothing i say or do will have any effect to the good or to the bad.

Nate--IRL--

K-9 wrote: »

Yes, but he is correct in what he says.

It is far cheaper to raise the money through the ECB, rather than through the normal mechanisms. With an Interest Bill of €3-4 Billion this year and rising, it's an important point.

Basically, borrowing money from the ECB is far cheaper than through the markets.

So, the less loans we put through NAMA, means more capitalisation which means more borrowing, which means far higher interest payments on the debt required.

Nama bonds have a 6 month rollover. Currently the interest rate is 0.5% above the ECB base rate --> 1.5%

The yield on the Sept 2009 six-month NTMA Treasury Bill auction? 0.5%

Have a read of this to understand the Nama bond mechanisms

http://www.irisheconomy.ie/index.php/2009/09/07/ecb-nama-bonds-and-the-irish-banks-as-issuers-of-sovereign-debt/

Nate

Scofflaw

SkepticOne wrote: »

No one said freefall. What we're doing is comparing our situation now with Britain in the 90's. I have pointed out relevant differences. We are simply in a worse situation. You are not addressing the points made. The points were a) unemployment higher and rising, b) can't lower interest rates which will likely rise, c) oversupply. Never mind that this is or isn't part of a doom chorus.

No, I'd be happy enough with the points made to accept that our position is hardly identical to that of the UK in the early Nineties - but that doesn't mean we're in a position analogous to Japan, which was the point at issue.

I'm not sure you are open to persuasion Scofflaw.

I'm always open to persuasion - sometimes I may not comprehend what someone is saying well enough for me to find it persuasive at once, but don't give up! I recognise my limitations are relatively acute in matters financial, but I have taken the time to check my understanding of NAMA with economists of my acquaintance.

My main interest here is to understand NAMA, but mostly all I get in the way of education on the subject is "AAAH! We're all doomed!", which is somewhat less than satisfying.

I could point out that the above part I've quoted about debt, illustrates an accounting device to keep State Debt below set legal requirements and maintain the fiction of our current debt-GDP ratio.

It is government funded debt either way. It does not matter who the loan is from, it is debt and the cost of that debt that has to be serviced. How this money is channeled to the banks does not matter, it still has to plug that same hole in the balance sheets, it will still cost the same.

If you cant see that, or even grasp the concept, then you have little hope of understanding what Nama is, and what its ultimate aims are.

But that's essentially the point I've been making. We're funding the banks, because they're in a hole, and however we do it we wind up putting in the same amount of money. NAMA allows us to keep within Euro guidelines, and yes, it's more of an accounting trick than anything else from that perspective - but it's still the point of NAMA.

If you're saying that the cost of servicing the debts accrued by the State in buying the NAMA assets is higher than the cost of simply plugging the same money into the banks, then clearly NAMA has an additional cost attached to it compared to such an approach - although the reasons for doing so remain as before.

Overall, what is your estimate of the cost of NAMA to the Irish taxpayer - after all, that's our main concern - and how could that cost have been mitigated, while still staying within the allowable debt-GDP ratios?

cordially,
Scofflaw

K-9

Nate--IRL-- wrote: »

Nama bonds have a 6 month rollover. Currently the interest rate is 0.5% above the ECB base rate --> 1.5%

The yield on the Sept 2009 six-month NTMA Treasury Bill auction? 0.5%

Have a read of this to understand the Nama bond mechanisms

http://www.irisheconomy.ie/index.php/2009/09/07/ecb-nama-bonds-and-the-irish-banks-as-issuers-of-sovereign-debt/

Nate

I'll have a look over that more in depth and with a clearer head, tomorrow!

I see what you are saying alright.

dynamick

SkepticOne wrote: »

You are not addressing the points made. The points were a) unemployment higher and rising,

unemployment has been stable for the past 9 months.

SkepticOne wrote: »

b) can't lower interest rates which will likely rise,

Rates are at 1% and not expected to rise this year.

SkepticOne wrote: »

c) oversupply. Never mind that this is or isn't part of a doom chorus.

Oversupply is overplayed right now as a factor in suppressing future demand for housing. If you look at the figures for empty housing in any of the sources, you see that Dublin and commuter counties are least affected while places like donegal, leitrim, rosommon etc have huge quantities of empty housing. When non-speculative demand reappears for housing it will be on the back of new jobs most lilkely in urban areas where companies tend to locate. Housing in remote counties is never going to recover in value. Shed loads of rural houses and no jobs to pay for them means housing will fall below its construction cost if it hasn't already done so.

Nody

dynamick wrote: »

you don't like NAMA, then you should propose an alternative, although you are a little late now.

Nationalization Sweden style (and not the mockery known as NAMA), at least then the stockholders get to take their share of the cost instead of only taxpayers.

ei.sdraob

Scofflaw wrote: »

An asset bubble is not required. Here are annual Irish house price changes (%) since 1976:

...

Those aren't some kind of cumulative figures - they're the yearly changes, based on the CSO quarterly house price index.

You can get the necessary house price rise for NAMA from 1980-1985, or from 1985 to halfway through 1989. Those weren't exactly stellar years for the Irish economy.

The bubble rises were double-digit annual rises - in some cases the entire NAMA rise within 5 quarters, not 5 years. To get a 25% house price rise in 5 years has been possible at virtually any point since 1976.

cordially,
Scofflaw

1. adjust those figures for inflation which was very high then and remember that that 6% will have to be 3 times above ECBs target of 2%, and right now is negative altogether :eek:, see @SkepticOne's graph here > how many 6 year periods are there of growth at 3x above inflation (tip the obvious bubble)

2. residential property in Ireland is a rather small slice of NAMA, most of it is commercial and if you read Ronan's article the yield calculation is wildly optimistic, and theres 10 years worth of empty commercial property (in dublin alone) that will keep the yields down even more

3. at no period in the history of this country was there ever so many empties, ie there was never so much supply, and with more people leaving than coming in (mostly people in prime earning age) things wont be pretty

4. what other asset bubbles in history have re-inflated within a decade?

5. its in the interest of NAMA and the government to hold up rents and prices via NAMA, how can we increase our competitiveness when the government is actively involved in making the country un-competitive via its new quango? how many more businesses have to close?

ei.sdraob

Scofflaw wrote: »

I haven't seen an argument that ties the two together, that's all. There have been how many house price crashes in the world over the last 30-40 years? Lots, let us say - but our house price crash has to be the same as Japan's! Why? Why not the same as the late Eighties deregulatory bubble in the UK, say? Why Japan?

please tell us the rate of inflation and the interest rates back in the 80s UK, and for that matter the amount of oversupply

and you will find your answer

we would be lucky to be in a Japanese situation, and no hope in hell of "doing a Sweden on it" as were being promised by our "highly competent leaders" (yes the same people who harped on about committing suicide and soft landings)

ei.sdraob

dynamick wrote: »

Oversupply is overplayed right now as a factor in suppressing future demand for housing. If you look at the figures for empty housing in any of the sources, you see that Dublin and commuter counties are least affected while places like donegal, leitrim, rosommon etc have huge quantities of empty housing. When non-speculative demand reappears for housing it will be on the back of new jobs most lilkely in urban areas where companies tend to locate. Housing in remote counties is never going to recover in value. Shed loads of rural houses and no jobs to pay for them means housing will fall below its construction cost if it hasn't already done so.

yes 10 years worth of empty commercial property in Dublin is not a factor?

aint that what we were told right thru the bubble? "the laws of demand and supply don't apply to Ireland" :rolleyes:

its the above type of thinking that ended us having so much oversupply

Scofflaw

ei.sdraob wrote: »

please tell us the rate of inflation and the interest rates back in the 80s UK, and for that matter the amount of oversupply

and you will find your answer

we would be lucky to be in a Japanese situation, and no hope in hell of "doing a Sweden on it" as were being promised by our "highly competent leaders" (yes the same people who harped on about committing suicide and soft landings)

You need a bit more to make us Japan than the rate of inflation or interest rates!

amused,
Scofflaw

SkepticOne

Scofflaw wrote: »

No, I'd be happy enough with the points made to accept that our position is hardly identical to that of the UK in the early Nineties - but that doesn't mean we're in a position analogous to Japan, which was the point at issue.

No, it just means that we're not going to see the sort of upturn that the UK experienced after their crash. We're looking at something a lot more severe. Having said that, it is probably necessary for prices to come down off their absurd highs. From the point of view of competitiveness, far better to have workers paying off mortgages on 100K to 150K properties than 300K. The danger of NAMA is not so much that it will cause the bubble to re-inflate - too big for that - but that it will drag out this necessary adjustment to the detriment of the economy.

Sand

@Scofflaw

I don't see how we'll be "paying for NAMA for generations", I don't see how it's a "bank and developer bailout". As far as I can see its been structured to take toxic debt out of the Irish banking system with as little risk, and as little up-front cost, as possible. Even the money being used to buy the loans is being loaned to us by the ECB - and while that needs to be paid back, it's nowhere near as costly as bailing the banks out to the same degree with government-funded debt, quite aside from what that would do to our debt-GDP ratio.

Like I said, I'm open to persuasion, but I'm not persuaded by people milling about panicking.

Thats totally incorrect Scofflaw. The ECB will not be giving a single penny towards the cost of NAMA. Not 0.01 Euro. Its a myth spread by the likes of Frank Fahey and Willie O Dea who were sent out to sow chaos and confusion on the airwaves. Its only a sad indictment of the media that interviewers allowed them to utter such misinformation.

The entire funding of NAMA will be based on the issue of Irish government bonds which will be given to the banks in exchange for their overvalued loans. The Irish taxpayer will then owe the banks the nominal value of those bonds.

The only involvement of the ECB is that the ECB accepts government bonds as collateral for lending. The banks can use the government bonds we give them to borrow money from the ECB, but this is simply business as usual for the ECB. It has nothing to do with NAMA. Its just a sign of the mixture of incompetence and corruption within Fianna Fail that they have been attempting to portray NAMA as some sort of ECB bailout when its nothing of the sort.

As for not seeing how we will be paying for NAMA for generations

- The bank bailouts have been funded by raiding the NPRF, and that money is going to have to be replaced or else pensions are going to have to be cut back
- The issue of government bonds for NAMA will make it all the harder and costly to issue further bonds for the states needs
- The NAMA project is supposed to try make a return on loans so risky and damaged that the banks cant wait to get them off their books: We arent going to see even half the money back on it, but we will still owe the banks the money due on the bonds we gave them
- To raise the money to cover the debts to the banks the government is going to have to hike taxes and cut expenditure on health, education and justice even further than they would have to do to address the fiscal crisis alone.

There is no such thing as a free lunch. The losses on those toxic loans cant be wished away. Under NAMA we are going to take those losses, losses of a scale that apparently would finish of AIB, BoI and Anglo Irish. We are going to pay for that loss for generations through higher taxes and cutbacks. Theres no escaping that.

beeno67

ei.sdraob wrote: »

please please NAMA "believers" explain to us how do you expect prices to go up by 25% in 10 years assuming the falls stop today??

NAMA is a sham :mad: and thank you Ronan for excellent article

Because NAMA has to rise 10% from current prices not prices 1 year ago. NAMA is not going to pay 54 billion for the loans. That was the estimate 1 year ago. It was an estimate only. Reality now means it was a very optimistic estimate. Irish Times had an article yesterday entitled
"Lenders may be 'shocked' by size of Nama discounts"
http://www.irishtimes.com/newspaper/finance/2010/0313/1224266197713.html

ei.sdraob

Sand wrote: »

@Scofflaw


Thats totally incorrect Scofflaw. The ECB will not be giving a single penny towards the cost of NAMA. Not 0.01 Euro. Its a myth spread by the likes of Frank Fahey and Willie O Dea who were sent out to sow chaos and confusion on the airwaves. Its only a sad indictment of the media that interviewers allowed them to utter such misinformation..

we were sold a dud, and what's worse people have fallen for it yet again

incredible

and thank you very much @Sand for this very long and well thought out post of yours in parallel thread which is also relevant here

ei.sdraob

beeno67 wrote: »

Because NAMA has to rise 10% from current prices not prices 1 year ago. NAMA is not going to pay 54 billion for the loans. That was the estimate 1 year ago. It was an estimate only. Reality now means it was a very optimistic estimate. Irish Times had an article yesterday entitled
"Lenders may be 'shocked' by size of Nama discounts"
http://www.irishtimes.com/newspaper/finance/2010/0313/1224266197713.html

you really should read the linked article and other ones linked from it

Ronan provided us with a very good illustration of relation of falls to needed rebound

but of course I would like to see your figures (oh and that IT article is not viewable) of this 10% rise from current prices

beeno67

ei.sdraob wrote: »

you really should read the linked article and other ones linked from it

Ronan provided us with a very good illustration of relation of falls to needed rebound

but of course I would like to see your figures (oh and that IT article is not viewable) of this 10% rise from current prices

OK you need to show what the loan book is worth and then crucially what is NAMA paying for this loan book. Not some estimate from a year ago but actually how much is NAMA paying. Until you know that it is very difficult to say how much property has to rise.

ei.sdraob

beeno67 wrote: »

OK you need to show what the loan book is worth and then crucially what is NAMA paying for this loan book. Not some estimate from a year ago but actually how much is NAMA paying. Until you know that it is very difficult to say how much property has to rise.

read the article and my post

the rises are only one part of the story considering that most of NAMA stuff aint residential property but commercial and land

the yields on which NAMA is basing its calculations is extremely optimistic to say the least

and then there's empties, a huge amount of oversupply

OrangeDagger

There seems to be a misunderstanding out there that it doesn't matter too much what discount is applied to the loans by NAMA as the bigger the discount the bigger the whole left on the balance sheet to be filled i.e. smaller discount/smaller recapitalisation = bigger discount/bigger recapitalisation. 'It doesn't matter how the money is channeled to the banks.'

If the total paid by NAMA for the loans is X and the total necessary to then recapitalise the banks is y, then total cost is x + y. The argument goes that if X is bigger then Y will be bigger and vice versa.

If NAMA takes the loans at a big discount and then recapitalises the banks, that will pretty much nationalise the banks. That means for X + Y the state gets ownership of the loans and ownership of the banks.

If however NAMA applies a smaller discount, X, then they will have to add as much capital and therefore own a lower % of the banks. So for the same amount of money they get less by applying a smaller discount.

I know which makes more sense to me.

beeno67

ei.sdraob wrote: »

read the article and my post

the rises are only one part of the story considering that most of NAMA stuff aint residential property but commercial and land

the yields on which NAMA is basing its calculations is extremely optimistic to say the least

and then there's empties, a huge amount of oversupply

I accept that but it seems a major part of this thread is about the need for property to rise 25% in next 10 years when we do not have the figures to base this estimate on.

ei.sdraob

beeno67 wrote: »

OK you need to show what the loan book is worth and then crucially what is NAMA paying for this loan book. Not some estimate from a year ago but actually how much is NAMA paying. Until you know that it is very difficult to say how much property has to rise.

1. those estimates are not from a year ago but from the nama bill

2. we dont know what NAMA is taking over, the whole thing is totally opaque, were trusting a small group of people (who includes ex BOI boss) to handle billions worth of assets and the people of this country in whose name all of this is being done, dont know what happening inside the box.

ei.sdraob

beeno67 wrote: »

I accept that but it seems a major part of this thread is about the need for property to rise 25% in next 10 years when we do not have the figures to base this estimate on.

for your benefit

http://www.ronanlyons.com/2010/03/09/elephant-in-the-room-namas-yield-problem-hasnt-gone-away/

What’s the loan book worth now?
On the first, no harm reminding ourselves that NAMA is scheduled to take over the loans of properties that were, when the loans were issued, worth €88bn. The loans themselves were worth €68bn, although there’s about another €10bn in accruing interest, by this stage. As I pointed out six months ago, while there is some international diversification, the 6% of the loan book that’s not in Ireland or the UK just about offsets the 6% that’s up in Northern Ireland, let alone the 66% in the Republic.
In terms of getting the fall right, the big problem with NAMA is that, for all the detail we have – €110m in Czech developments compared to €90m in Italian associated loans – we just don’t know what’s in about €64bn of the original €88bn. All we know is that these are broken down into €32bn of land and €32bn of “associated loans”. It seems likely that about €21bn is in Irish land. This is the same land that, for what it’s worth, Judge Peter Kelly of the Commerical Court estimates has fallen in value by about 75%. Indeed, if some land is down 95% or more – like the land in Athlone over which he was judging – while other land is down by (only!) 60%, the original €21bn of land is probably now worth less than €5bn.
The focus then turns to the €16bn or so in Irish commercial and residential developments. It’d be a brave person who’d put €10,000 (or, if you like, €10,000 for every citizen in the State) on the average peak-to-trough fall in prices in both segments being less than 50%. (Asking prices – more than likely above closing prices – were 43% down from peak levels in Dublin city centre in late 2009.) So, looking purely at the Republic of Ireland, it’s hard to see how how falls of 50%-75% could average at 47%.
The vast bulk of the remaining €21bn of foreign land and developments is in the UK, either in Britain, where property prices are falling again after a supply drought had help them up, or Northern Ireland, where prices are over one third below the peak.
In short, even a 20% average fall in NAMA’s non-Irish loan book means that a 47% is already looking optimistic. The figures outlined above would suggest an average fall of 51%. (And remember, from this graph, every percentage point more on the way down makes the 10%-in-10-years argument increasingly risible. A 51% fall means NAMA needs a 25% rebound in property prices by 2020 to break even, give or take the token amount the banks would have to pay back to the state in such an occurrence.)

beeno67

ei.sdraob wrote: »

1. those estimates are not from a year ago but from the nama bill

Yes but you know what I mean. It was only an estimate and the valuations are going to be less than in NAMA bill. I think everyone accepts that. It is just how much less

ei.sdraob wrote: »

2. we dont know what NAMA is taking over, the whole thing is totally opaque, were trusting a small group of people (who includes ex BOI boss) to handle billions worth of assets and the people of this country in whose name all of this is being done, dont know what happening inside the box.

Well we should have some figures soon but there is so much we still don't know as you say. We don't know what the actual yields are for example. We know about 40% of the loans are performing but we don't really know what performing means. So the article you quote is guesswork really based on out of date figures.

Scofflaw

Sand wrote: »

@Scofflaw


Thats totally incorrect Scofflaw. The ECB will not be giving a single penny towards the cost of NAMA. Not 0.01 Euro. Its a myth spread by the likes of Frank Fahey and Willie O Dea who were sent out to sow chaos and confusion on the airwaves. Its only a sad indictment of the media that interviewers allowed them to utter such misinformation.

The entire funding of NAMA will be based on the issue of Irish government bonds which will be given to the banks in exchange for their overvalued loans. The Irish taxpayer will then owe the banks the nominal value of those bonds.

The only involvement of the ECB is that the ECB accepts government bonds as collateral for lending. The banks can use the government bonds we give them to borrow money from the ECB, but this is simply business as usual for the ECB. It has nothing to do with NAMA. Its just a sign of the mixture of incompetence and corruption within Fianna Fail that they have been attempting to portray NAMA as some sort of ECB bailout when its nothing of the sort.

No, I appreciate that - it's a foolish piece of shorthand, and I won't use it again.

Sand wrote: »

As for not seeing how we will be paying for NAMA for generations

- The bank bailouts have been funded by raiding the NPRF, and that money is going to have to be replaced or else pensions are going to have to be cut back
- The issue of government bonds for NAMA will make it all the harder and costly to issue further bonds for the states needs
- The NAMA project is supposed to try make a return on loans so risky and damaged that the banks cant wait to get them off their books: We arent going to see even half the money back on it, but we will still owe the banks the money due on the bonds we gave them
- To raise the money to cover the debts to the banks the government is going to have to hike taxes and cut expenditure on health, education and justice even further than they would have to do to address the fiscal crisis alone.

There is no such thing as a free lunch. The losses on those toxic loans cant be wished away. Under NAMA we are going to take those losses, losses of a scale that apparently would finish of AIB, BoI and Anglo Irish. We are going to pay for that loss for generations through higher taxes and cutbacks. Theres no escaping that.

I can see what you're saying, but where does that leave the tax clawback mechanism? Are you assuming it simply won't be used? And, again, what's the cost of NAMA to the Irish taxpayer?

Our national debt has increased by €40bn over the last couple of years. We'll be paying that off for years, and it continues to grow - why does NAMA cause so much excitement? I can't see how it's going to be bigger than that, even if the whole asset base is worth nothing at all.

cordially,
Scofflaw

Sand

Tax clawback cant be used as it undermines the purpose of NAMA - boost their assets vs. liabilities.

The tax clawback is a contingent liability: the bank is going to have to record it as a liability. If the tax clawback is in any way credible then NAMA will have zero effect as it will boost assets and liabilities by effectively the same amount.

Talk of the tax clawback is just another lie, much like the one that NAMA would restart lending. Its convenient to hint at a clawback to appease the masses, but it will not and cannot be taken seriously because if it was then the banks would be considered insolvent all over again once that future liability was taken into account.

Scofflaw

Sand wrote: »

Tax clawback cant be used as it undermines the purpose of NAMA - boost their assets vs. liabilities.

The tax clawback is a contingent liability: the bank is going to have to record it as a liability. If the tax clawback is in any way credible then NAMA will have zero effect as it will boost assets and liabilities by effectively the same amount.

Talk of the tax clawback is just another lie, much like the one that NAMA would restart lending. Its convenient to hint at a clawback to appease the masses, but it will not and cannot be taken seriously because if it was then the banks would be considered insolvent all over again once that future liability was taken into account.

Hold up a second. Tax clawback is intended for the end of NAMA - if NAMA makes a loss, there's a provision to take the money back out of the banks' profits at that point - which is 7-10 years away.

Now, I accept that there's a political risk that that mechanism may not be used, but calling it a lie is kind of meaningless, because the mechanism is part of NAMA, and the government can be held to it. Does your prognosis that we'll be paying for NAMA for generations rely on claiming parts of the mechanism are a lie?

Does anyone have a valuation of NAMA as a huge debt burden that doesn't involve dismissing the idea that the government levies any final losses on the banks?

Finally, what exactly is the point of the government arranging such penal servitude for generations of taxpayers? Are they doing it just for jollies?

cordially,
Scofflaw

Count Dooku

Scofflaw wrote: »

Hold up a second. Tax clawback is intended for the end of NAMA - if NAMA makes a loss, there's a provision to take the money back out of the banks' profits at that point - which is 7-10 years away.

I afraid that banks will be nationalized at this point…

Scofflaw

Count Dooku wrote: »

I afraid that banks will be nationalized at this point…

Thus far, the government has done everything possible to avoid that outcome. Whether that's sensible of them is another question entirely, but they've been very definite on the point. Even the shares they have acquired have been to some extent forced on them.

If the banks were nationalised, we can pretty definitely say, in line with current economic paradigms, that the government would seek to de-nationalise them as soon as possible.

Again, though, this is another deus ex machina for making NAMA a disaster. By many accounts, NAMA is the worst thing evar in and of itself - so I want to hear why it's a disaster without having to assume the sky will fall in. So far I'm not hearing that - I'm hearing that maybe the valuations are off a bit (but they'll be overseen by the EU Commission, so they're probably not going to get too far away from reality), and that the NAMA bonds may cause some difficulties for the NTMA's bond issues, that the government's definition of 'losses' might not cover everything we'd prefer covered, and that some of the ostensible reasons for NAMA don't hold up when interpreted in the simplistic way beloved of many. What I'm not hearing is why the thing either (a) is a disaster even if it works the way it's supposed to; or (b) cannot possibly work the way it's supposed to, but only in disastrous ways. Either one of those is convincing - explanations that involve the total collapse of the Irish economy, meteor strikes, or the dismissal of some bits of the NAMA mechanism but not others, on the other hand, are not convincing.

cordially,
Scofflaw