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NAMA - figures are not adding up
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Count Dooku wrote: »My point is that those changes were primarily based on immigration and immigrants couldn’t stay here without housing.
We had strong immigration from 1997 onwards. The problem with immigration post 2002 was that it was primarily construction driven immigration ...ie they came to build or to take an unsilled job of someone who had left the meat factory or petrol station to go building.
The sudden demand for HOUSING was a function of the frenzied rate if construction that drew in extra immigrants...especially post May 2004...and those extra immigrants then went building like crazy.
This push push mechanism was confused with real sustainable demand for housing and we built like maniacs with a peak in 2006 and 2007.
Once the building stopped after 2007, immigrants left as there was no more builiding and this created a large gap between what we built and what was required.
We therefore have a grossly excessive housing stock, no demand for it and no engine in place that will drive demand for that housing stock and thereby reduce the number of empty homes.
If we could convert Laois into Afghanistan and offer to train NATO armies there pre deployment we might start to make inroads maybe
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These are CSO figures showing unemployment has been stable for 9 months. I can't do better than that. Can you?1 - There is no proof unemployment has stabilised as the figures do not take into account emigration and back to education(FAS courses). Do you have employment numbers?
Yes I have employment numbers:
These are CSO QNHS figures. Employment down from peak but not fallen off a cliff.
Probably they will.2 - Interest rates will rise either this year or next year, they ain't going lower.
Relative to the rest of the country, the numbers are low. I am not going to present the numbers to you, you can do that yourself if you are interested.3 - Plenty of vacants in the Dublin area.
In short, I think that at this stage, irrational despair has replaced irrational exuberance. The same mistake during the boom of extrapolating straightline trends on all statistics is being made now with people assuming the whole country is going back to the 80s.
That is not to say that house prices are not going to fall further or that NAMA will break even. Just that we are not heading for armageddon any more.
And banks have to lend, after all what else are they going to do with the billions they have on deposit? I think there is a misunderstanding of what a bank is: it is merely an agent for lending money from depositors out to other people.0 -
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oppenheimer1 wrote: »Why ten years? NAMA can run for an indefinite period of time.
Ah shure lets run it forever so that we have a false bottom to our property prices, that way ff/developers/bankers can control the flow and price of property for ever :rolleyes:Over a decade - not in the next year or two. That's a 2.5% annual rise per decade (yes, it actually is!) - or, if we assume prices continue to drop until 2013, then we need a 6.5% annual rise in property prices for the next 6 years.
Those are not in any way bizarre figures. They do assume an Irish economic recovery, as opposed to Japan-style years of deflation, that's all.
Whatever we do with NAMA we wind up giving money to the banks directly - and the lower the valuations, the more money we directly give the banks.
But looking solely at the valuations is pretty meaningless. What the State is buying isn't property, but loans. Only if the debtors are terminally unable to service their loans does the valuation of the property really come into play.
Ah for fecks sake why do people persist with this fallacy that we will only get the loans if the debtors are unable to service the loans.
It is not an if, it is a when and in some cases it has already happened.
Some of these loans haven't being serviced in ages, ala carroll's and the banks haven't cared because they have known NAMA i.e. the taxpayers are going to be carrying the can.
Look at the big players who have already been responsible for 16 odd billion AFAIK loans going into NAMA.
mcnamara's empire has crumbled, a couple of judges laughed the rosey future outlook carroll's Zoe group had of it's future.
ACC/Rabobank have more realistic view of this.
fleming is finished leaving a 13 storey tower eyesore in Sandyford together with a big hole in the ground.
paddy kelly is a busted flush.
sean dunne is running a possibly unplanned supermarket within an ex hotel to keep the wolves form the door.
derek quinlan has legged to Switzerland and is trying to shift his expensive pads around the world.
These are some of the biggest, just imagine all the little guys with a field here and everywhere.
Yet these are the same developers that are going to be serving their loans ? :rolleyes:Not only that, but if NAMA loses money, there is a clawback mechanism to take the loss out of the banks' profits, because after all, this is their mess that's being cleaned up.
Cock and bull story no.2
Where exactly are these profits going to come from ?
The banks aren't lending and they will up their charges meaning it is joe soap, who is probably a taxpayer, who is paying yet more bank charges so that joe soap's government gets more money back in a supposed clawback.I'm not a fan of NAMA - it would certainly have been better not to be in a position where such a thing was in any sense required. Nor am I particularly optimistic about NAMA. I'm only involved in the debate because, as so often with anything complex, the sheer level of misunderstanding and misinformation about NAMA is horrific.
Any proposed alternative is not - realistically - going to happen now, but it's still interesting to speculate on what else could have been done, and in what way it would have been better than NAMA. However, to propose something better than NAMA, people need to be better than the real NAMA, not the confused straw NAMA that has been created by public incomprehension.
NAMA has the following elements:
1. valuation of loans and assets
2. transfer of performing loans and assets
3. long-term management of loans and assets for maximum return
4. clawback of any NAMA losses from bank profits
Step 1 is the tricky bit, but a low valuation of NAMA assets has the automatic corollary of the State putting more money directly into the banks. A high valuation of NAMA assets increases the risk of NAMA making a loss - which is then taken out of the banks' profits by added taxation.
To me, the main risk here is political - that NAMA will make a loss, but the government will not choose to take the losses out of the banks' profits. Aside from that, there is a slighter risk that banks involved will go out of business.
Where is the monumentally bad thing that NAMA is supposed to be in all that, exactly?
puzzled,
Scofflaw
Maybe the monumentally bad thing in all this is that we will be wasting billions of taxpayers funds over the coming years to keep afloat a bunch of banks/bankers that were/are at best inept/wreckless/greedy/unethical and at worst corrupt, while at the same time we desperately have a huge budget deficit, massive unemployment, a shrinking economy and the money could be better used elsewhere.
Will we end up in a situation where we have healthy non lending high charges banks with little or no general productive economic activity, high unemployment, emigration like the old days, massive government borrowing, high taxes and poor services ?oppenheimer1 wrote: »Say a developer builds houses at a cost of €300k per unit but aims to sell them for €325k he borrows 80% of the build cost to finance the project. The developer then gets into financial trouble after some time and cannot repay his loans, but has 50k paid off. House prices tumble to half their expected value to €162.5k. Loan of 240k-50k=190. The house is worth 85% of the remaining value of the loan, and NAMA makes back 88c in the euro for its loan. Not exactly a disasterous return. And with NAMA controlling supply they will be able to control price, and the longer they hold the asset the more pressure they will be able to exert on developers to pay up.
Except in some cases developers have not paid off anything, nada, zilt, nothing.
Sometimes they had cosey relationships where they only paid on completion which was meant to be last year or year before.
Thus you are left with full loan to be paid back.
We have oversupply of property, residential, retail and commerical so is NAMA going to sit on these properties until eventually that supply dries up and there is demand ?
So basically you are fine with an artifical price floor being put on property ?
Meanwhile what happens to all the half built developments, what happens to the empty property ?
Why would any investors of property funds buy into this market ?
In other words if you want to invest in property especially commerical or retail don't in Ireland since because of NAMA you are paying too much.oppenheimer1 wrote: »The banks are still generating an operating profit. With the bad loans dealt with they will be quite healthy.
It would be wonderful if all businesses or private individuals could operate in such a fashion. :rolleyes:
Hell I am very profitable too if I reckon my mortgage, my credit card, my taxes, etc.
I am not allowed discuss …
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Ah shure lets run it forever so that we have a false bottom to our property prices, that way ff/developers/bankers can control the flow and price of property for ever :rolleyes:
Ah for fecks sake why do people persist with this fallacy that we will only get the loans if the debtors are unable to service the loans.
It is not an if, it is a when and in some cases it has already happened.
Some of these loans haven't being serviced in ages, ala carroll's and the banks haven't cared because they have known NAMA i.e. the taxpayers are going to be carrying the can.
Look at the big players who have already been responsible for 16 odd billion AFAIK loans going into NAMA.
mcnamara's empire has crumbled, a couple of judges laughed the rosey future outlook carroll's Zoe group had of it's future.
ACC/Rabobank have more realistic view of this.
fleming is finished leaving a 13 storey tower eyesore in Sandyford together with a big hole in the ground.
paddy kelly is a busted flush.
sean dunne is running a possibly unplanned supermarket within an ex hotel to keep the wolves form the door.
derek quinlan has legged to Switzerland and is trying to shift his expensive pads around the world.
These are some of the biggest, just imagine all the little guys with a field here and everywhere.
Yet these are the same developers that are going to be serving their loans ? :rolleyes:
Cock and bull story no.2
Where exactly are these profits going to come from ?
The banks aren't lending and they will up their charges meaning it is joe soap, who is probably a taxpayer, who is paying yet more bank charges so that joe soap's government gets more money back in a supposed clawback.
Maybe the monumentally bad thing in all this is that we will be wasting billions of taxpayers funds over the coming years to keep afloat a bunch of banks/bankers that were/are at best inept/wreckless/greedy/unethical and at worst corrupt, while at the same time we desperately have a huge budget deficit, massive unemployment, a shrinking economy and the money could be better used elsewhere.
Will we end up in a situation where we have healthy non lending high charges banks with little or no general productive economic activity, high unemployment, emigration like the old days, massive government borrowing, high taxes and poor services ?
Except in some cases developers have not paid off anything, nada, zilt, nothing.
Sometimes they had cosey relationships where they only paid on completion which was meant to be last year or year before.
Thus you are left with full loan to be paid back.
We have oversupply of property, residential, retail and commerical so is NAMA going to sit on these properties until eventually that supply dries up and there is demand ?
So basically you are fine with an artifical price floor being put on property ?
Meanwhile what happens to all the half built developments, what happens to the empty property ?
Why would any investors of property funds buy into this market ?
In other words if you want to invest in property especially commerical or retail don't in Ireland since because of NAMA you are paying too much.
It would be wonderful if all businesses or private individuals could operate in such a fashion. :rolleyes:
Hell I am very profitable too if I reckon my mortgage, my credit card, my taxes, etc.
This is exactly the kind of rant about NAMA that entirely fails to impress me. There's not a single solid argument in there, just a couple of anecdotes and a lot of speculation interspersed with shouts of "it's all awful! look how bad the government are! it's all lies! lies! it'll never be better! we're doomed I tell you! DOOMED!".
See earlier posts regarding the tax clawback mechanism, EU oversight of valuation, non-performing loans, likely profitability of banks in a decade's time, etc. I can't be bothered writing it all out again for a post of this quality.
bored,
Scofflaw0 -
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It would be wonderful if all businesses or private individuals could operate in such a fashion. :rolleyes:
Hell I am very profitable too if I reckon my mortgage, my credit card, my taxes, etc.
i think the point he was making is that the banks are profitable at the moment when you strip out the writedowns and bad debts which is a perfectly reasonable way to judge if the bank can be profitable when things return to normal.0 -
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