A Solicitor whinges over 71.5 million award against him and his doctor wife

gigino

later10 wrote: »

I'd imagine the O'Donnells actually out more effort into making their acquisitions (property) more appealing than the effort you ever put into the companies in which you had a share.

+1. And being a landlord is providing a service to society. If there were no landlords, there would be no tenants or places to rent, and life would be much worse. Landlords are being shafted now of course and tagged with the label " speculator".

Zen65

later10 wrote: »

Now how, exactly, do you think speculation in equities is more honourable than speculation in property; since exactly the same principle applies to the one described in the first quotation box.

My contribution was in response to the suggestion that greed was ultimately the motivation behind Mr O'Donnell's actions.

I'm not pretending that acquisition of shares is in any way more "honourable" than buying property. My point was that unlike the big property speculators we read about (such as Mr O'Donnell) I, like most of the small investors in Ireland, accepted that what I was doing was a gamble and I limited the effects of my investment to myself only, without dragging in third parties to pay my losses, by only investing my savings (acquired though work).

Mr O'Donnell, and indeed most of the big property speculators in Ireland, attempted to distort the market in their favour by speculating on such a scale as to be able to control the price of the assets they invested in. They did not speculate with just their savings, they did it on the basis of loans (a promise to repay) which were secured against assets whose values were over-stated. They knew well that they could not repay the loans if the investments went bad, so their actions were dishonest. Using large sums of money, they attempted to gain leverage by being "too big to fail".

I hope this clarifies my statements?

Z

Zen65

gigino wrote: »

+1. And being a landlord is providing a service to society. If there were no landlords, there would be no tenants or places to rent, and life would be much worse.

+2 to this. Landlords are essential to the working of society. Shareholders also provide a service to society by providing seed capital to allow businesses to establish, operate & expand. Of course many shareholders may have less altruistic aims when they buy into a company.

But a Landlord is a businessman who invests in a property on the basis of making a reasonable return in the medium-long term through rental returns. In some fashion, everybody benefits from this form of sustainable investment.

Mr O'Donnell and his ilk did not invest in order to make rental returns. They borrowed on the basis of capital gains, hence they were willing to sign up for a property price, as well as banking terms & conditions which would require that they sold their assets at a substantial profit. If being a Landlord was the objective of the loan, Mr O'Donnell would continue to be in business as many of his properties are still being rented, so they would yield sustainable profits.


Z

prinz

Greed. Pure and simple. O'Donnell could still be living the high-life without having to lift a finger ever again. Greed drove him on, and on.. and on...

He made his own bed. No pity for them whatsoever.

later12

Zen65 wrote: »

I'm not pretending that acquisition of shares is in any way more "honourable" than buying property. My point was that unlike the big property speculators we read about (such as Mr O'Donnell) I, like most of the small investors in Ireland, accepted that what I was doing was a gamble and I limited the effects of my investment to myself only, without dragging in third parties to pay my losses

What third parties did the O'Donnells drag in to pay for their losses?

They are not responsible for the bank guarantees.

They did not ask for the quasi-nationalisation of some Irish banks.

They are certainly not requesting that their debt be written off.

Like thousands of Irish people up and down that country, they're requesting for reasonable flexibility in repaying their debts.

Zen65

later10 wrote: »

You seem to be misunderstanding the position they are taking. They're saying the bank is behaving in an unreasonable manner and is not being pragmatic with the outstanding loan balance; do you think that is likely to have any foundation?

I understand this assertion by Mr O'Donnell, but there is inadequate information in the thread article to develop a considered response to this. The article is told from one side only, and we don't know what the bank's motivation or strategy is.

Z

ghettogrl

Like thousands of Irish people up and down that country, they're requesting for reasonable flexibility in repaying their debts.

spot on.

prinz

ghettogrl wrote: »

spot on.

They got flexibility when repayment plans were agreed with the banks. They f*cked it up by not meeting the payments. YOu also forget that in attempting to weasel his way into BoI's goodbooks he offered to act on their behalf, you know as legal counsel in screwing those other "thousands of Irish peole up and down the country" who are in difficulties.

Zen65

later10 wrote: »

What third parties did the O'Donnells drag in to pay for their losses?

By taking out a loan on the basis of over-priced assets they are joining the bank in their losses. Small investors are typically only exposed to their own losses, and if their investments go belly-up, they simply live with the loss.

Of course the banks jumped into this marriage of convenience willingly. I am not suggesting that the affair was one-sided. My argument is that the banks were motivated by greed also, and hence they breached normal good lending practices to make funds available to the O'Donnells.

later10 wrote: »

They are certainly not requesting that their debt be written off.

Perhaps, but they appear to be disputing the terms of the loans by denying that they should have to pay penalties / interest (that's my understanding of the controversy about the repayment of the €9.3M). Seeking to renege on the terms of the loan is equivalent to asking the bank to absorb some of his losses.

The judge (who saw all of the facts) ruled that the banks were justified to seek the full payment, so one has to presume that the terms of the bank loan were being correctly applied by the bank all along.

But to restate my original contribution is not about the rights and wrongs of the legal case, but rather a more general comment that the plight of the O'Donnells was the result of greed: theirs & the bank's.

Z

Zen65

later10 wrote: »

Like thousands of Irish people up and down that country, they're requesting for reasonable flexibility in repaying their debts.

We should not confuse the plight of the O'Donnells by equating it to the plight of thousands who lost their jobs in the recession and are seeking flexibility to meet their home mortgage payments. The two situations are vastly different. The O'Donnells still have their jobs, they are simply over-stretched because they were seeking to acquire wealth on an enormous scale though a form of gambling.


Z

prinz

Are people forgetting that the €71million is a drop in the ocean of what O'Donnell actually owes to banks all over the world? Try €800 million.

AskMyChocolate

Zen65 wrote: »

O'Donnell was a solicitor, his wife was a doctor. If they had simply worked in their jobs they would have lived comfortable lives, never really being short of cash. Of course, that means they would have had to work long hours, and continue to do so until they reached (about) 60 years of age. They could have afforded to raise their children in comfort. Some people may have begrudged them their wealth of course, but only those people who begrudge anyone achieving more than themselves.

But they were not happy with such a life plan. They wanted more. They wanted real wealth. No harm in that, such aspirations are worthy if they lead to an honest path of acquisition.

The path they chose was to speculate in property. Unlike an artist who adds value to a lump of wood by crafting it into something beautiful and desirable, property speculators simply buy an asset (property) and hold it in the hope that when they choose to sell it they will get more than they paid (including interest payments) for it. That's quite a risk really, because in a normal market prices go up and down.

To increase the chances of the speculation yielding a sizeable profit, speculators need to acquire property on a scale that ensures the normal rules of the market are twisted in their favour. Hence if enough speculators acquire similar properties they can effectively set the price for it at sale, thereby driving up their profits. This is what happened in Ireland with office complexes, retail developments and eventually even housing estates. It was the "ordinary Joe/Josephine" who then had to pay inflated prices for their houses, inflated rents for their shops, etc while this speculation was rampant. Developers continued to build furiously, asking for increased prices in order to take their share of the bubble too. Many developers became speculators in their own properties, believing that this was the way to a faster profit than they could get from the honest path of turning stone, steel and wood into buildings.

The banks and their investors threw money onto this fire knowing exactly what it was, but fearing that if they did not extract their share of the profit somebody else would, which would leave them at a competitive disadvantage. The Regulator did not wish to get involved in the matter, preferring instead to play dumb and allow the vicious circle to continue because the resultant taxes were funding the country in the short-term and permitted a system of light taxation to continue.... much to the joy of the incumbent politicians.

One day the banks could not get hold of cash to throw onto the fire, and everyone started trying to pull their money out as quickly as they could.

Many people succeeded in getting some or all of their money out. The speculators who started it all could not, because the absence of cash in the market meant that Joe & Josephine could not borrow to pay those inflated prices for their homes.

The banks were left holding only the promise of repayments from the speculators, but those promises were based on the hugely over-valued property assets which by now could not be converted to cash because nobody could afford them.

The process of the bubble served only to transfer wealth from one large proportion of the community (house buyers, retailers, etc) to the smaller proportion of the community (speculators, banks, investors). No new value had ever been created by the speculators & investors; their lumps of wood, steel & stone were no different from when they had been bought by them. Nothing added but time, really.

So now as the bubble bursts and the piles of money unravel, how does it get re-distributed? Do Joe and Josephine get some of their cash back too?

No, in fact the middlemen (banks and investors) have their losses re-distributed to everyone, even those not involved in the game. O'Donnell, a speculator and one of the people who started the very fire that burned us is trying to avoid facing up to the risks he took when gambling his money at day one. In a fair and just society his wealth should be reduced to the level he would have had if he and his wife had simply worked in their jobs to earn their living, with perhaps some variation up or down as a gambler might have to expect. But instead he tries to hold onto the wealth he earned through no real work of his own, in the expectation that somebody else (most probably you and I) would pay off his losses.

I am not taking the communist position here. Like O'Donnell I am working a job that pays well, and when times were good I speculated a little by buying shares in companies that appeared to have a bright future. When my shares became worthless I accepted my losses and moved on. I had not borrowed to buy those shares; I just used my own savings. My family did not go hungry as a result because I had not gambled the money I would need to provide food and shelter for us. I would have been happy to take the profits had they come. I am equally happy to accept the losses, because they are mine.

O'Donnell and his ilk deserve no sympathy from us. They had more than most but wanted more than a person could spend in a lifetime of luxury. When that gamble failed we should expect them to behave responsibly and hand back the wealth to where they got it.


Z

One of the best and most considered posts on After Hours ever.

I should really ask you if your mother reads After Hours. Just so y'don't get banned, for your reason/dryness.

*brilliant man but keep it happy/durty, just so y'know. You'd be a loss*