NAMA - Trying to inflate that conmstruction bubble

Fr Tod Umptious

News this morning is that NAMA are going to loan 2bn to developers to complete commercial and resedential projects

http://www.rte.ie/news/2012/0523/nama-to-invest-2bn-creating-jobs.html

RTE wrote:

The National Asset Management Agency has announced proposals to invest €2bn in Ireland over the next four years.

The Chairman of NAMA Frank Daly has said that the investment could generate 25,000 jobs in construction and an additional 10,000 jobs in the wider economy.

He said that the figures are based on two studies, one from the Department of Finance in 2010 and one from the Construction Industry Council in 2009.

The money will be used to complete commercial and residential projects and to develop future green field sites.

90% of the agency's Irish property assets are located in the greater Dublin area and in Cork, Limerick and Galway.

NAMA will also launch at least one Qualifying Investor Fund this year, to attract big institutional investors.

The agency has said that there is an 80:20 deferred payment initiative for residential mortgages which has generated €8.4m since the pilot phase was launched two weeks ago.

Rental income is being generated from over 9,000 residential units in NAMA.

Frank Daly said that NAMA is "cautiously positive about the property market, we think that the economy and some of the important property segments have turned the corner."

He said that having analysed all the business plans of NAMA's debtors, he belived that two thirds of our debtors will be working with NAMA and that they can have a commercially viable future, and he considered that a very positive outcome

It was said that when NAMA was setup that the only way for it to be a success was if it inflated the property bubble again, just the thing we were trying to get away from, and this seems to be some indication of it.

I know there are properties built in the wrong place that will never be sold, and properties that are in the right place and worth something, but I'm still not sure there is enough demand out there for more commercial and residential units.

Plus the banks are not that willing to give out loans any more, sow here are the buyers going to come from.

An odd move in my eyes, will be interesting to see how it pans out.

ardmacha

The title of this thread is nonsense. Some construction is not a bubble. Ireland presently has much less construction that you would expect and finishing off properties is a wise move. The only thing that you can say about this is question the location of these schemes.

lmimmfn

and to develop future green field sites

This is what i have an issue with, other than the Childrens hospital what new buildings does the country need?

Dob74

NAMA can get revenue by dropping the price of what they are selling.
Living in Cork City I can count a least 100 houses and about 500 apartments lying idol since 2007. The developer, than the bank and now NAMA dont want to sell them at market price but wait til the prices bounce back.

The most frightening thing about NAMA is they made a profit last year when property prices fell by 17%. Would love to know how they managed this?

I am sure they have the same accountants as the banks used from 2000to08.
Very reliable chaps.

Frank Daly is sounding more and more like Sean Fitzpatrick pre bubble.

Fr Tod Umptious

lmimmfn wrote: »

This is what i have an issue with, other than the Childrens hospital what new buildings does the country need?

Same here

Yes there are unfinished developments worth finishing but I would be surprised if there was a shortage of housing or commercial stock, in any area, that would necessitate the building of new units on greenfield sites.

Sleepy

Honestly, I can see some potential for this in Dublin. There's a few un-finished estates of semi-d's up behind Clarehall that if they were priced right I'd consider (assuming I could get mortgage approval), tbh.

It all comes down to price I think. Obviously there's no demand for Celtic tiger apartments in the midlands (nor will there ever be again hopefully) but good quality houses at a reasonable price in Dublin will sell.

Fr Tod Umptious

Dob74 wrote: »

NAMA can get revenue by dropping the price of what they are selling.
Living in Cork City I can count a least 100 houses and about 500 apartments lying idol since 2007. The developer, than the bank and now NAMA dont want to sell them at market price but wait til the prices bounce back.

The most frightening thing about NAMA is they made a profit last year when property prices fell by 17%. Would love to know how they managed this?

I am sure they have the same accountants as the banks used from 2000to08.
Very reliable chaps.

Frank Daly is sounding more and more like Sean Fitzpatrick pre bubble.

Well that's not that much of a mystery and I would not read that much into it.

They sold the 'low hanging fruit',
The good properties in the right areas, many abroad, and thus they did well out of it and fair play for them for making a profit

The problem now and down the line is how to get rid of the less desirable properties.

later12

There is a similar over-reactive antipathy to construction in this country as there was to the banned foods that gave rise to the Jewish kashrut. A dramatic exposure to the dangers associated with certain goods leading to an awkening of excited, irrational fury against that product.

There's nothing wrong with construction as an industry. There's nothing wrong with maximising your profit from building houses. There's nothing inherently wrong with lots of money.

This goes further than the construction industry, and right into the macroeconomy. Entrepreneurship has taken a serious hammering in this country, and is continuing to do so in light of the banks and the SME sector. In an era where progress and economic development are of major importance, I fear Ireland is in for a long run of conservative, anti-development superstition where anything but the humblest of economic policies or business projects will be popularly derided.

I'd love to be proven wrong on this, but I think there is a genuine danger that Ireland is in no hurry to get back on the horse from which it has fallen, and it's possible our economy will be the more wobbly for it for some time.

Fr Tod Umptious

later12 wrote: »

There is a similar over-reactive antipathy to construction in this country as there was to the banned foods that gave rise to the Jewish kashrut. A dramatic exposure to the dangers associated with certain goods leading to an awkening of excited, irrational fury against that product.

There's nothing wrong with construction as an industry. There's nothing wrong with maximising your profit from building houses. There's nothing inherently wrong with lots of money.

This goes further than the construction industry, and right into the macroeconomy. Entrepreneurship has taken a serious hammering in this country, and is continuing to do so in light of the banks and the SME sector. In an era where progress and economic development are of major importance, I fear Ireland is in for a long run of conservative, anti-development superstition where anything but the humblest of economic policies or business projects will be popularly derided.

I'd love to be proven wrong on this, but I think there is a genuine danger that Ireland is in no hurry to get back on the horse from which it has fallen, and it's possible our economy will be the more wobbly for it for some time.

Yes that's true that 'building' and 'construction' now seem to be taboo subjects in Ireland after what happened, and yes it could be seen that there is an overreaction to it.

But the problem is that there is no credit out there, so even if people wanted to build and buy the banks are reluctant to finance them to do so.

So what is the use in trying to pump funds in to the supply side of the business when the banks will not help fund the demand side.

ardmacha

So what is the use in trying to pump funds in to the supply side of the business when the banks will not help fund the demand side.

NAMA has offered mortgage deals with other properties.

antoobrien

Fr Tod Umptious wrote: »

But the problem is that there is no credit out there, so even if people wanted to build and buy the banks are reluctant to finance them to do so.

So what is the use in trying to pump funds in to the supply side of the business when the banks will not help fund the demand side.

I wonder how much of it is "no credit" and how much is "no realistic business plan". When I hear cries for normal lending, I hear people wanting to get back to no credit checks etc. What is happeneing now is closer to "normal lending" than anything that happened over the past 10 or so years.

who what when

This must be the worst thread title ever!
The bubble well and truly burst in 2008!

Mr.Micro

NAMA - Trying to inflate that construction bubble

That was the impression I got as well, watching the slot on the news. NAMA have now turned into estate agents, with the double speak BS that goes with them. Maybe the Chinese will be interested in buying the properties. The green field sites bit, after all the massive over development. The County Councils and planners will be rubbing their hands with glee.... again, all the possible bribes, and no planning rules. NAMA should sort out all the ghost estates and abandoned houses, not just cherry pick and and make a few more developers rich, maybe its even the employed developers it retains on 200k+ each a year, a double bonus?

Fr Tod Umptious

who what when wrote: »

This must be the worst thread title ever!
The bubble well and truly burst in 2008!

Christ almighty - we can change the title of the thread if people wish but my interest is in the fact that NAMA are trying to get developers building again when it seems like there is still oversupply in the market
And my recollection that at the time it was being setup some (then) opposition TD said that the only way it would be successful was if we went back to an bubble situation.

Sorry for getting people so upset with my choice of thread title

Mr.Micro

Fr Tod Umptious wrote: »

Christ almighty - we can change the title of the thread if people wish but my interest is in the fact that NAMA are trying to get developers building again when it seems like there is still oversupply in the market
And my recollection that at the time it was being setup some (then) opposition TD said that the only way it would be successful was if we went back to an bubble situation.

Sorry for getting people so upset with my choice of thread title

You are perfectly right Tod, Nama are trying to ignite the property sector, albeit the commercial sector. Its looking out for itself and its clients (developers), and the taxpayer eventually.

MadsL

Fr Tod Umptious wrote: »

I know there are properties built in the wrong place that will never be sold, and properties that are in the right place and worth something, but I'm still not sure there is enough demand out there for more commercial and residential units.

..there is also the question of if the apartments are up to fire regs and size requirements.

‘Toxic bank’ NAMA has dramatically been refused permission to complete the Gateway Galway shopping and residential complex off the Western Distributor Road.

The groundbreaking decision is understood to be one of the first planning refusals of its kind in the country.

The National Asset Management Agency had sought a five-year extension of time to complete the development, which is anchored by Dunnes and B&Q and commonly known as the Knocknacarra Shopping Centre.

City planners rejected the application on the grounds that 131 apartments which form part of the plan no longer meet planning guidelines.

http://www.galwaynews.ie/25880-planners-sink-nama-plan-finish-major-city-complex

Sleepy

TBH, more apartments is the last thing that area needs. Far too many "starter homes" there already.

murphaph

Dob74 wrote: »

NAMA can get revenue by dropping the price of what they are selling.
Living in Cork City I can count a least 100 houses and about 500 apartments lying idol since 2007. The developer, than the bank and now NAMA dont want to sell them at market price but wait til the prices bounce back.

The most frightening thing about NAMA is they made a profit last year when property prices fell by 17%. Would love to know how they managed this?

I am sure they have the same accountants as the banks used from 2000to08.
Very reliable chaps.

Frank Daly is sounding more and more like Sean Fitzpatrick pre bubble.

NAMA owns lots of foreign property (especially UK) too. London has seen prices surge as the Greeks buy up all in sight.

That's where they're making any profits.

Icepick

The problem isn't construction activity.
The problem is that the government continues to distort the market and funnel people's money into projects selected by committees and not market needs.

the groutch

NAMA is about getting the best return for us, the taxpayer.
If they have half-finished developments, surely it's more profitable to finish the job and sell them on, rather than try selling as is, or worse yet buldoze what's there already and just be selling a plot of land.
And if they're taking thousands of people off the dole, all the better.

Icepick

the groutch wrote: »

If they have half-finished developments, surely it's more profitable to finish the job and sell them on, rather than try selling as is, or worse yet buldoze what's there already and just be selling a plot of land.

No, it's not if it's done inefficiently.

the groutch wrote: »

And if they're taking thousands of people off the dole, all the better.

Not really. The taxpayer is still paying their income.

2 billion would be better spent on infrastructure or business start ups

Nothingbetter2d

nama have lots of unfinished building sites... this means those sites are unsellable in their current form and also unrentable

the 2bil is to get them finished so at the very least they could rent the properties and actually start contributing towards paying off the bank debts.

with loads more rentable properties on the market the cost of rent will drop as there will be far more available to choose from.... this in turn will allow the sw to reduce the RA allowance inline with reduced rent costs.

Sleepy

Option A: sell unfinished estates as they are and let developers who buy them cheap and finish them off turn a profit

Option B: NAMA invests in those estates and the taxpayer gets the benefit of any profit.

I know which option I'd pick tbh.

K-9

The problem for developers is getting banks to finance them. They might pick up the unfinished estates cheaply but it would still cost significant sums to finish them and banks would be very slow lending to developers in the current market.

ardmacha

No, it's not if it's done inefficiently.

if people believe it is being done inefficiently then point out in what way this is happening, rather than generalisations.

Not really. The taxpayer is still paying their income.

The taxpayer may be paying their income, but if the developments are finished and sold then the taxpayer will get this back.

Sleepy

Not everyone needs finance to embark on a project like that.

And once the business plan was sound (i.e. not based on crazy sale prices), I don't see why a lender wouldn't get behind it tbh.

K-9

Sleepy wrote: »

Not everyone needs finance to embark on a project like that.

Indeed. I think a couple of unfinished estates did go on the market, never heard how they did.

And once the business plan was sound (i.e. not based on crazy sale prices), I don't see why a lender wouldn't get behind it tbh.

Yep, but they aren't lending to construction which is the problem. I don't see any evidence they are.

djpbarry

lmimmfn wrote: »

... what new buildings does the country need?

I can’t believe that’s a serious question? Ireland doesn’t need any new buildings?

Dob74 wrote: »

The most frightening thing about NAMA is they made a profit last year when property prices fell by 17%. Would love to know how they managed this?

Because they acquired some very valuable sites and properties? Case in point:
http://www.rte.ie/news/2012/0504/chelsea-bid-for-nama-owned-battersea-power-station.html

Fr Tod Umptious wrote: »

... there is still oversupply in the market

That really depends on what market you’re referring to. Sure, there is definitely over-supply in the “Apartments in the middle of nowhere” market, but I wouldn’t be so sure about, for example, flats in the centre of Dublin.

Deleted User wrote: »

2 billion would be better spent on infrastructure or business start ups

Neither of which fall under NAMA’s remit.

The bottom line here is that NAMA is doing pretty well and it is not at all far-fetched that, ultimately, shock, horror, it will actually turn a profit for taxpayers. How this is being portrayed as a bad thing, or something to be wary of, is beyond me.

Do people actually want Ireland to recover? Or will that mean that people will start running out of things to moan about?

Icepick

People still blindly believe that the government knows best how to spend their money. What kind of a lesson greater than a bankrupt economy do they need?

djpbarry

Icepick wrote: »

People still blindly believe that the government knows best how to spend their money. What kind of a lesson greater than a bankrupt economy do they need?

This money is being spent to upgrade assets that are currently unsaleable and, therefore, useless to everyone including taxpayers. Admittedly, I've not seen the details, but on the face of it, it seems to me like a good idea. Even if it only generates a very modest return on investment, it will at least mean that derelict and/or abandoned sites will be cleaned up.

Sand

@Later12

This goes further than the construction industry, and right into the macroeconomy. Entrepreneurship has taken a serious hammering in this country, and is continuing to do so in light of the banks and the SME sector. In an era where progress and economic development are of major importance, I fear Ireland is in for a long run of conservative, anti-development superstition where anything but the humblest of economic policies or business projects will be popularly derided.

I'd love to be proven wrong on this, but I think there is a genuine danger that Ireland is in no hurry to get back on the horse from which it has fallen, and it's possible our economy will be the more wobbly for it for some time.

Oh Please. This is not entrepreneurship of any sort. Its a group completely unqualified bureacrats making *incredibly* stupid bets with other peoples money. Bets so *incredibly* stupid that even Irish banks wont touch them with a barge pole.

NAMA is a symptom of a deep, institutional hatred of entrepreneurship - as far as Official Ireland is concerned, entrepreneurs are the enemy. The average Irish person doesnt have any unusually strong feelings on entrepreneurs Id think - so long as they take their losses with their gains most people are fine with that.

NAMA was founded to prevent normal market rules applying - to prevent Official Ireland from taking losses. Trying to paint this up as some brave, plucky little entrepreneurs taking a researched and calculated risk is laughable.

NAMA was a disaster right from its inception, and they are busy throwing more and more good money after bad because they haven't got the common sense to cut *our* losses. Whatever happens they'll get a nice pension and payout for their supposed expertise - the Irish taxpayer will get lumped with the bill.


@djpbarry

This money is being spent to upgrade assets that are currently unsaleable and, therefore, useless to everyone including taxpayers. Admittedly, I've not seen the details, but on the face of it, it seems to me like a good idea. Even if it only generates a very modest return on investment, it will at least mean that derelict and/or abandoned sites will be cleaned up.

@Ardmacha

Some construction is not a bubble. Ireland presently has much less construction that you would expect and finishing off properties is a wise move.

If there was a sound economic logic or principle behind this, then it would find actual financial backers. Right now, Germany is issuing zero coupon bonds - Investors are literally paying the Germans to take their money. If there was really an objective, sound analysis that could demonstrate that there is a demand out there for these properties then investors could be found as they'd be happy to get a nice return on a sure thing.

It is very telling that *nobody* is willing to fund the completion of these projects other than the great white elephant that is NAMA, which is funding its great adventure with other peoples money: our money.

All this talk about a property bounce back, or construction having some natural level of activity etc is just that: Talk. Just like the talk about "Long Term Economic Value", the nonsense that NAMA was founded on.

@Ardmacha

NAMA has offered mortgage deals with other properties. [to fund the demand side]

Oh well, thats alright so. Because lending into both sides of a property bubble to create your own bubble is guaranteed for glorious success. :rolleyes:

I wonder how it turned out for AIB, Bank of Ireland, Permament TSB, etc, etc...and the Irish taxpayer of course.

Sand

djpbarry wrote: »

This money is being spent to upgrade assets that are currently unsaleable and, therefore, useless to everyone including taxpayers. Admittedly, I've not seen the details, but on the face of it, it seems to me like a good idea. Even if it only generates a very modest return on investment, it will at least mean that derelict and/or abandoned sites will be cleaned up.

Its being spent to upgrade assets that are not in demand, which no one values enough to buy.

That money could be spent on assets which are in demand - but that would be crazy, right?

later12

Sand wrote: »

Oh Please. This is not entrepreneurship of any sort. Its a group completely unqualified bureacrats making *incredibly* stupid bets with other peoples money.

I love how there's never any doubt in your mind about anything. I don't know anything about these properties; i haven't read the Department of Finance study that is helping to inform NAMA's decision in this case. So I'm hardly in a position to be saying whether or not the decision is a wise one.

I'm talking about a point blank refusal to believe that this project is worth undertaking without looking at the evidence, which is what the OP seems to have done.

Sand

I love how there's never any doubt in your mind about anything. I don't know anything about these properties; i haven't read the Department of Finance study that is helping to inform NAMA's decision in this case. So I'm hardly in a position to be saying whether or not the decision is a wise one.

Yeah, but banks and investors have looked at these properties and their prospects. And they have ditched them onto the first group of morons they could find: NAMA.

If there was a return to be made, investors would be looking to make it. Thats what I have no doubt about.

But investors know when to cut their losses. Groups of dumb, unqualifed eejits gambling with other peoples money will always throw more good money after bad. What I find amusing is that you say you know nothing about the prospect of these properties but youre happy to presume NAMA must know what theyre doing. It goes back to my point that the real problem with Irish policy making is that the government is never, ever, ever expected to justifiy its policies. Instead the burden of evidence is always placed on those disagreeing with the government plan.

Its the root of all the problems we find ourselves in. And will continue to find ourselves in going by the above.

later12

Sand wrote: »

If there was a return to be made, investors would be looking to make it. Thats what I have no doubt about.

Absolutely not true. Just look at the bank debt out there which is guaranteed by the Irish state, which yields way above Irish Government debt despite being of equivalent risk. I don't think that makes sense to anyone. Markets are brimming with these sorts of anomalies right now.

What I find amusing is that you say you know nothing about the prospect of these properties but youre happy to presume NAMA must know what theyre doing.

No! I don't. I have already said that I don't know whether or not this is a wise move. I have absolutely no idea. I haven't read the reports, and I don't have any information apart from what I have read in that article. Therefore, I am not in a position to know anything about anything.

What I am querying is the OP's and others' immediate opposition to the plan; but perhaps he and they have read the evidence.

you've read it, I presume?

ardmacha

Its being spent to upgrade assets that are not in demand, which no one values enough to buy.

NAMA owns these properties. That is the current situation, whether you think NAMA was a good idea or not. Whatever about green field sites, which might well be suspect, the completion of properties increases their saleability and so can be perfectly rational.

It is being spent to upgrade assets that are not in demand, which no one values enough to buy.

NAMA owns half finished properties. It finishes them and agrees to sell them to people who agree to pay for them over a 20 year period or whatever. Notwithstanding general difficulties in the economy, many people can afford to make payments on houses, I fail to see how having a agreement from such people to pay for the house is not at least as good a having a half finished site.

But never allow logic spoil a good rant.

djpbarry

Sand wrote: »

If there was a sound economic logic or principle behind this, then it would find actual financial backers.

Right. This is your basic “If something was worth doing, somebody would have done it by now. Nobody’s done it, so it’s obviously not worth doing.” If we take this to its logical conclusion, nothing is worth doing – if it was, somebody would have done it already.

Sand wrote: »

That money could be spent on assets which are in demand...

So there’s absolutely no demand for any kind of property anywhere in Ireland right now?

Sand wrote: »

Yeah, but banks and investors have looked at these properties and their prospects.

And if we’ve learned anything over the last number of years, it’s that banks and investors are always bang on.

Right?

Let’s take an example from history. Rolls Royce almost went bankrupt developing the precursor to the Trent jet engine. Had the UK government not stepped in to save the company, Trent engines would not be mounted on 40% of the world’s commercial airliners today. But by your logic, Rolls Royce was not worth saving because no private investor(s) spotted an opportunity – they were clearly wrong. I mean, they could not possibly have been more wrong.

Sand is 100% right here.

The government should not be jumping into bad investments where the private sector steers clear. If the government tackled to root causes of our problems then the government would be doing its job and the private sector would do this job.

Between the internship scheme, the banks & NAMA you`d swear we were on the route to communism

djpbarry

djpbarry wrote: »

Let’s take an example from history. Rolls Royce almost went bankrupt developing the precursor to the Trent jet engine. Had the UK government not stepped in to save the company, Trent engines would not be mounted on 40% of the world’s commercial airliners today. But by your logic, Rolls Royce was not worth saving because no private investor(s) spotted an opportunity – they were clearly wrong. I mean, they could not possibly have been more wrong.

What rubbish, the engineers, designers and manufacturers would have found work elsewhere and who knows we might have even better engines now. Nothing magical about a brand name.

djpbarry

Deleted User wrote: »

What rubbish, the engineers, designers and manufacturers would have found work elsewhere...

Not the point. The point is that investors at the time didn't recognise the potential. I'm not saying the government of the time did - it was most likely a political move to save a large employer - but I find this idea that the market is always right a touch ridiculous.

Sand

@djpbarry

Right. This is your basic “If something was worth doing, somebody would have done it by now. Nobody’s done it, so it’s obviously not worth doing.” If we take this to its logical conclusion, nothing is worth doing – if it was, somebody would have done it already.

No, its your basic " Investors wont touch it with a barge pole so that should set off really big red flashing lights all across the dashboard".

Markets are very useful for sending signals - Irish policymakers completely and totally ignored the question as to why the Irish banks couldnt raise funds in September 2008. Much as they are completely and totally ignoring the question as to why these property developers cannot make an objective case to investors to back completion of their projects today.

Bull headed stubborn refusal to acknowledge reality hasn't really worked out as a policy response for the Irish state so far.

But feck it - go nuts. Shure its only taxpayer money, its not like anyone in NAMA will lose a cent.

So there’s absolutely no demand for any kind of property anywhere in Ireland right now?

I'm sure there is, but if there was demand for the property NAMA is planning the complete then it would fund itself without NAMA intervention.

And if we’ve learned anything over the last number of years, it’s that banks and investors are always bang on.

Right?

Yep - banks and investors were fleeing out of Irish banks and the Irish property bubble long before the guarantee was required. Their departure sparked the need for the guarantee. And even the dumb Irish bankers managed to dump all their losses on some even dumber mugs - the Irish government! Even the worst banks in the world are smarter than the Irish government.

We have also learned that the governments are woefully incompetent when it comes to budgeting, measuring risk or understanding what theyre doing: out of control spending, stupid bank guarantee, NAMA, acceptance of derranged "bailout"

Let’s take an example from history. Rolls Royce almost went bankrupt developing the precursor to the Trent jet engine. Had the UK government not stepped in to save the company, Trent engines would not be mounted on 40% of the world’s commercial airliners today. But by your logic, Rolls Royce was not worth saving because no private investor(s) spotted an opportunity – they were clearly wrong. I mean, they could not possibly have been more wrong.

Dear god - when Rolls Royce went bankrupt, someone else would have bought their equipment, designs and hired their best workers. Engines would still have been mounted on planes, just at much less cost to the UK government and its people.

Bailing out of failed companies is simply robbing Peter to pay Paul. It simply rewards incompetence and strangles out any fresh competitors. Look at the Irish banks - rescued by the Irish taxpayer, but busy sucking the Irish economy dry and I laugh when people wonder why the banks arent grateful...

@Ardmacha

NAMA owns these properties. That is the current situation, whether you think NAMA was a good idea or not. Whatever about green field sites, which might well be suspect, the completion of properties increases their saleability and so can be perfectly rational.

Throwing good money after bad is never rational. Any funds invested in this crap is funds that cannot be invested to deliver infrastructure or services people actually demand.

We have a limited ability to raise funds - we ought to be thinking *really* hard before throwing it at white elephant developments because we wont get those funds back easily.

Absolutely not true. Just look at the bank debt out there which is guaranteed by the Irish state, which yields way above Irish Government debt despite being of equivalent risk. I don't think that makes sense to anyone. Markets are brimming with these sorts of anomalies right now.

Bank debt, even bank debt guaranteed by the Irish state, is not Irish government debt - despite the desperate attempts by very stupid Irish governments to equate the two. Investors recognize the difference - they know its much more likely that the Irish government will revoke its guarantees long before it will ever default on its own actual sovereign debt. That's not an anomaly - that common sense.

No! I don't. I have already said that I don't know whether or not this is a wise move. I have absolutely no idea. I haven't read the reports, and I don't have any information apart from what I have read in that article. Therefore, I am not in a position to know anything about anything.

So you've no logical reason to consider this a wise move by NAMA - but you still feel opposition to it has to be justified, not acceptance of it. This despite *nothing* about NAMA being wise.

I mean I laugh when I remember explaining why NAMA was going to be a disaster back in 2009 and I encountered the above "Ah shure, it'll be grand - you cant justifiably disagree with NAMA because you havent seen their secret plans. Trust the plan".

Now were in 2012 and disquieting news about NAMA is slipping out: Banks dead and reverted to parasites killing the host. Rental incomes 26% below target. Property prices fallen significantly below target. Increasingly desperate attempts to "get the property market going".

And still, even now people are still "Ah shure, you have to explain why you disagree with NAMA...you havent seen their secret plan. It'll be grand" whilst NAMA is rushing around throwing *their* money around with no explanation or justification...

Irish people never learn.

What I am querying is the OP's and others' immediate opposition to the plan; but perhaps he and they have read the evidence.

you've read it, I presume?

Absolutely everything about NAMA is locked up tight under state secrecy - they report only the MoF. NAMA has not released any detailed investment plan or strategy on how they're going to waste your money by investing in overpriced property and selling into a depression. You can choose to be reassured by that.

ardmacha

Sand wrote:

We have a limited ability to raise funds - we ought to be thinking *really* hard before throwing it at white elephant developments because we wont get those funds back easily.

This makes perfect sense.

Now having thought *really* hard about it, might completed properties not be more saleable (i.e. to get your funds back) than uncompleted ones?

Sand

@Ardmacha

This makes perfect sense.

Now having thought *really* hard about it, might completed properties not be more saleable (i.e. to get your funds back) than uncompleted ones?

Think a *little* harder. Maybe purpose built schools or services might offer a better investment for the Irish taxpayer than a proerty investment punt in the middle of an epic property crash and depression. Maybe.

And you're only thinking about one side of the equation. Lets say you have a house. You bought it for 120K. Its worth 100K. You want to increase its sale value.

You borrow 50K and spend it on all sorts of fancy gadgets and gizmos and gold plated taps.

The house sells for 125K.

Now have you reduced or increased the loss on your investment by increasing its sale value?

ardmacha

Sand wrote:

You borrow 50K and spend it on all sorts of fancy gadgets and gizmos and gold plated taps.

This is not finishing a property to make it habitable. There is an enormous difference between a completed habitable property and one that is not finished. Fancy gadgets are only icing, not the cake itself.

later12

Sand wrote: »

Bank debt, even bank debt guaranteed by the Irish state, is not Irish government debt - despite the desperate attempts by very stupid Irish governments to equate the two. Investors recognize the difference - they know its much more likely that the Irish government will revoke its guarantees long before it will ever default on its own actual sovereign debt. That's not an anomaly - that common sense.

Ok, not really getting into this, but the risk carried on an indenture is what matters, both in terms of holdings for the purposes of regulatory requirements and trading on the open market. Djpbarry gave you a logical refutation for your statement, and this is just an illustration of the sort of aberration that can exist arising out of a pretty extraordinary marketplace.

So you've no logical reason to consider this a wise move by NAMA - but you still feel opposition to it has to be justified, not acceptance of it.

I don't know what you're not getting about this. Have I said this should be endorsed? Absolutely not. Therefore, there is no acceptance of the value of the project on my behalf. I would be wary of anybody who immediately decides a €2bn project has merit (or not) without at least looking at the evidence that is available.

Absolutely everything about NAMA is locked up tight under state secrecy

"Absolutely everything"? Quite unfortunate that you wrote that at the same time as NAMA was publishing its Q4, 2011 Report alongside The Comptroller & Auditor General's Special Report on NAMA Loans.

The news that NAMA was about to make this €2bn investment mentioned 2 reports, one of which should be available on the Department of Finance's website (it may be 2010's National Strategic Report, if I were to hazard a guess) and the Construction Industry Council's Plan for National Recovery

Now I know there is a good deal of opacity surrounding NAMA - much of it could be done away with, but you can't quite say that everything is shrouded in mystery; at least not in this case.

NakedNNettles

2 billion seems to a lot of cash to be spending on construction especially with the way things are economically.

Bulldozers would be far cheaper.

djpbarry

Sand wrote: »

Markets are very useful for sending signals...

Sure. But they’re not perfect. You seem to believe they are.

Sand wrote: »

But feck it - go nuts. Shure its only taxpayer money...

Being spent on taxpayers’ assets. You seem to be deliberately overlooking this.

Sand wrote: »

I'm sure there is, but if there was demand for the property NAMA is planning the complete then it would fund itself without NAMA intervention.

That assumes that private funding is available from somewhere?

Sand wrote: »

Yep - banks and investors were fleeing out of Irish banks and the Irish property bubble long before the guarantee was required. Their departure sparked the need for the guarantee. And even the dumb Irish bankers managed to dump all their losses on some even dumber mugs - the Irish government! Even the worst banks in the world are smarter than the Irish government.

Ok, I’m done with this nonsense. Sand, you’ve firmly rooted yourself in the “It’s Irish, therefore it’s ****e” camp and absolutely nothing is ever going to convince you that you’re not 100% right about absolutely everything. So I’m done reading your rants. It’s boring.

Dob74

murphaph wrote: »

NAMA owns lots of foreign property (especially UK) too. London has seen prices surge as the Greeks buy up all in sight.

That's where they're making any profits.

http://www.rte.ie/news/2012/0524/nama-faces-big-challenges-in-recovering-loans.html

I think the C and AG takes my few.
Yes there is cash follow from the sales of London property.
Profit minimal at best, our developer superhero's paid top dollar for every thing they bought.
Sterling in down v the euro so any profit from the UK would be watered down.
NAMA are just going have to admit that they are unable to make a profit due to economic conditions.

The next scandal will be the sale of there Irish assets to the usual insiders.

Mr.Micro

NakedNNettles wrote: »

2 billion seems to a lot of cash to be spending on construction especially with the way things are economically.

Bulldozers would be far cheaper.

NAMA was set up to protect the developers and grossly incompetent banks. It has all the scruples of a big developer and appears to be largely secretive in its operations. It cannot do wrong, as the taxpayer underwrites its activity, so there is no risk, as it protects the rotten developers and banks. The taxpayer will pay for a very long time and I doubt if prudence or logic will have much to do with NAMA decisions as it is not paying the bill.

djpbarry

Mr.Micro wrote: »

NAMA was set up to protect the developers and grossly incompetent banks.

No, it wasn't. NAMA was established to get "bad debts" off the books of banks so they could start lending again and get the economy moving - it was supposed to be a "bad bank". Whether it works or not is another matter, but let's please stop pretending that NAMA is a "protector" of developers in particular. The major flaw in the business plan was that it depended on a global recovery which has yet to occur.