Stablisation is not, however, what we need. We need it to go back to fundamentals. Market values when?
And others won’t (or can’t) ?
I think that answers the ‘valution’ question !
Yep, the derivatives that come with the loans will be transferred at market value.
I was thinking about it this morning, what choice does the government have besides Nama?
1: Let banks fail
Outcome A: Government has to pay money it has guaranteed to depositors and other creditors, can’t do this we don’t have it.
Outcome B: If there was no guarantee then many hundreds of thousands of people would lose their savings = civil unrest. also, few would be willing to lend into Ireland again
2: Nationalize banks
Outcome A: Government end up with all the debt with no chance of being able to claw it back from the banks in the future when they are healthy again. Little civil unrest
Outcome A: Government pays over the odds for the debt, banks live on, government can claim more money from the banks in 10 to 15 years once they are solvent again. Little civil unrest.
Is there something I’m missing? As it looks like NAMA is the best of a few bad choices?
Most people are concerned that the banks will end up the winners out of NAMA, not the taxpaper. If we are to take over those debts, the banks need to face some responsibility for getting us here.
On the ground, there is a fear that the banks and the developers will run rings around the State in this respect. Effectively while the theory of NAMA is probably not too bad in a certain light, how it is implemented is important. I haven’t looked at the detail of the legislation but given that some people down the country (I have a straw poll of one) feel that NAMA should be run by outside agencies on the grounds that networking connections etc would be detrimental to the interests of the country in this respect, if that makes sense. IE, make sure that cronyism is not an option.
That’s it in a nutshell whizzbang.
It’s the least worst scenario. None of which are desirable but we’re here and have to move on. There’s no simple ‘reverse thrusters’ button.
Fair point, there is that risk alright. So is all the NAMA negative sentiment here about NAMA getting a good deal, rather than NAMA being a bad idea and should be scrapped?
I can understand people working towards essentially taking everything we can from the banks without actually killing them.
Bubble went to far but FF will always go further, redefining the brink second by second. The FF vanguard, now hand over your children’s pocket money!
Can’t speak for everyone but that would encapsulate most of my concerns. That being said, I see CIF is screaming for it to be sorted out ASAP which leads me to assume they haven’t actually connected themselves with the reality of having killed their golden goose because of short term stupidity.
It’s interesting that there’s a lot of discussion about winding up/examinership of construction companies rather than the healthy ones swallowing up the small/unhealthy ones. That tells me that if there are any healthy ones, they see no future for the unhealthy ones.
I would say any healthy ones would rather wait until the landbanks the unhealthy ones are sitting on come back onto the market at attractive prices. They will probably buy them and then wait for the next bubble.
I don’t see any major developers doing anything in Ireland for a good long while yet. They will just cut 90% of their staff and go into hibernation until things pick up again.
If the Government nationalize the banks, can you imagine if interest rates go up. Remember the PTSB 0.5% hoopla?
And what about mortgage defaulters?
There would be a lot of ‘local’ pressure.
Let’s say after selling all the assets the Government is €30 billion short, the banks should pay this shortfall over a period of 10/20/30 years. Faster they pay, the less interest.
Under no circumstances should the taxpayer be at a loss.
The problem for me is the upside for bank shareholders far exceeds the upside for the taxpayer. Shareholders and bondholder should have been wiped out by now. If we’re gonna bail out these dodo’s then we, the taxpayers, should have 100% of whatever upside there might eventually be.
Mind you, we all know what happens when the Irish govt flog their wares to the markets, they get eaten alive by the sharks!
I dunno, it just feels like the objective is to stiff the taxpayer and get the banks back to 2003 - won’t happen, so the taxpayer will get the bill for a failed objective. Let’s remember, somewhere in “the banking system” is some critical infrastructure of the state (clearing system, etc.). Nowhere are we addressing how the whole thing went wrong. We should be taking the critical bits and nationalising them, and charging the banks for their usage in perpetuity. That way, we never have to risk another bank guarantee again - let the stupid banks go bust and smarter banks come in to replace them - no bank should represent a systemic risk.
There is no revolution of thinking in this approach.
Its not a “gamble” as depicted in the Indo today to but it is a theft.
We must be clear to understand what is happening here and who are the ultimate victims.
We’re all in a spin dealing with what NAMA is and its grand effects but we have been duped by a complicit media to debate only one thing. The real story is the banrkupt dogma pushed by criminal untouchables who hide behind the office and pomp of state.
They have wiped their arses with the consitituion. They’ve put shit in your water. They allow religious order freedom to rape children. They pay primary school headmasters a quarter of a million while children it their classes sit with no breakfast in their stomach. The list is endless.
Yet we are forced to believe its all now to do do with this NAMA thing.
NAMA is the last gasp of a lose-lose ideology.
To be fair, any shareholder who bought AIB at €20 a pop has been fairly wiped out by now!
I think we all agree that their has been a massive failure in regulation and that it never should have come to this, but now we are here we have to fix the current situation before preventing it happening again. There is a risk that the “Preventing it happening again” may get sidelined.
How about 1a Let banks write down all bad loans, wipe out all equity, declare legal insolvency (which they have been de-facto since Sept 2008), default on sub ordinate debt, clear out all upper management and use the 20 of 30 billion in cash which the Government is planning to give them anyway to provide the needed Tier I capital to establish new clean solvent banks(s), then transfer all deposits to new banks.
Dump all un-performing loans (not just property) onto a Resolution Corp to wind up and liquidate them in an orderly fashion.
NAMA is purely a vehicle to enable the vested interests to cash out most of their bubble gains at the tax payers expense, or if they are serious pyramided, give them enough time to unwind so they are net plus by the end, again at the tax payers expense.
If NAMA goes ahead in its present form there will be a NAMA 2. It will look a lot more like one of the Scandinavia Bank bailout schemes. NAMA 2 will be introduced either after all the insiders have cashed out in a year or two or when NAMA 1 collapses under the weight of its inherent contradictions.
If NAMA was a genuine attempt at clearing up the mess the bill would not have gone to such great lengths to put all the power in the ministers hands and to have absolutely zero transparency about the acquisition, valuation and disposal process.
If they were being honest the bill would have outlined the process to put in the public domain what loans are being bought, from who, for how much, and what they eventually realized. NAMA is financing loans to companies that are bankrupt or well on the path to bankruptcy. Having all of NAMA business operations and processes fully published in the public domain in a timely manner will not have much material effect on the long term survival of the vast majority of these businesses. They are dead.
But doing everything in secret, which is what they plan to do, makes it very easy for the principals and investors of all theses dead companies to extract as much money as possible from the dead companies before they are wound up. That is how the fraud works. It can only be carried out in secrecy with the minister having very tight control over the whole process.
Make public the what, who, when, are for how much and the game is up for the whole scam.
eh? do you mean the teachers who also happen to be Ministers?
The central problem with NAMA is that high land & property prices are the primary driver of high costs in this country.
Our high cost base is causing us to haemorrhage jobs.
Low land prices are a good thing for the economy. It will help bring down our cost base.
NAMA however is going to artificially keep land prices high to reduce the taxpayer’s exposure but this will keep our cost base high.
This will increase pressure on other costs such as wages.
There is an enormous conflict of interest here. We need to get our cost base down. The state has to keep it high.