All of these moves by NAMA - selling apartments to Cluid, providing loans, guaranteeing NE - are all just ways of disguising the losses the taxpayer is being made to pay, breaking it up into chunks so that the appalling truth is less apparent.
Take the supposed ‘200k apartment’. NAMA probably reckon the value is really 170k now and will end up much lower eventually. They are economists, they understand supply and demand. But how much has it really cost the taxpayer? For me the important thing to note is that we really bought these apartments when we bailed out the banks - whatever loans the developer had against them and can’t pay back were transferred to public ownership, leading to ultimate foreclosure and takeover of the assets. Everything that’s happened since is just softening the blow in a slow and expensive process
Example with very rounded off figures:
The developer has 50 apartments that were asking 500k at the top of the bubble. Now say the developer expected to make 25% markup on those, so we can assume the cost was 400k each. They are now worth allegedly 200k. Really, in a fire sale in a market with no credit, they would struggle to make 150k each.
So, if there was no NAMA, no Clúid, no HFA, no rent allowance, or no market distortion of any sort, and the now state-owned bank was to take these apartments and put them on the market in one fell swoop, what would happen?
The developer loan of 20 million (400k cost x 50 apartments) would realise a return of 7.5 million (150k x 50 units). An immediate and visible loss of 12.5 million for the bank aka the state aka the taxpayer.
Instead of doing that, part of the 12.5 million loss is booked at the bank, part of the loss is booked at NAMA, part of it at Clúid, part of it in covering NE losses. Of course the process is so convoluted and expensive to administer that the losses will in reality be much more than 12.5 million. All the while, the cost of living in Ireland is artificially high, damaging our competitiveness and recovery, because property values are being propped up.
Am I alone is seeing it this way, or is it self-evident?