From today’s SBP:
He is right about the weird sense of entitlement shown by the Namaphiles.
and, judging by their deceitful style of argument, many Namaphiles seem to have a top-class jesuit “education”.
… but pass vs honours maths? WTF.
That article reminded me of my school days. We have students that were always protected from their misbehaviour because they were the class act students. I meet one of them at a wedding in mid 2006. He told me he had four properties and was considering a fifth. I told him that I wouldn’t be so sure about the property market and he responded by telling me that I didn’t know what I was talking about. To be fair he was alright but I say he’s suffering now.
Another thing that I’ve noticed about Irish society is we always have to have an elite. Does it comfort folk when they look up to these people? As soon as we get rid of one bunch of aristocrats we replace them with some more.
I guess things never really change.
Eh… David… where are the bankers in all this?
As for putting a floor in the market - it won’t. It’s not the purpose of NAMA either.
The banks have a load of trash and no cash. The banks get cash from the state. The state gets trash from the banks.
The banks will sit on the cash until they’re technically solvent - which will entail getting more money from the state at some point in the future. Until they get their second bailout they will continue to plead inability to lend - thus necessitating a bailout. You gotta love that catch-22!
So the banks won’t lend. The state will have a load of non-performing loans - so no money coming in from there. The extra borrowing on the state’s balance sheet, for NAMA, will increase the cost of borrowing - so more money going out. Chinese water torture of the state’s finances.
All NAMA will achieve is a state of deep freeze. It just means no one has to recognise their loss. If the loans had stayed with the banks then they would have been forced to take the loss or get others to take it. NAMA puts all the recovery effort on the state - which won’t try too hard.
So now you have banks that won’t lend and a recovery agency that won’t recover.
No floor. Just lots of little baby steps down the rabbit hole.
I don’t understand why McWilliams dresses up his very worthwhile observations in layers of bullshit, but if it convinces one more person of the stupidity of NAMA then it’s ok with me.
Just an observation, but has anyone noticed how Eoghan Harris is attempting to defend his masters with the continuous use of the phrase ‘the political class’. Every time he opens his mouth he uses the phrase, and judging from the context in which he uses it I believe it is a deliberate attempt to tell the people to stop interfering in the business of their ‘superiors’. It’s a subtle trick, but by reinforcing the notion of this form of class structure, he creates a sense of this ‘class’ being untouchable or above reproach. Watch out for it, and perhaps I’m wrong…
Nama is going to be so cumbersome it’ll mean jobs for the boys and money for old rope. Maybe he meant it’ll be a bail out in that sense. Lawyers, EA’s, bankers, share and bond holders all getting a bail out.
Em, anyone else think this is all very DT?
I heard today from someone who knows some of the straight-As (his children at the same school as their children) that a whole heap of them are bust. A really big whole heap. He seemed rather shocked. I started on my spiel about builders and developers and bankers, and he stopped me and said “no, not them, you’d be surprised at who this is. Ordinary joe soap professionals.”
Now, I don’t really buy the conspiracy theory that the wide-boys sold the straight-As up the swanee. I’ve said before that I think that the wheels came off the property thing in 2005, that suddendly the system broke. And that everything since then has been a desperate attempt to shore it up. Which has now failed. NAMA is the final throw of the dice, but not for the straight-As. They will be wiped out totally and utterly. It is bankers and developers who got us into this mess, they are the ones who are going to try and get themselves out at all costs.
In the course of the UCD Economics Dept gig in the College of Physicians earlier this year - (ironically the idea of Colm McCarthy) I had a friendly chat with a ‘household name’ with whom I used to have a nodding/friendly chatting relationship.
Thirty years ago he was one of those dudes who would talk enthusiastically about his own pension and would actually do the pen and paper exercise at the drop of a hat with a personal confidence that was palpable. He was a man who looked forward to a secure future with great deal of satisfaction - boy was happy with the prospects before him.
On the day we spoke - he was fatalistic-
‘I’m totally fucked’ Can’t even convince the wife to take what we can get for the redbrick and rent somewhere. she wont budge’
Given his position, career and who he is - I was stumped. He knew where his pension contributions had been invested and he knew they were down the pan. He is quite possibly typical of his peer group
Have to say I think this article a miss rather than a hit…
For private individuals with 5 houses bought from a builder already, and looking for a tenant for each, and everything in negative equity on interest only mortgages…dont really see how Nama comes to the rescue? Those are not the properties Nama is going to atake over the loans on…
The banks - sure ; the builders of half-finished estates…MAYBE…althought the money is technically still due, but Nama might be willing to wait longer than a bank…
Doctors wont benefit from big fees for nama. Lawyers and accountants …maybe…but its going to take a LOT of big fees to make up the neg equity on 5 houses bought in 06.
Cash King, it is not the purchase of private houses that is at stake. It is equity and mezzanine portions of commercial and retail developments as well as the Construction and Development stage of them and residential units.
It is in the build process, not the finished product that the losses are being made. These are all first loss, or at best second loss positions. Not percentage losses, total ones.
A fair portion of the investments are borrowed. These are, I guess, some of the ‘other’ loans.
Such is my understanding anyway.
the feckin jesuits, they have it all tied up
seriously though, what is mcwilliams waffling on about here?
sounds like he’s basically taken his observations about his own school upbringing and basically extrapolated that somehow the whole of ireland works like this…pretty bogus science if you ask me
(Disclosure. recipient of a jesuit education here but don’t fall into either of DMcW’s categories)
What has been said here before and i concur with is that there is pretty much no correlation between having smarts and making money over the last couple of years. For 95% of the the "so called wealthy
", it was a case of right place , right time, and it has now become easy come, easy go.
I still maintain that there was no great scam pulled by the bank economists/ estate agents/ any shill circa 2005/6/7 who said no worries/soft landing/continue as normal. These people had no idea of what was going on, they actually thought they had invented free money, and were so out of there depth that they actually believed the crap they were spouting. It was only when the hard figures starting pouring in that they realised that there was a problem. That’s when the lying started, as it became a race to get out before the plebs in the street.
“Never attribute to malice, that which can be attributed to stupidity” - some wise dude
This article makes really depressing reading and not for the reason that David may automatically assume.
Not having attended a private/rugby school, upon reading this I find myself wondering whether most people who come from that background spend their whole life cloaked in some sort of cultural detachment from the rest of the world around them. Are their school days that important and that defining that they never really leave them behind and spend the rest of their days in competition with people with whom they shared a classroom 20/30/40 years ago?
And possibly the most depressing aspect of what David has written is that there is an implied assumption that one or other of these schoolboy cliques is automatically in a position to rearrange society to suit their own sectional interests.
Worryingly, I know of two legal eagles who have already secured jobs with NAMA. While Im not sure of their backgrounds, their OTT accents would suggest that David’s analysis of where the NAMA payroll/consultancy fees will ultimately end up may be correct.
Hmmm…on reading the article a 2nd time, he is talking ONLY about the people in a “syndicate”? IE not the “wealthy” professionals who bought say 5 separate actual houses in 5 separate transactions, and renting them all out and flipping them…
How many of the professional classes are in hock to the gills on a “syndicate” rather than on separate privately owned NE houses? Any data on this, probably not? Or if BOTH, then still f**ked even if NAMA resuces the syndicate?
But even then, isnt NAMA there to buy the right (from the bank) to collect on the loan? ITs not actually buying the houses themselves? The loan is still due (yes, yes, “quietly written off” etc…)
I guess that with all the talk about “NAMA will make a profit if property prices rise 10% over 10 years”, people have the idea that NAMA is actually buying lots of houses? this is not tecnically correct?
Or am I completely misunderstanding things?
Cash King - I think it was Greenspan who said something to the effect that:
‘If you think you understood what I have said - the chances are I was not making myself sufficiently clear’ - the answer s therefore variously yes and no - McWilliams outline is not such much a thesis as an an attempt to convey once more the natural order of things in this great little country.
I believe so.
Yes, probably both, but at least there is some chance of light at the end of the investment property. There was plenty of investor buying going on for years before the boom, so perhaps they are not too exposed there.
Even if not written off, at least forborne. But I think one of the keys is that for any of the syndicates to make money, the buildings they’ve invested in have to be completed. This, I feel, is the main reason for the extra money that NAMA is going to pump in - this is where the bailout is?
Yes, NAMA is only buying loans. Some of these are for land, some are for building residential or commercial, some are for completed residential or commercial, some are for ‘other’. I think the other is the largest of these syndicate loans or for all the syndicate loans from INBS and Anglo - interestingly in the Tribune today we learned that there is no €5 million limit for loans from INBS and Anglo. This was news to me, but it does tie in with this theory?
Nope - we’re all still groping in the dark a bit. And not in a good ‘grope in the dark’ way.
I also am a product (at least in part) of one of those Dublin Jesuit schools. The old boys network is strong for those who are interested in it. Stronger than at any of the subsequent schools I was at (in England, say).
I wonder is this purely a Dublin thing? Did the ‘first among equals’ of the other cities get involved in the same rackets? Here in Offaly and I suspect for a large part of the country, land zoning, that age-old scam, has been the favourite tool, with development, overseas investment and hotels forming the severe trashing of the monied classes post 2002.
I am not the product of a public school but went to a good school in a provincial city. I understand what McWilliams is saying about his classmates.
There was streaming in the school I attended. Many of those in the top stream went to university to study for the safe professions, medicine and law. Those in the next stream academically went to study commerce and accountancy, science, the humanities (most ended up teaching) and then many went for the civil service and into the workplace (limited jobs at the time).
Many in the top stream were (and probably still are) financially illeterate. I know of some who had financial advisors who were collecting like minded individuals to form commercial property syndicates - after all you have to have somewhere to invest those high fees. I suspect that they they were introduced to the magic that is leverage and that may have been their downfall.
McWilliams is also probably right in that NAMA is probably being viewed by these people as a way out. This should be linked with Harris’s political class. Ireland is a small country and there is a class of people who view politics, law, medicine, banking,stockbroking, stand up comedy, quangos and RTE as their preserve and the preserve of their offspring.
NAMA will take the loans off the banks. Over a period of time there will be a politically guided writedown of non-performing loans which were made to the syndicates, whose members then get away scott-free and the taxpayer picks up the tab.
Don’t lose any sleep over it, the elite always look after each other and the peasants provide the cannon fodder.
very soon people will see that what is good for the banks and developers is not good for the people. I have no doubt that FF got re-elected in 2007 was because people thought the forthcoming bailout (rather the perceived soft landing) of the property market would eventually trickle down to them. wrong suckers!
I’d agree with that totally but the fact they were stupid is not an excuse to lie to government and put us all under the cosh they therefore should have a criminal action taken against them for doing this.
I think this paragraph sums up Lenihans NAMA approach perfectly…the ‘background in school debating’ and ‘a brilliant barrister’ is really paying off…