Nobody, count em, nobody, outside government supports NAMA. Not the domestic commentators, not the IMF, not the ECB, nobody.
By the same logic NOBODY outside government has clearly stated an alternative although George Lee had a crack when he started his blue period …except that it was not that clear I thought …beyond saying create a new bank .
Personally I would have made NAMA into a special investment and with a defined 15 year workout mandate and the right to sell bonds after 7-10 years
three options have been given, none perfect. But all end up in the same place, at least pro tem. That seems to be the issue . the govt are ideologically 1000% opposed to there being no public float, for some unspecified reason. If we could find out why, we might get somewhere.
I think the why is obvious… things will be found out. things they don’t’ want us to find out. Perhaps if we do the following might happen,
The government basically not having a clue does not help either
NAMA started off as an effort to dodge the cds spread bullet/givt financing costs in the winter. Now the cds spread is narrowing the pressure to get it off the books is lessening and the NTMA is coming more into the frame as the government calculates that NAMA will not pollute the issuance of GGD overly .
In Feb as out debt servicing costs rose inexorably things were different , non ??
Again, that shows that the dept of finance have not got a clue about the bond markets (Dr Somers DOES), if they think that the markets will think that branding a shitload of junk bonds in a REIT as NAMA-bonds will makethem sovereign AA bonds. They will look through the NAMA to the ultimate guarantor, note that they are also issuing shedloads of dodgy paper also and go “uh uh, no thanks, I want me some bunds”…
The old issuer/rating agency trick of taking €100bn face value of junk and somehow issuing AAA rated secirties against at least €50bn of it will simply not work here, far too sub prime.
All of the structure will be risky, by definition not A at all, more like BBB+ at best . This will have to cough up 10% interest on the best of the structure as against which the underlying developer loans are not performing at all these days if they issue a collateralised bond of any sort .
OTOH if the banks take a 50% bath on this we will have to support the useless bastards anyway and the thing still won’t wash its face at 50% discount I fear because the assets are basically not performing .
Finally there are lots of good ‘property’ loans in banks but these tend to be where SMEs have taken out commercial mortgages for investment not only for construction related reasons but for operational cost of money reasons .
Lumping these on a non lending NAMA seemed unreal to me , making NAMA a lending body as now proposed makes it even more unreal .
I wouldn’t put too much stock in Lucey’s predictions about 2010.
I’m not quite sure in any respect why he started out by cautiously welcoming FG’s plan because he does a great job of showing why it’s a very bad idea. We end up with
But we’d sort that out by carving good banks out of bad by some unknown means in the future. Presumably the unknown means wouldn’t involve removing toxic loans from the balance sheets.
As for creating a new bank, presumably that wouldn’t be open for customer deposits as the run that this would cause would be a Lehman type event for Ireland. Funding would have to be short term ECB. The bond markets would have just lost the money they invested in the old Irish banks and would hardly be rushing to lend to the new bank.
The key is the bad assets and their removal, sequestering, deep-freezing, whatever is the most popular term. The Germans are nationalising their Anglo (HRE), they’re not looking to nationalise the others. If the Germans think that’s the right route, I can’t see how Lucey thinks the opposite route is inevitable.
Economists all round did a shite job of predicting, well, anything. Analysis is what they are better at
The main problem, looking at the comments and article, is the timing. A delay between announcement and implementatin is a recipy for disaster. And the new banks wont come on line until the old ones are dead, fro the FG plan.
The german plan may make sense to them with they being germany and all but we aint germany. And they are talking about I think 200b, which is flyspeck to the german economy. We are talking about 90b which is more like a gigantic skelp of a bte from a buzzard.
Yeah, I’m sure there’s dirty dealings right through the system. But, I think the main thing is that they think they have an answer to all their problems… as I’ve said before, and I’ll say again - *I believe that the primary function of NAMA as far as the elites are concerned is about creating a mechanism whereby the market price of land will be controlled by same elites.
They will appoint their ‘right-minded’ professionals and ‘experts’ who will develop a rationale and associated ‘scientific’ propaganda for the valuation levels arrived at.
They will then work systemically to stimulate market activity at these levels. They will convince the majority that these levels are indeed ‘the bottom’, and ensure that the banks are funded to lend at these levels (and also convince the banks that the market is adequately controlled and thus the values of these housing assets will not fall further)… you get the picture… anyone on this site is aware of the variety of machinations that will be used to stimulate the ‘market’…
Basically, what we are going to see is a form of totalitarianism in the housing market. And the tools of this totalitarianism will be more of the (obfuscated) carrot type rather than (obvious) stick type so people will think it is acceptable.
I, myself, didn’t like the ad hominem nature of posting that link but if he’s going to write his analysis and his predictions in national newspapers, his track record is relevant.
I don’t believe you can set up a national recovery bank which just underwrites the SME sector lending. The bond markets would surely see that step as the end of the line for the existing banks and react accordingly, guarantee or no guarantee. It would be a collapse and a mess we’d be cleaning up for a lot longer than NAMA. The guarantee is implemented now in any event and that’s the problem staring us full in the face. If we hint at withdrawal (and we all know how tight-lipped government is), we’ll be called on for the full €400bn before we know what’s hit us. The guarantee will go on for as long as the bad loans are on the balance sheets. If we want out, we either go down the NAMA route or the special purpose vehicle with guarantee route a la Germany. But, in any event, it comes down to the bad loans and that’s where the focus should be.
dont think that that has been pressed home Gilroy. Its a good point.
We are stuck with the blasted guarantee
nama must be a workout agency , not a bank, we already have enough banks
I believe the German bad banks are going to insure of the order of a trillion euros of bank debt with the 200 bn being the readies to keep them going for the moment.
I still think that own bank SPVs, a selective guarantee, recapitalisation in return of equity (mostly nationalisation) and selective nationalisations/forced marriages where appropriate (like for example INBS) are the way to go.
But all this is about zombie banks working off their debts rather than the state being immediately liable for them. The ‘problem’ of flowing credit still needs to be addressed. And for that setting up a couple of joint ventures with a couple of european banks would be my preferred solution. Banks that currently take deposits in Ireland and that currently do not (and will not) give mortgages, commercial mortgages and C&D loans, but that will do personal loans and business loans. At the moment, we have crazy amounts of money in Rabo, NR, An Post, Investec and next Nationwide with that money ‘working’ outside Ireland. The best reason for setting up a competitor bank that issues loans is that the deposits have already taken flight!
I think you are mistaken here, while there is growing concern outside about the specifics of NAMA, EVERY, count em, EVERY builder and developer in the country, and more than a few speculators and investors WANT a bailout and are waiting with baited breath to get it. There are so many people with 1-10 million loans which they cannot repay who expect that they will get some kind of bailout, they may be delusional to any sane person but that is the reality on the ground and they support NAMA, the guarantee, and any and every other mechanism which will provide them with a get out of jail free card.
The expectation that somehow the government will solve all this is alive and well and FF could well be returned in an election as they are the best hope of providing a “solution” to the benefit of those with unperforming loans.
Okay, so what numbers are we talking here? Developers wanting a bail out and the Canny McSavy Part Time Landlord also needing bail out? They are far form a majority I think…
If the “Good People Who Don’t Vote” are somehow rallied to cast a vote, would FF still get the majority required to be in Government? My personal feeling, and talking to a wide range of people, (Celtic Cubs to FF Silver Surfers) are all shocked and sickened by what is happening. None of them trust NAMA, and all of them believe there is no way back from the brink with the current people in power. How does one motivate them enough to get out and cast their voices? Or do we watch the FF machine with it’s blinkers carry on to the edge of the abyss, and hope that the people will vote them out then? If we are still sovereign to be bale to vote?
I guess I meant "nobody who doesnt have direct interests "
For what it’s worth, I was listening to South East radio today and Mick Wallace was definitely against Nama and he reckoned that it was only a matter of time before the banks were nationalised!!..Now having said that he also said that what was needed was for the banks to start giving out money again… He reckoned that if he could get the finance he has some developments which he would start immediately… … Wasn’t he reported on TV as saying that every developer ( including himself) is just rolling up the interest at the moment?