Where was the €90B spent?

I was chatting with the old man over the weekend. He works in the financial business and he said he just couldn’t see where the €90B in bad debts came from. We started doing a back of the envelope calculation on empty houses, hotels, shopping centres, golf clubs etc and could only come up with a fraction of the €90B.

We came to the conclusion that a significant amount of the money just disappeared in a massive fraud.

Do the pinsters have a better estimate of how the €90B is made up?

[edited for spelling]

Lots of ‘private syndicates’ like the one that spent over €1bn on one building in Canary Wharf two years ago . They were buying half of London and New York up to two years ago .

and of course Builders and their landbanks and ghost estates …but you knew that :slight_smile:

And digging big holes in Chicago.

Some of it is surely derivatives?

Some more insights into our debts from Brian Lucey and Constantin Gurdgiev.

irishtimes.com/newspaper/opi … 83096.html

EDIT: Based on this article, I would say 90bn is seriously on the low side

…And unpaid interest… need we go on? :neutral_face:

But it is all speculation. Can anyone put real numbers against some of the categories?

Three areas of Waterford:

Estate 1: 40 houses unsold out of 56. 40 by, say, even 200k = €8m.

Estate 2: at least 50 houses unsold. 50 x €200k = €10m

Estate 3: exclusived ‘gated development’. At least ten apartments unsold. 10 x €200k = €2m.

Grand total €20m.

And that’s just in three SMALL developments in Waterford City. At a rough guess I suppose you could multiply that out by 10 or 20, so €200m in those new developments alone. Multiply that out across the country…

I’ve used €200k as a rough stab at the construction cost including land. It could be more.

And remember - it’s €90bn owed by 50 developers. The total mortgage debt for the NATION is only €148bn in comparison.

Is the 90 bn bad debts? I thought it was all development lending. Not all of it is bad, surely.

I may misunderstand this, but take whatever percentage you think to be bad less the book value of the loans and you get the market value of what NAMA will be buying.

If NAMA pay above this they’ve bought an overvalued book, won’t make any returns and losses will end up as National Debt.

The banks can’t take the hit on these bad debts in the first place, but should NAMA underpay, it will just mean the Government will have to fork out more money to recapitalise the banks. And National Dent will increase.

All goes bank to the bank guarantee.

ED: I didn’t mean to write National Dent. I meant to write National Train Crash.

300,000 empties

200,000 of which say are unpaid for and borrowed against

€200,000k on each unpaid for empty

40,000,000,000. 40 billion in Irish empties

and that’s before you even take a stab at commercial, canny investments in trouble, unemployed people homes, Ballsbridge Hotels, big holes in chicago, Industrial sites in London, Skiing resorts in Bulgaria, and VAT leas back chemes in france…

I think the bulk of the 90 billion represents property that currently has nothing on it but grass, cows and sheep. Little patches of waste ground that some developer sold to another for say 10 billion.

Interesting that the square root of ninety billion is 300,000 yoyo, or the (alleged) cost of an average dwelling in Ireland.

I can just see the article in the Times’ property supplement

“Take 300,000 at €300,000”
:wink: