They invested because the government guaranteed the Bonds, you fuck them over the IMF are in before the week is out. Anyway that wasnt my point, my point was by nationalising you rule out future investment. If we cant get the investmenet from outside sources the gov need to do it themselves!
I have answered that for Art earlier.
please repeat the answer
dernot desmond & the like gambled & are winning at our expense -let them lose for once
So.
There are many reasons why an academic mightnât sign up and there are also many reasons why you donât know who these guys are.
The fact that a number of respected economists are proposing an alternative to NAMA means we should take it seriously.
Why should I trust this Ahearne character? How many economists have come out in support of his proposals?
Nama is not the only game in town and we shuold debate the alternatives. Its not like they are implementing tomorrow. It will be October before the bill is debated in the Dail
Shur didnât the Kaiser advise Lenihan in the black days of last autumn when the country was going down the tubes.
back to the topic, in relation to the safeguards built into the NAMA legislation: there were a number of safeguards for taxpayers in relation to the banking system already in place, the problem with little pieces of legislation here is the enforcement. We wereânt labelled the wild west of banking for no good reason. the oint being that while there is protection there the question is whether clowen and his cohorts would enforce it and their record indicates that they wouldnât
the bond holders and the shareholders specifically in the cases of anglo irish and fingerâs bank would have a good shot in the courts on the grounds of ultra vires on the 2 main boyos and we all know that fingers has a nice pension fund of 25m and Iâm sure seanie could get the golden shower to cover his legal bils.
both of those banks had unhealthy balances on their boards in that there was no corporate safeguards in place, the audits failed and the ODCE & IFSRA should have been all over them in 02. again this is a failure of enforcement.
still havenât read the proposed legislation in any depth (need a latin dictionary !!)
nice to see fintan oâtoole agree with me
http://www.irishtimes.com/newspaper/opinion/2009/0901/1224253586352.html?via=mr
[quote=âdancarterâ]Just for balance SO
Furthermore, it is highly likely that the banks will end up at least partially funding any subsequent Nama losses through a levy even if that is not enshrined in the Nama legislation.[/quote]
Dan, as Art has mentioned, how can we have any confidence that the Government will follow through on this. If NAMA is safe as houses for the taxpayer (pardon the intentional pun) then whatâs in it for the Banks? NAMA takes on their loans, because of the effect the paper losses are having on their capital, but if NAMA realises a loss down the line weâll take it off the banks anyhow?
So all NAMA is is a vehicle to allow the Banks to put off the loss to a later date and hope it doesnât happen even then?
And if there is a residual loss, and the government/NAMA has the bottle to levy the Banks, where do you think the Banks are going to get that cash? From their customers, us, the taxpayer!
I donât think everyone gets this point Dan. Some people seem to think we can ride roughshod over international law and not expect the international community/IMF to take notice and punish us.
[quote=Rory Gillen]Just for balance SO
OPINION: I MUST be unfortunate in having missed the balanced debate surrounding the National Asset Management Agency. Either that or it has indeed been incredibly one-sided. One can understand the concerns and as long as the facts are used to present criticisms of Nama in a balanced manner, then one can have little complaint, writes RORY GILLEN
It is in that regard that I found Fintan OTooles recent article on Nama ( Gambling all for a prize not worth winning , Opinion and Analysis, August 25th) disappointingly cynical and drawing conclusions on questionable facts. The Irish taxpayer deserves better. In response, I would make the following points:
-
Ireland is not now betting the house on Nama;
-
It is far too simplistic to say that the Government is planning to pay way over the odds for assets being transferred to Nama; and
-
Arguing that replacement cost is a sensible way to value homes is at odds with the fundamentals that have actually determined house prices in Ireland over the past several decades.
For right or wrong, in the midst of a global banking crisis, the Government guaranteed, for two years, the funding sources of the Irish banking system in September 2008. Sebastian Orsi of Merrion Stockbrokers rightly points out that Irish taxpayers also benefited from the Government guarantee at that time as their deposits were then secured.
The direct implication of that guarantee was that had the funding sources for the Irish banking system come under further subsequent pressure, the Government would then have had no choice but to nationalise the banks. Nationalisation would, in effect, have seen the Government and the taxpayer owning all the banking assets as well as the liabilities. Any subsequent decline in the value of those assets was, therefore, a risk the taxpayer already had. Thus Ireland is not now betting the house on Nama that bet was largely made in September 2008.[/quote]
The âbetâ in September 2008 was a deferral to ensure the banks didnât collapse overnight. This was a short-term strategy to protect deposit holders and other stakeholders for a limited time period. You cannot extend that guarantee forward indefinitely or it just undermines the whole system of capitalism anyway.
The government injected confidence into the banking system last September but the State is not obliged to support that guarantee into the future, nor could it.
[quote=Rory Gillen]In yesterdays Irish Times , 46 economists made the point, among others, that banking shareholders, and, perhaps, some bond holders, should shoulder further losses before the Irish taxpayer is hit.
There is merit to the argument that shareholders should be wiped out first. But it is hardly a transforming solution from the taxpayers viewpoint and claims for nationalisation fail to make this point.[/quote]
The little piece about âsholdering further lossesâ tells alot about the writerâs attitude. Thereâs a hint of a complaint in there that the shareholders have already suffered big losses. Of course they did, they invested in disastrous financial models. I find it genuinely astonishing to read the amount of people who have invested so much in capitalism who are looking for some sort of immunity from the downside.
This is the most disturbing paragraph because itâs playing with the truth in my opinion.
First of all it ignores the value of the assets being transferred to the government in the event of nationalisation and paints a picture whereby the government would suffer all the losses under nationalisation but avoid them under NAMA.
4 billion of equity is in addition to the value of the loan book that the government would be assuming. Now you can argue that this loan book is worth next to nothing but in that case NAMA is screwed too. The reality is that you just canât make the argument that the government would be short funding under nationalisation but that this problem would disappear under NAMA. The essential difference between the two strategies is protection for shareholders and bondholders. NAMA protects them from wipeout, nationalisation doesnât.
Arguing about greater econcomic impacts of nationalisation is a red herring. Any shortfall in funding from nationalisation will exist under NAMA too.
Nothing to say here other than that is a very strange paragraph to include. Itâs the economics argument equivalent of name-calling.
[quote=Rory Gillen]There is no doubt that it is difficult to place a value on development land being transferred to Nama. And I have had no Einstein moment on the issue myself. But, in my view, pointing to distressed sale prices due to the bankruptcy of property developers such as Liam Carroll to quantify possible losses on Namas assets is deceptive, possibly wrong and certainly fails to take into account a critical part in the jigsaw. It was, after all, the actions of the Government itself that resulted in the near complete absence of overseas buyers for Irish property assets.
How can you value illiquid assets when the Government itself has seen off the likely acquirers of Irish property? Through its reckless management of the countrys finances, which has resulted in a disastrous budget deficit, the Government has played its part in ensuring Ireland Inc is off the overseas buyers list.
So the part problem maker morphs into the buyer of last resort and gets to determine the price as well. Force the banks to sell their illiquid assets to the Government but scare away the natural potential, the buyers first. Bring in the monopolies commission![/quote]
I think this piece is deeply disingenuous when the writer himself has engaged in the deception he is complaining about in previous paragraphs.
I donât know where heâs digging up all these international buyers of Irish illiquid assets from either. Can you explain that to me Dan. I certainly donât buy the notion that thereâs a queue of international investors dying to buy Irish property.
[quote=Rory Gillen]And I am not persuaded, and nor should the taxpayer be, by the alarmist arguments that Nama should buy banking assets at the price set by the marginal seller.
In March 2009, marginal sellers sold shares in Norkom, a small and highly successful Irish security software developer, at under 40 cents a share. This represented a price near the net cash value sitting on Norkoms balance sheet at that time. No rational businessman would have valued Norkom, in totality, using that 40 cents a share price. That is not to say that Nama is not going to overpay. But the arguments presented, and not just in OTooles article, are alarmist and unbalanced.[/quote]
Again thatâs just a red herring. This isnât about a small security software company and there was no national investment in that company and no national stakeholders. Theyâre totally different situations.
[quote=Rory Gillen]Fundamental to the valuation of development land is the average house price. In Ireland, at least, the average house price since 1970 has been determined by the interplay between average earnings and interest rates.
For the Irish, the purchase of a house has always been a lifestyle decision. Hence, the bubble era aside, we pay what we can afford to pay relative to our earnings and other affordability measures such as interest rates. To suggest that replacement cost determines house prices is mischievous at best.[/quote]
Eh no. Irish property was massively overvalued. Massively. Even suggesting otherwise is bizarre.
[quote=Rory Gillen]There is no ideal solution to dealing with the banking crisis but deal with it we must to return the banks to a position where they can lend again. And the fact remains that Nama will buy its assets at a discount.
Furthermore, it is highly likely that the banks will end up at least partially funding any subsequent Nama losses through a levy even if that is not enshrined in the Nama legislation.[/quote]
There is no ideal solution is right but that doesnât mean that competing ideas shouldnât be explored and evaluated.
There are arguments to be made in favour of NAMA but I think the one above is a load of horseshit frankly.
Hereâs Richard Brutonâs and FGâs alternative to NAMA in todayâs IT.
No, Iâm not going to put bullet points on it.
FG âgood bankâ plan offers better alternative than Nama
Fri, Aug 28, 2009
OPINION: The man asking for trust on Nama is the same man who said the property market was sound, writes RICHARD BRUTON
THE GOVERNMENT has to write whatever cheques are necessary in the interest of maintaining financial stability.
This quote, from our Taoiseach just over a month ago, (July 14th on Newstalk Radio) neatly sums up the concerns Fine Gael have with Fianna Fils insistence that the National Asset Management Agency is the only way to fix our banking system. The banks and the developers come first for Fianna Fil, the taxpayer a distant second. But weve been here before. Fianna Fil knows best. Any criticism is unpatriotic. In the recent past it was even wondered aloud by Bertie Ahern why such critics of Fianna Fil didnt just commit suicide.
This is the type of bombast that allowed Fianna Fil to implement reckless, economically illiterate and politically motivated policies that succeeded in crippling our economy. Its the type of approach that insisted the housing market was built on sound foundations as Brian Cowen said before the general election. And it was the type of approach that backed Anglo Irish Bank to the hilt. And it is now the type of approach that is saying, trust us, we know best, Nama is the only way to go. Well I dont believe that. And I dont think we need another reckless and economically illiterate policy from Mr Cowen and Mr Lenihan.
Our main concern about Nama, reinforced by 46 independent economists, is that it will pay too much for the 90 billion or so distressed developer loans to be bought from the banks. While this would be good for the banks investors, it could have devastating consequences for our public finances over the next decade, and result in greater tax hikes and service cuts.
The Government has tried to justify overpayment to banks on the basis of a very questionable concept of long-term economic value. But this is impossible to quantify in practice. The crashes in other countries like Japan and Finland are a cautionary tale for those who believe that prices will inevitably rebound from current prices in the short-to medium-term.
Five months ago Fine Gael offered a two-track alternative to Nama.
Under track one, we propose, as a temporary measure, to improve credit availability for struggling businesses and households by the establishment a wholesale good bank, or national recovery bank, with initial investment from the State and further funding from the ECB and markets, using a model that is well established in EU countries. Enforcing the lending commitments already made by AIB and Bank of Ireland in return for the 7 billion given to them in new capital would be another priority.
In parallel, under track two, the banks would be given until the end of the guarantee period in September 2010 to pass a rigorous stress test to show that they had repaired their own balance sheets by selling assets (such as foreign subsidiaries), raising more deposits and negotiating with their investors to write off their losses.
In the event that the banks cannot pass such a stress test by the end of the guarantee period, Fine Gaels proposal is to split each failed bank into two, leaving the assets with the most uncertain values (the developer loans) in legacy asset management companies owned largely by the shareholders and other classes of risk investors. Deposits, other short-term liabilities, personal loans, mortgages and business overdrafts, the branch networks and the vast majority of the staff would all move safely and seamlessly into a new, going concern clean bank, initially owned and guaranteed by the taxpayer.
These new clean banks would be free of toxic developer loans and fully open to resume lending to small businesses and households.
We are confident that this break-up procedure would never prove necessary for most and perhaps all of the banks, as they and their investors would have every incentive to avoid it.
All the major banks have already announced plans to buy back debt from their bondholders at a discount in a way that pushes some of the banks losses onto those that funded the reckless lending.
These types of negotiated debt buy-backs and debt-to-equity conversions would accelerate dramatically under our policy and at greatly discounted prices.
The big advantage of this model over the current Nama proposal is that the risks associated with working out distressed developer-related loans would remain with those professional bankers and investors that funded them.
Rather than engaging constructively in debate on the alternatives to Nama, Fianna Fil has instead chosen to invent an economic bogeyman to try and hysterically caricature our policy as the Government reneging on its own debt. We are, of course, making no such proposal. When the blanket guarantee expires, bank liabilities revert to being purely private, not sovereign, obligations.
It is accepted international practice for risk investors in the banks, including some classes of bond-holders, such as owners of subordinated debt, to absorb loan-related losses ahead of taxpayers.
Putting banks into managed administration, where depositors are protected and losses are absorbed by investors, including some bond-holders, has been a common feature of recent banking policy in the US (Washington Mutual) and Britain (Bradford and Bingley).This is, after all, the nature of capitalism.
Until confidence has been restored and the banks returned to health, funding for the banks would be secured by targeting an extension of the guarantee to all deposits, other short-term liabilities and new term funding. Only those long-term risk investors like shareholders and subordinated bonds that remain locked into the banks at the end of the guarantee period would lose the guarantee and be exposed to losses.
I am not pretending that any solution to the banking crisis will not involve pain for the Irish taxpayer. But by allowing some investors and speculators to walk away scot-free from this crisis, the Government could be exposing the taxpayer to additional, unnecessary costs of up to 10 billion.
This write any cheques approach has already damaged perceptions of Irelands creditworthiness and provides terrible incentives for banks to engage in more bouts of reckless risk-taking.
Fine Gaels approach is based on a set of core principles: protecting the taxpayer; minimising and ensuring a fair distribution of the losses; and improving credit availability for struggling businesses and families.
These principles underpinned our written submission to the Minister on how to transform Nama.
It is not a dogmatic approach, it is one open to genuine debate and discussion. For the sake of the taxpayer I hope he embraces this genuine offer for real engagement.
Who is Rory Gillen?
Chartered Acountant and co-founder of Merrion Capital, Rory Gillen, runs an excellent training facility through ILTB, which equips investors with the practical tools for investing and keeps them updated on market data"
Eddie Hobbs - âYou & Your Moneyâ, June 2007
presumably Merrion Capital are no longer owned by Lansbanki, so I couldnât say who his boss is.
Itâs Dan Carterâs real name.
Doesnât sound very cork sailing crowd to meâŚ
[quote=âartfoleyâ]back to the topic, in relation to the safeguards built into the NAMA legislation: there were a number of safeguards for taxpayers in relation to the banking system already in place, the problem with little pieces of legislation here is the enforcement. We wereânt labelled the wild west of banking for no good reason. the oint being that while there is protection there the question is whether clowen and his cohorts would enforce it and their record indicates that they wouldnât
the bond holders and the shareholders specifically in the cases of anglo irish and fingerâs bank would have a good shot in the courts on the grounds of ultra vires on the 2 main boyos and we all know that fingers has a nice pension fund of 25m and Iâm sure seanie could get the golden shower to cover his legal bils.
both of those banks had unhealthy balances on their boards in that there was no corporate safeguards in place, the audits failed and the ODCE & IFSRA should have been all over them in 02. again this is a failure of enforcement.
still havenât read the proposed legislation in any depth (need a latin dictionary !!)
[/quote]
nice to see fintan oâtoole agree with me
http://www.irishtimes.com/newspaper/opinion/2009/0901/1224253586352.html?via=mr
Brian Lenihan is on Prime Time now discussing NAMA
Little is grilling him pretty hard.
That was a good effort from Little, but poor reasearch on a couple of questions. The one about allowing developers to continue wasted a lot of time and it was a distraction from the real issues. Someone in RT misunderstood the legislation.
Anyway Little fairly put it up to him but I thought Lenihan did well.
Still not in favour of this NAMA thing. The whole system is so deeply flawed when you just rescue everything that is too important to fail. I understand the arguments about protecting important institutions but thatâs where nationalisation comes in.
Some German economist lad on the radio this morning was interesting enough. Not much radical but he was adamant that when you donât know the value of an asset it should be transferred to NAMA at zero and then if thereâs recovery thatâs shared between NAMA and the original bank. So youâre keeping the bad bank idea of NAMA but youâre paying nothing short term for the assets, just injecting capital for equity.
I much prefer ideas along those lines. Thereâs something horribly wrong with allowing failed banks to continue unimpeded and expecting them not to repeat the same mistakes.
In fairness to Lenihan he seems to be far and away the most capable minister/member in Fianna Fail. Anytime he has appeared on television debates he has acquited himself very well, he got off to a rocky start in the job but I believe he has done very well so far.
Yes, I must say I am warming to him, seems conscientious enough, thought he done well on Prime Time, People need to reailse that something needs to be done, and done fast to get banks working again, if they donât NAMA will be least of this countries problems