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 Post subject: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 12:15 pm 
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Joined: Jul 26, 2009
Posts: 46
Brian Lehihan cannot for the life of him and his political party tell the Irish public that the nation is bankrupt and sinking into a financial morass.
That would be political hara kiri and unthinkable for our noble warriors. We Irish lack a sense of responsibility as a nation.
It is vitally necessary to maintain the banks existance because they are the arteries through which the money that gives life to the economy, flows.
Therefore he took Bacon's solution and invented NAMA. The banks will be allowed to exist with just enough capital to float and lots of hope but without that weight of debt that makes them hopelessly bankrupt as they now are.
This creature will become a repository for all those losses or toxic debts or whatever you want to call them just to preserve the banks which would otherwise close their doors. Everybody's savings would be lost forever and it would be back to the land and allotments for urban dwellers.
That is the nightmare scenario he cannot tell us about because he and his mates Cowan, Bertie and co caused it.

Commentators dont seem to understand the purpose of NAMA and continue to debate the valuations of assets etc without recognising that the purpose of NAMA is simply to transfer all the bank's losses into one big pot to be set aside and financed by massive government borrowing that will swamp the taxpayers with a massive annual interest bill.
Its about FF trying to cling on to power by throwing a flimsy lifebelt to a drowning man after walking him into the deep.
Fianny Gael and Labour cannot solve the mess either but like all politicians they bullshit that they can do better.
They all distorted the market for all property and undermined it with planning laws that restricted land owners and developers from supplying what the market demanded. Government schemes, planning and zoning and consequent corruption has cocked the country up completely and now we are looking into the abyss with a supply of houses and commercial white elephants that is undermining and devaluing all the existing older stock of buildings and placing a burden on the state that will be felt by all.

Hopefully that will explain the valuations to be placed on the white elephants necessary to keep the banks doors open because if they close we are all stuffed.


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 2:10 pm 
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Posts: 2622
themainman wrote:
Hopefully that will explain the valuations to be placed on the white elephants necessary to keep the banks doors open because if they close we are all stuffed.


Why are we stuffed if the banks close? Either banks can make a profit from lending or they can't. If they can, then there is no need for governmental intervention as either the current lot will work their way out of their current problems or else they will fail to be replaced by other banks (and in a capitalist economy there will always be someone wanting to make a profit if its there). If they can't, then we must look at why banking in Ireland is not profitable. Is it because of too small margins between capital market finance and high street rates? If so, then increase the high street rates or try to source cheaper capital (e.g. from customer deposits). Is it because there is too high a risk of default? If so, then make sure they lend more prudently. The real reason why banks aren't lending is because the current ones have not just liquidity problems, but unreported solvency problems. Let them fail and let the chips fall where they may. Someone will always lend money if there's a profit in it, and if there isn't a profit then they shouldn't be lending anyway.


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 3:25 pm 
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IMF'd

Joined: Sep 13, 2007
Posts: 31337
Location: Tullamore
The added problem to the banks not lending is that their new found prudential attitude to their customers means that to their horror, the banks find their customers are bust. Not all of them, to be sure, but a large number of those looking for credit. With interest rates at an all-time low, the banks know that there is only one direction for them. The people who could take on more credit are the people who don't need it. Those who resisted the lure during the boom. They are unlikely debt-monkeys of the bust.

Personally, I begin to think that the CIF estimate of 23% of the economy directly or indirectly related to the property market is an underestimate. Exports are largely unchanged. The public sector is largely unchanged. All we have seen is the collapse in construction and the collapse in property sales.

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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 3:47 pm 
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Joined: May 24, 2008
Posts: 1205
johnnyskeleton wrote:
themainman wrote:
Hopefully that will explain the valuations to be placed on the white elephants necessary to keep the banks doors open because if they close we are all stuffed.


Why are we stuffed if the banks close? Either banks can make a profit from lending or they can't. If they can, then there is no need for governmental intervention as either the current lot will work their way out of their current problems or else they will fail to be replaced by other banks (and in a capitalist economy there will always be someone wanting to make a profit if its there). If they can't, then we must look at why banking in Ireland is not profitable. Is it because of too small margins between capital market finance and high street rates? If so, then increase the high street rates or try to source cheaper capital (e.g. from customer deposits). Is it because there is too high a risk of default? If so, then make sure they lend more prudently. The real reason why banks aren't lending is because the current ones have not just liquidity problems, but unreported solvency problems. Let them fail and let the chips fall where they may. Someone will always lend money if there's a profit in it, and if there isn't a profit then they shouldn't be lending anyway.


+1

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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 4:43 pm 
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Back Home with Mammy

Joined: Nov 8, 2006
Posts: 56
Location: Ireland
johnnyskeleton wrote:
Why are we stuffed if the banks close?


Normally we wouldn't really be, since there are plenty of banks across Europe who would happily walk into a vacant market, even ours. Isn't the problem, though, that if banks collapsed and there was a run on them, we'd be up the creek thanks to last year's knee-jerk unlimited bank guarantee?


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 8:10 pm 
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Private Tenant

Joined: Jul 26, 2009
Posts: 46
johnnyskeleton wrote:

Why are we stuffed if the banks close? Either banks can make a profit from lending or they can't. If they can, then there is no need for governmental intervention as either the current lot will work their way out of their current problems or else they will fail to be replaced by other banks (and in a capitalist economy there will always be someone wanting to make a profit if its there). If they can't, then we must look at why banking in Ireland is not profitable. Is it because of too small margins between capital market finance and high street rates? If so, then increase the high street rates or try to source cheaper capital (e.g. from customer deposits). Is it because there is too high a risk of default? If so, then make sure they lend more prudently. The real reason why banks aren't lending is because the current ones have not just liquidity problems, but unreported solvency problems. Let them fail and let the chips fall where they may. Someone will always lend money if there's a profit in it, and if there isn't a profit then they shouldn't be lending anyway.


Most public service workers get paid through the banks monthly. Most commercial companies and businesses pay their workers through their bank accounts, weekly or monthly. Most businesses and individuals pay their bills by cheque and accept cheques from each other.
Traditionally thrifty people saved their money in the banks rather than under the matress. So all those people who have money, have it invested in the banks earning interest.
If the banks closed, those depositors would lose all their money and people with mortgages would have nobody to pay. It would be the end of capitalism.
Traditionally banks lent the depositors savings out to entrepreneurs at higher interest rates and that was how they made a profit.
Loans were leveraged so that they could safely lend out several times what they held on deposit without running the risk of a run on the bank if savers panicked and suddenly wanted their money back.
Most savers left their money there indefinetly and that bred complacency by the banks which led to them taking risks to make more money with other types of lending.
They developed derivitive trading, Nick Leeson style, which effectively means they were playing roulette with depositors money.

What had traditionally been the most conservative of institutions became casinos because of US style bonuses that were geared to profit and risk taking.
Government and regulators failed to see these developments and prevent them.

Credit unions and building societies have most of their money in the banks also so they are as I said the arteries through which flows the life blood of economic activity or the oil that lubricates all commercial activity.
We would be back to barter and peasant farming without them.


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 8:17 pm 
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IMF'd

Joined: Sep 13, 2007
Posts: 31337
Location: Tullamore
Yeah, barter and peasant farming. See, if we had our own currency, and the problem was a lack of it because the banks ceased to exist. And it wasn't possible to get electronic money from somewhere else. And the supermarkets refused to give Cashback! Bonus! with every purchase and act as a de-facto cash machine. And international banks refused to accept international capital flows into Ireland. I could believe the possibility. As it is, it is chicken licken stuff.

Dislocations in the flow of cash? For sure. Lots of stuff on credit while the dislocations work their way out? Probable. The ECB standing behind Irish depositors or at least organising someone else to? Almost a certainty. Look at the big picture - if any euro bank goes down and depositors lose money, they all go down as people start keeping vast sums at home.

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"It is impossible to design a system so perfect that no one needs to be good."

So long and thanks for all the fish.


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Sun Aug 16, 2009 9:38 pm 
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Under CAB Investigation

Joined: Jun 7, 2008
Posts: 2622
DoNotPassGo wrote:
Normally we wouldn't really be, since there are plenty of banks across Europe who would happily walk into a vacant market, even ours. Isn't the problem, though, that if banks collapsed and there was a run on them, we'd be up the creek thanks to last year's knee-jerk unlimited bank guarantee?


themainman wrote:
If the banks closed, those depositors would lose all their money and people with mortgages would have nobody to pay. It would be the end of capitalism.


Here are two diametically opposed views on why our banks should not be allowed fail. In general terms I agree that the guarantee was where it all went wrong, but when it comes down to it, I'm not convinced that defaulting on the guarantee or honouring the guarantee and defaulting on our national debts are worse options than the route we are now taking. But also I don't agree that if the current banks were to go under that banking would go with it. Most likely someone would buy the branch and retail banking parts of some of the banks, perhaps in a deal brokered that they take on customer deposits. Investors can swing because that's the nature of capitalism and all development loans should be pursued rigourously. This would lead to a big loss, and the reason we haven't seen this is because of fear of the unknown liability. However, that fear does not prevent the government from taking on a not only unknown liability, but also a potentially unrealisable loss. NAMA is the liability that keeps on losing. Whereas the fallout of a collapse could at least have been managed in a way that we could analyse and deal with.

Quote:
Most public service workers get paid through the banks monthly. Most commercial companies and businesses pay their workers through their bank accounts, weekly or monthly. Most businesses and individuals pay their bills by cheque and accept cheques from each other.
Traditionally thrifty people saved their money in the banks rather than under the matress. So all those people who have money, have it invested in the banks earning interest.


There would be some minor temporary inconvenience, but if managed well such problems would only last a few weeks.

Quote:
What had traditionally been the most conservative of institutions became casinos because of US style bonuses that were geared to profit and risk taking.
Government and regulators failed to see these developments and prevent them.


Yes and if we send out the message that we will cover them whenever they fuck up, they will do it again. There's no long term solution in NAMA, only problems.

Quote:
Credit unions and building societies have most of their money in the banks also so they are as I said the arteries through which flows the life blood of economic activity or the oil that lubricates all commercial activity.
We would be back to barter and peasant farming without them.


No, we would in a very extreme case default on our national debt, get a new currency and start afresh.


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Mon Aug 17, 2009 9:56 am 
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Joined: Jul 26, 2009
Posts: 46
johnnyskeleton wrote:
No, we would in a very extreme case default on our national debt, get a new currency and start afresh.


Dream on. The only thing saving Ireland Inc thus far is the fact that we are tied into the Euro club. Our Euro partners must be looking for ways to ditch us and Lisbon may provide that.

We have become a danger to the greater European project because of our recklesness in building so much unsustainable houses and commercial buildings which Europe will now have to support by loans to nurse us along. That will of course mean that our sovereignity as a nation is shot because we are in hock.

The underlying cause of the debacle is unsustainable development built to the drumbeat of planners permissions distorted by schemes, bribes and tax breaks rather than built to meet demand in a level playing field.
Builders raced to build if they got planning permission as if that was a guarantee that the houses would sell.
Planners only considered roads, bribes, sewers and water etc etc. These bureaucrats knew nothing about sustainability or demand and spiralling cost meant nothing to them.

Now NAMA will be the repository for all those bad loans to builders so that the banks can survive. Valuations or haircuts as they refer to the discounts, are not so much important as to save the banks. Its panic stations and in that situation one resorts to extreme measures as a drowning man will grasp any straw.

If our politicians ever waken up, you will know it when they cut their own salaries by half. Until that day, dream on into the abyss.
Some lone voices did cry in the wilderness but got no votes and no oppertunity to put their case to the people.
http://www.noelogara.com/vision.htm


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 Post subject: Re: How valuations will be decided for the NAMA sanatorium
PostPosted: Mon Aug 17, 2009 11:41 am 
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Joined: Jan 26, 2007
Posts: 632
Location: North Dublin
themainman wrote:
johnnyskeleton wrote:
No, we would in a very extreme case default on our national debt, get a new currency and start afresh.


Dream on. The only thing saving Ireland Inc thus far is the fact that we are tied into the Euro club. Our Euro partners must be looking for ways to ditch us and Lisbon may provide that....


More misinformation! Lisbon or no, the EU can't just expel a member state. Ireland stays in till Ireland wants out (and the referendum is not a vote on EU membership, FFS!).

OTOH, if the referendum weren't still ahead of us, would the ECB be throwing all this cash as the Irish banks?

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