I tried my best to help you see what you are going to end up as, but I want to be the first to laugh at the Irish, the laughing stock of Easter Island, Iceland, and Estonia!

HaHAHAHAHA!

Sounds hollow

NAMA will live within its cultural context - both public and private.

@ Maurice
I wonder how else NAMA might usefully licence the use of its brand

Maybe we should put a NAMA branded condom beside every place setting in the Directors Dining Room in BoI and AIB to discourage high risk behaviour.

I don’t think Ireland neccessarily constitutes an advanced nation when it comes to the business of Government.

It’s all well and good for the Swedes to advocate nationalisation of the banking system because they know how to govern themselves.

Remember Michael Lowery is still an elected representative in this country.

Admittedly Irish bankers haven’t covered themselves in glory but neither have bankers in most countries….

Nationalised banks are open to political influence, cronyism and nepotism?

Does this hold in advanced societies with their legal, regulatory and political oversight systems?

It this based on any research that has demonstrated that either ICC, ACC, or TSB were anymore exposed to external influence than say AIB with it’s write off’s of politicians personal bad debts.

In reverse, the state becomes captive of private banking…ICI & NAMA.

The largest Non-Resident abusers were AIB (Private) and ACC (Semi-State). Ownership status aside.

To what extent did private bankers learn from ICI and adopt TBTF risk taking behaviours?

“To this end, the draft law provides for the establishment of a corporate body, the National Asset Management Agency (NAMA), to acquire eligible bank assets from participating institutions, expeditiously deal with the assets acquired by it and protect or otherwise enhance the long-term economic value of those assets, in the interests of the Irish State.”

Is that not stating that they are trying to keep untenably inflated values intact? If we know from previous bubbles that true market values will not recover for 8-18 years, how can they deal “expeditiously” without unreasonably inflated valuations? And who would be ignorant enough to buy them without some non-transparent quid pro quo or even baksheesh? Do we all trust Lenihan and FF to be immune from this?

I hate to rain on everybodies parade but nationalising the banks and taking the bad assets away is a bit like GWB foray into Iraq to find the WMD. How do you run the place when you own it in a manner that is fair to all. That loan of 60m to Carroll isa salutory reminder of what happens when you do go in. How do you win the trust of stakeholders-bond investors, depositors etc. Personally I would run a mile from a nationalised bank ….back to Carroll again.

Finally,how do you get out. I can see a govt falling apart in two years time over the decision to sell out. I can just see the rage when the govt proposes sellling to the Mounties or tha Spanish or …”how dare that lot sell out at bargain basement prices”

I am not a fan of NAMA but I do see a point in Lenihan’s travails. He is clearly floundering for a compramise that mitigates the damage to the taxpayer and keeps the fiction that the banking sector is in private hands.

So the bank becomes insolvent. We look around to see if FCBN is interested. If it is, great. If it isn’t, state steps in only if absolutely necessary.

You say the state is the funder, via nationalisation, of ‘last resort’. But you want them to nationalise as first resort, as per the 46 letter….

I understand and wholeheartedly agree that Nama is likely to overpay with LTEV and commend you for shining a light on this. But I don’t see why we should nationalise first without knowing whether we need to.

Now, there are intermediate scenarios - FCBN buy 25% of the system by agreement agreed on nationalization/towel-slip-day.

Part of the problem is that we are still in a very fragile world economic situation actually and prospectivly. So FCBN would probably want to just dip its toe in, at best. Who knows what the crazy micks will do - best play safe. So the state is the last resort, but one that I think we have all ASSUMED would be needed, without articulating it.

However, if the banks took possession of the properties securing distressed loans, and sold them on the open market in significant volumes, prices would certainly fall further, and could fall quite a lot further. The banks would get much less than the pre-firesale market price, which represents the floor on what they expect to get from NAMA. The market value of the property securing their outstanding loans would fall too, reducing the fair value of these loans.

we posted simultaneously. But you’ve bulls-eyed my point. Thanks you.

The fact that there is no market (or market value) means the state must pay LTEV to get them off the balance sheets.

But let’s say they did mark to market. Then they could just sell them on the market and we wouldn’t need Nama. The state would only need to step in after the assets were sold to plug the capital gap (probably with help from private investors, seeing as the banks would be insolvent, but clean and therefore attractive to investors).

The crux of my confusion is this: if the assets were valued at market value, we would not need Nama at all. We’d only need the market. The fact that the state need to step in as buyer denotes that there is in fact no market at all, so there can’t be a market value. So we need Nama.

This is why I am inclined to support Nama (from what little I know) and am prepared to accept the state paying over the odds. Because the alternative doesn’t exist. There is no market, therefore there can be no market value and no other buyer exists.

I agree, I am just saying that it looks as though it is now a political ideology that has taken over.
Not even an ideology, more of a pig headed attitude by the government.

The whole process seems fraught with the unforeseen.

Has Nama any legal right to override loan agreements or terms of re-payments already in place between banks and developers? I would doubt it.

The Zoe. and other cases indicate that in some instances these can be 3 or more years long.

By now, any major developer will have secured their positions with the banks in anticipation of Nama.

Any legal experts out there to shed some light on this?

If Nama was to just pay ‘market value’, then why woud it need to become involved at all? If there was a discernable market value for these assets, it would imply there was a discernable market for them. If there was a market, then why would the banks not just sell them on the market, as opposed to selling them to Nama. It would achieve the same aim (removing the assets from the banks balance sheets).
I’m not an economist, as you’ve probably guessed, but I would like to know the answer to this question. It has been bugging me for ages now.

It would have been nice to keep the debate focused purely on the economic implications of Nama.

However Brian Cowen has already signalled to the market that the Irish government will write whatever cheques are necessary.

How much? Of no consequence!

Debate now seems futile.

As Brian Lucey said a few days ago, at least we tried.

I gather the gang of 4 have bought a white hiace van (off Anglo) & are to be scent driving around spying on the 46. The big ariel on the top is a give away. I gather one of the 46 has turned and is now a paid agent of the Nomenklatura.

It is easy to get cranky with ‘insurgents’ on a national level.
But if international voices start getting the same treatment then how will that play out?
It may back fire and attract more attention and presumably with that criticism.

Al