2. I understand that Anglo will (at some stage) be liquidated. The €4bn or so of taxpayers money that went into to NAMA - will the liquidation see a return of this to the taxpayer?

3. The government has warrant value (options) worth 25% stake. Is this the same as the €7bn stake in AIB and Bank of Ireland?

Yes, a peace and reconciliation commission may be necessary ……. after the fighting and bloodshed have stopped. Accountability arises swiftly these days.

I don’t care what excuses he gives down the road. He has brow beat the nation into “the only game in town” I have carried out due diligence, which he has not, he will have to answer to the Peace and Reconciliation Tribunal after NAMA unwinds the finances of the state. Maximum 3 Years but probably less!

“The idea that NAMA was going to become primarily a massive land owner is misplaced. There is a huge cost in managing and maintaning property. Who are NAMA to employ to do it and what kind of asymmetries of information would exist?

NAMA will foreclose where the developer is unlikely to be able to pay off his debts. If the developer can make the assets pay off then it is in the taxpayer’s interest to let him do so”

Zhou it may be misplaced as I am now seeing but what is now being delivered is plain wrong.

If NAMA will foreclose where the developer “is unlikely to be able to pay off his debt”, then NAMA will foreclose on everything apart from the performing loans. However, from what I have read on here, the criterion of “likelihood” will be extended to allow for some years to see if the market turns - a one way bet or to use the catchphrase of the month, an asymmetric wager for the developer.

And please don’t use the excuse that it is a huge expense and difficulty to manage these properties. With fees of €264 million per annum, there could be a lot of management paid for and at least then the state would have the upside as well as being able to control the supply side of the market.

If the developers are allowed to wait for their one way bet to come good, as soon as the market turns sufficiently their decent loans will be repaid/refinanced meaning that the state gets no upside on that portion and is still left with the dross. So they don’t go bankrupt even though in a normal functioning banking/legal system they would all be bankrupt by now.

It’s simple Zhou. If the state takes the risk, it should buy/transfer the loans, call them, take possession of the security and wait for the bet to come good with the state retaining the upside. Anything else is a developers’ bailout..

DEAR MADAM,

CONFIDENTIAL BUSINESS PROPOSAL

HAVING CONSULTED WITH MY COLLEAGUES AND BASED ON THE BUSINESS PLAN GATHERED FROM THE DEPARTMENT OF FINANCE, I HAVE THE PRIVILEGE TO REQUEST FOR YOUR ASSISTANCE TO TRANSFER THE SUM OF €47,500,000,000.00 (FORTY SEVEN BILLION, FIVE HUNDRED MILLION EUROPEAN UNION EURO) INTO YOUR ACCOUNTS. THE ABOVE SUM RESULTED FROM AN OVER-INVOICED CONTRACT, EXECUTED COMMISSIONED AND PAID FOR ABOUT FIVE YEARS (5) AGO BY A DEVELOPER. THIS ACTION WAS HOWEVER INTENTIONAL AND SINCE THEN THE FUND HAS BEEN IN A SUSPENSE ACCOUNT AT ANGLO-IRISH BANK.

WE ARE NOW READY TO TRANSFER THE FUND OVERSEAS AND THAT IS WHERE YOU COME IN. IT IS IMPORTANT TO INFORM YOU THAT AS CIVIL SERVANTS, WE ARE FORBIDDEN TO OPERATE A FOREIGN ACCOUNT; THAT IS WHY WE REQUIRE YOUR ASSISTANCE. THE TOTAL SUM WILL BE SHARED AS FOLLOWS: 70% FOR US, 25% FOR YOU AND 5% FOR LOCAL AND INTERNATIONAL EXPENSES INCIDENT TO THE TRANSFER.

THE TRANSFER IS RISK FREE ON BOTH SIDES. I AM AN ACCOUNTANT WITH THE NIGERIAN ASSET MANAGEMENT AGENCY (NAMA). IF YOU FIND THIS PROPOSAL ACCEPTABLE, WE SHALL REQUIRE THE FOLLOWING DOCUMENTS:

(A) YOUR BANKER’S NAME, TELEPHONE, ACCOUNT AND FAX NUMBERS.

(B) YOUR PRIVATE TELEPHONE AND FAX NUMBERS — FOR CONFIDENTIALITY AND EASY COMMUNICATION.

(C) YOUR LETTER-HEADED PAPER STAMPED AND SIGNED.

ALTERNATIVELY WE WILL FURNISH YOU WITH THE TEXT OF WHAT TO TYPE INTO YOUR LETTER-HEADED PAPER, ALONG WITH A BREAKDOWN EXPLAINING, COMPREHENSIVELY WHAT WE REQUIRE OF YOU. THE BUSINESS WILL TAKE US THIRTY (30) WORKING DAYS TO ACCOMPLISH.

PLEASE REPLY URGENTLY.

BEST REGARDS

SEAN

Excellent.

You are actually correct. Apologies to the better halves out there - Nama is a bloke-led heist.

So farcical, it has encouraged me to write a one-act farce about it:

http://grahamstull.com/index.php/2009/10/15/the-payer-family-a-farce-in-one-act

If he doesn’t know, it can’t be his fault. If he wasn’t told, he can’t be held responsible. If he can’t remember, well, we’re all human, aren’t we?

Such are the excuses of Irish politics. The same one that have been trotted out through the history of the state. Anyone wondering why we are in such an abject state need look no further.

If not, read this:

http://pages.stern.nyu.edu/~tphilipp/papers/philippon_schnabl_june09.pdf

Abstract, my emphasis:

We analyze public interventions to alleviate debt overhang among private Örms when the government has limited information and limited resources. We compare the e¢ ciency of buying equity, purchasing existing assets, and providing debt guarantees. With sym- metric information, all the interventions are equivalent. With asymmetric information between Firms and the government, buying equity dominates the two other interventions. We solve for the optimal intervention, and show how it can be implemented with subordinated loans and warrants.

We’ll make a great case study for the follow up to this paper, I think.

I know the whole business plan is an exercise in backwards accounting, but it would be nice if they knew where they were starting from.