Interesting speech by Dan Boyle on NAMA. All my fears have just melted away.

But seriously, we do need more females on the air waves and on telly, who aren’t arriving from a journalistic/political angle. It would send out the right message that Ireland is a modern country with modern values. A bit like the ‘Eurovision’ did so much for Ireland’s image abroad in the past.

Stay cool E76.

You give this man too much credit.

He is no Lemass. He’s just being bullied by those who want your children’s income. He has no vision for Ireland. He is a complete failure.

He is just a frightened crying little bullied boy.

He’ll be gone soon.

Then the people will have to come to terms with reality.

What is the price of fish where you live?

Whatever you do, never ever disagree with him in public. Whelan, Lucey, McWilliams, the number of people whose public life he has tried to end will soon be in double figures. McWilliams was trying to help him but he was shown no mercy. Ireland’s Francis Urquhart is I am sure personally very charming. The worst ones always are. He will tell you that he was always opposed to the government’s budgetary policies.
He has been a TD since 1996, Minister of State since 2002 and at the cabinet table since 2005! He never said a word!
Be careful, your public life is in danger.

They can keep the names. Ownership can and will change.

But as you say “we don’t know”. And that is the most worrying and insidious thing.

One way or the other we’re getting screwed.

Even if we end up owning them all 100% who is to say that apart from a merger or two there will be any change. Given what happened I expect remarkably little change. But we don’t know.

A similar approach to AIB and BofI would indeed seem to leave them in the “sshhtt” that Greg outlines above.

AIB & BofI are going to get crushed by the ECB.

NAMA takes the toxic development sshhtt of their balance sheets onto the Citizen.

They are forced to sell “non-core” assets by the ECB as part of the bailout.

They are left with balance sheets that are completely impaired and with unrecognised residential mortgage delinquency to follow.

They can’t raise any capital on the “market”.

The ECB places sever restrictions on an Irish Government recapitalisation.

German & French banks come in (24 mths?) and buy for cents on the euro.

The ECB declares that the imposition of a surcharge of corporation tax is “non-competitive.”

Pan European banking takes another little step.

Now I’ll take my tinfoil hat off.

“The cheapest bailout in the world”

But hey, as long as the bondholders are made whole.

http://www.independent.ie/national-news/lenihan-laughs-off-claims-1930818.html

I would just warn other advisors about publicly breaking with Lenihan. The knife will go in up to the hilt.

Lenihan is now too suave to be Nixon. I am afraid he is now the Irish Francis Urquhart.

http://en.wikipedia.org/wiki/Francis_Urquhart

“Is David McWilliams a lunatic? You might very well think that. I couldn’t possibly comment.”

The viciousness and immorality of our elite as they defend their interests with the €20 Billion Nama robbery makes this country more and more resemble the Britain of the Urquhart novels.

Thanks. If there is a true sale of assets from the banks to NAMA, I don’t see how the 5% rule would apply. I can see how this rule would apply for synthetic risk transfer where a bank might create a spv in order to do a securitisation. I don’t think this is what is being proposed with NAMA.

The way I understand it, NAMA will acquire the banks’ assets (true sale) and in return the banks receive two types of bond - a government guaranteed bond and subordinate bonds. I don’t see why a 5% rule would apply.

“Could it be the risk-sharing will end up having negative value?”
A very simple answer is yes. If you believe the DoF’s business plan, no losses are assigned to these sub. bonds but a good deal of interest is paid. I bring this up as it’s another example of the plan’s madness.

If you want to be a little more realistic…
Subject to caveats like I don’t know when losses get assigned to sub bonds etc…

Assuming no loss is assigned until a ‘call’ date 10/11 yrs from now, to get to a negative value you have to look at the interest being paid and the timing of these payments. If NAMA didn’t pay any coupon, then in year 1 you have 190m (2.7bn * 7%) and 10 years to invest the 190m (and so on). If you could get returns on investments (bond coupons) in excess of 7%, then the risk sharing would have a negative value.

http://bloomberg.com/apps/news?pid=20601087&sid=a1GMxUFBOhrY&pos=5

Didn’t explain that very well.

I didn’t mean the use of the SPV was the plan all along.

I mean’t that the plan was that the banks would get away scot free.

It seems like that’s the case now.

If they could shovel another €20bn in they would.

I had another bad thought. NAMA will be ‘buying’ assets from the SPV, presumably in return for the debt that is owed to it. This is the function of the purchase panel. The purchases of horses, artwork, property, land will make the SPV whole so it makes a profit, while each purchase will be at a loss. Expect the NPRF to be stuffed with so much useless tat in the next few years in lieu of genuine cash.

Paranoid? I don’t think so. I think that is how it was planned all along.

The Master SPV becomes a conduit laundering the toxic loans. You can add €10bn to the €54. The Minister has already declared that he will breach the €5bn agreed with the Green Party (and no levy.) God, they really are living up to their name.

The banks never touch the NAMA bonds. They package the loans and deliver to the Master SPV. The SPV gets bonds from NAMA then repo, and the entire risk of the bonds remains with the SPV.

As the book unwinds and the losses crystallise the SPV becomes a real liability for the State. Eurostat are prepared to fudge for now. The ECB will over-ride that in the future. That is, the Sate will be forced to replace bad NAMA bonds with Irish Government Bonds.

The covered banks on the other hand will have received hard cash.

The SPV copper-fastens the losses on the books of the State.

No future government can change this by making the banks write down the value of the NAMA bonds held on their balance sheets…because there not there.

I wonder how this will work out for the subordinate debt? The same? Literally no risk sharing?

http://www.irishtimes.com/newspaper/finance/2009/1031/1224257766416.html

Other experts are suggesting the opposite.

http://www.atimes.com/atimes/Global_Economy/KJ24Dj01.html

http://www.atimes.com/atimes/Global_Economy/KJ31Dj01.html

Also on the bank levy. Looking at things I have written previously is it correct to say:

1. That Brian Lenihan originally proposed it to reassure us about Nama losses.

2. That he then withdrew it because of the effect on the banks.

3. That the Greens then claimed to have won the levy back. They trumpeted this to get the backing of their convention for Nama.

4. That the magical levy has now disappeared again, because of its effect on the bank shares (it effects bank shares but Nama doesn’t according to the minister…but the levy is for Nama losses).

5. The Greens are completely unperturbed by the disappearance as I stated above.

So we have the comic opera of the magical levy.
The black humour of the pretence that bank share prices reflect anything other than the Nama overpayment and therefore the higher they are the better for the country.
But now the deep sarcasm of a levy on bank profits that Lenihan is claiming (mass groan) will in ten years time affect their profits.

http://www.irishtimes.com/newspaper/ireland/2009/1031/1224257767314.html

Whatever valiant efforts the bionic economist may be making it is clear that our politicians/top administrators are not up to the task.
It is really time that top independent business and economic people were recruited en masse into our government & administration.
The tale told below is another giant, depressing reinforcement of this.

http://www.independent.ie/entertainment/books/david-mcwilliams-the-night-lenihan-banged-on-my-front-door-1930001.html

Could it be the risk-sharing will end up having negative value?

Let’s say that the interest rate is 7%. 7% compound over 10 years is how much?

@Zhou

“It is my conclusion that the drip feed of information mirror’s closely the DoF’s progress in putting NAMA together.”

I agree with you entirely. There is not so much as a fag packet in sight. This is being made up on the hoof with the minister getting a briefing on how it will work as he walks into the press conference. He does a good job of selling it, but it is mostly rubbish invented by idiots.

Anyway, I’m not entirely convinced that the NAMA bonds will now be passed to the banks. The SPV structure could indicate that the SPV will be repo’ing the bonds and passing cash to the banks in return for the assets. The result being that the government gives ‘authorisation’ to the SPV, the SPV owes the government 54 bn. The SPV swaps the bonds for cash on a six-monthly basis. The banks get cash and hand over their trash. The state holds all the risk. Am I being paranoid? Please tell me I am.

@Greg

Couldn’t disagree with your analysis more… the upper bound for losses is €35 billion according to me (backed up by Morgan Kelly!).

Apart from that, pretty spot on. In particular, it is interesting that the corporate tax surcharge will affect the foreign operating banks. Profits are an interesting thing - post-bonus… post-dividend (no?) whereas a levy would be an operating cost so would reduce profits by the same amount, but would also, presumably, reduce bonuses…

The DOF are so out of their depth, it’s not true.

What station?

Sounds about right.

Vis-a-vis the gigantic residential mortgage problem on the horizon…. I am currently making a radio programme about that very subject. Should be complete by Christmas and broadcast February by the looks of it. The problem might be a bit more visible by then so I hope it is not too late!

One.

The developers cannot possibly deliver that which is expected of them by Minister Lenihan via NAMA.

They cannot turn €35bn into €79bn in ten years.

Two.

The covered institutions will need to raise close to €20bn in Tier 1 capital just to tread water in terms of solvency margin. Of that €20bn, the State will have to ante up (say) €10bn to keep Anglo & Irish Nationwide afloat.

Three.

Of the (say) €20bn of NAMA funds that goes to Anglo & Irish Nationwide not one cent will find it way into the “real” economy.

Four.

AIB & BofI will not lend into the “real” economy. They already have their riding instructions. “Shrink your balance sheets”.

Five.

NAMA will lose between €15bn and €30bn depending on economic growth, inflation etc.

Six.

There is not bank levy, just a promise of a corporation tax surcharge. That would penalise Ulster Bank, ACC Bank and National Irish Bank who are not covered by the guarantee and are not participants in NAMA.

Seven.

There is a gigantic residential mortgage problem on the horizon.

Probably left something out but I’m glad to get that off my chest.

Your point is well made.

However I think you are being unfair to blog hosts and most of the commentators.

The blog hosts have done a great service to the Nation in their contribution to the NAMA debate.

They cannot be blamed if the political “opposition” failed to mobilise the public antipathy to NAMA.

And even if it is Gish Gallop, should Citizens suspend critical analysis? That is a recipe for tyranny.

http://dublinopinion.com/wp-content/uploads/2009/09/joekrman.jpg

In other words, I know there is nothing to prevent women from really being no. 1 in terms of understanding and facility to think through problems of this nature. I have seen them do it, when they want to.

I feel that men folk have been given a raw deal in NAMA. At least half the brain power available to us in the state is not being used. It is the same in the banking institutions more or less. I am sick to my back teeth of seeing it. That is the ‘culture’ which needs to adopt some change.

I have to admire the perseverance of Joan Burton, but there is something needs to be said. I have being paying attention to the Dail debates in the Oireachtas coverage on the RTE website. It is the most I can do in my evenings. I am more or less NAMA-ed out. My diary is full of events to do with carbon neutral societies etc, and renewable energy engineering talks. Hard to do everything I guess.

The one thing that does piss me off lately when I watch the Oireachtas tv coverage, is this. I would blog it tonight, but it is too late. The title of the blog entry would be: Lisbon is for Girls, Nama is for Boys.

I don’t care what politicians are on the ballot card in the next election, whatever female candidate is on the ballot card is getting my vote. It is about time female stood up and did some work on behalf of the country from a political point of view. If there isn’t a female candidate on my ballot card, I will probably spoil my ballot card instead. But one thing is guaranteed, no male is getting my next vote, that I have decided.

Especially in something like NAMA. I know it is a committee, what I am looking at on TV at the moment, but it is way too male dominated. I heard lots of female politicians during the Lisbon debate, when it was mud flying in every direction, and now with the boring mathematics, they are no where to be seen.

It is a perfect reflection of the state of our education I think. Females give up the mathematical stuff too early, because it is too hard. Yet females are so successful and prominent in business and commerce. I don’t understand it. I would also like to hear at least one female economist show up on Prime Time or somewhere, once, just to counter balance somewhat, Colm McCarthy, George Lee, David McWilliams, Brian Lucey, Karl Whelan, Gurdgiev etc, etc.

I do know one lady in property business at the moment, who has a voice about economics and can use it. She is very good on the issue of the environment also. I don’t know - this is the most depressing part of the NAMA debate for me at the moment. I feel that men are being asked to carry too much of the stress and bother of NAMA on their backs. Put your feet up guys and why not take a rest for yourselves?

Two points to consider:

i) Occam’s Razor
Which is more likely?
A - NAMA is a scam by members of a political party with a proven history of corruption and with close ties to developers in order to protect their own members and associates.
B - NAMA is a real attempt to react to global economic crisis

ii) The constant drip-drip of different aspects and the language used to describe the aspects could be seen as a classic example of a Gish Gallop - http://rationalwiki.com/wiki/index.php?title=Gish_gallop - “an informal name for a rhetorical technique in debates that involves drowning the opponent in half-truths, lies, straw men, and bullsh*t to such a degree that the opponent cannot possibly answer every falsehood that has been raised.”

The allure of acronyms and theoretical hair-splitting is blinding most of you to the underlying scam that is going on here. Keep arguing about the exact position of the deckchairs lads, the ship is still going down.

The SPV has appeared. Although Minister Gormley is unconcerned.
http://news.eircom.net/national/16740554/

The bank levy has been dramatically amended. But Minister Ryan is unconcerned.
http://www.breakingnews.ie/ireland/ryan-defends-watering-down-of-nama-levy-432292.html

And of course we now see that the risk sharing is bogus.
I couldn’t be bothered seeing who is unconcerned about this (Dan Boyle?)
but I did find an article from some time back quoting Minister Ryan:
http://www.businessandleadership.com/news/article/15586/leadership/nama-risk-sharing-agreed-ryan

“The Minister also said that now this risk-sharing element had been agreed, the really important element of NAMA to get right is how the assets acquired by the new agency will be developed”.

I think if you ignore the first part of the sentence you get a truthful statement about what has been the Green main (only?) concern all along.