Does NAMA requre another property boom to work?

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Shawady

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If NAMA buys back these assets at prices that are less than market value, it is obviously going to require prices to rise again for this plan to work.
It is therefore in the government's interest for property prices to go up again sooner rather than later?

I'm just wondering will the government be tempted to shape policy that could lead us down the road of another boom, which was a big part of the problem in the first place.

If wages and take-home pay are going to decrease over the next few years, surely everything including house prices should be allowed to fall also. What do other think?
 
Re: Does NAMA requre another proprty boom to work?

Shawady said:
If NAMA buys back these assets at prices that are less than market value, it is obviously going to require prices to rise again for this plan to work.
It is therefore in the government's interest for property prices to go up again sooner rather than later?
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Well, we still haven't seen a Fianna Fail minister admit that maybe runaway house prices - and the wages required to buy them - were bad for the country's affordability and competitive strength. And why would they, since most of them are landlords working in the public sector.
 
Re: Does NAMA requre another proprty boom to work?

Shawady said:
It is therefore in the government's interest for property prices to go up again sooner rather than later?
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Yes.

If property prices don't go up, then for generations the country will be saddled with tens of billions of debts that can't be paid off + the cost of servicing those debts.
Interest on bonds, which is running at €3.3bn p.a. already accounts for 10% of our total tax take. If NAMA issues €90bn of debt at 5% pa, that's an extra €4.5bn of interest costs each year, and we're already back in the 80s in terms of debt burden.
Direct and indirect taxes will rise, businesses will relocate due to the high cost of doing business, services and infrastructure will crumble.

If property prices do go up (which in the medium term could only happen as a result of government intervention), the core factor that is making the Irish economy uncompetitive - the cost of housing - will not be addressed. The cost of living, and therefore labour costs, will remain high. Unemployment will remain in double digits. Direct and indirect taxes will rise, businesses will relocate due to the high cost of doing business, services and infrastructure will crumble.

That, my friend, is why the country's future is sealed and in a hundred years' time Brian Lenihan will have taken the place of Oliver Cromwell in your children's history textbook. Unless, of course, that textbook was written by a descendent of a banker or developer.
 
Re: Does NAMA requre another proprty boom to work?

Don't know if this has appeared on another thread/post but what about NAMA extending further credit/investment to complete or develop some of the properties it acquires security on? If it decides never to finance any half-built office blocks it may genuinely be cutting off its nose to spite its face, but if it gets in the habit of throwing good money after bad, 90bn will be only the start of it.
All the "clever" bankers in the country were willing to keep Carroll funded, but the learned judges said they were mad.
Truth is they were afraid to let Carroll go under, in the same way that a gambler who can still borrow $1000 to have one last game will do so, rather than get up now, give up on that last chance to win, and go home and face the wife & kids.
Isn't NAMA likely to throw more money at projects? Is it just gmbler's psychosis on an epoch-making scale? How much further into hock could they get us before being forced to stop gambling?
 
Re: Does NAMA requre another proprty boom to work?

Chancer said:
All the "clever" bankers in the country were willing to keep Carroll funded, but the learned judges said they were mad.
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The clever *ankers were waiting for NAMA to clean up their mess, Does the moratorium on the loans to carroll, stand when NAMA takes over the loans, I'm guessing it does, so the banks seem to be allowed to set credit terms for the loans that would then be transferred to NAMA, in order to prop up a dead property market.

I think NAMA is the worst idea that this government has come up with & they have come up with some rediculous nonsense over the last few years.
 
Shawady said:
If NAMA buys back these assets at prices that are less than market value, it is obviously going to require prices to rise again for this plan to work.
It is therefore in the government's interest for property prices to go up again sooner rather than later?

I'm just wondering will the government be tempted to shape policy that could lead us down the road of another boom, which was a big part of the problem in the first place.

If wages and take-home pay are going to decrease over the next few years, surely everything including house prices should be allowed to fall also. What do other think?
Click to expand...

This is exactly the question I had about NAMA and I think deserves greater debate.

In order to make a profit on these toxic loans, the value of the development and land banks will have to rise. Even with such a vested interest, the government I dont think has much say in this in the current climate, with wages and costs coming down and may have to continue to fall to regain competitiveness.

Either way, it could be another government decision that could go belly up and an extremely costly lesson. Time will tell as it always does.
 
The more I read and hear and think about NAMA, the angrier I am getting. This is a WRONG thing for the government to bring in. They have clearly made a choice between the international bond merchants and their own people and have decided to shaft their own people. Who is Peter Bacon to put forward this plan, to gamble our good money (borrowed) after bad? We are giving out about the bank managers not calling a halt on time to the bad loans. But NAMA is going to do exactly the same thing - 10 billion no less to complete some of these works! And anyone who thinks 10 b. will end the matter is a total fool. Remember the emperor with no clothes? That's NAMA and it is about time those of us who see it for what it is, a con job on the Irish nation- speak our minds. Don't let Fianna Fail end their reign by selling Ireland to the lowest bidder.
 
The fact that a lot of NAMAS assets will be in other countries is a good thing so what happens in these countries will not be influenced by Irish political decisions.There could be booms or even sustained rise in value over a few years in some of these countries.
 
Don't worry Bog Man, that'll be factored into the 'long-term economic value' we buy them for...
 
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