Peoples Economy Ronan Lyons Day 4 Was NAMA really necessary ?


You can get more information on http://thepeopleseconomy.com/the-economists/

Questions Asked:
Andy >> (All): Hi Ronan! What are your predictions for house prices in the coming years, have we hit rock bottom or have we a bit to go?

Andy >> (All): Also, at what point do you expect foreign investment to start entering the market?

James >> (All): I see in the journal.ie today that google have just bought a large property from NAMA. It was said that the price paid “means we have recuperated out outlay on the property.” I thought the point of NAMA was to make gains. Am I wrong?

jim >> (All): How much have money did we spend on property over the bubble

Peter Beavis >> (All): Are Fine Gael likely to succeed in negotiating a better deal with the EU? years, how much was borrowed, how much will be written off?

Peter Reid >> (All): How will the banks or instituions be in a position to lend to the mortgage market if they have no funds?

Bri >> (All): Could NAMA be shut down (not just in the theoretical sense). Given a consensus of opinion, could it be undone?

Bri >> (All): If so, what would it take in term of re-organisation etc. Cheers.

Nollaig >> (All): The market was illiqiud becuase the valueswere way too high the were development value rather then commerical value ie A business couldnt make a return from the price of the building

Evert >> (All): Isn’t the real issue with NAMA not the concept but rather the execution?

jim >> (All): Were the sweedish banks in their crisis insolvent or illiquid?

Evert >> (All): The announcement of sales by NAMA today was not accompanied by a statement on the value of said assets. Have you got any knowledge of these?

Gordon Hardie >> (All): Iceland took a different view on the guarantee of the banks shareholders and bondholders – both had to take large losses.  Between Iceland and Ireland, which strategy looks right now?   If Iceland, why can’t Ireland change strategy?
jim >> (All): Is there any upside to this write down, does it help to make the losses crystal?

Stephen Walsh >> (All): GCost estimates value of senior bondholers still in banks = EUR42bn, value of ‘burden sharing’ to taxpayer between EUR 25-33bn

Liam >> (All): hmmm there is the opportunity cost though Ronan.

Vicky >> (All): Did you just say that all the bondholders are OUT — does this mean that it is not possible to burn the bondholders cos they have already took their money and ran?

Nollaig >> (All): As the banks require the taxpayer to bail them out by paying their bonds could we the taxpayer argue they are in default and claim on the CDS etc that were bought on the bonds

Liam >> (All): Vicky, yes, it seems that most of the bondholders have been repaid, and many of then were unguaranteed.  Burning secured bondholders more difficult.

Peter Beavis >> (All): Will NAMA distort the property market?

Stephen Walsh >> (All): GTCost Constantin Gurdgiev @
@Stephenpmadden Both sources show that we can get 25+bn out of bondholders. Not 7bn as Gormley claims

Evert >> (All): I would agree that now that we have NAMA in place that we need to stick with it but it needs an overhaul of management & focus.

Liam >> (All): Vicky, not impossible though I might add.  we can still fix this.

Evert >> (All): here’s a glut of vacant commercial property that could perfectly well be used to provide low-cost premises to start-up businesses.

Nollaig >> (All): As the banks require the taxpayer to bail them out by paying their bonds could we the taxpayer argue they are in default and claim on the CDS etc that were bought on the bonds

Alan >> (All): So a core issue to this is bringing down the liabilities by persuading Mr Trichet to accept only a partial repayment for the funds pumped into Ireland over the last 18 months

Peter Beavis >> (All): It migh be the best thing commercially to sell NAMA properties now, but is that politically acceptable?  Isn’t the danger that we’ll be forced to hold properties longer than is optimal in the hope that there will be some sort of pick up?

eamonn moran >> (All): Eh the bond fall due at certain fixed times.

Alan >> (All): Think we need to send over the “Rotweillers” P Summerville refers to

jim >> (All): here here on country went mad

Peter Beavis >> (All): Will NAMA distort the property market?

Stephen Walsh >> (All): @GTCost Constantin Gurdgiev @

Nollaig >> (All): It was only tax breaks that was making most of the property deals viable terrible stupidity by the accountants that were building business plans around this

Peter Beavis >> (All): Willl NAMA be used to keep property prices as high as possible?

eamonn moran >> (All): Nama has been placing an artificial floor on the market that causes this distortion. Isnt that a good arguement for demanding nama sell off assets much more quickly? This hold and hope stratagy seems silly to me.

Liam >> (All): there seems to be a situation emerging where landlords for commercial properties are upping rents, losing tennants rather than negotiating rent downwards.  This doesn;t make sense, how do you account for it?  Can it be fixed to stop smal business folding?

Evert >> (All): Any idea why NAMA is exempt from FOI?

Evert >> (All): Not asking for facts just opinion there..

Peter Beavis >> (All): The avoiding the “fire sale” argument carries a lot of weight with a lot of people.

Hoppoer >> (All): My issue with the investment property market is what is the ceiling that the banks have for increasing varibale interest rates. They dont want new customers and are raising variable interest rates independently of the ECB. With the ECB due to raise rates over the next 2 years and irish banks raising their rates, I can see variable interest rates hit 10%. Is this realistic.

jo >> (All): Just a point, we all weren’t involved even thought now we have to pay. On those who were; about 100 developers borrowed €100billion losses around €50 billion, compared to mortgage holders, about 100,000 people borrowed €100 billion losses to date, don’t know but according to your figures about €1billion???

eamonn moran >> (All): Doesnt that means its just a bluff? havent we been here before with the bank guarantee?

paul H >> (All): Paddy & Mary bought their house is 2007 for €350k on a 35yr mortgage,..2011 the house is worth €250k a drop of €100k,.should that €100k be written off,..shared or should Paddy & Mary have to live with it,…tough luck as they say.

squod >> (All): Can NAMA be approached directly by business people or start-ups ? Is there a sales agency dealing with these properties?

Evert >> (All): @paul H Make them repay it. Really. Action -> reaction

jim >> (All): a fire sale would reduce prices and increase competivness, does this counter the loss we suffer on nama in the fire sale

Peter Beavis >> (All): A landlord on the edge of solvency will act in this bizarre way.

Nollaig >> (All): They are generally Insurance co’s that are looking for high rents becuase the value of the property is a multiple of the reant so if they reduce the rent they reduce the value of the property and have to book a loss also they the get a discount on rates from the local authority

joe >> (All): here’s that link http://joegarde.posterous.com/bubble-rtept-2003-a-debate-with-dvidmcw

jim >> (All): but since so many borrowed to the hilt, in a low interest low tax economy even those working will be in trouble as our taxes increase and interest rates rise, what then?

Liam >> (All): What about we do a debt-for equity deal for mortgage holders?  How about we factor that in to any deal we might do with the EU?  Are there any other workable solutions that get people out of the negative equity trap?

Liam >> (All): ok, never mind, you’;ve sort of answered it!

Vicky >> (All): Agree with Jim – -plus wage cuts effect your ability to pay too

jim >> (All): but if you have no safety net as your mortgage payments are now 60,70,80% of your take home

Nollaig >> (All): The only way to get people out of neg equity is to get the economy growing again and more demand increase demand you will increase prices

jim >> (All): You can get it growing, but bubble prices won’t be back for a decade at absolute earliest

eamonn moran >> (All): the property market is currently valued at 320Billion. but is it actually worth that?

squod >> (All): FG will have us all in the poor house I reckon.

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