The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Bogball XV]

I am not sure what to make of the Anglo/Bovale story .

It looks like Bovale already have the most of the money already and are negotiating an extension of repayment . Anglo could presumably appoint a liquidator to sell the assets and reclaim what it can  but has made a commercial judgement that it has a better chance of recovering its debt by making additional advances to Bovale to complete unfinished development. There was some talk of an hotel being completed and leased to an operator on propertypin.com . The worst thing banks can get left with is uncompleted development - undeveloped land and completed units can be readily sold but half finished work in progress will be a nightmare to handle. Design and building warranties can be invalidated and value destroyed completely.

Without knowing the details of underlying transaction it is impossible to tell whether anglo are making the correct decision or not though I can understand why you may not want to give them the benefit of the doubt.

As an aside since Bovale are trading insolvently ....the balance sheet has negative net worth are Directors personally liable for any losses arising to creditors ?

just what we need another hotel!!

Every director and shadow director runs the risk of being held personally liable nowadays thanks to the reckless trading legislation (which effectively makes 'limited' worthless), it's difficult enough to prove though, but, the fact that Bovale has in the past paid out rather large sums in wages and pensions to the owners might make it a little easier.

[Bord na Mona man]

From what I can see the timeline on NAMA is fairly straightforward.

(1) Get the thing up and running before too much muck hits the fan with regard to Liam Carroll etc, so as to legitimately buy "packages" of loans for perhaps 75c in the euro. In theory all loans over a certain size have to be bought out, so that the state gets the good with the bad. In practice the banks get enough time to decide for themselves which loans they want to keep, so as to split it up from a 20m loan into four 5m loans.

(2) NAMA then takes about six months to put all the assets together, during which time no properties can be sold yet, and no repayments are sought because everything "takes time".

(3) The banks take the capital, shore up their liquidity ratios, and promptly resume their closed wallet policy since there is still a recession on after all. Government pressure will mean that there will still be some mortgages issued, since small mortgage holders are easy chase, but finance to business will remain impossible to get.

(4) Over time it will be revealed that several developers with, on average, 100m of debt, have no intention of paying anything off, have nothing only half finished estates in Cavan and Longford to show for it, and anything of value that they own has been transferred to their wives. The loans are worth approximately 10c in the euro at most.

(5) In the meantime Anglo goes bust anyway, while foreign investors come in and cherry pick the carcasses of AIB, BOI and PTSB. Anglo leaves the state on the hook for another 100bn in bondholder funds because the guarantee is still in place. Anyone thinking that they've cleaned up their act, have a look at the Bovale story coming out today.

(6) The Irish public begins to realise that we were sold the biggest con job in the history of the free world. People start to get angry. The government claims that "they couldn't have known" that things would be as bad as this, and that "the banks deceived us". In the meantime all the bankers have retired with their golden parachutes.

(7) Now here's the real sting in the tail - NAMA has the right to sell any assets they own with no VAT, no stamp, or anything, should the government so decree. They will "liquidate" a wide variety of assets as such, probably within a year of an election. "Commercial sensitivity" will preclude prices being issued, but essentially that half finished estate in Gowna or Mullinalaghta will be sold on to some insider, who'll pick it up for a song - since NAMA is going to be bust anyway. Basically this will be the mechanism for FF and their cronies to have one last dip in the pot before they are voted out.

( After one term of FF being in opposition, the country will be beginning to recover, but because it's not fast enough, and becuase some harsh medicine will be felt, the new goverment will be voted out with people claiming that "they're all the same" and falling, yet again, for cheap promises and nods and winks. People finally give up on the idea of fair governance and vote with the guy who promises to sell little Johnny and Mary a cheap house, glossing over the fact that he himself picked it up in the firesale for virtually nothing.


I think I've covered most of it there. Anybody who would like to add some details that I may have missed, feel free.

If it goes like that, at some stage I'd expect the government to all but ban the issuing of planning permission in an effort to force people to buy the crappy cardboard houses that they've landed themselves with.

[Billys Boots]

Dogbert moves to Ireland

[magpie seanie]

Lone Sharks scenario is chillingly realistic.

Am I a hopeless optimist or am I correct in sensing that there is a bit of a public swell of opposition to this ridiculous NAMA plan? Its a little ironic that we're all relying on the Green Party to stand up and tell the Emporer that he is wearing no clothes. I hope they don't fail us but worry that their leaderships new found power will urge them to force it through their membership. I believe anything is better than NAMA and that includes doing nothing. This govt, who in a gross error of judgement I voted for, have to be got out of office yesterday. It is not possible for anyone to do any worse, I'm sure of that now.

[muppet]

Lone Sharks scenario is chillingly realistic.

Am I a hopeless optimist or am I correct in sensing that there is a bit of a public swell of opposition to this ridiculous NAMA plan? Its a little ironic that we're all relying on the Green Party to stand up and tell the Emporer that he is wearing no clothes. I hope they don't fail us but worry that their leaderships new found power will urge them to force it through their membership. I believe anything is better than NAMA and that includes doing nothing. This govt, who in a gross error of judgement I voted for, have to be got out of office yesterday. It is not possible for anyone to do any worse, I'm sure of that now.

The editorial line in the Indo is that it would be unpatriotic for the Greens to 'play politics' with NAMA. FF strategists use the Indo only when they really need it such as election time and Lisbon etc. They must be really concerned that the Greens will walk.

[magpie seanie]

Did I not see some FF back bencher last night commit political suicide question the whole NAMA thing and say he'd need more assurances to support it?

[muppet]

This is my problem (admittedly with very limited knowledge of banks or economics) with NAMA.

Either you have a free market economy or you don't.

In a free market regulation and Government intervention is minimal. The whole economy is based on supply and demand. For the workers and investors it is survival of the fittest. Good well run businesses can succeed and rise to the top while poor badly run businesses fail. Successful people do very well while most who are willing and able to work can live comfortably. The system encourages and rewards risk takers unless the risk fails in which case the system makes them start again. Extreme versions of this type of economy believe that all services including health are most efficiently provided by a free market.

A quick look at the net tells me there a lots of types of not free market economies, some of which I have never heard of and all of which I don't understand. However I do know that typically there would be significant Government intervention. These economies seem to be less efficient and workers pay higher taxes. These economies are anything but survival of the fittest for workers and don't encourage risk takers. However on the plus side these Governments provide far better public health care for example and workers tend to have greater job security than in free markets.

To my mind NAMA represents the worst of both worlds for us. The banks insisted on and got minimal regulation. They took free market risks and failed spectacularly. They, along with the Developers are the consummate Irish free marketeers. But the free market would have them fall on their swords.

Now they want unprecedented levels of Government intervention to subsidise their failures. Having benefited hugely from their successes in a free market they want the taxpayer to be liable for their failures. It is galling to see such champions of the free market in the boom times become cheerleaders for intervention in the crash. The likes of Parlon, the Baileys, Carroll, Fitzpatrick, Harney etc have no shame.

But what's worse is that NAMA seems to me to give the free market failures that are the Irish banks, the ability to give the debt to the state and then return to the free market as if nothing has happened. Witness the financial commentators cheering the Canadian bank's interest in AIB, AIB after NAMA of course and telling us that it means confidence is being restored.

Do they think we are completely stupid?

[magpie seanie]

I agree 100%.

I don't know whether they think we are stupid or not but they are banking (sorry for the horrible pun) on there being enough stupid and/or docile people out there to save their asses. Frankly, I think on this and this alone they've read things right. Most people are either thick, apathetic or both.

There has to be somethnig we can do to take our country back, surely?

[Lone Shark]

Do they think we are completely stupid?

I don't think they do - however they think, indeed they know, that ultimately, short of re-enacting the French revolution, we are powerless. The remarkable part is that this is the case the whole way up along the line, which is an indictment of our lack of genuine democracy. A large majority of our TD's know that without that beloved FF logo beside their names, their electibility is way down. This should not be the case, since in an ideal world the people of Tipp North should be delighted to see Mattie McGrath dabbling with the idea of some independent thinking. (I say dabbling, he has yet to prove that he's actually going to engage his brain and contemplate the knock on effects of what we're about to do). Of course in practice, the people of Tipp North want him to be a good lackey so that when they call up their personal concierge, which is of course how most Irish people see their TD, they'll know that he'll be well placed to push them through whatever loophole they wish to go.

Our ministers dare not question Biffo and Brian, our TD's dare not upset the ministers since that's where they want to be themselves some day, our councillors are too busy milking the expenses pot since the rezoning bonanza has finally drawn to a close, and our citizens shrug their shoulders and simply groan that this is the way it has always been, and will always be.

We are the equivalent of subservient slaves, 90% of us voting the way we're mentally programmed or on the back of some stupid slogan, or perhaps for whichever guy will be best placed to help us bend the rules, cheat the system, land a stroke, or any of the other things that make this messed up country function.

Muppet has pointed out perfectly how the actions of our political leaders follow no ideology, they follow no clear plan and indeed they are utterly incorrect in terms of achieving the stated aims. I say the stated aims, because I have no doubt that they will achieve the unstated ones perfectly.

The Green Party will get their carbon tax and fall into line. After all, unlike Labour or indeed the Pd's in their time, the Greens are well aware that they will always oscillate between 3 and 6% in the national polls, with 10% popularity the aim. Stuff like this, which appeals to their core vote but further alienates people who were never going to vote for them anyway, is perfect for them. Dan Boyle will make noises, (though you'll hear nothing from Gormley) but ultimately there is basically no chance that they will knock it on the head.

I've come to the conclusion now that even the Courts can't save us. My gut feeling is that the Government isn't interested in trying to convince us of the merits of NAMA any more, as Seanie said, the nation is becoming aware that we're being sold into penury for generations. The only reason the liquidation of Carroll's companies might have saved us was that it would have been politically difficult to pay 75c in the euro for loans which are revealed to be worth a fifth of that - but politically difficult is only an issue if you have any popularity to lose. This government is down to the hardcore, wouldn't-vote-anyone-but-FF-even-if-their-local-TD-only-called-over-to-defecate-in-their-porch, simply mentally unable to vote anyone but Soldier of Destiny, vote. Robbing them of another 100k per person for their lifetimes is going to make no difference to their voting pattern next time anyway.

Short of actually taking to the streets and having a bloody revolution, actually storming the Dáil and physically removing every government deputy and beating them to a pulp, this thing is going through and the only options open to those left is either get used to poverty, or get the hell out. Badly and all as we're getting raped here, I still don't think we have it in us to go down that road.

[magpie seanie]

Do they think we are completely stupid?

I don't think they do - however they think, indeed they know, that ultimately, short of re-enacting the French revolution, we are powerless. The remarkable part is that this is the case the whole way up along the line, which is an indictment of our lack of genuine democracy. A large majority of our TD's know that without that beloved FF logo beside their names, their electibility is way down. This should not be the case, since in an ideal world the people of Tipp North should be delighted to see Mattie McGrath dabbling with the idea of some independent thinking. (I say dabbling, he has yet to prove that he's actually going to engage his brain and contemplate the knock on effects of what we're about to do). Of course in practice, the people of Tipp North want him to be a good lackey so that when they call up their personal concierge, which is of course how most Irish people see their TD, they'll know that he'll be well placed to push them through whatever loophole they wish to go.

Our ministers dare not question Biffo and Brian, our TD's dare not upset the ministers since that's where they want to be themselves some day, our councillors are too busy milking the expenses pot since the rezoning bonanza has finally drawn to a close, and our citizens shrug their shoulders and simply groan that this is the way it has always been, and will always be.

We are the equivalent of subservient slaves, 90% of us voting the way we're mentally programmed or on the back of some stupid slogan, or perhaps for whichever guy will be best placed to help us bend the rules, cheat the system, land a stroke, or any of the other things that make this messed up country function.

Muppet has pointed out perfectly how the actions of our political leaders follow no ideology, they follow no clear plan and indeed they are utterly incorrect in terms of achieving the stated aims. I say the stated aims, because I have no doubt that they will achieve the unstated ones perfectly.

The Green Party will get their carbon tax and fall into line. After all, unlike Labour or indeed the Pd's in their time, the Greens are well aware that they will always oscillate between 3 and 6% in the national polls, with 10% popularity the aim. Stuff like this, which appeals to their core vote but further alienates people who were never going to vote for them anyway, is perfect for them. Dan Boyle will make noises, (though you'll hear nothing from Gormley) but ultimately there is basically no chance that they will knock it on the head.

I've come to the conclusion now that even the Courts can't save us. My gut feeling is that the Government isn't interested in trying to convince us of the merits of NAMA any more, as Seanie said, the nation is becoming aware that we're being sold into penury for generations. The only reason the liquidation of Carroll's companies might have saved us was that it would have been politically difficult to pay 75c in the euro for loans which are revealed to be worth a fifth of that - but politically difficult is only an issue if you have any popularity to lose. This government is down to the hardcore, wouldn't-vote-anyone-but-FF-even-if-their-local-TD-only-called-over-to-defecate-in-their-porch, simply mentally unable to vote anyone but Soldier of Destiny, vote. Robbing them of another 100k per person for their lifetimes is going to make no difference to their voting pattern next time anyway.

Short of actually taking to the streets and having a bloody revolution, actually storming the Dáil and physically removing every government deputy and beating them to a pulp, this thing is going through and the only options open to those left is either get used to poverty, or get the hell out. Badly and all as we're getting raped here, I still don't think we have it in us to go down that road.

Unfortunately not or not enough of us anyway.

[Declan]

Short of actually taking to the streets and having a bloody revolution, actually storming the Dáil and physically removing every government deputy and beating them to a pulp, this thing is going through and the only options open to those left is either get used to poverty, or get the hell out. Badly and all as we're getting raped here, I still don't think we have it in us to go down that road.

Agree 100% - I said earlier in the thread if I was a younger man I'd be long gone from this place and that is the advice I'm giving to my kids. I've lived through the 80s recession and saw 20 out of 22 lads I grew up with having to leave this country with a fair few coming back over the years because it's home and nothing has changed in the political landscape. 

http://www.irishtimes.com/newspaper/opinion/2009/0826/1224253267074.html - What some of the economists think

[Zapatista]

The Irony of it is the more that leave the bigger the debt per person left behind

I think we are somewhere around 25 000 per head and rising.

[muppet]

The answer to the question 'What if the Bank Guarantee doesn't work?' is Nama.

What is the answer to the question 'What if Nama doesn't work?'

That to me is terrifying.

Not only would it mean that property has continued it's fall in value but that we as a State will have bought a monstrous amount of it at an inflated price. As most of us watch our only assets continue to collapse in value we will have to pay more taxes to pay for the lunacy of our decision makers.

Only the poor with nothing to lose revolt. That is why we haven't done it.............yet.

[Bogball XV]

The answer to the question 'What if the Bank Guarantee doesn't work?' is Nama.

What is the answer to the question 'What if Nama doesn't work?'

That to me is terrifying.

Not only would it mean that property has continued it's fall in value but that we as a State will have bought a monstrous amount of it at an inflated price. As most of us watch our only assets continue to collapse in value we will have to pay more taxes to pay for the lunacy of our decision makers.

Only the poor with nothing to lose revolt. That is why we haven't done it.............yet.

No, Muppet, the state will be buying these assets at their long term economic value, sure it wouldn't be fair on anyone if they were to pay market value, the very notion of market value is one of those anachronistic terms from way back in the heady days of capitalism.

[Main Street]

There is surely a credibility issue to what the Government is claiming.
Its the reasoned difference between what is perceived as the long term economic value and real market value, that is the issue.

Anyway some credit to the Gov for at least allowing some time for public debate. I'd say they made sure to buy off the Green Party tds first.
Should be a general election called on this issue alone. Must be the biggest single issue facing the voters since the general election of 1922 when Sinn Féin A beat Sinn Féin B