Where will the NAMA money go?
Wondering if NAMA will help get liquidity back into the Irish economy, it’s primary purpose?
They say a picture paints a thousand words, but this one only paints one: NO.
Where will the NAMA money go?
Where will the NAMA money go?
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- Where will the NAMA money go?
Categories: Opinion
Thanks to Peter and yourself for all your work on this. You have done a fantastic job in making the inevitable costs of NAMA known. Based on the current state of the country I believe that Peter’s estimate of a probable €20 Billion in losses will be an underestimate. His continuing appearances may well force the government to be much more cautious in its approach. I don’t know if NAMA can be stopped but you may well save us hundreds of millions, hopefully more. Thanks again.
Mr O’Rourke, just wondering if Mr Mathews believes the scale of our economic problems will cause further losses? When you included admin costs he estimated total losses at €20 Billion. Was this for a recession like they had in England in the 90s?
It strikes me that comparisons of our likely property loan losses to the UK experience in the nineties are likely to result in significant underestimates.
1. The UK drastically devalued its currency in the early nineties. Our currency the euro is actually drastically appreciating.
2. The UK is densely populated and builds few houses. We are thinly populated & build many houses.
3. The UK had a small property overhang due to its low building – we have a huge property overhang, 300,000 units, enough for many years supply. We are building more and will build more again through NAMA.
4. Finally, we are in a dreadful budgetary crisis. The UK had problems but we are looking at a deficit next year of 15% of GDP and 17% of GNP per the EU commission.
I would be interested to hear your views.
Eamon, your points are well made and Peter has deliberately not included such considerations to keep the message simple.
However, he has pointed out that the ‘prudent’ 20% default rate assumed in the NAMA business plan has been incorrectly applied to only the NAMA loans. If it is correctly applied to the full Irish loan book (~€400bn), then the default rate wipes out NAMA completely. A very sobering consideration, particularly when nobody in government, certainly Deputy Frank Fahey, has spotted the error. How could such a basic mistake be made considering what’s at stake?
Would the prudent 20% default rate result in close to the losses of €30 Billion, including admin costs, in his worst case scenario, on the payment of Euro €54 Billion for the loans? To me our country’s economic situation looks so much worse than the UK’s was in the early nineties that double the rate of defaults Barclay’s had would seem prudent. In fact it might even be a good outcome!