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Thread: NAMA will need a Bailout next year - Namawinelake

  1. #1
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    Default NAMA will need a Bailout next year - Namawinelake

    http://namawinelake.wordpress.com/20...h-a-e1bn-loss/

    Last year Nama made a 1.1 billion loss. Most of Nama's problems, according to the Namawinelake blog, come from the fact that Nama properties were purchased at the valuation of 30th November 2009.

    Take a step back from today’s announcement of NAMA’s final results for 2010 which revealed a €1.1bn loss in its first full year’s operation. Okay, we have gotten used to billion-euro-plus losses with our banks – in fact Anglo Irish Bank’s loss for 2010 was €17bn, which made the top 15 global corporate losses in history; but in the league table of Irish corporate results, a €1bn loss is exceptional.

    NAMA was created with a clean slate in December 2009 and it acquired loans using stringent valuation and due diligence standards. Perhaps it should be surprising, even shocking, therefore that the agency has racked up such a large loss in its first year of operation. Indeed were it not for NAMA’s accounting treatment of part of the consideration it pays the banks – the subordinated bonds which will only be honoured if NAMA makes a profit – then NAMA might have been forced into a position today of asking the Government for further capital of at least €1bn.

    It is an astounding loss.

    It mostly arises from the fact that NAMA chose the 30th November, 2009 as its “valuation date” which means that the underlying property securing the loans acquired by NAMA, was valued by reference to values pertaining at that date. And in Ireland, the country where most of the property securing NAMA’s loans is located, both commercial and residential markets have tanked since November 2009. And not just in 2010 – there is some evidence to suggest that subsequent to the NAMA year end, the decline has accelerated; for example the 5.7% decline in commercial property prices in quarter two of 2011 was the biggest quarterly decline since NAMA was created, and the property industry is saying that commercial property will decline a further 20-30% if expected changes are made in the Autumn to abolish Upward Only Rent Review leases. Of the €1.1bn losses reported today, €1.485bn comes from revaluing loans at the end of 2010 and as bad as those figures are, the 2011 losses might be considerably worse and the betting on here is that NAMA will indeed need additional capital from the State at the end of 2011 to cover what is likely to then be a substantial negative capital position.

  2. #2
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    Default Re: NAMA will need a Bailout next year - Namawinelake

    While the other banks aren't lending, I don't see much of a natural end to the downward spiral.

    And if the US defaults......gulp....

  3. #3
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    Default Re: NAMA will need a Bailout next year - Namawinelake

    Well NAMA was an attempt to prop up the market by having somewhere to sequester loans and the hideously overpriced developments behind them at a false floor valuation of November 2009.

    NAMA was never going to work unless the loans and develoments were taken in at the actual real floor and Nov 2009 wasn't it.

    This really is now a concertina of bailouts laid one on top of the other. Some sections of the finance industry have made money out of NAMA- by booking a loss on loans taken into NAMA and claiming tax refunds on the subsidiaries with NAMA bound development loans. So they offload the crap and still charge it to the Irish taxpayer. The taxpayer is left holding wildly deteriorating loans and overvalued collateral and the banks walk off with money made from a tax writeoff.

    NAMA was conceived as a swindle, operates as a false market swindle, and will end up being bailed out as a swindlng of the Irish taxpayer.

    If the UK market where many impaired NAMA loans reside looks buoyant at any stage you can be sure that those properties and loans will be sold off to 'private buyers' long before there's any remote chance of the taxpayer's stake going into the black.

    That will be the fourth and final swindle.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: NAMA will need a Bailout next year - Namawinelake

    What are the chances of another property-led boom?
    Give me a misty day, pearly gray, silver, silky faced, wide-awake crescent-shaped smile

  5. #5
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    Default Re: NAMA will need a Bailout next year - Namawinelake

    The only possible property led boom I can see in Ireland is firstly a scheduled drop in agricultural farmland around the time that it is realised that farm subsidies are going to disappear altogether - highly likely within ten years.

    After that there will be a boom in buying of agricultural farmland strangely enough as farmland landbankers (predominantly UK and EU based) buy up swathes of it on the cheap as large supermarket chains and economic reality drives the last of the small farms out of business.

    Basically I predict the arrival of the combine industrial farm in Ireland. Residential and commercial property is dead in the water as even a contrived boom led by policymakers couldn't draw a sufficent economic veil over the oversupply in the market and economic downturn in what light industry there is and of course office space is massively oversupplied.

    Thats my crystal ball effort.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: NAMA will need a Bailout next year - Namawinelake

    I had to do some research there last year which involved checking on the value of rich farmland in Oxfordshire and I couldn't help out of curioisity checking against what I could see of good farmland prices per acre in the Golden Vale and to me it looked like Irish farmland is way overvalued in comparison.

    I think this will make for a lurch downwards in value before farmland landbankers will be attracted to it.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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