Nama – When Is A Haircut Not a Haircut?

 Posted by on September 17, 2009  Add comments
Sep 172009
 

Well? When is a haircut not a haircut?

Answer: when it’s not even a light trim.

Now, I’ve been doing a little calculating, but of course I’m not an accountant or an economist, so this is probably all wrong, but anyway, here goes nothing.

INGLORIOUS

Pic courtesy of C'est la Craic

Yehudi Lenihan announced that Nama would pay €54 billion for the banks’ bad loans, which have a face value of €77 billion: in other words, he says he’s paying 70% of the original value they had when the loans were issued at the height of the boom. These are the values that were assigned when everyone was coked out of their heads and drunk on power and helicopters. Let’s call this the loans’ lunacy value.

Because he’s only paying €54 billion and not €77 billion, this is called a discount.

But wait. That lunacy value of €77 billion includes €9 billion in rolled-up interest, so the loans were actually worth €68 billion at the top of their value. Their lunacy value.

So not only do the taxpayers make sure that the banks get most of their money back after their disastrous lending spree, driven by greed and stupidity. We also make sure that they get the interest they feel entitled to earn on these criminal loans.

But it doesn’t end there.

Because the government nationalised Anglo-Irish instead of letting it collapse like the zombie it is, we’re liable for the entirety of its bad loans, which amount to €28 billion, out of which you have to strip about €3 billion in phony rolled-up interest. We’ll say Anglo’s total bad assets are worth about €25 billion.

I might just add in passing that Anglo-Irish Bank was not a bank in the sense any of us understand, but simply a conduit for passing credit to builders. It had no importance to the wider Irish banking system and could have been allowed to collapse without the slightest impact on our economy. Yet, despite this, our government chose to nationalise it and make its problems our own.

Why?

Well, that’s one of the biggest questions that will have to be answered. Why did Fianna Fáil rescue the developers’ bank when they didn’t have to?

Time will tell.

Let’s see now. Time to recap.

  • Nama gives €19 billion to Anglo.
  • The government tops that up with another €6 billion.
  • Nama gives €35 billion to the rest of the banks.

That makes €60 billion in total, against a maximum loan value of €68 billion, which was their supposed worth at the most insane level of valuation.

That’s 88% of the total inflated value of the loans, when measured at the absolute height of the property bubble.

Isn’t that great? I hope you feel a lot better now, knowing how much you’ve contributed to guarantee the top bankers a sound night’s sleep.

Leaving Anglo out of it, the total face value of bad debt is €49 billion, but you have to take out the proportionate amount of rolled-up interest of about €5.7 billion. (In other words, the interest the banks would like to earn for making insane loans to people who couldn’t possibly pay the money back). We’ll call it €6 billion for round figures. That leaves the face value of the un-nationalised banks’ bad debt at €43 billion.

€35 billion of Nama money goes against this bad debt, so Yehudi Lenihan is actually paying the independent banks about 81% of their lunacy value while their real value might be in the order of €20 billion. Might be. Nobody knows.

So, by my reckoning, Yehudi Lenihan has just suggested that we give the banks’ big institutional investors a free gift of €15 billion.

Now. Have a look at those rough figures and correct me wherever I made a mistake. After all, I’m neither an accountant nor an economist, and I don’t really understand the subtle details of these things.

Now that I think of it, I’m just like our Minister for Finance and our Prime Minister. The only difference is, I don’t have the power to give your money to the billionaires who want it.
_______________________

Here’s an interesting question in today’s Irish Times.

If the bank loans for Nama are only worth €47 billion, why is the Government going to pay €54 billion?

Do you have the answer?

If so, please let us have it as soon as possible.  Thanks.

________________________

Meanwhile, Fingers Fingleton enjoys his retirement.

_______________________

Also on Bock

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Paying For The Celtic Tiger

Why Are Irish Banks Backing Liam Carroll’s Zoe Group?

IMF report on Irish economy

NAMA Millstone Will Sink Ireland

NAMA Long-Term Economic Value Explained

Economic Treason – Simple Recipe

Asset Management Agency – Ireland’s Bad Bank

Bludget 2009

Budget 2009 – My suggestions

Fingers Fingleton Sole Beneficiary of €27 Million Irish Nationwide Pension Fund

Bailing Out The Property Developers

Business Ideas for the New Great Depression

Sorry? What?

Irish Government Ministers

Denying the Economic Crisis

Anglo-Irish Bank’s Croke Park Corporate Box

The Anglo-Irish Ten, Hiding Behind Client Confidentiality

Irish Bank Guarantees

Sean Fitzpatrick Tells Parliamentary Committee To Fuck Off

Letter To Brian Goggin, Bank of Ireland CEO

Anglo-Irish Bank, Brian Lenihan and the 7-Billion-Euro Fraud

Irish Government Nationalises Anglo-Irish Bank

  45 Responses to “Nama – When Is A Haircut Not a Haircut?”

Comments (45)
  1.  

    Yep, we’re screwed. I have the horrible feeling too that it will be like the US bailout. Right now the Americans are pining for the good old days when all the bank wanted was $700 billion. How many trillion is it up to now? I fear we will go the same way. NAMA will pass and the pat outs will continue. They’ll assure us and assure us until some unforseen (ha!) incident forces the government to invest more and more to stop the anger of the sky god Recessianus.
    What a bunch of complete cunts.

  2.  

    We will have to recapitalise Anglo again soon, and AIB as well
    Maybe another 6 or 7 billion
    A rise in intrest rates and charges and soon they will be back paying bonuses and dividends like nothing ever happened.

  3.  

    Firstly good people I am changing my name, norma/nama, i don’t like it.
    When i first took over the house i now live in, i was so screwed by the bank, i was paying upwards of 15% int on my loan, it was torture, I decided i would never ever buy anything unless i had the cash in my pocket for as long as it took be to get them off my back, it took me 10 long years of slog, i paid them in full interest and all………………………..then i got a mortgage ! seemed like a dream deal after what i had been through, now i think i’m going right back to, no actually further back than sq 1, i’m now probably worth more dead than alive !

  4.  

    Livid!

  5.  

    I think you forgot one thing.

    The bill allows NAMA to borrow €5Bn guaranteed by the State to “finish out”.

    This €5Bn needs to be added to the €54Bn.

    NAMA can also borrow beyond that €5Bn, but not guaranteed.

    I suspect were on the hook for that as well.

  6.  

    Oh, I’d say I forgot a lot of things.

    Thanks for the reminder.

  7.  

    So “we” can borrow more money to finish out shite that nobody wants in the first place??? That’s great.

    It just gets better and better, doesn’t it?

  8.  

    We’re going to be getting this one with all the zeal of a bunch of Christian Brothers let loose in the showers after Under 10’s hurling practice.

  9.  

    The horrific thing about this is there will be no market for a lot of the crap NAMA will be taking over until 2027 . That is “best case” estimate. Wait for the next Budget Folks. Oh! You had better buy a lot of Vaseline.

  10.  

    Heh, I’m going into the bank this afternoon and will be looking for a very big loan to “develop” my property which in the two years since I bought it has probably dropped by 10-15% in value on the market by dint of nothing other than it having been grossly overpriced in the first place.

    Fuck ’em if they can’t take a joke.

    What I would like to know though is this. Let’s tay that in 10 or 15 year’s time, by some astronomical stroke of luck (let’s say the seas rise and we only end up with 3/4 of our landmass habitable so prices go through the roof again) and NAMA actually turns a profit. Who gets that profit? (hint: It’s not us)

    Awesome photoshop job by the way.

  11.  

    A few other things to add to the Government’s Help the Wealthy Campaign…

    The state has a window to acquire properties for social, education or health purposes, (c) Green Party.
    – this will set the inflated floor price for property, and help out some developers.
    – watch closely for any co-location or public-private-partnership deals on these sites.

    Expect a ramping up of the scheme in which Local Authorities lease groups of empty houses
    – this will look after lots of smaller developers and buy-to-rent investors
    – this will tie social housing into private ownership for decades
    – watch closely for sweetheart deals with politically connected folks

    Inflated house/apartment values will maintain inflated private rents.
    – as more people are unable to pay private rents they will seek rent allowance assistance.
    – the State will pay inflated private rents through the HSE rent allowance scheme.
    – the amount of money the State has already gifted private landlords through these allowances is absolutely huge

    Lenihan said yesterday that aside from a carbon tax he is committed to not increasing the tax burden in the budget.
    – this is code for, “You property owners and speculators can relax, I’m not bringing in a property tax.”
    – in the absence of of a property tax system few folks earning money from property will pay tax on that income

  12.  

    And the fuckers still have a 20% support rating. I think we’re the cunts here.

  13.  

    And don’t forget that Lenihan and Cowen are saying that we are going to make money when the property market inflates again! 10% in 10 years they reckon – it hasn’t even hit rock bottom yet. NAMA is going to be left with half-developed sites all over the country with no infrastructure and no-one with any money to move into them…

  14.  

    To make matters worse, some miss the point that the so called getting back to where we are figure is more difficult than some understand. e.g. 100 devalued by -30% = 70 but to get back to 100, 70 has to grow by + 43%. Duh!

  15.  

    Is it (nama) unconstitutional. Or has this been considered by anybody. The constitution gives a right to private property, which the government is effectively giving away now.

  16.  

    At what point do criminal charges against these cunts become possible?! They have lied, cheated, manipulated and conned taxpayers out of their money.

    I don’t want their useless fucking fields! The only way they will gain substantial value is by planting vast quantities of cannabis on them, but ofcourse that would be unnaceptable for this holier-than-thou government that is willing to imprison an MS patient for bringing a little bag of grass into the country, but is perfectly willing to con decent people out of their wages, and this without even providing us with a referendum!!

    Great artwork, good post BTR, this country is driving me up the wall

  17.  

    Lord Henry Mountcharles a well known Left wing activist ( I think not) . Has reported an incident in a very expensive Spanish restaurant. Admittedly reported to him by a friend, where Irish developers were singing “NAMA, NAMA “and toasting the Minister Brian Leninehan for it. I think this just about says it all. The total and complete incompetence of this Government is beyond belief!. If F.F. do not join the P.D. in the history books after this I despair. All of the filth that are these developers ,bankers, builders and all who sail with them should be sent on a one way trip to the edge of the Galaxy. Or perhaps into the Sun. Although they would probably set up in business there.

  18.  

    Bock I don’t like admitting this, but I think you’ve made Mary Harney look quite attractive!! She could appeal to a certain section of the male population in her next campaign, but no; not me!! NEVER!! NEVER!! I’ll go and compose myself now ahem!

  19.  

    Well, the Irish are, for some sad, forgotten reason, probably the biggest cowards in the world.

    Otherwise, the government would never dare try this sh!t on.

    OTOH, this political apathy might present an ideal opportunity for a new, probably nationalistic, party to swoop in.

  20.  

    Good morning, and welcome aboard Wall Street Executive Air.

  21.  

    Do I hear the sound of Jackboots ? I hope not.

  22.  

    Right boss , it’s time to roll out the “Robber Party” manifesto.
    The time is right.

    Where’s me outhailer, we hafta get to the church gates mon.

  23.  

    Nationalistic government? You think this is an opportunity for a nationalistic government? Nationalism, the greatest curse ever to afflict humanity, the ideology that gave us the Holocaust? And you think it’s a good thing?

    Jesus, did you come to the wrong place.

  24.  

    Wow, talk about misreading a post!!

    There is a political vacuum in Ireland now. A new party could probably attract significant attention if they offered a certain agenda. Ireland is probably ripe for a party with a nationalistic leaning.

    (Making that comment is not the same thing as wanting such a party. You ought to know that, Bock.)

  25.  

    Well said Bron, all part of the ‘thinking it through’ process, I think,!…you had some valid and interesting point’s, the post did’nt particularily strike me as advocating ‘nationalist politic’s’ !….gave me some food for thought!

    9

  26.  

    The ‘9’ is due to me bad typing, btw! saw it too late to edit! also, reckon you’ll find the gate’s shut ‘Mr. Geek!!!

  27.  

    Mr Geek has more ways through the gate than I do.

  28.  

    Your a good man, Mr. Bock…luv your site! (over or under or around the gate’s the go, though!) still reckon they’ll be shut…!

  29.  

    I saw a good post on the propertypin.com eviscerating the FF/Greens myths, lies, spin and general bullshit they’re trying to blind us with. http://www.thepropertypin.com/viewtopic.php?f=50&t=25100

    It’s a long post but a good one.

  30.  

    Nationalisem is the last place of retreat for a scoundral. Never forget it.

  31.  

    Charles regrettably it seems in times of recession People turn to the Right Wing. “Eine Richt ,Eine Volk ,Und ,Eine Füher”. Approximately 1,500 to 2,000 individuals were the beneficiaries of the so called Celtic Tiger. They have now relocated to places in the Sun shine. We the regular people shall pay for generations to come. NAMA is like putting one’s house on a bet . If it works out Great! If not Tough!. May all the Gods be with us. If any exist.

  32.  

    Gary, There will be consequences and I pity the poor people of Ireland who will pay heavily for Nama. I don,t want to sound alarmist but looking at the total face of Ireland can one say with some degree of credibility that The Republic is showing signs of a failed state?.But what is the alternative?. There is as I see it no political party worthy of the word “credible” by that I mean in front of the citizens. The real difficulty is not the 2000″ Sunbathing Mucs” but the lack of beleif in the citizenry to really carry out a sea change in the political culture of the Republic. Remember real change happens when the ruling class no longer can and the ruled class no longer will. Hopefully the new leaders will not appeal to base sentiments which could lead to what we have left behind in Europe.

  33.  

    Charles Brother if I may be so impenitent to address you as such. We the Irish shall survive all. Even own venial Politicians . The “right wing “ twats shall not prevail. They shall be defeated . However “Communism “ has never been tried .Any attempts have failed Humans work from birth on ME. Unfortunately the “I” “me” and “ME “factor seems to rule. NAMA shall save the Golden Circle of “ME “boy’s and Fuck the Peasants.

  34.  

    Gary Brother, I grew potatoes this year , Have had potatoes since mid summer, that is the 21 june when the sun stays up all night. At least where I live. I have given some to my neighbours and even to one enemy.You may ask what has this to do with Nama, the 2000 Mucs and the feckin GAA. Answer nothing. Yes! you mentioned the word survival and this is an exemple of surviving. I even fish. Impenitent is a lovely word. Get a crew of lads and start growing stuff.

  35.  

    Charles brother some have tried the grown you own rout. However NAMA shall hold a very great deal of land and entire town’s built on land that was perfect for agriculture use. That no one has any money to buy and even if they did they would have no interest in these. Well done on the “spuds” (Potatoe’s) you should store some for winter.

  36.  

    Brother Gary 8 Ah! I,m a sucker for the use of that fraternal greeting, I,m using my potatoe capital as a pskological barrier against desperation. I reason like this “as long as I have spuds( what a lovely word) I can survive. I have a stone cellar which withstands the cold. As we can have minus 30c. In there I have carrots , onions, and about 250kg “spuds” You can hang the old cured ham from the roof and I even store beer ther in the summer. this (jordkällare) was built of granite in or about 1850. It.s about 4kvadratmeter. The floor is earth and the roof is made of granit coverd by earth. It is constantly plus 8c, about the temp of a houshold fridge. The more I hear of NAMA the more I love spuds. Gary you are a true brother to tolerate my rantings. Have you tried spud and onion soup with freshly baked bread?.

  37.  

    You might be interested to know that the word “spud” has Scandinavian origins.

  38.  

    ‘Brother’? Are we in a lodge gentlemen?

  39.  

    Bock, I never cease to marvel at your univerasal knowledge. The mere fact that your knowlege encompasses the history of the humble spud (love the word spud) heightens my respect for the wholeness of your cultural being. Spuds are known as “Potater” “Potatis” och” Knölar”. In Denmark as “Kartofflar” (pluralis)” Spuds” could very well be very old Norse. Old people have great respect for spuds here as it many a time held hunger from the door. I know the Irish are identified with the potatoe sorry spud but in all honesty it has a special place in the heart of people every where. Herring and new spuds are the bees knees here at mid summer and vodka. Can,t stand the stuff, the vodka. ush.

  40.  

    Should mention that the “Jordkällare” must face north. That is to say the door so as to avoid the heat of the sun. The bulk of the cellar with the earth on top as isolation is in line with the south. All so as my little spuds feel cool. No! C’est la Craic we are in a “Jordkällare” with my spuds. Ask Gary what that is. We are about to start a Fraternity for the admiration of the humble spud.

  41.  

    -Charles
    Through the magic of google I do not need to ask Gary what a “Jordkällare” is. Also, and it may just be coincidence but the “källare” part looks like ‘celler’.
    Best of luck with your fraternity of the potato. Here’s a logo if want.

  42.  

    C’est La Craic, I hereby adopt the logo and thanks for taking us seriously. May I recruit you as a member? (Irish section) You wisely observed that “källare is cellar and “Jord ” is Earth”.

  43.  

    Wo onto he who would take a man’s eyes
    And then mock his blindness in secretive cries.

    No thanks Charles, I’ll pass. I have no time for the ‘Great Potato Planter’

  44.  

    Charles Brother I agree wholehearted with you on the logo. C’est Le Craic has done an excellent job. My thanks for same and for the photo of the Jordkällare it reminds me of New grange here in Ireland. Unfortunately after NAMA is rammed through anyone left in Ireland shall all have to grow our own food. C’est Le Craic has had the good sense to move to France.

  45.  

    Listen lads we really have to get organised, C’est La Craic you are a genius as well as Bock. The flight of the wild geese has begun, again. Why France?. Gary brother our fraternity has lost a potential member to France. That Black Scenario has depressed me and I don,t even live in Ireland.

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