Ghost Estates

Nama taking economic poison

The whole point of Nama is to transfer money to the banks.

Always keep that in mind.

Whatever they tell you about haircuts, remember that Nama will still be paying the banks more than their loans are worth, through a deft piece of doublethink known as Long-Term Economic Value.

This means that Nama doesn’t buy the assets from the banks at their current value, but at some price which they hope will emerge perhaps ten years from now.  It’s like buying an Ikea table and waiting for it to become an antique.

All well and good.  Who knows?  Perhaps some of the properties that these loans are secured against will recover part of their value, but where does that leave the so-called Ghost Estates?

These are the abandoned building sites in Roscommon, Leitrim and Sligo, where concrete mixers lie rusting, on their side, and roofless shells of houses slowly deteriorate in the rain.

There’s a conundrum for you.  The ghost estates are worth absolutely nothing today.  Not a cent, because nobody will buy a house in them.  They’re worthless, but that isn’t the worst part of it for Nama, which is spending your money to acquire the associated assets: namely, the bank loans.

You see, not only are these houses currently worthless, but their long-term value is even less than zero.  Why?  Because they are slowly crumbling and will eventually have to be knocked, which will cost a fortune in demolition, removal of the rubble and reinstatement of the land for agriculture. Many of them are timber-framed, a method of building which was uncommon in Ireland until a few years ago.  Any house built in this way, which has not been protected from the weather, is now uninhabitable, and cannot be repaired.  Many more have been soaked so long, with exposed cavities, that their timbers are saturated and their polyurethane insulation has been degraded by ultraviolet light.  These houses are fit only for the bulldozer.

It’s even worse than that.  Apart from the houses in the areas I mentioned, where the demographics ensure nobody will ever live in them, there are estates in our urban centres which are at a standstill for financial reasons, and many of these houses will also feel the kiss of the bulldozer, because they’ll have rotted away while the money gets sorted out.  Ironically, when these houses are knocked, identical new ones will be built on their foundations.

So, what exactly will Nama pay the banks for assets which are currently worthless , and which will gradually turn into a huge financial burden?  What sort of haircut do you think the banks should be expected to take?

Even if it didn’t pay a penny for these loans, Nama would still be doing the banks a huge favour if it took them over.

Why?  Because it would remove the long-term toxicity from the banks and place it on the shoulders of the taxpayer.

It’s one thing to buy assets which are worth less than they should be.  It’s another thing to buy assets which are worthless.

But what about acquiring assets which will become more and more toxic as the years pass?

Why should the taxpayer do such a thing?

19 thoughts on “Ghost Estates

  1. “Why should the taxpayer do such a thing?” Because we’re no choice in the matter or think we have no choice. Our leaders don’t put these things to a vote, because they’d know the outcome. We think we’re living in a democracy. It has all the appearances of one which is all that matters.
    What’s it Churchill said about democracy, ‘democracy is the worst form of government except for all the others.’.. or something to that affect.

  2. You don’t have to go far to see these ghost estates, Castleconnell, Croom, Fedamore and other places.
    Most of these are timber framed, or even worse the so called aeroboard houses.
    Most of these aeroboard houses were put by one builder and now he can’t give them away.
    The thing is that most of these houses wouldn’t pass the standard needed for local authority houses.
    It never ceased to amaze me that people were paying out huge sums of money for houses, and it never crossed their minds to hire an engineer (for the price of a flat screen TV) to check it out as it was been built.

    The corners that were cut, the bad workmanship, poor materials, despite all the money been handed over.

    In the last 15years I have worked mostly on private sector houses, and I can tell you that only one builder that I worked for in that time, had any pride or genuine interest in doing a good job.

  3. Well the simple answer to why should the taxpayer do such a thing, is they shouldn’t. But that question assumes choice in the matter.

  4. Is there actually anything any of us can do about the national scam that is going on? Seriously, I will be the first cunt there with a pitchfork and a flaming bale of hay on it. As I said in earlier posts, I am embarrassed to be Irish, not because of other corrupt fuckbags, but because we seem to be powerless to do anything about it. I lived in France before and there is no fucking way they would tolerate this deception, they still have the revolutionary mindset in their psyche and celebrete it with passion every July. Maybe we should take a leaf or two

  5. Well, see, there’s the thing. We like to pretend we had a revolution, when in fact all we had was a transfer of power to a different bunch of crooks.

  6. Seriously Bock, I am open to suggestions as to how we will tackle this, has anybody got any ideas to stop this crippling death grip? (which is the correct translation for mortgage”

  7. It is true that timber frame houses will deteriorate beyong repair quickly and evan concret block houses with Polyurethane insulation in walls will suffer as that insulation is not supposed to be saturated.
    I often wonder what damage is being caused to the large projects such as the Parkway and behind the Post Office. The re-inforcing steel and other corrodable elements are exposed to the weather and rusting away. There must come a point where the rust and deterioration has gone too far.

    Strictly speaking the owners of these sites could be fined under the derelict sites act as they have left these sites in an ugly state.

  8. NAMA is the Haiti of financial institutions practising voodoo economics with a cast of zombie banks

  9. @FME

    I like to think there are other forms of democracy where this kind of folly and waste aren’t permitted to occur, because building would be regulated for the common good. That would require democratic control over the economy, though.

    But I doubt we get there in an evolutionary path from the current faux-democracy under which we suffer.

    I had to laugh when I read someone from Democrats Abroad in the Irish Times urging young people to ‘engage with the system’. Those who think about these things must be utterly un-enthused by those who promise change, and then provide the same-old-same-old when in power. Just look at the performance of Obama. Look at the Greens here. Promising change within the existing system rings increasingly hollow.

  10. Very true Pope.. it’s must all get a bit disheartening eventually for the ‘engage with the sytem’ types. But then again everyone was young once and believed any ole bullshit. ‘Yes we can’ rings a bit hollow all right.. like walking up the morning after and realizing you’ve been pushed over to the wet side.

    By the way, hope the housekeeper is well. :) I’m grown quite attached to her with your mention of her here and there. Lazy bastard. :)

  11. There was a banker from AIB on the TV last night complaining about the extent of his “haircut” by NAMA.
    I think when barber Lenehan finish haircutting all these guys,and spits out the garlic, he will find that there never was any hair there at all-the guys were wearing wigs..
    Should the banks be paying him to restore the ghost estates to agricultural land?

    “NAMA is the Haiti of financial institutions practising voodoo economics with a cast of zombie banks”
    (I love that phrase it sounds so right.)
    Does this trailer do justice to the movie?

  12. Folks,
    this is the best recession ever, I am having some laugh everyday listening to the sob stories and everyone blaming everyone bar ourselves.
    Every fkn plasterer in the country bought a 4×4 that would’nt fit a buckett in, every fkn blocklayer bought an appartment in Bulgaira and every painter bought summer house in the west…..this is some laugh.
    I wish it was 10 years from now to see how we have got on……I know that I will be in bits from laughing

  13. Talking about tradesmen;during the peak of the money grabbing, Madness Era an electrician charged me 500 Euros (cash and presumably tax free as I got no reciept) to tidy up my main fuse board.
    Granted it took him a long day to do it.
    Funny,like you mention, he was driving a very flash 4X4..
    I would probably get the job done for less today.!

  14. John, I dont mean in the least to be offensive,but my father had an aphorism that went ‘a fool and his money are soon parted’.

  15. Yes but you could not get a tradesman to do a small(ish) job back then. They were all beavering away on the building sites making fortunes.
    Living abroad as we do most of the year,when we came home we got the sense/feeling that everybody in Ireland was wallowing in money(which they were ) at the time.
    Actually in Gran Canaria where I live it was the same.
    Now all the building sites are derelict there too, and tradesmen are ten a penny.!

  16. John McD. Isn’t it time to dispell the notion that ” Everyone in Ireland was wallowing in money ” ? This really was not the case for a lot of people.
    Yes. I see the whole ” reckless lending, reckless borrowing ” and ” manyana ” picture, But there were and are many, myself included for whom those years made little or no difference.
    Good talented tradesmen can command a price for their work and entitled to it, After a bit of haggling !

    We were unrealistic, we fell for the hype, If we are’nt been led by the nose by the Church then their cohorts, Bankers and Politicians pull the rope.
    Time to find our own strengths and recognise our weakness.

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