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Dermot Desmond says NAMA will do untold long term damage to Ireland Inc




LDF

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Interesting timing from Desmond - to announce his idea on the morning of the debate. This could rally those in Govt who are doubtful about NAMA.
 

blacbloc

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Interesting timing from Desmond - to announce his idea on the morning of the debate. This could rally those in Govt who are doubtful about NAMA.
There was remarkably little commentary about him selling his shares in Irish banks a couple of weeks ago. It was a big signal about what he felt about where this was all headed. Wonder what behind-the-scenes 'discussions' have been taking place. Nothing confirms my opinion more that not even Lenihan believes this is a good idea. Desmond is tactful about the motives of the valuers and the plan. His intervention now, is a big signal that the government and Fianna Fail will be finished for a very long time if they go ahead with this.
 

Lennon

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Dermot Desmond must be listened to by Government.

His solution makes much more sence than NAMA, is much more transparent and less risky to the taxpayer.

"Further overseas investments by the Irish banks cannot be justified in an environment where we need all our capital to deal with the problems in Ireland. The banks should be returning to their roots and selling off their overseas assets. Ireland Inc should provide all the necessary funding to meet the liquidity needs of the banks and should charge appropriately for the liquidity. Equally the funding provided by the Government should rank in priority to the existing equity and capital providers so that if there are losses then these will be the groups that suffer them."

Financial institutions should be left to manage their own delinquent assets - The Irish Times - Wed, Sep 16, 2009
 

Hobo Sapiens

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Brilliant news!

Perhaps DD is not just another oligarch?

If FF continue to ignore all the warnings about NAMA and try to push it through, they will deserve all the calumny that will come their way.

The Greens, OTOH, have a fantastic chance to redeem their electoral hopes by ending NAMA right now. That probably would lead to a gen. election and there's the crux. Their TDs appear to like their perks more than their integrity.

DD, how about calling for a No vote?!
 

Aindriu

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The Greens, OTOH, have a fantastic chance to redeem their electoral hopes by ending NAMA right now. That probably would lead to a gen. election and there's the crux. Their TDs appear to like their perks more than their integrity.
Absolutely correct! There is no integrity left in the Greens IMHO. They have sold their souls to the devil in order to gain the power they now cling to with their fingertips.

Shame on them!
 

b.a. baracus

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While Dermo may be correct he can keep his opinions to himself considering he is a tax exile.
 

blacbloc

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Why did he wait until now? :/
His history of support for Fianna Fail, I suppose. But he sold all his shares in Irish bank/s a few weeks ago which was a pretty obvious message to the government that he was getting out before things got worse. Bet there have been ferocious discussions behind the scenes. He is basically saying that the developers and the banks should face into the problems they created for themselves and that the government must only give money for genuine economic reasons, isn't he? The risk should lie where it belongs as much as possible.
 

LDF

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His history of support for Fianna Fail, I suppose. But he sold all his shares in Irish bank/s a few weeks ago which was a pretty obvious message to the government that he was getting out before things got worse. Bet there have been ferocious discussions behind the scenes. He is basically saying that the developers and the banks should face into the problems they created for themselves and that the government must only give money for genuine economic reasons, isn't he? The risk should lie where it belongs as much as possible.
Yes. He seems to lean more towards the FG proposal than the FF one.
 

needle_too

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Isnt it obvious?

Surely he wants to buy a bank and sees NAMA, propping them up, as an obstacle.
 

Malbekh

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His history of support for Fianna Fail, I suppose. But he sold all his shares in Irish bank/s a few weeks ago which was a pretty obvious message to the government that he was getting out before things got worse. Bet there have been ferocious discussions behind the scenes. He is basically saying that the developers and the banks should face into the problems they created for themselves and that the government must only give money for genuine economic reasons, isn't he? The risk should lie where it belongs as much as possible.
Hang on a second here, I sense a complete lack of logic going on - not with you - just with the way the thread is going.

If NAMA is good for the banks (and very few people would disagree with that), then surely the share prices will continue to prosper on the basis that there will be no nationalisation?

Why then, did he sell his shares instead of leaving them in longer to make a bigger return on his investment? Is this some sort of Clever Trevor approach affirming that bank investors are making a fortune on the back of NAMA?
 

cactusflower

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Hang on a second here, I sense a complete lack of logic going on - not with you - just with the way the thread is going.

If NAMA is good for the banks (and very few people would disagree with that), then surely the share prices will continue to prosper on the basis that there will be no nationalisation?

Why then, did he sell his shares instead of leaving them in longer to make a bigger return on his investment? Is this some sort of Clever Trevor approach affirming that bank investors are making a fortune on the back of NAMA?
He cleaned up. He can go in again, or not, depending on his assessment of where his money is best off. Perhaps he was attracted by the surging gold price.
 

goosebump

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DD provides a good explanation of the problem, but there is an inherent contradiction in his solution.

He says we should not attempt to value the property loans, but he claims that recapitalisation should occur via the banks issuing new bonds to the value of €60bn that are guaranteed by the State.

The banks would then manage their own assets and pay off these bonds over time.

However, what happens if the property loans aren't worth €60bn? That means the taxpayer will have to come in and fulfil the bonds.

In effect, he's proposing that we value the loans at €60bn, which is exactly what NAMA will do.

At least he is poo pooing nationalisation, but his main beef with NAMA seems to be the involvement of the public sector.
 

goosebump

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Hang on a second here, I sense a complete lack of logic going on - not with you - just with the way the thread is going.

If NAMA is good for the banks (and very few people would disagree with that), then surely the share prices will continue to prosper on the basis that there will be no nationalisation?

Why then, did he sell his shares instead of leaving them in longer to make a bigger return on his investment? Is this some sort of Clever Trevor approach affirming that bank investors are making a fortune on the back of NAMA?
One of the big questions at the moment is why are banking shares still trading at relatively low prices when it is stated Government policy to recapitalise them without making the shareholders take a hit.

The markets would appear to believe that its 50/50 whether or not NAMA goes ahead.

DD appears to believe that it won't.
 

goosebump

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cactusflower

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A must read:

Financial institutions should be left to manage their own delinquent assets - The Irish Times - Wed, Sep 16, 2009

Says the last thing we need is another expensive quango. The guy makes sense about this but a a good few questions arise. Eg leaving the same people in charge seems to be implied.
This is exactly what I said on another thread yesterday. Digout was shocked.

Based on the widely rumoured figures, Ireland Inc intends to provide circa €60 billion of bonds to the banks as part of the Nama exercise. The Government could achieve exactly the same impact by guaranteeing €60 billion of bonds issued by the banks themselves. The Government can then charge a completely transparent fee for the use of this guarantee. This leaves all the risk of the existing loans with the existing capital providers and could be implemented in the morning without new quangos, complicated legislation, or additional risk. It should be noted that Ireland Inc is already showing significant profit on its preference share investment in the two main banks.
I said that NAMA is a minefield and would be a disaster to administer and that a straightforward bailout (say, pay the banks enough to cover rolling over the loans for 4 years) would be cheaper.

Where I part company with Desmond is that I think Nationalisation might be the answer. But there are huge risks in that too, as we have no real knowledge of the assets and future liabilities of the banks.

A State investment bank is the only way to guarantee that new loans could be issued.

The Banks are planning to put up interest rates and charges as soon as NAMA is through.
 

blacbloc

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This is exactly what I said on another thread yesterday. Digout was shocked.



I said that NAMA is a minefield and would be a disaster to administer and that a straightforward bailout (say, pay the banks enough to cover rolling over the loans for 4 years) would be cheaper.

Where I part company with Desmond is that I think Nationalisation might be the answer. But there are huge risks in that too, as we have no real knowledge of the assets and future liabilities of the banks.

A State investment bank is the only way to guarantee that new loans could be issued.

The Banks are planning to put up interest rates and charges as soon as NAMA is through.
What's outrageous about the uncertainty of the risk is that so much of it is completely unnecessary. We should know who and what is involved - it would go a long way to enabling us to make some sort of reliable assessment. The secrecy is unforgiveable.
 

Malbekh

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This is exactly what I said on another thread yesterday. Digout was shocked.



I said that NAMA is a minefield and would be a disaster to administer and that a straightforward bailout (say, pay the banks enough to cover rolling over the loans for 4 years) would be cheaper.

Where I part company with Desmond is that I think Nationalisation might be the answer. But there are huge risks in that too, as we have no real knowledge of the assets and future liabilities of the banks.

A State investment bank is the only way to guarantee that new loans could be issued.

The Banks are planning to put up interest rates and charges as soon as NAMA is through.
Digout shocked? Surely not....

We've had a thread on how much money the country has made on the existing €7b investment in AIB/BOI here:

http://www.politics.ie/economy/101394-taxpayer-up-1-4bn-banking-investment-date.html

I tried to tidy it up as best as my NAMA-fried brain could and there seemed to be some consensus that in answer to us making money:

This is quite clearly not the case. The state has yet to receive any payment from the banks, and the payment when it comes in might well be in ordinary shares. The value in those ordinary shares are dependent to market forces and are therefore an unknown quantity.

We have a 25% stake option in the banks, but until that is exercised - and it may not be - you can't put a value to it.

In the meantime we are paying interest on the €7b loan afforded to the banks in the first place.

I'm just seeing a bunch of IOU's that mean another TLA, SFA.
And as Islands said later:

And bear in mind that when the options do become exercisable in 5 years time, they may only cover 15% or so of the bank capital, not 25%
 

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