Is it realistic to expect state owned NAMA to become a giant developer of housing, replacing private sector housing developers?

Patslatt1

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In general and proved all over the world: no business where State holds the majority stock giving politicians powers to make business decisions, can ever run as efficiently as privately held. The reason is simple: politicians do not put their own money in the business therefore they have no real desire to run it efficiently and be the best as it can be. When you put your own stake (money) in a business, you'll do anything to make it work, it's yours. If you get millions to manage with no real financial repercussion if it fails and with no real prospects of gains when it success, then this is never going to work well.
Add corruption, political goals (elections etc) not aligned with the business targets, boards and management elected on grounds of political sympathies rather than on experience grounds and then you have elections, change of government, new government get rid of the boards, elects it's own boards (again on political sympathies grounds), changes strategy to fit it's political agenda.

You can ask, if it's all so bad, why state owned companies bankrupt so rarely? Well, that's simple too, governments do not let State companies fail. When business goes bad they just pump taxpayer money into it and all is grant. But do we really want this?
People before Profit think Sinn Fein has sold out in trying to befriend FF. But both favour all forms of government spending for which the small minority of rich will pay in the hard left fantasy peddled to bedgrudgers and naive youth.
 


Patslatt1

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In general and proved all over the world: no business where State holds the majority stock giving politicians powers to make business decisions, can ever run as efficiently as privately held. The reason is simple: politicians do not put their own money in the business therefore they have no real desire to run it efficiently and be the best as it can be. When you put your own stake (money) in a business, you'll do anything to make it work, it's yours. If you get millions to manage with no real financial repercussion if it fails and with no real prospects of gains when it success, then this is never going to work well.
Add corruption, political goals (elections etc) not aligned with the business targets, boards and management elected on grounds of political sympathies rather than on experience grounds and then you have elections, change of government, new government get rid of the boards, elects it's own boards (again on political sympathies grounds), changes strategy to fit it's political agenda.

You can ask, if it's all so bad, why state owned companies bankrupt so rarely? Well, that's simple too, governments do not let State companies fail. When business goes bad they just pump taxpayer money into it and all is grant. But do we really want this?
An example of politicised business-Bord Na Mona gets heavily subsidised electricity from ESB to keep some useless business going in the midlands AFAIK.
 

Man or Mouse

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NAMA performed reasonably well in its workouts of distressed debts of banks going by its three billion estimated profit on conclusion of its deals, although there are doubts about valuations in sales prices obtained in many secretive sales, especially in Northern Ireland.

Given this financial workout track record, the government hopes the public will support its plan to turn NAMA into a giant developer of housing, a completely different business. It likely assumes projects proposed or endorsed by NAMA as a state agency will be better at navigating the red tape obstacle course of planning permissions and vexatious appeals than similar projects of private developers. But why should salaried NAMA civil servants be any more persuasive with planning departments than private developers and their top managers who are motivated to get things done by big potential profits and bonuses and have a track record in housing construction?

The main barriers to housing are caused by NIMBYS (not in my back yard) and Ireland's more extreme BANANA (build nothing anywhere near anything). For examples, see NIMBY, BANANA, CAVE and other acronyms. These selfish objectors are mostly home owners who influence council and general elections. To pander to them, councils and governments have created planning red tape to slow housing development. This isn't as bad as Cromwell's edict "To Hell or to Connacht", but it is socially very divisive now that average couples can no longer afford the average house prices in Dublin and many areas of surrounding counties.

There would be no need for statist NAMA if the government directly tackled the planning red tape by centralising planning permissions, though retaining local planning offices for local knowledge. Other measures could include selling off numerous government owned sites all over Dublin to take advantage of presently high development land prices; raising the height limits of apartments in architecturally mediocre areas of Dublin; imposing quotas of housing construction on councils with a poor housing track record;investing in water and sewerage to bring more development land on the market; and financing more housing association social housing projects which would likely be better managed than council housing.

Those who are fond of statist solutions will argue that NAMA could use its financial expertise as a banker to builders and developers. But in the long run the Irish banks and financial institutions should be better suited to that role assuming they have thoroughly been humbled by the mortgage losses in the crash. There is a risk that in the absence of a profit motive, NAMA might be tempted to play favourites with developers and builders with an inside track, whereas bank shareholders interested in profits would want the banks to finace the most profitable developments. If the banks are short of capital for housing finance, maybe the government should use the proceeds of NAMA asset sales to invest in bank shares or bonds which could be sold in public offerings over time.
No. No. A thousand times no.
 

Patslatt1

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No. No. A thousand times no.
Bank credit is the engine of the economy. If the banks are short of capital for home mortgages, an investment of NAMA sales proceeds in bank shares would be justified and should not be confused with bailouts. The shares could be resold to the public over a number of years, depending on stock market conditions, possibly with a legislated deadline for the resale.

The slow pace of home repossessions in mortgage defaults and the problem of strategic defaults are also deterring bank mortgage lending. The solutions could include increasing the number of judges with financial experience, increasing rental housing supply to help evicted home owners and subsidies for home mortgage insurance.
 

FunkyBoogaloo

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Not any more, The government set up an SPV of which 51% was privately owned in 2010.
They put in €51m and will get a return on that alone. But the nationalisation of most of the contributors took the Govt stake to 66% and necessitated the sale of some SPV chunks.

The original "owners", which we in turn mostly owned.

Irish Life Investment Managers, a part of PTSB
  • New Ireland Assurance, a part of BOI
  • Clients of Allied Irish Banks Investment Managers, a part of AIB
NAMA is still a privately owned entity. If it wasn't our debt to GDP/GNP/GNI* would skyrocket immediately.

SCAMA's private ownership structure means that its debts don't appear on the state's books. The way it was designed.
 

Patslatt1

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NAMA is still a privately owned entity. If it wasn't our debt to GDP/GNP/GNI* would skyrocket immediately.

SCAMA's private ownership structure means that its debts don't appear on the state's books. The way it was designed.
The government plan to redirect NAMA to supply housing is non commercial and would likely be opposed by the private shareholders since NAMA lacks experience in housing construction. To get them to agree, the government might implicitly promise to bully the councils into fast tracking planning permissions for NAMA, a form of state support forbidden by the EU.
 

wombat

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My opinion is that NAMA should be closed asap. Bord na Mona was setup to develop turf as a fuel when we imported coal. It has long overstayed its welcome, diversifying into everything from pollution control to windmills to justify its existence. NAMA could still be around in 50 years building theme parks in Connemara or flying drones off Donegal, justifying its existence.
 

Patslatt1

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My opinion is that NAMA should be closed asap. Bord na Mona was setup to develop turf as a fuel when we imported coal. It has long overstayed its welcome, diversifying into everything from pollution control to windmills to justify its existence. NAMA could still be around in 50 years building theme parks in Connemara or flying drones off Donegal, justifying its existence.
The Offaly vote is influenced by Bord's non turf business there.
 

sic transit

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The government plan to redirect NAMA to supply housing is non commercial and would likely be opposed by the private shareholders since NAMA lacks experience in housing construction. To get them to agree, the government might implicitly promise to bully the councils into fast tracking planning permissions for NAMA, a form of state support forbidden by the EU.
We own 66% of it so it doesn't matter a hoot what the private shareholders think.
 
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sic transit

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NAMA is still a privately owned entity. If it wasn't our debt to GDP/GNP/GNI* would skyrocket immediately.

SCAMA's private ownership structure means that its debts don't appear on the state's books. The way it was designed.
It's not. I really have no idea what point you are trying to make with all of this apart from the I HATE NAMA tattoo you clearly have. It had a very clear purpose and it has largely achieved it, As for its debts, currently at about 5% or so of the original total, they will be cleared by the end of 2017 and it will deliver a nice windfall for the Exchequer when it does shut down pretty soon.
 

HarshBuzz

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My opinion is that NAMA should be closed asap. Bord na Mona was setup to develop turf as a fuel when we imported coal. It has long overstayed its welcome, diversifying into everything from pollution control to windmills to justify its existence. NAMA could still be around in 50 years building theme parks in Connemara or flying drones off Donegal, justifying its existence.
It is a rare thing in the Irish PS though - an organisation that actually achieved its strategic objectives.
 

FunkyBoogaloo

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It's not. I really have no idea what point you are trying to make with all of this apart from the I HATE NAMA tattoo you clearly have. It had a very clear purpose and it has largely achieved it, As for its debts, currently at about 5% or so of the original total, they will be cleared by the end of 2017 and it will deliver a nice windfall for the Exchequer when it does shut down pretty soon.
I have always detested NAMA, and argued against its inception from the beginning.

My point was, rather simply, to point out that NAMA is not state-owned. As the title of the thread states.
 

JCR

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It is a rare thing in the Irish PS though - an organisation that actually achieved its strategic objectives.
Yes it did, no doubt about it. Which was keeping property values as high as possible in order to cover up the fact that Irish banks were a busted flush even with the bailout. Part of this strategy was to restrict supply.

Well done with the objectives, maybe some day people will realise the full extent of the mess the builders and banks made of the country. I doubt it though. The people seem happy enough with the nonsense they have been fed by Irish "journalists" who are paid to deflect attention from what actually happened in this country.
 

Golden Phoenix

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There's much that can be said of Nama.

Let's start with its lack of transparency.
 

Patslatt1

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We own 66% of it so it doesn't matter a hoot what the private shareholders think.
Minority shareholder rights have legal force. A legal challenge could prove embarrassing if it showed NAMA's lack of housing construction experience. There is also the threat of exposing possible skeletons in the closet from pricing in past asset deals that were not subject to public disclosure.
 

Patslatt1

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Yes it did, no doubt about it. Which was keeping property values as high as possible in order to cover up the fact that Irish banks were a busted flush even with the bailout. Part of this strategy was to restrict supply.

Well done with the objectives, maybe some day people will realise the full extent of the mess the builders and banks made of the country. I doubt it though. The people seem happy enough with the nonsense they have been fed by Irish "journalists" who are paid to deflect attention from what actually happened in this country.
Without measures to support housing prices,the alternative was to increase the bank bailout by maybe a further 20 billion euro, about 20,000 per Irish household.
 

Patslatt1

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I have always detested NAMA, and argued against its inception from the beginning.

My point was, rather simply, to point out that NAMA is not state-owned. As the title of the thread states.
NAMA is majority owned by the state but not wholly owned. With the governmnt plan for NAMA to engage in business that isn't profit maximising, it is not a real private sector company.
 

sic transit

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Minority shareholder rights have legal force. A legal challenge could prove embarrassing if it showed NAMA's lack of housing construction experience. There is also the threat of exposing possible skeletons in the closet from pricing in past asset deals that were not subject to public disclosure.
They are financial funds,mostly pension and this is a speculative what-if conceit.
 

JCR

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Without measures to support housing prices,the alternative was to increase the bank bailout by maybe a further 20 billion euro, about 20,000 per Irish household.
That's the very contentious line being fed alright. Ownership of Irish banks by foreign capital was another alternative.
 


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