Judge Refuses to allow sale of Carroll Company's Property

[Cassandra Syndrome]

Cassandra, where did you study Economics?

Why do you ask?

[ManUnited]

Why do you ask?

Maybe because he doesn't know yet that you are a libertarian..if he did he would'nt ask

[Cassandra Syndrome]

The writers of both pieces are Irish economics professors , and Philip Lane references literature in his piece. The EC did introduce the strict phrase, and others are happy to use it. The concept is quite clearly defined in both links I provided , other people use other names for the same concept, e.g.

The Irish Economy Blog Archive The Valuation of Distressed Assets

Lane's paper indicates a linear approach will work, though on another Irish economy post Prof Honohan points to econometric modelling that does rely on stochastic elements:

The Irish Economy Blog Archive The maths of NAMA-type valuations

The methods are not the issue here, rather the claim that some make (now including Peter Kelly) , that current "market" values, may not correspond with fundamental/long term economic value.

cYp

Why complicate this issue going down the Markov level? We are not dealing with a series of complex fractal butterfly variables within our matrix. Plus this is 54 Billion Euro of taxpayers money we are gambling with. These econometrics failed miserably in the advent of the financial crisis.

Concerning NAMA, I appreciate is involved in property and has template complex Markov chain formulas to risk assess with, but it is more akin to the simplicity of demand and supply. The econometrics of demand supply are more easy to calculate in relation to this country.

The variables within demand are;
1. the price of the good itself
2. The price of a substitute (rent, live with family0
3. Socio Economic Factors (trend setting factors, keeping up with the Joneses, I have to buy because my friend is, population trends)
4. Income Levels (shrinking rapidly)
5. The expected Future price of property (going down)

1 is still too high as restrictions on borrowing means that about 3 times one's income can be mortgaged these days, thats if you can secure a mortgage.
2 Rent is cheap. Living at home an option
3 Its no longer cool to have a home, mass emigration
4 Incomes plummeting
5 Going Down

So draw up an econometric of demand and it will show about 15,000 units of demand at current levels per year.

Supply
Over 300,000 of housing units.

Market Equilibrium. To increase demand from the current 15,000 units to 300,000 units prices need to drop from the average now at 200,000 to about 30,000 Euro.

Of course there will be market externalities to prevent this equilbrium such as reserve price etc, but there are units selling at 35,000 to 45,000 and there are over 1,000 properties for sale under 100,000. So if NAMA is an externality currently existing at 200,000, how will these properties sell for 220,000 in 2010 money come 2020?