Originally Posted by SPN

Neither the ECB nor the Irish Government believe that there will ever be a demand for payment from the ECB, not least because the outcome of such a demand would be the bankruptcy of the ECB itself when the Irish Government said "Sorry dude, no can do". The ECB is never going to cause such a situation to occur.

And isn't this similar to the position that the guarantee puts us in, viz-a-viz the developers.

It all goes back to the guarantee. Without it, or with a more limited 'it', things might have been different.

Originally Posted by Schuhart

It all goes back to the guarantee. Without it, or with a more limited 'it', things might have been different.

It doesn't.

Our EU "partners" are on the cusp of recapitalising their banks, and none of them were guaranteed by their respective states.

What it all does back to is Lehmans, and the dreaded fear of contagion in the globalised banking system.

Originally Posted by tonic

What happened to your ignore button or were you just lying again?

You know how it is, Tony. I couldn't resist.


Loan Value €73.6 billion
Loan cost €30.3 billion.
Difference €43.3 billion.

Originally Posted by goosebump

What it all does back to is Lehmans, and the dreaded fear of contagion in the globalised banking system.

Remember the length of the road we've now travelled in this discussion.

We're saying (well, you are saying, at any rate) that an inevitable consequence of Lehmans was that the Irish taxpayer would have to pick up Irish developers' losses.

Just to be clear, are you also saying that lying to the Irish public as they were made to pay for developers' losses was also a necessary part of the process?

Thinking about this today.

All the contributions above etc......

Its all a WORD GAME. Similar to scrabble

Bail out, subsidy, developers, loans written off, bankruptcy, etc.....................


Someone more intelligent can put words to this


I`m a developer. I bet on property. I lost. My business fails. I cannot repay the banks. I can pay some interest not all. I`ve given up paying capital. NAMA are my best friend. They will pay me a salary if I help complete developments etc. I will work hard to achieve this goal. The situation is as follows



I bought land / property to the value in 2007 of circa € 1,000 million.
I have loans of €800 million
I am worth €200 million - Happy Hammer

Soft landing doesn`t happen.

Property now valued at €600 million
Nobody will buy it.
My loans are €800 million with interest being added daily.

NAMA arrive.

They buy my loans at a 40% discount from AIB.

They "pay" €480 million.

If I could sell my assets now for €480 million I would get out of this at no cost to me.
I`ve lost my equity in 2007 of €200 million. I waited too long.

NAMA has given me time to pay my debts.

It could have been worse.

€480 million assets €800 million debts

NAMA hasn`t done anything.
The exchequer has covered my losses by putting the €320m into the banks for which I was liable
or some other word play !!!!!

Originally Posted by Dreaded_Estate

That may be true in some situations.

However, we also have to accept the fact that the developer will be allowed to walk away from a portion of the debt with assets and a business still intact.

Dreaded, if the developer has assets and businesses not covered by cross guarantees on defaulting assets in NAMA, there is not a lot NAMA can do.
What NAMA are currently doing is seeking to have these unencumbered assets brought under their security in the consensus agreement reached with the developers.

Originally Posted by Schuhart

And isn't this similar to the position that the guarantee puts us in, viz-a-viz the developers.

It all goes back to the guarantee. Without it, or with a more limited 'it', things might have been different.

I don't see how the guarantee affects the developers (if that is what you are saying).

NAMA is a misguided, monstrously expensive and failed vehicle to recapitalise the banks and get credit flowing again.

The guarantee guaranteed deposits and debt investments in the banks to attempt to 'ensure' they were capitalised properly.

I don't see a link between the guarantee and NAMA, unless I am missing something.

_ Perhaps one of David McWilliams better articles.

David McWilliams » Sacrificing jobs to protect landlords is plain wrong

Originally Posted by meriwether

I don't see a link between the guarantee and NAMA, unless I am missing something.

This is really just the way I see it - I might well be wrong.

As I see it, by promising to repay almost all bondholders and depositors, the guarantee meant that the State suddenly had an interest in whether or not all borrowers repaid their loans. Developer loans were a very significant and troubled portion of the banks' business. Yet, the developers problems were suddenly our problem - because of the guarantee. If the developer couldn't pay, then we'd still have to repay the bonds issued to raise the funds that were lent.

Consequently, the State had and has a very keen interest in whether those loans could perform, and in how the return could be maximised. So, even if all the FF/building industry links didn't exist, the State would still have to take a close interest in how the best returns on developer loans could be obtained. So, if developer X says "I'll meet you half way and save you the cost and delay of chasing me through the Courts - just leave me the house and a few million", the State has to be open to the offer if it's the best way of getting those particular loans to repay as much of the guaranteed bonds and deposits as possible.

I've read over that again - I don't think I'm explaining it too eloquently, but hopefully the main thread is clear. The guarantee basically put us in the loop, by placing us between the bank and the bondholder. Also, because of the guarantee, the banks were relieved of the absolute need to pursue developers for the loans, as we were committed to repay the bonds regardless.

Now, I'm not saying this is the only dynamic in play. Clearly, FF/builder links are important, too. What I'm mostly pointing out is the technique of the guarantee tied the public's fortunes to those of the developers. We, effectively or ultimately, became their guarantors.

Originally Posted by Schuhart

Remember the length of the road we've now travelled in this discussion.

We're saying (well, you are saying, at any rate) that an inevitable consequence of Lehmans was that the Irish taxpayer would have to pick up Irish developers' losses.

Just to be clear, are you also saying that lying to the Irish public as they were made to pay for developers' losses was also a necessary part of the process?

No. How do you come to that conclusion?

I believe in the necessity of recapitalising the banks. I don't agree with NAMA being only concerned with what they paid for the loads. I believe they should be focused on maximising the return to the taxpayer, not merely clearing their lines.