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About LinkBacksWill the long term economic value take into account that anyone with legs and the ability to work will have left the country to avoid the bill of paying off these debts and therefore there will be plenty of spare houses about?
Will the long term economic value take into account that anyone with legs and the ability to work will have left the country to avoid the bill of paying off these debts and therefore there will be plenty of spare houses about?
will these be 10 year bonds, 25 year etc, how in the name of god will we ever honour them, we already have a fair few to pay off.
It is quite simple what is being planned and the obfuscators are getting paid to muddy the waters.Originally Posted by Hal
In a market, the value of an asset it what it can be sold for right now. There is no other valuation method. The govt is saying that the market does not decide the value but that they do and thus they ARE the market, which is just a straightforward lie. In reality they are just using taxpayers money to make an investment. All investments try to guess what value will be in the future, this investment is no different to any other except in the scale. The only difference is that the investors in this case are uninterested in buying at the lowest price and thus they have absolutely no chance of even breaking even. Simple. End of.
The notion that an Irish government board has "discovered" the long term economic value (notice value not price) of property in Ireland is laughable. Like a previous poster has already stated, hundreds of millions of people have lost billions forecasting things like this incorrectly. The sad thing is they are gambling with taxpayers money. The state and banks now have a vested interest in keeping prices of property above a certain level and I find this sickening to be honest, prices should now be coming down for all the sensible people who were living within their means, saving for the day when house prices were more affordable (or simply for their deposit), and these people are being screwed again by bad government decisions.
I agree with a previous posters analysis of the governments decision-making methodology:
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Pretty much, all long-term house price data available from the US, UK and Holland (where we have house price records going back over the last century) all says pretty much the same thing: over the long term property tends to only just beat inflation, by around 1% to 1.5% pa.
Soul almost completely worn through
It is very easy to make the long-time economic value proposition sound eminently reasonable in theory. But as the govt are so fond of telling us re the impending budget, we all need a massive reality check, and the govt and media are numbers one and two on the list of those who need to get rid of the post-celtic tiger blinkers on NAMA.
For example Cliff Taylor wrote a pretty serious, but essentially pro-NAMA, comment piece in the SBP this weekend. Regarding how to assess LTEV he claimed:
and againA key input will be an assessment of what the underlying property assets would be worth when the economic cycle turns up; the estimate is likely to be based on the expected value in five to seven years.
Now this sounds reasonable, he's clearly not expecting a Celtic Tiger to re-emerge in the next ten years, and neither, he implies, is Mr. Lenihan. Yet he repeatedly refers to the 5-7 year period within which "normality" returns. What is this normality?...an amount will be added to the loans to reflect their expected value in five to seven years’ time. This is not intended to be a valuation at the next peak of the property cycle, which will most likely be longer away, but rather an estimate of a value when some kind of normality returns to the market.
And why, in a market with a massive overhang of products, a still falling price situation, a large unemployment rate, increasing taxes and public service cuts, and widespread uncertainty, is it anticipated that Normality will return in a mere 7 years?
Maybe Hal could elucidate?
I have opinions of my own - strong opinions - but I don't always agree with them. - George Bush
A mind boggling post. What you are saying is that the government is going to rig the market. In a free market as has been pointed out, the value is what people will pay for it. The government is, using our money, overpaying for the assets and will then sit on them until they rise in value. On the basis of other burst bubbles that will be 20 years in the future at least. All the while paying interest on the debt thanks to our taxes.
"The Egyptians could run to Egypt, the Syrians into Syria. The only place we could run was into the sea, and before we did that we might as well fight.” -Golda Meir
Basic law of economics, the value of something is what someone is willing to pay for it. QED.
Not what you would like to think they might pay for it in a few years or anything else. I mean for god sake, something is worth what something is worth, end of story. Property for development in a country not developing or not likely to for a generation is virtually worthless, end of story. Deal with it.
That is the whole point of my objections to NAMA. You simply cannot predict a market. Look at the analysis of the Celtic Tiger 2 years ago by economists and what happened. Trying to shoehorn people's reasons for buying property (or anything) into straight figures is impossible.
"The Egyptians could run to Egypt, the Syrians into Syria. The only place we could run was into the sea, and before we did that we might as well fight.” -Golda Meir
On this thread, we have now arrived at a simple but total destruction of the 'long term economic value' concept. I don't think we will see any more NAMA-ers coming in to fight this as they have completely lost this argument but I hope they try. We should send this thread around anti-NAMA representatives to help their arguments.
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