MK exposes the deeply flawed caluclations underlying Lenihan's 'long term economic value' proposal for NAMA. He suggests that neither side in the debate thus far has provided any credible rationale for their arguments.
The prognosis is not good - not nearly as good as it would have to be for Lenihan/NAMA figures to stack up. A key factor (among others) that has been overlooked - or more likely is being deliberately ignored or finessed out of the equation - is the fall in rental values for both commercial and residential rental property. Daft had 25,000 rental properties available at start of 09 compared to 5,000 in 07. In addition to an excess of property supply, incomes are down, spending cuts are up and there is no economic stimulus to ease the economy. The excess of rental property was the exact indicator that Kelly pointed to two years ago to show that the bubble was already busting - to howls of outrage. It took 15 years for the market to hit its floor during a similar property-related crash in Japan. And yet our genuises in government are STILL carrying on regardless as if we in Ireland are uniquely impervious to economic realities. I don't believe there is a single head in the Dail that doesnt know this NAMA thing is pure scam. It's main objective appears to be to get the filthy thing through, get the boys paid off as quickly as possible and let the ramifications of it all be felt and lamented long after there is any chance of preventing it. Fianna Fail will brazen this out like they have brazened everything else out. Are we seriously going to let them do this?Already the Irish property market has seen unusually sharp falls by international historical standards. The Sherry FitzGerald house price index is down 35 per cent nationally, and 42 per cent for Dublin; while the Society of Chartered Surveyors estimate that commercial property prices have fallen 48.6 per cent from their peak; and Knight Frank estimate that farmland prices, which were driven by their development potential, are down 45 per cent from their peak but are still twice those of comparable UK land.
Despite these large falls, which already exceed the one third haircut on Nama assets rumoured to be proposed by the Government, the property market remains moribund. Property transactions, measured by stamp duty receipts, are two thirds down on this time last year, and 80 per cent lower than two years ago.
In other words, if nobody is buying despite large falls in price, then price needs to fall considerably further to reach its long-run equilibrium
Every man woman and child in this country should be registering their anger with all of their local TDs about this crime. The government have got to be sent a strong signal: thus far but no further, you shower of incompetent, thieveing wretches.
Overpaying for Nama may hit taxpayer for €30bn - The Irish Times - Tue, Sep 15, 2009