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Thread: NAMA versus the Grim Reaper

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    Default NAMA versus the Grim Reaper

    At its foundation, NAMA's purpose was made crystal clear: its job is to restrict supply in the Irish market for homes. Minister Lenihan called it "preventing a fire sale", which is euphemistic but leaves the position fairly clear.

    So far, NAMA has been successful in its goals. The property price register shows that people (not many people, but enough to matter) are nowadays paying huge prices for homes in so-so locations in a bankrupt, insolvent nation. The Irish obsession with getting mortgaged-up as quickly as possible regardless of prevailing economic conditions has clearly not entirely faded away. The founders of NAMA gambled that, by withholding Ireland's immense oversupply of boom-era properties from sale, you could have a small but enthusiastic market for houses at excessively high (from an objective point of view) prices.

    Many people will raise their eyebrows at this, pointing out that prices today can often be 40% of the bubble peak in 2007. But the fact is, you can't measure things like that. The bubble began in 1996, and prices are still far, far above 1996 levels. And just in case you think 1996 is too low a bar, have a look at the economic data for 1996: falling unemployment, extremely healthy business creation stats, great confidence. Ireland today is miles behind 1996. It makes no sense for the housing market to still be above that level. But the free market is about as rational as a hippy who's swallowed 50 blotters of LSD.

    So, short-term, NAMA's strategy is going to go on working. They already own most of Ireland's unoccupied houses, excepting holiday homes in areas far from economic centres of activity.

    But long term? The challenge for NAMA is that house-owners are not immortal. They die every day. Assume that the majority of deaths are of people born around 1940, and eventually you get a steady trickle of houses not in NAMA ownership which they cannot prevent from coming to market.

    Not only that, but NAMA's success creates an inflated housing price which those who inherit the house must pay as inheritance duties. For many inheritors, a combo of economic depression and opportunities abroad might motivate them to liquidate their overpriced asset in Ireland at the inflated price NAMA has created for them, then hightail it out of Ireland for a luxurious retirement abroad, where 200K will buy a much better lifestyle than Ireland can ever offer.

    Presumably, NAMA have a game-plan for this eventuality. Perhaps they feel that Ireland's mania for property is strong enough to withstand the added supply from homeowners passing on. Or maybe, just maybe the reaper will finally bring Irish house prices into line with the rest of the economy.
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

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    No, the laws of economics don't apply to Ireland,

    There is no such thing as the equilibrium price,

    Nothing is building up, nothing,

    Nothing,

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    Politics.ie Member Shpake's Avatar
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    very far above 1996 prices? have U accounted for inflation in the equation?
    "Well, OK. Fine. As long as it comes with a steady paycheck, I'd believe whatever they wanted me to believe, as the Guy in Ghostbusters said."

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    Quote Originally Posted by Shpake View Post
    very far above 1996 prices? have U accounted for inflation in the equation?
    Like I said, even if they were exactly the same as 1996 prices, accounting for inflation, that would still be far too high.

    1996 was a vastly better economic period than 2013, Ireland today is in a much worse position than in 1996. Cost of living's way up, economic activity is way down. Real unemployment is at 23%. By rights, houses should be a lot cheaper today than they were then.
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

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    Nama's only success is to make those who run it, and a select few who caused it to be formed, to live in the manner that they were accustomed too. I have no proof, i just made it up, as does Alan Duke.

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    Politics.ie Member Malbekh's Avatar
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    NAMA will be an unmitigated disaster. It has all the ingredients required to ensure that it will fail. Think about this. First of all the people who actually run it are all refugees from the various governmental, political and financial departments who presided over our banking and budgetary crisis.

    Then it puts their combined 'expertise' in charge of the largest property portfolio on planet earth.

    Then it ensures that this vehicle of massive assets driven by vested interests is given carte blanche in its actions answerable to no-one, bar a governmental executive who have no interest in anything other than getting through their tenure with a few skid marks in their underpants and their retirement funds greatly enhanced.

    The only other bodies that have sight or sound of the NAMA process, are the various financial auditors who conspired or turned a blind eye to financial misgivings during our house flipping years. They don't care what happens as long as they get the gig and pay the partners the bonuses they richly deserve.

    When the bank guarantee scheme came about, sifting through the doom-mongers, certain cogent posters on this site instinctively knew it was going to be a disaster. The same posters voiced similar fears about NAMA.

    Nevermind. I'm sure there's something good on TV tonight to keep us distracted.
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    Quote Originally Posted by PlanetBertie View Post
    Nama's only success is to make those who run it, and a select few who caused it to be formed, to live in the manner that they were accustomed too. I have no proof, i just made it up, as does Alan Duke.
    Credit where credit's due: NAMA have taken an obviously-worthless asset, the Irish housing stock, and inflated its value far beyond what prevailing circumstances would suggest. Real people are paying real money (inasmuch as any modern currency is real, that is) for an asset that is clearly far, far too expensive.

    And they've done it in plain view of the world. Every bog-standard gaff in a shabby location in Ireland that sells for over 200K (250K for any non-prestige location in Dublin) is an immense success for NAMA. A salesman who takes what is plainly a turd and successfully polishes it up and sells it like it's a beautiful and rare antique deserves kudos.
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

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    Quote Originally Posted by Malbekh View Post
    NAMA will be an unmitigated disaster. It has all the ingredients required to ensure that it will fail.
    You may say that, and I might agree, but the fact that NAMA has managed to survive and keep prices inflated well into May 2013 is a genuine achievement. Postponing an inevitable disaster is in itself a partial success.
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

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    One thing I'd like to find out is how many houses are left in estates (I mean wills, not housing developments) every year.

    Is it 5000?
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

    You have to pity the kind of people who buy into conspiracy theories. I find the following to be the saddest words on the internet: "Re: connection between Bilderberg puppet lady gaga and viral outbreak in ukraine "

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    Quote Originally Posted by feargach View Post
    Like I said, even if they were exactly the same as 1996 prices, accounting for inflation, that would still be far too high.

    1996 was a vastly better economic period than 2013, Ireland today is in a much worse position than in 1996. Cost of living's way up, economic activity is way down. Real unemployment is at 23%. By rights, houses should be a lot cheaper today than they were then.

    I was sifting through the CSO data. Something I'm not good at. I was looking for the average industrial wage in 1996 and the average house price for that year... then compare it with the corresponding figures for 2013. But that would give a very rough indicator of how much further they have to fall. But 1996 Ireland we were all young and full of optimism. There were jobs going all around the country. Now it seems the rural housing and small country towns are feeling the pinch much worse than the big cities. Unemployment is 14% now instead of 4-5%.

    Average house price 1996 divided by average industrial wage 1996 and compare this with corresponding figures from 2013 would be a rough indicator of how much further they have to fall.
    Shpake
    Mathematically and statistically challenged
    "Well, OK. Fine. As long as it comes with a steady paycheck, I'd believe whatever they wanted me to believe, as the Guy in Ghostbusters said."

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