Ronan Lyons has an interesting post over on his blog discussing whether NAMA can deliver on its promises. His big worry is whether those running NAMA have got their assumptions right vis-a-vis fall from peak to time-of-tranfer, the yield, and how yields might correct. Given the data he presents, he suspects that their assumptions are off and concludes, “If NAMA could show that it’s aware of these very basic facts about Ireland’s property market before it starts taking over any loans, I would be a lot less worried about giving it access to tens of billions of euro worth of current and future taxpayers’ earnings. If it doesn’t, the elephant is very much still in the room.“ One suspects that given the drop in land values, the oversupply of both residential and commercial property, and the downward trend in residential and commercial prices and rents – all noted by Lyons and discussed in loads of posts on this blog (see here, for example) – is that the elephant is very much in the room. The wonder is that certain parties seem completely blind to it. It must be a lonely elephant as, no matter how it tries to make itself visible, it is ignored! Is this a case of blind faith? Time will tell. Like Ronan, one would be a bit more confident if, a) one felt that those organising NAMA, and are responsible for trying to stabilise the economy and get it back into growth, gave the impression they knew what they were doing, rather than making it up as they went along, b) we had a lot more info about what assets will be in the NAMA portfolio, where they are, and a realistic LTEV in relation to loan value, so we could judge things for ourselves.
Tuesday, March 9th, 2010
March 9, 2010