Saturday, September 5, 2009

Bob the Builder and Ba-NAMA

Something has been bothering me about this whole NAMA concept.

So lets start with the NAMA FAQ. In it we find the following statement.
NAMA will then manage these loans so as to obtain the best achievable return from them. In the meanwhile, it will collect interest due and pursue debts so as to ensure its own income stream and to recoup the Government investment over time.NAMA in effect puts itself in the place of the bank that originated the loan, and will have all the same rights to pursue debts, where necessary. Borrowers who continue to meet their contractual obligations, of course,have no reason to worry – their rights are fully protected.

So let's begin this Kiss exercise.
Kiss = Keep it simple stupid.

In 2006 Bob the Builder was doing very well for himself. He had just sold all of the house's he had built in a commuter town 30 mile's outside of Dublin. He then decided to get another loan from the bank to buy another site and build an estate of 30 new home's. Roll on to 2009 and Bob has completed the estate but has been unable to sell any of the house's because the market has tanked, and he can't find any suckers to pay the asking price he needs to break even on the deal. The banks have been helpful and have rolled up the intrest for Bob so that he can sell the houses when the market recovers. Effectively Bob is bust, but Bob the Builder is Bob The Builder LTD. So the bank now hands the loan over to NAMA, Bob can't pay the intrest on the loan and goes into liquidation. NAMA now seize's Bob the Builders assets. So now NAMA owns a completed empty housing estate in a town 30 miles from Dublin. An empty housing estate can not be left sitting for year's. There are 2 options (A) sell at the current market clearing price or, (B) Secure the the estate by hiring Bob the Builder to caretake the site for 10+ years until the market recovers. Multiply by a couple of thousand times.

This NAMA plan is a complete Joke.

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