Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

nama

The importance of getting NAMA’s core assumptions right

This post examines three key assumptions underpinning the assertion that NAMA only requires a 10% rebound in property values in 10 years to ‘wash its face’. It looks at the importance of measuring the fall right, questions the yield given for NAMA’s loan book and raises the possibility of any yield correction coming through downward rent adjustment, not a rebound. Read more

Do the NAMA figures add up? A broader and more realistic assessment of long-term economic value

This post looks at the numbers behind NAMA in more detail, producing estimates of how much is in different segments of Irish and international property markets. It also critiques the calculation of long-term economic value, which turns out to be based on about 5% of the loan book, and presents revised estimates based on a broader sets of loans and more realistic assumptions. Read more

Environmental Pillar workshop on NAMA, the Irish property market and economic sustainability

From one EP to another! Following Electric Picnic at the weekend, which featured Leviathan political and economic discussions as well as more food stalls and music acts than you can shake a stick at, today it was back to business and off to another type of EP altogether.

That was the Environmental Pillar, part of Ireland’s Social Partnership framework which comprises about 30 organisations in the environmental space in Ireland. They held a workshop on NAMA, the Irish property market and economic sustainability in Dublin. There were four speakers including myself. The other three were NAMA tag team Brian Lucey and Constantin Gurdgiev as well as Feasta founder and environmental economist Richard Douthwaite.

There was a good attendance and a great degree of interaction. Fortunately for those who couldn’t make it, including many prominent member of the Pillar who were meeting Cabinet members at the time, the whole thing is recorded.

The talk I gave is available on these three videos:

Blog readers may be a bit tired of my thoughts on these matters, though, in which case I’d recommend watching the other talks. The full list is available on the Environmental Pillar’s channel on Youtube. Some of Brian and Constantin’s thoughts in relation to how the government could have reacted to criticisms of the original NAMA proposal are very interesting, while the panel discussion at the end covers a whole range of topics from ‘What can I do?’ to  ‘Does it matter if environmental armageddon is just around the corner anyway?’!

Some of the key things I took away from the talk:

  • It does seem bizarre that journalists, financial services executives and foreign politicians are all prepared to listen to the anti-NAMA side, while the only way those opposed to NAMA can get to speak to government is through the media.
  • “Long-term economic value” could actually mean larger falls than current market value, because it means using yields/net present value as opposed to the catch-the-falling-knife which could still give totally unrealistic yields by the time rents have stopped falling.
  • The idea of a public trust that owns NAMA and that can decide on what to do with NAMA land tracts, for example, is worth exploring, regardless of whether or not we own the banks.
  • Our current crisis presents a huge opportunity to reorder things the way we want them. To a lesser extent NAMA, but to a much greater extent the lack of a broad strategy for the next five years and the oddly between-two-stools Commission on Taxation report suggest to me that we are wasting this opportunity.
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It’s so cold and it’s so broken, Board Snip Nua!

I’ve always had a soft spot for song parodies, as longer established readers of the blog will probably ruefully attest. My last foray into this territory with my economic hat on was “Brother, Can you bail out my bank?” in the midst of our global financial excitement last Autumn (although I did try my hand at Copa-obama later last year). Anyway, with the launch of An Board Snip Nua’s report later today, that peculiarly Irish name, for a peculiarly Irish public sector expenditure body, will probably recede back into the depths of our subconscious until the next time national debt threatens to cripple us.

But before it does, I feel we should mark it in song. You can thank An Taoiseach’s about-turn on publication date for the missing fifth and sixth verses… but as it happens only die-hard Leonard Cohen fans know those anyway! Yes, today’s ditty is to the tune of Hallelujah, and while I think Cohen was most inventive to come up with no less than six sentences that sort of rhymed with the title word, surely An Board Snip Nua was made for rhyming with it! So, crank open your itunes and put on Cohen/Buckley/Wainwright/whatserface-from-X-factor – or else open the video below – and get singing…

Now I’ve read we are so short on bread
That even the Galway tent is dead
But you won’t really go for tax hikes, will you?
“You cut like this
Cut FAS, cut NESC
Cut the lads who print the car tax disc”,
The baffled Cowen is told by Board Snip Nua
Board Snip Nua, Board Snip Nua
Board Snip Nua, Board Snip Nua

Your vote was strong but you needed the youth
You cut stamp duty on the hoof
While the OAPs dreamt they overthrew you
They cried you
didn’t really care
They broke your vote, it collapsed in Clare
And the best that you could do was Board Snip Nua

In the 80s we were here before
We know this gloom, we left these shores
We used to live State-side before we knew you.
We’ve heard all about the ECB
But have you seen our GDP?
It’s so cold and it’s so broken; Board Snip Nua

What will you do-ah, Board Snip Nua?
Board Snip Nua, Board Snip Nua

It’s about time that you let us know
What’s really going on with our dough
But now you never tell it straight, do you?
We paid two mill to move in here
But NAMA’s going to cost us dear
And every budget cut by Board Snip Nua

Board Snip Nua, Board Snip Nua
Board Snip Nua, Board Snip Nua (repeat to fade…)

Youtube: Rufus Wainwright on Tubridy, getting the lyrics to An Board Snip Nua wrong