Architecture and NAMA

@garethace wrote:

I for one, am sick of hearing that ‘media friendly’ phrase of fire sale prices,

This is where the limitations of the ‘London Fire’ analogy are exposed also.

You’re mixing up your analogies there a little bit.

The ‘fire sale’ analogy has to do with flogging property quick and cheap to get some return in and, more improbably, get some kind of hype going to rouse the dead property market.

The ‘London Fire’ analogy has to do with the manner of the response to a property calamity. Faced with the 80% destruction of Europe’s biggest city, the authorities could have said: ‘Our property rights and lack of regulatory burden built this city, our fundamentals were sound, we just need to be sure that in the future every house has a bucket of water nearby’

In deciding not to do this, and instead in attempting to change the fundamentals and re-imagine the city, they laid the foundations for a sustained building programme that put London back on top in jig time and arguably kept it there to this day.

Personally I think the fudamentals of our planning and development system are wrong. I think we need to move to a system where a ‘development authority’ decides what development is in interests of the city/country, goes off and master-plans it and then invites ‘developers’ to come and build the bits they’ve tendered for. At present, the ‘planning authority’ in limited to a negative role, adjudicating on the developer’s plans, which invariable have everything to do with making the developer rich and little or nothing to do with advancing the public interest. How is this not the opposite of planning?

If you combine the concept of NAMA (the taking of a public interest in failed private developments) with the other public interest enterprises like transport21, for example, and put them under the guidance of a ‘Development Commission’ with powers to acquire the property necessary for the execution of a particular strategic plan, and you might have the makings of a mechanism for driving development that would, for once, be integrated, sustainable, and in the public interest.

What’s wrong with that?

Thanks gunter,

I’ll read over your post a couple of times again, when I get a chance.

The other crucial thing that professor Barrett’s article exposed in my view, is that phrase ‘development land’.

Barrett is correct, and I would side with him in a lot of issues. The things that seem to piss off professor Barrett, such as this thinking inside of a bubble mentality, are the things that piss me off too.

What is ‘development land’ supposed to be anyhow? Is there a kind of land, upon which development cannot happen? I don’t think so. I remember David Wetzel, when speaking on his ideas about land taxation in Dublin a while ago, recognised the fact that from an economics point of view, even the water and the sea is land. Places such as Dubai, proceed to make themselves more land, if they need it. The fact that land happens to be covered with water, is only a minor technical detail.

When I think of the phrase ‘development land’ I also think of the phrase ‘re-habilitation’.

Does anyone remember that scene from Shawshank Redemption, where Red, played by Morgan Freeman, is up for his parole hearing? He says to fellow at the other side of the desk, yes son, I know what you think ‘re-habilitation’ means. It is a bull s*** word, a politicians word. A word made up, so that young men such as yourself can wear a suit and have a job. Go ahead and fill out your papers, becasue I don’t give a damn.

Brian O’ Hanlon

One question that professor Barrett did ask, and didn’t exactly venture an awnser himself in today’s Irish Times article is: Did we sow the seeds for the ‘Casino’ banking system twenty years ago, in the last major banking crisis on this island.

This is where I really do get stuck. I don’t remember the last banking crisis we had on this island. Perhaps some one else can fill in those details better than I can.

You see, economics is not my field, whereas property is. Land economics is something that I am interested in, because it informs quite a lot of decisions to do with design and planning. But Land Economics is hardly taught, or at best taught poorly in architecture schools. To the extent where architecture students all fall asleep in the Economics class. (Or was it only myself) We need to animate that subject for students. It is like the problem with higher mathematics in second level schools – nobody will touch it with a barge pole. I would not blame students either, it is made too boring by the manner in which it is taught.

The point everyone here should be interested in, including architects and planners, is what sorts of ‘seeds’ is NAMA going to sow for the next twenty years. I know NAMA is important to improve the image of Ireland abroad etc. But professor Barrett talks repeatedly about is the need for a banking system that serves 99% of the needs of the Irish population.

What we had for the last twenty years in Ireland probably, was a banking system that increasingly only catered for the needs of 1.0% of the population. The problem is, planners and architects spend most of their time, working in close proximity to that same 1.0% of the population. That is why I believe provocation is now required, within the land professions, in order to shake them out of the current paradigm and set ground rules for a new one.

Brian O’ Hanlon

Very intersting history, and not that long ago. Yeah, I was really wondering what professor Barret was refering to. I know the IMF were barking at the door back in Garret’s time also. I wonder, how Alan Dukes was wrapped up in all of that, at the time.

Apologises, back in 1985 I think I was more worried about how many goals Diego Maradona was scoring.

Brian O’ Hanlon

What I have written down below is of great relevance to Irish Architects, or any architects who are seeking to find commission for their services in Ireland over the coming two decades at least. Basically, when you read Pat McArdle’s article in today’s Irish Times, the truth of it all hits you between the eyes. Those ‘angel investors’ who kept the boat afloat for Irish architects over the past decade are essentially wiped out. Even if they get the best possible deal on the 16th of September. Architecture has to look for a new business model, or clear the hell out of dodge. The later being the most likely solution.

Angel Investors

I remember a story told about Bob Noyce, one of the founders of Intel who later became an ‘Angel Investor’ to many Silicon Valley high tech start up companies. When Bob Noyce was preparing his legal will not long before he died, he told his accountant there was something he should look into.

Noyce went upstairs to his bedroom wardrobe and fetched an old shoe box which had been there for years. He handed the shoe box to his accountant. The accountant almost dropped dead when he discovered what was contained inside. It was millions and millions worth of ‘first issue’ stock market tokens for young Silicon Valley companies.

It appeared that Bob Noyce had been pumping money into small companies for decades. But he had no idea what was in the shoe box and whether it had any worth. There were some interesting finds in the shoe box, such as Advanced Micro Devices (a competitor to Intel) first round investment papers. But the bulk of what was in the shoe box was of no value at all, when they went through it.

A lot of the companies had not lasted more than a few months and died. They were forgotten bits of history in Silicon Valley. Bob Noyce was philosophical about the whole thing. The way he looked at it was, he was giving back to the garden from which he had derived so much of his own wealth and achievements. That is what ‘Angel investment’ is all about.

Pat McArdle, an economist until recently at Ulster Bank wrote a good article in today’s Irish Times newspaper.

The difference between the initial value of the projects funded, €115 billion, and the current market value of €50 billion is split 45:40:15 with the borrowers losing €30 billion equity, the banks taking a hit for €25 billion and the Government putting up €10 billion.

http://www.irishtimes.com/newspaper/opinion/2009/0904/1224253820646.html

As soon as I read McArdle’s article, I knew he had put time an effort into structuring the writing and the overall points very carefully. He seems to have covered quite a lot of ground in his article. The paragraph above did strike me as significant. It is the first time I have seen NAMA analysed in that manner.

I like to visualise something called a ‘NAMA tree’. On the 16th September, we will all find our presents underneath the NAMA tree. I can visualize it now. First the taxpayer will sneak down stairs and pick up the smallest of the presents. The taxpayer will give it a shake, listen to it closely against their ear and then turn it upside down and around. Satisfied that they cannot ‘guess’ anymore, they will go about their business satisfied and proceed to unwrap it.

Next will come the the banking institutions. They will choose the next largest present and proceed to do the same as the taxpayer with their present. They too will go away satisfied and unwrap their present.

Lastly will come the ‘borrowers’. They will be the least enthuasiastic about the whole affair. They will take one look at the big huge box lying underneath the tree and say: That is much too big, it couldn’t be mine and walk away in denial.

The truth is, the Irish property developers travelled around Ireland in their Mercedes four wheel drives and helicopters for the past ten years. The story is told in Frank McDonald’s excellent book ‘The Builders’. They weren’t even property developers of any note worthy skills or talent. They thought they were ‘Angel Investors’ like Bob Noyce and NAMA land was their Silicon Valley.

The truth is, many of the developers operated very little sole traders, and very bad ones at that. Yet the banks offered them million after million to do their ‘Angel investing’ with. On the 16th of September, the taxpayer has got the department of finance and heaven knows how many other departments to interpret the figure of €10 billion. The banks are also capable of understanding

The only people who have no ability whatsoever to understand their figure of €30 billion is the Irish property developer. They were the only ones who really bought into the ‘spirit of Christmas’ that was the Celtic Tiger madness. On the 16th of September, the builders will begin their process of collective denial of reality. Perhaps they will never come to terms with their own collective actions. To many of them, the Celtic Tiger was only a shoe box full of monopoly money. It was never real at all.

Brian O’ Hanlon

Keep working in architecture Missarchi, there is no future for you in finance.

Too many platitudes and clichés in that article. Why did the journalist not ask some hard questions of Went, also Chairman of the I Times?? Hmmmmmm.

David Went was in Ulster Bank, then Coutts before leaving top job ILP in mid-2007. It is more than a bit rich that he now is pontificating from the podium. What was he doing about the ILP’s lending policy when he was in control there? His suggestion that a rules-based regime was “not a panacea” is obtuse if not even specious to say the least – it was the use of a rules-based system (i.e. subjective criteria by humans) that caused the crisis. Behaviour-based (use of stored historic data) would take years to implement because the raw data is corrupt, caused by years of stupid lending.

What does he propose instead? Answer – it is “crucial that the right staff were hired, that they were paid well, empowered and provided with good IT.” Maybe poor David needs to be told that there are about 25k staff in the IFSC, mainly graduates, working in more than 1000 companies, ranging from aircraft finance through fund management (servicing one third of global hedge fund assets) and SPVs for insurance. Now, in a few words, tell me how a bunch of civil servants, the majority of whom without any qualification (and currently on strike) are going to be able to learn about – let alone oversee and police – complex financial transactions?

“It fills me with absolute horror some of the things I have seen that have emerged,” Went said. I’m sure it does. Me too. But that gob$!te was in control at ILP and was in a position to ask questions, like why fund ludicrous prices for a Ballsbridge property, particularly when it did not even have planning permission? Anyone?

“EBS chief executive Fergus Murphy said the chief risk officer should report to the chief executive of a financial institution and be present at board meetings.” Very erudite. Now, if I’m not mistaken, the CRO at Anglo reported to the CEO and look at what happened there. Sshhhhh – don’t mention directors’ loans.

Slowly going further down the tubes, waiting for the IMF.
Kb.

For those still interested in NAMA and Bank Inquiries, here is some reading on how Uncle Sam conducts a bank Inquiry – the JPMorgan-Chase Statement On Financial Crisis

Testimony of Jamie Dimon Chairman and CEO, JPMorgan Chase & Co. before the Financial Crisis Inquiry Commission January 13, 2010

In it he has some classic stuff. The gobdaws in Finance, IFSRA and the financial institutions here really should start learning it for future use e.g.

To be sure, there are a number of things we could have done better: the underwriting standards in our mortgage business, for example, should have been higher, and we wish we had done an even better job in managing our leveraged lending and mortgage-backed securities exposures, all of which I discuss later in my testimony. But our entire team – including the firm’s credit officers, risk officers, and legal, finance, audit and compliance teams – worked diligently to address these issues and minimize the cost to our company and our customers.

and other guff. Full text is here
http://newsroom-magazine.com/2010/governance/financial-crisis-governance/fcic-jamie-dimond-statement/

K.