An opinion piece was published by Ronan Lyons in Friday’s Irish Times, it can be read in full on Ronan’s blog.
It examines NAMA’s three core assumptions:
The first key assumption that NAMA’s 10%-in-10-years argument makes is the market has bottomed out already, and not only that but that is has bottomed out where the Minister says it has, i.e. an average fall of 47% from the peak. The second key assumption that NAMA makes is that yields are high, relative to European and historical averages. The third key assumption is that any yield correction will come from properties rising in value, rather than rents falling.
It examines each in detail and the importance of getting them right and unsurprisingly concludes that the Government has got it wrong on all counts, concluding that:
A range of genuine alternatives to the NAMA proposal have been proposed, for example Dermot Desmond’s idea for an extended and modified guarantee, outlined in this paper last week. If, though, the Government honestly believes that NAMA does offer the best way of fixing Ireland’s financial system, it needs to get the fall, the yield and the correction right. On all three, the analysis presented by the Government so far seems at best lacking in detail and at worst fundamentally flawed.
