slow release strategy.
1. Information cascade. Say there are 3 houses in a row, all
identical, all owners having paid 200,000 for them.
Now NAMA sells the first one for 100,000. What happens to the
reference price for the other 2? It collapses. This isn't negative
equity per se, because it doesn't relate exactly to the other 2
properties in question, but to the first one just sold. But the extra
bit of information clouds what might be an otherwise healthy situation
2. Undershooting. Now say the house sold for 100,000 was really worth
150,000. The 'firesale' price has damaged both NAMA (and by extension
the taxpayer) and the other 2 houses.
3. Credit-free house sales. Many of these houses will be bought by
those with access to lots of cash, as predicted by Morgan Kelly in his last IT column. Not many people will be borrowing
from private banks like AIB and BOI to fund these house purchases. So,
rather that 'restart' the market again, the NAMA strategy may end up
just exchanging properties amongst wealthy individuals with inappropriate reference values for prices thrown into the bargain.