Financial Crisis

(Redirected from MIRAS)

This page is a list of important financial crisis that have occurred and the response of regulators and governments.

1987 Stock Market Crash

1988 Nigel Lawson Abolition of dual MIRAS Fiasco

Mortgage Interest Relief at Source, or MIRAS, was a scheme introduced by the government of the UK in 1983 in an effort to facilitate a greater level of borrowing for house purchases; it allowed borrowers tax relief for interest payments on their mortgage. This was available for the first £30,000 of a qualifying mortgage and up until 1988, those with joint mortgages were able to combine their allowances to £60,000. The Chancellor, Nigel Lawson in his budget of 1988 gave a two month window for the abolition of Joint MIRAS - which completely predictably gave rise to one of the fastest examples of House Price Inflation the UK has ever seen (i.e. a 2 bed house in an average West Wiltshire town that cost 50K in the April of 1988 was worth 70K by the August). After this point the market stalled and in the early 90s collapsed under the onslaught of rising interest rates (such that the house in the example above was worth only 38K in 1991) (see also What happened during the last house price crash). MIRAS was completely abolished in April 2000.

1991

Bank Credit & Commerce International (BCCI)

BCCI went bankrupt

Robert Maxwell Mirror Pension Raid

Robert Maxwell robbed the Mirror Group pension fund of several hundred million pounds before falling off his yacht and drowning (some suspect suicide as his suspect buisness dealings were starting to become know).

1997

Long Term Capital Management (LTCM)

Russia could not pay back the money it had borrow and LTCM suffered significant losses and thus went bankrupt. This episode is now seen as a practice exercise for the Northern Rock crisis!! How short our bankers memories are!

Asian Financial Crisis

Uhm this one was partly caused by a property bubble which caused Thailand to be in effect bankrupt. Oh well not like the U.K. then, Gordon Brown keeps reassuring us that we have a robust economy!

Gordon Browns Pensions Robbery

Gordon Brown introduces a stealth tax on pensions that will cost the pension funds £5 billion per year. This will significantly reduce the amount of money people get when retired. To date (2007) it is estimated that the pension funds have lost £100 billion due to this stealth tax. Most companies close there final salary pension schemes.

There are significant differences between Gordon Browns pension robbery and that of Robert Maxwell's. For example Robert Maxwell only took several hundred million where as Gordon has taken 100,000 million! It is also suspected that Robert Maxwell was so ashamed that he committed suicide were as Gordon is still taking 5,000million per year!

2000

Dotcom Bubble burst

During the late 1990's people thought that internet companies would make massive profits this lead to a rush to buy their shares which then turned in to a bubble even though the Yields were zero i.e. most of these companies that people were investing massive amounts on money in had never made a profit or paid a dividend. Alan Greenspan response was to lower interest rates thus preventing a recession.

Equitable Life

Equitable Life almost went bankrupt in 2000 after a House of Lords rulling that it had to honour it's Guarantee of Pension payouts to existing pensioners. This lead to a significant cut in the future pensions of thousands of people who had not yet retired.

2001

Enron Bankruptcy

The supposedly independent auditors kept assuring everyone that the company was strong but what latter can out was that the auditors were making massive profits from consultancy for Enron. Oh this sound familiar only this time it's the credit rating agencies reassuring us about the value of sub-prime loans while at the same time making massive profits from the sub-prime companies for making such ratings - not independent in fact more of a conflict of interest!

World Trade Centre Terrorist Attacks

The New York Stock Exchange was closed for several days and governments injected a significant amount of money to improve Liquidity and dropped interest rates to avoid a recession.

2006 Fairpak Hamper Collapse

Thousands people lost their christmas savings when this charity went bankrupt. The charity was not registered with the FSA and thus savers will not receive compensation (under the FSCS).

2007 Credit Crunch

Fear of banks having large Sub-prime losses in the U.S lead to the Credit Crunch which in turn lead to the run on the Northern Rock bank in the U.K. and the share price collapse of Paragon.

See also