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House Price Crash Forum


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About TortoiseYid

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    HPC Poster
  1. I don't need to use a "search" function to tell you know that there is no "bloodbath" in the City. Sorry to spoil your fun, but it just ain't happening yet. Will be sure to let you know when it does start, ok?
  2. So in September someone claimed "brutal redundancies are only days or weeks away". Must have missed that. Not the greatest anecdotal ever. Things will be painful next year, and there will be layoffs, but there's still plenty of work/vacancies in the City, bonuses are being paid as normal, wages are still high.
  3. Here's one for any financial historians to answer: Has any government/central bank ever successfully prevented their economy going into recession, when the economic cycle made clear it was going to happen? Has any financial bubble ever been prevented from popping? I'm sure they have delayed it for a year or two, but it must be inevitable now?
  4. It's can hardly be a surprise to anyone that the US politicians are pressuring the Fed into changing the rules in the run up to election year. But if the leaked details are correct it can hardly be considered a "bailout" by US taxpayers. 1) Only applies to mortgage holders who are not currently in arrears on their mortgage (alot of these subprime borrowers will be behind on repayments already). 2) Only applies to subprime mortgages taken out between Jan 05 and July 07. 3) Only applies to owner-occupiers. 4) You have to continue paying your mortgage as normal. If you default on your mortgage at any stage then the property can still be foreclosed. 5) The typical subprime mortgage has teaser rates of between 7-9%. The typical reset rate is 9-11%. That means the mortgage holder is locked into a 7-9% fixed rate mortgage for the next 5 years - sounds pretty expensive (for the US) to me. Very difficult to keep up those repayments as the US economy slides into recession. So, naive and/or irresponsible (delete as appropriate) borrowers will get to stay in their homes IN ELECTION YEAR. Banks and mortgage lenders will get 7-9% interest on their money for the next 5 years, rather than face a tsunami of 500,000 subprime mortgage foreclosures in 2008. I fail to see how it is costing the US taxpayer any money AT THE MOMENT - it is not an inflationary "bailout" in any sense. This will not halt house price falls in the US (or the UK), it is simply political fire-fighting in an election year.
  5. I don't understand why people are surprised/angry that retailers and mortgage lenders are calling for lower interest rates. Of course they will, their industries do better when rates are lower. It's the (supposed) job of the BoE to ignore these calls and look at what is best in the wider economic context. However, if the US continues to slide towards recession (dragging Europe with it), and the Fed continues to cut, then the BoE will have to follow and cut IRs hard. They will have no choice, they will have to be seen to "do something". What else is there? But imo it will have little effect, as the central banks no longer have any control over the situation. The credit and derivative markets are now in freefall, and the housing market will be impossible to save.
  6. http://www.bankersball.com/2006/11/06/2006-bonuses/
  7. City workers HOPE for bigger bonuses this year. People in every job in the UK want more money this year compared to last year. Human nature. Don't see why city workers should be considered any different. Whether they'll get an increase or not is a different matter. Only time will tell.
  8. The lucky ones are still working in the city on large salaries. Budgets are being tightened across the London banking sector, and bonuses may fall overall at the end of '07, but there is still plenty of work for people with experience. Amid all the media doom and gloom, many companies are still struggling to recruit for technical positions, hence salaries remain high. I am pessimistic for 2008, and flash idiots with large debts who expect a bonus to bail them out will be in trouble, but AT THIS MOMENT IN TIME there is money to be made.
  9. I'm not sure the expression "short term pain" is quite the right phrase for a total banking collapse. I guess some people might like to restart British society from scratch - housing would certainly be cheap! - but I personally doubt it would be a pleasant period of history to live through.
  10. What if the government believed that it would cause the entire system to collapse? Maybe they did believe the system was at risk? Plenty of banks have been allowed to go into administration before (BCCI, Barings are recent examples). Why was NR different? We already saw contagion spreading to A&L amongst others before they stepped in.
  11. A banking system is an essential requirement of civilisation. They can be traced back to the earliest recorded eras of human society. No banks = no currency, no wages, no employers, no industry. Nothing A full-scale total banking collapse leads back to us being hunter/gatherers. Society would cease to exist. Over the top I know, but that's why the world governments have to preserve the banking system at all cost. It's not an option. Banks need to be highly regulated to prevent any threat to the system. In general they are, but the last decade has seen the investment banks realise that they can make huge amounts of money with new "products" in the areas of derivatives, debt, and commercial paper. These were not regulated like other bank sectors because: 1. The regulators had no idea how they worked. 2. They made everyone a lot of money. 3. Politicians won elections because the economy boomed. The regulators have been behind the curve for the last 15 years. What has happened since August 9th is that people have realised that these new financial models do not work indefinitely. The central banks/regulators/government are now embarking on a damage limitation exercise, but we have no idea how successful this will be. Expect to see rafts of new banking regulation over the next few years, but it's all way too late. Boom and bust, same as throughout history. But the banking system has to survive, trust has to be restored.
  12. At the moment this money is "real", and we have to pay it back. In reality however, the figures are so vast as to be meaningless. The money doesn't exist and can never be repaid. With the market boyant, no-one cares. Now everyone cares. That is why the banks cannot value this stuff, because it has no value. It is not backed by anything tangible (or rather by assets so small as to be insignificant). When a private equity vehicle or hedge fund goes kaput, then they will not have any assets to repay the creditors. The money will disappear from the system. But the bank who leveraged them will have to write it down as a huge loss. That is why the whole industry is currently frozen with fear. But it will still get very bad for the man on the street - our pension funds are (usually) not allowed to invest in hedge funds and the like, but they have been investing in equity hedges for years. To do this, they do not invest in the fund itself, but in a fund owned and run by the hedge fund. Dangerous business, and of course just a question of semantics. There is no regulation to stop this. And it's all about to unwind. This is what is happening at Absolute Investment this week, and it's going to be very messy indeed.
  13. Voters with savings in Northern Rock = skint and angry = bail out. Cayman Island-based hedge-fund investors = still millionaires = no bail out.
  14. Would you really like politicians and civil servants deciding who can and can't open accounts, get loans, mortgages? Not saying it would be worse, but remove the element of competition and nationalised industries have hardly been models of efficiency and customer satisfaction. I thought most people on this site would be asking for less government intervention in the economy (HPI, IRs, etc) rather than more. It's also worth pointing out as well that no taxpayers money has been used to bail anyone out yet. That may change of course.
  15. "In fact, I remain the largest single shareholder in ACMH - with my ex-wife and children also holding substantial stakes - and I intend to continue to fight for shareholder value in ACMH and hope to contribute in that role in anyway I can." There is no shareholder value now. However, I admit it does take some sort of moral fibre to walk away from the company you set up, and of which you own 60%. Don't cry too hard though, he's still worth a couple of quid!
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