Banks Won’t Lend Myth

[roadtoruin]

No need to bring up Broon on this thread.

True, I'll try not to divert the thread again, apologies for any offence...

[Injin]

You cannot own your home 'outright' without denying somebody else the right to lay claim to that item, thats the problem. Once it's generally accepted that land ownership is natural then mortgages and rent also become a natural part of economic life without people stopping to think and ask questions such as: how did the first landlord/tenant relationship take place?

And I can't own my underwear without denying other people access to it. I don't rent or have a mortgage on my pants, so why the hell would I rent my house?

The state does have a role to play but will argue vehemently for the rights of property owners to soak up all the benefits created through local business and taxation. So much so that it caused a rewiting of the British constitution prior to WW1

Yes I'm aware that you can use violence to get what you want. Doesn't prove much beyond that though, dioes it?

Violence has made this system therefore it's natural. Like the application of coercion isn't a choice and can't be abandoned at some point. I think this is called "begging the question."

link

http://en.wikipedia.org/wiki/Charley_Says

[InternationalRockSuperstar]

I'm not a gold bug, fwiw. Useless yellow metals aren't my thing.

Now that you're posting on GEI does that mean I finally get to see the great showdown?

cgnao "bullion is your only saviour" vs. Injin "gold is shiney fiat"

[bogbrush]

I don't rent or have a mortgage on my pants, so why the hell would I rent my house?

You should experience the pleasure of leveraged underwear.

[uncle rogi]

UNCLE ROGI: Sorry, but being able to link a cartoon that supports your position simply doesn't cut it for me. Its as if because some left wing cartoonist with an axe to grind put in the time to draw a cartoon suddenly invalidates a firm grasp of the issue and real business experience.

I'm sorry to be rude but unless either of you would like to attempt perhaps a paragraph of logical thought which doesn't draw its valiadty from a sketch or the voices in your head I can't really engage with you on an even slightly meaningful level.

ok, left wing cartoonist eh ? oh dear, oh dear, oh dear.....

1. watch the video money as debt it is available free on Google videos ok> ?

after you have seen it please refer specifically to it when replying to my posts.

the only practical way for you to understand the harm done by the system is to understand it first or at least understand the actual mechanisms by which it operates so you can defend it form a position of informed opinion however after watching money as debt i dont think you will want to.

40 to 1 leverage is what has got us into this mess why support a system that allows it.

That is the ultimate end for any currency backed by a limited resource. Those that post on here wanting a gold backed currency only say that cos they've got some and would be the "aristocracy" in such a system.

this is quite possibly the most incorrect view i have ever read, well done.

people own gold as a historical protection against the collapse of fiat also certain cultures save in gold for the same reason or variations of that such as natural disaster protection etc i.e. if you are wearing you wealth and you survive the cyclone/flood/earthquake etc then surviving is much easier...etc..

that someone can be such a fan (as you have stated) of a debt based money system is one of the saddest things i have heard the damage caused by such a system is incaluable as the wars etc fought simply because it allowed them to be have cost millions of lives vietnam would not have gone on nearly as long if the gold standard disipline had still been in force....

[InternationalRockSuperstar]

You should experience the pleasure of leveraged underwear.

codpieces are so last millennium.

[HAMISH_MCTAVISH]

WOW.

This thread went downhill faster than the price of a newbuild flat in Liverpool.

[Super Mario]

people own gold as a historical protection against the collapse of fiat also certain cultures save in gold for the same reason or variations of that such as natural disaster protection etc i.e. if you are wearing you wealth and you survive the cyclone/flood/earthquake etc then surviving is much easier...etc..

that someone can be such a fan (as you have stated) of a debt based money system is one of the saddest things i have heard the damage caused by such a system is incaluable as the wars etc fought simply because it allowed them to be have cost millions of lives vietnam would not have gone on nearly as long if the gold standard disipline had still been in force....

I take it you own gold and are therefore a gold VI. Personally I have no issue with holding gold as an investment / hedge, I even have some myself.

The problem with gold is that their isn't enough of it to go around - and what about those countries that have no gold? They can however trade their time and effort which a debt backed currency allows them to do. However while a properly implemented debt backed currency is the only fair way - I will concede that governments keep f*cking it up by not punishing the wreckless.

The war argument is stupid - there have been wars for 1000's of years, and as far as I know fiat has only be around for the last 60 odd. It's industrialization of war that has allowed killing on the scale seen this century and not fiat currency.

Anyway - all you people that think fiat is going to hyper-inflate in the next few years - why aren't you borrowing as much as you can at fixed interest rates and buying gold / houses / other assets? Surely that's the logical thing to do if you think paper is worthless.

[Authoritarian]

And I can't own my underwear without denying other people access to it. I don't rent or have a mortgage on my pants, so why the hell would I rent my house?

http://en.wikipedia.org/wiki/Charley_Says

If when you bought your pants they also included wonderful sea views and access to the local conveniences then you would have had to take a mortgage out on them Selling what you didn't create is costly and the antithesis of capitalism.

[hairy]

For you yes.

Now the underwriters have to review you, submit to the risk committee, secure the funds, value your investment, pay professionals blah blah blah

NO, I phoned, they fast tracked me and offered me the mortgage in principle, I got the forms the next day, pre filled in with the obvious, I sat down, filled it in (10 mins) and was offered the mortgage in full 3 days later.

If you have a good credit history and a good deposit (10% on a 1.29 tracker), you cna secure a mortgage very easily. I have already phoned up about another and was told the same thing; no problem.

The money is there. Banks will only make money, realistically, by loaning money; it's what they do, it's what they are: lending institutions. As for the being an idiot that someone remarked earlier as I am loaning money to buy assets, well, you would, wouldn't you. I have 4 asets, which may decline in value a little bit more, but in the long term will be worth a lot more, will pay for themselves in rental and capital repayment.

Banks are lending money.

[olliegog2]

actually you are 'borrowing money' to buy assets. not 'loaning it' (unless you are a bank). Sorry to be pedantic

[worzel]

Anyway - all you people that think fiat is going to hyper-inflate in the next few years - why aren't you borrowing as much as you can at fixed interest rates and buying gold / houses / other assets? Surely that's the logical thing to do if you think paper is worthless.

For me - I think the hyper scenario is the most likely, the problem is calling the timing, and taking on a load of debt on the meantime can mean getting wiped out on the way, which is not a nice thought.

[KingBingo]

1. watch the video money as debt it is available free on Google videos ok> ?

after you have seen it please refer specifically to it when replying to my posts.

the only practical way for you to understand the harm done by the system is to understand it first or at least understand the actual mechanisms by which it operates so you can defend it form a position of informed opinion however after watching money as debt i dont think you will want to.

I have noticed on these boards it is common for a certain type of poster to very quickly call other posters a range of things things. Typically it is that they are ill-informed, stupid, mad etc etc. Yet reading the posts by these individuals would seem to suggest that the very thing they accuse others of most closely matches the impression they themselves give off.

I suspect this may be the case of a little knowledge is a dangerous thing.

I don't particularly feel the need to prove any thing, nor try claim any status. I certainly don't present myself as an expert. Far from it, I have made a long list of financial blunders and missed some great opportunities that would have made me very wealthy indeed had I shown better foresight. But I do have a masters degree in economics. I have worked in the city for several years and for a short while parliament. I have run my own business and I am in regular contact with people who certainly are experts. A close friend of mine is a treasury minister in waiting and operates a shadow position to that effect. I am having lunch with a major corporate bond fund manager early nest week. Over the years I have met a good proportion of the chief executives running some of Britain's leading businesses, specifically to discuss their business and the economic environment.

Now I appreciate you have goggled 'money is debt' and then watched the video that popped up. But I would suggest that you don't needlessly start throwing terms like 'ill-informed' at people without stopping to consider what your saying.

I'll watch your video when I get home. I suspect I know what its about. I might post a response, and where its misleading point out so. Not that it will do any good. I doubt you would be willing to accept anything I say, or even research further areas I suggest.

[worzel]

I'll watch your video when I get home. I suspect I know what its about. I might post a response, and where its misleading point out so. Not that it will do any good. I doubt you would be willing to accept anything I say, or even research further areas I suggest.

What do you suspect you know?

btw - I responded to your point on the other thread if you care to answer.

[KingBingo]

What do you suspect you know?

btw - I responded to your point on the other thread if you care to answer.

I'm guessing its a critic on the monetarist economic management. And an alarmist interpretation of the fractional banking system and the velocity of money.

I could be utterly wrong though, so when I get home to a computer with speakers I'll find out.

[why me]

I'm guessing its a critic on the monetarist economic management. And an alarmist interpretation of the fractional banking system and the velocity of money.

I could be utterly wrong though, so when I get home to a computer with speakers I'll find out.

If it's the money as debt video it's propaganda.

[hourkid]

Banks getting tougher with borrowers

Banks will lend. It is all about the price. Banks and borrowers are both realising that you cannot lend (in the corporate world), or borrow at libor +100bps.

Banks are not the only source of capital either. The capital markets are starting to thaw but there to, prices are way up.

[threesixty]

Banks getting tougher with borrowers

This is an interesting thread. For me, King Bimbo and Injin both represent micro and macro perspectives. From an individual’s point of view, our reality is that cash in your hand will allow you to survive. It will buy you goods and services that are essential to us. On top of that we have the threat of prison/violence if we don’t get that cash in our hands to pay for taxes etc..

However, in order to know what is really going on in any society we have to look at things collectively, i.e. a macro perspective. There is no point in 3 families that live in Chelsea saying that the economy is fine because they have money, when everyone one else in London is poor. The experience of those families is not typical and when looked at in context is completely misleading.

The truth is the majority of money that is lent out to buy a house or fund a business technically doesn’t actually exist. It only “works” as a form of exchange because the borrower has “promised” to pay it back at sometime in the future. The process is enforced by a government that can punish people who don’t pay and a society that doesn’t know any better and has opted into a system that is inherently unjust.

From a macro perspective the money doesn’t actually exist because governments allow banks to inflate the amount of money they actually have by only demanding that a bank have 10% of it’s assets readily available to give back when asked. Obviously, it is extremely rare that all creditors will ask for their money back at one time, so the illusion can remain. But Injin is 100% correct, the banking system from a macro perspective is an elaborate illusion.

The only thing that is actually tangible, is the “blood, sweat and tears” in labour that we give and the things that are built/found/extracted with that labour. They are real, money actually isn’t. Injin is also correct in saying that from a macro perspective “defaults” only serve to give over what is actually “real” to people who have used what “isn’t real” to get it. From a macro perspective a bank has not done any real “work” to get the house it has repossessed or the business it has taken over. It has literally invented the money to loan to you to buy a house and can either get the invented money back plus huge interest, or take a real asset in exchange. Its like magic!

A bank is only concerned with keeping the “system” going and to them that means meeting the capital adequacy requirements that central banks and governments have agreed upon. As long as they have this 10% or so in assets the bank can continue to play this game. Because there assets (i.e. securitied mortgages from America) have been devalued they need a some more real funds to prop up their assets. So they are now engaged in getting more savers in as a result. But don’t be confused, they are still not lending the same money given to them by their savers, they are only lending a “fraction” of the what savers give them. That’s why the whole thing is a confidence trick.

The credit crunch is happening because a bunch of people at the top of this game (pyramid, ponzi scheme etc..) have decided to say it actually matters whether the “promise” that seals all the values of the assets they have is worthy or not. In reality they could have refinanced those loans and kept the whole thing going for as long as they wanted. But the guys at the top of the chain decided to say it matters that these people at the bottom can’t pay at this point in time. Now the people at the top of the chain will get “real” assets for practically nothing as people with debts cant pay these institutions.

The money is debt video, far from being propaganda is actually pretty informative. If you watch it all you will see that the use of credit contraction is by design and is used by central banks to transfer ownership of real wealth. At the great expense of the normal people of this world. America fought a civil war with the English over this exact process. But as we can see now, the banks have won.

The bankers have been ridiculed by the press as being idiots, and we are all laughing at them. The goverements are quick to put them to shame as well. But in actuality, they are far smarter than all of us, goverments included. They have managed to define a system that will ALWAYS benefit their interests and put them in control of the world. Since we have let them define our means of exchange, they control us. They really are the masters of the universe…

[hourkid]

Take the LyondellBassell situation; it's a big business that's in Chapter 11 in the US so it is basically being restructured. Some creditors will get hurt, some will do OK. RBS has an exposure of $3.5bn to this entity. The value of that exposure is let's say $1.5bn. It could sell its exposure and take a $2bn hit. This is pretty similar to someone defaulting on an RBS mortgage and RBS selling the home at auction for say 50% of the value of the mortgage. Either way, lender and original owner take a hit.

Where is the transfer of real wealth here? It's not to RBS is it? In both cases, RBS takes a hit.

The assets in both examples will end up in the hands of someone who can operate the assets more efficiently. The original owners and creditors get penalised (make losses) for making bad decisions, that's all.

[Bloo Loo]

Take the LyondellBassell situation; it's a big business that's in Chapter 11 in the US so it is basically being restructured. Some creditors will get hurt, some will do OK. RBS has an exposure of $3.5bn to this entity. The value of that exposure is let's say $1.5bn. It could sell its exposure and take a $2bn hit. This is pretty similar to someone defaulting on an RBS mortgage and RBS selling the home at auction for say 50% of the value of the mortgage. Either way, lender and original owner take a hit.

Where is the transfer of real wealth here? It's not to RBS is it? In both cases, RBS takes a hit.

The assets in both examples will end up in the hands of someone who can operate the assets more efficiently. The original owners and creditors get penalised (make losses) for making bad decisions, that's all.

this is wht banks HATE bankruptcy....they are not going to complete their deals to profit. Thats why you, as a FAILURE, a bankrupt, a failed business man should hang your head in shame. The entire notion that bankruptcy is a SHAME on you and its the last resort for any DECENT human being is carefully nurtured and encouraged by the bankers.

The boom bust cycle caused by the financial system means bankruptcy is entirely NORMAL. Its banks that should apologise to us for reversing the truth to suit themselves.

[tiggerthetiger]

Not silly from the bank's perspective, as HPCers surely we believe that the person in the above figures will buy a £500k house that will fall in value to £250k, the 40% deposit means the mortgage is £300k, and when the house sells it will be at loss of -£50k due to the negative equity. Hence they want the £50k savings to cover that shortfall.

all entirely consistent behaviour from bankers who can see 50% drops in house prices.

same analysis applies for someone remortgaging who believes their house is worth £500k.

Nice reasoning !

[hourkid]

this is wht banks HATE bankruptcy....they are not going to complete their deals to profit. Thats why you, as a FAILURE, a bankrupt, a failed business man should hang your head in shame. The entire notion that bankruptcy is a SHAME on you and its the last resort for any DECENT human being is carefully nurtured and encouraged by the bankers.

The boom bust cycle caused by the financial system means bankruptcy is entirely NORMAL. Its banks that should apologise to us for reversing the truth to suit themselves.

Quite. Some of the people involved in a transaction that massively over-estimated the business' ability to service an astronomical amount of debt will get fired. And the assets will change hands, and hopefully, the business will be left with manageable liabilities, and this, should lead to productive employment.

It still remains that many banks here will be left with no hard assets and a big hole in the balance sheet.

[threesixty]

this is wht banks HATE bankruptcy....they are not going to complete their deals to profit. Thats why you, as a FAILURE, a bankrupt, a failed business man should hang your head in shame. The entire notion that bankruptcy is a SHAME on you and its the last resort for any DECENT human being is carefully nurtured and encouraged by the bankers.

The boom bust cycle caused by the financial system means bankruptcy is entirely NORMAL. Its banks that should apologise to us for reversing the truth to suit themselves.

Isn't Chapter 11 a restructure of debts, not that you'll never pay them? I thought it just changes the debt schedule to something more manageable. A bankruptcy tends to mean that no one can get money from you, ever. In this country RBS could have taken their assets and resold them and so on. I'll bet the assets sold separately for a company that big are worth far more than their debts. Win, win IMO. I'd be more worried if the debtor was just another huge finanical institution preteding to worth a lot but with no real assets...

[why me]

The truth is the majority of money that is lent out to buy a house or fund a business technically doesn’t actually exist.

What absolute nonesense.

What does the housebuilder or houseseller get - thin air? The money exists. Entries on a ledger when in the bank - cash when they take it out.

[hairy]

actually you are 'borrowing money' to buy assets. not 'loaning it' (unless you are a bank). Sorry to be pedantic

thats ok, point was made