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Nicholas Cage

Bad Loans Moved To Tax Payer If They Default

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http://news.bbc.co.uk/1/hi/business/7835768.stm

The Treasury is to announce an insurance scheme for banks next week to try to revive confidence in the industry, the BBC has learned.

It would allow banks who pay a fee to have their bad loans underwritten by the taxpayer up to a certain level.

Peston..peston...peston

Liberal Democrat Treasury spokesman Vince Cable said an insurance scheme may have to be tried.

But he said: "We do need to establish first of all what happened to the £37bn worth of taxpayers' money that's already gone into the banking system.

It seems they really are working over the weekend on an emergency rescue, ordering curries late at night and trying to understand what a stop loss is.

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So as we plunge into complete destruction it will be good to know that when (not if) the vast majority of these loans default the taxpayer will be there to foot the bill!

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Guest sillybear2

So the tax payer essentially becomes the securitisation market, so the banks can basically lend to anyone and his dog, if the gamble pays off and they're a good credit the bank profits, if the loan is a dud you just pass the buck to the tax payer. Where's the risk for the bank? What happened to risk:reward, what happened to capitalism?

Putting the moral argument aside, look at Japan, they could not stop the deflation because the public were spooked and didn't want to borrow, if people cannot afford the repayments because of historically high house prices combined with limited wage growth and high unemployment, where do you go from here? Force people to borrow at gun point, force people to buy into a falling market?

It seems to me the 80's and 90's were a better environment for the banks, they lent small amounts, by today's standards, yet their margins were fat. The government are now asking the banks (or the taxpayer) to risk large amounts in return for a few basis points in real returns.

Edited by sillybear2

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Putting the moral argument aside, look at Japan, they could not stop the deflation because the public were spooked and didn't want to borrow, if people cannot afford the repayments because of historically high house prices combined with limited wage growth and high unemployment, where do you go from here? Force people to borrow at gun point, force people to buy into a falling market?

I fear the Japanese were amateurs at borrowing when compared to our lot.

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couldnt resist copying this comment from Pestons article on the same ..

110. At 6:11pm on 17 Jan 2009, sosraboc wrote:

Latest news conference from Gordon Brown:

We will do everything we can and whatever it takes to help the global crisis hit hardworking families with international cooperation and fiscal stimulus.

Er

We will hit the global crisis with everything we can do to hardworking international cooperation and help families? fiscal stimulus, whatever it takes.

Er

We will help do fiscal stimulus with international cooperation to can hardworking families whatever it takes global crisis

Er

We will help ourselves through fiscal hardworking and international global crisis stimulus to hit families with whatever it takes

Ah That is what I was looking for.

:lol:

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Guest sillybear2
I fear the Japanese were amateurs at borrowing when compared to our lot.

You'd be surprised, entire corporations went ponzi on commercial property speculation, people even borrowed against land to buy millions in the works of art, Japan was entirely bubblicious. Once a population gets b1tch slapped they change their attitudes, without the prospect of instant ponzi riches people see debt for what it is, a crippling burden in an uncertain jobs market.

Edited by sillybear2

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You have to look at from their position. They are old and have spent their lifetime accumulating, By the time you get any power you are old.

So their only priority is to maintain the asset values of their portfolio. They don't ask the young if they want to spend the next 30 years paying back the debts they are taking out in their name, they just take it. This allows them to grab the future production of the young whilst at the same time preventing those young people from being able to obtain assets themselves. They couldnt care less if they sadle the young with a zillion pound debt, they are going to be dead by then.

To make matters worse they have awarded themselves retirement at 65 or sooner and free health care. All to be paid for by the young too. Not that the young can pay because they leave university with £20K debts to find that graduates earn no more than shelf stacker's.

Its generational theft, pure and simple. The next generation is being prevented from accumulating assets itself, they cannot afford a house, they have debts so they do not start families. Its very short sighted of the greedy generation. They are taking everything for themselves and breaking the generational pact. The young need to turn around and take action. Refuse to nurse them unless they pay £1000 per hour and blockade the ports if they try to bring in immigrants to defeat the boycott.

The young have always been dumb but this generation is the dumbest on record. There are no student protests like their used to be. They simply bend over and take it.

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sorry cannot resist again .. beautiful summary ..

:)

The 10 question idiots guide to the UK financial credit crisis:

Q1.What caused it?

Answer. Gordon Brown says it was the sub-prime house mortgage crisis in America.

Q2. How did this affect our banks?

Answer. They could not borrow any more money so as to give more loans and mortgages. This caused the UK housing market to crash, further reducing their capital valuations and hence even further reducing their ability to lend more money.

Q3. Why were the banks using the wholesale markets to borrow more money than they had in deposits?

Answer. Because Gordon Brown changed the regulations allowing them to do so from zero in 2001 to �700 billion in 2007. Northern Rock would not have gone bust if they were not borrowing more money than they had in deposits.

Q5. So it is Gordon Brown?s fault that he changed regulations which allowed this to happen and for none of the three regulators the FSA, the Bank of England, and the Treasury to have the power to stop this cycle of debt?

Answer. YES!

Q6. Why were the banks lending more than they had in deposits?

Answer. Because the UK house prices were increasing so fast that they needed more money to lend.

Q7. Why were house prices rising so fast?

Answer. Because there was more money in the economy causing asset prices to inflate.

Q8. Why was there more money in the economy?

Answer. Because Gordon Brown was borrowing and spending in the economy more money than he was collecting from taxes.

Q9. Why was Gordon Brown spending more money on government created and funded jobs?

Answer. Because he wanted Labour to be re-elected by a majority dependent on state funded jobs and welfare benefits, with his belief that he had abolished boom and bust.

Q10. So it is Gordon Brown?s fault that he created the house price bubble which has crashed, and has subsequently bankrupted the Country with growing public sector borrowing from declining private sector tax revenues?

Answer. YES!

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You'd be surprised, entire corporations went ponzi on commercial property speculation, people even borrowed against land to buy millions in the works of art, Japan was entirely bubblicious. Once a population gets b1tch slapped they change their attitudes, without the prospect of instant ponzi riches people see debt for what it is, a crippling burden in an uncertain jobs market.

I just had a realisation that the Madoff Ponzi scheme was 50 Billion Dollars.

Jan. 16 (Bloomberg) -- Bernard Madoff’s brokerage, which is being sold to pay victims of his alleged $50 billion Ponzi scheme, may fetch no more than $10 million based on a profit report drawn up by investment bank Lazard Ltd.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Not trying to be clever or ironic or anything else that doesn't translate well across the internet, i just realised he

ran a ponzi scheme with $50,000,000,000 and according to recent news, never made any trades, at all, not even

blue chip.

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The man's a complete idiot. The more bailouts that are passed, the more that taxpayers are impoverished, which means more loans are defaulted on, more bailouts are passed, more taxpayers are impoverished... ad infinitum (or until the transfer of total wealth from poor to rich is complete - whichever comes first)

Edited by RajD

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Guest sillybear2
The man's a complete idiot. The more bailouts that are passed, the more that taxpayers are impoverished, which means more loans are defaulted on, more bailouts are passed, more taxpayers are impoverished... ad infinitum (or until the transfer of total wealth from poor to rich is complete - whichever comes first)

It doesn't matter about the taxpayer, provided a small elite are growing rich at their expense. It's quite simple, banking is all about stealing peoples' productive wealth via interest on money loaned into existence, but clearly people can and are defaulting so they've stepped it up a notch.

Taxation is just a more primitive less subtle form of banking and exerting control, you hold a gun to someone's head and steal their money... bankers have simply decided to cut to the chase and steal directly from the government, and our elected officials have diligently been writing blank cheques in the belief giving into this blackmail is the only way to be re-elected. Unsurprisingly like any form of organised crime, once they're on to a good thing they keep coming back for more until the victims wise up and rebel or are crushed under the burden. However national debt has unique properties,it never dies, we can sell the next generation and the unborn down the river without their consent.

image004.gif

Edited by sillybear2

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It doesn't matter about the taxpayer, provided a small elite are growing rich at their expense.

image004.gif

(My head was already a bit wonky after a couple of glasses of wine. The picture has made it worse :blink: )

Agreed. At some point the sheeple will rise up in arms. Granted it may not be until they're down to the last of their turkey twizzlers, but rise they will.

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and how will it look if some of these bad debts result in repossessions and bankruptcies and the govt (i.e. the taxpayer) is accused of being mean to 'hard working families' or 'struggling businesses' in pursuit of their money back. The banks meanwhile unless the premium they pay is sizeable will be 'laughing all the way to the bank'. They have got rid of the toxic loan and the feckless borrowers are bailed out and the government is stymied. :(

Edited by olliegog2

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and how will it look if some of these bad debts result in repossessions and bankruptcies and the govt (i.e. the taxpayer) is accused of being mean to 'hard working families' or 'struggling businesses' in pursuit of their money back. The banks meanwhile unless the premium they pay is sizeable will be 'laughing all the way to the bank'. They have got rid of the toxic loan and the feckless borrowers are bailed out and the government is stymied. :(

I can't disagree with that, but the inevitable prospect of bankers' heads on spikes offers me some comfort. <_<

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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