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Allied Irish Bank Weighs Debt Forgiveness In Europe’S Worst Housing Market

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Allied Irish Bank Weighs Debt Forgiveness in Europe's Worst Housing Market

Mon Jul 25 23:01:00 GMT 2011

Allied Irish Banks Plc (ALBK), the nation's biggest mortgage lender, may use money from its taxpayer bailout to rescue homeowners unable to pay their mortgages, opening the door to debt forgiveness in Europe's worst real-estate market.

http://www.bloomberg...ing-market.html

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The most expensive conceivable way of acquiring social housing.

Unless the gubmint does eventually sell these banks and fails to claw back the taxpayers' share - then the banks' new owners get to keep everything. I bet that's what happens.

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This qoute from them was a bit special

There are some people who will not be able to repay -- cannot repay -- the full amount of debt they owe,” Hodgkinson said. “I’d prefer to call it debt restructuring. Forgiveness implies a degree of moral hazard. I think it’s important we don’t get into that space.”

So they are saying this is moral hazard but we just don't want to say it outloud or it may cause people to say f*ck paying I'll just befault and let AIB pick up the tab, whihc sounds like a good shout to me!

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I can't see it happening. Surely it's better to keep them paying than just write it off.

The officials prefer to call it restructuring in the report. Isn't it just a wheeze to help prevent repossessions and market prices falling further. I'm just trying to anticipate what other measures might happen in England after SMI, interest rates cut to 0.5% and QE to prevent houses becoming affordable to more buyers.

“People who are unemployed can’t pay back their debts and that puts them into arrears and potentially default,” said Conall Mac Coille, an economist at Dublin-based securities firm Davy. “In Las Vegas, you can just throw the keys back in the door and you’re done, whereas here you go bankrupt.”

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Makes sense.

If the asset is written down on the b/s then the debt ought to be written down also.

Better still might be some sort of mechanism for linking the nominal value of a loan to an asset price inflation index so that the debt is variable in the same way the asset price is variable.

Current system invites and perpetuates booms/busts because debt isn't linked directly to asset prices.

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How much do you think average house prices/household debt/rent would be if mortgages were made illegal? I suspect everyone would be better off (except the financial industry).

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Even after 50-60% falls in house prices, the banks are still scared of further falls.

Without a credit bubble for the last 15yrs, are house worth about 10% of the peak 2007 price ? :unsure:

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  • 334 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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