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Ok Let`s Say You Were One Of The Masters Of The Universe

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Let`s delve a little into the oft healthy paranoia that exists here re. Vested Interests and assume there are "bigger forces" at work that can manipulate the current sitaution for political expediency.

I`ll start it off, firstly keep on keeping on being lax with credit, yes the bad debt provision would go up, but so would the profits and even if the margin between both shrunk they`d keep on lending.

Any additions?

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Let`s delve a little into the oft healthy paranoia that exists here re. Vested Interests and assume there are "bigger forces" at work that can manipulate the current sitaution for political expediency.

I`ll start it off, firstly keep on keeping on being lax with credit, yes the bad debt provision would go up, but so would the profits and even if the margin between both shrunk they`d keep on lending.

Any additions?

As I understand it, virtually all the money that is lent by the banks is also created at the point of lending - there are now virtually no restrictions on the amount of magick money that a bank can create (used to be limited by some ratios in the past, i.e. CAR)...therefore the banks love to lend, and I don't see a way that they could be particularly bothered by risky lending, because the money they stand to lose they invented anyway.

Given this, I am paranoid about the long-term goals of the political/banking establishment: the mass of the UK public is entering into a sort of debt serfdom. Now, either it is down to extraneous factors such as wage suppression by China etc., too much 'have-it-now' attitude among consumers etc.....OR there are more sinister motives being pursued. Looking at what I have written above it is clear that the banks are happy to lend their funny-money to as many people as possible - throw a mortgage yoke over someone and then gently milk them for 30 years as they struggle to pay it back. Financiers are essentially very smart parasites in my opinion.

Other powers that be are also very happy to allow this debt-system to operate because mortgages keep people in line!

Now, given that they are smart parasites these 'Masters of the Universe', it of course makes sense for them to not upset the host too much, or god forbid kill it. Rather they want to enter into a form of mild-parasitism that is socially acceptable, respected and almost completely un-noticed by the public at large. Witness the widespread ignorance among the public about the money-creation process.

An economic system based on debt-money and consequently inherent money scarcity has been constructed which encourages the proles to fight each other over a structurally insufficient money supply (due to it being supplied as debt) - this encourages frenetic economic activity and a seemingly constant demand that we must all work harder, which runs completely in the face of the huge productivity advances in the economy.

Meanwhile the financiers just chuckle to themselves and reap the profits.

Therefore it is not in the interests of the banking fraternity to upset the apple cart too much...their ultimate interest is in preserving the system which benefits them so much. Perhaps they could tighten supply a bit to force a reallocation of assets to them as houses are repossessed etc., but they would not want this to happen to0 severely (e.g. great Depression) because this might kill the goose that lays the golden egg.

God I am really rambling like the paranoid lunatic that I am. In summary, I would say that the bankers will attempt to maintain the financial system which transfers so much wealth from the population at large into their greedy little hands. They will also look for any way in which to increase the transfer mechanism - persuading the population to assume a mantel of seemingly painless debt to a degree never seen before is as good a way as any I suppose. The fact that the political establishment seems happy for this to happen just plain worries me.

What sort of future are we heading for? And what have we got a right to expect when the money-men are the ones in charge? :blink:

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Let`s delve a little into the oft healthy paranoia that exists here re. Vested Interests and assume there are "bigger forces" at work that can manipulate the current sitaution for political expediency.

I`ll start it off, firstly keep on keeping on being lax with credit, yes the bad debt provision would go up, but so would the profits and even if the margin between both shrunk they`d keep on lending.

Any additions?

1. Let the pound drift down slowly (death of a thousand cuts);

2. Allow wage inflation to creep up to compensate;

3. This prevents nominal falls in house prices & prevents a panic.

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Marko

how do you square this with the fact that the major shareholders of banks are in fact pension funds which are for the benefit of the average citizen (private sector mainly)?

Sure there are some bankers creaming off a few million a year - board members of the large UK retail banks. But the fact is that the top of most industries make similar amounts - lawyers, CEOs of other large companies, CEO of Royal Mail (£1.7m last year!), even doctors (a few on Harley Street will make a few million per year).

City Investment bankers are a different kettle of fish - they don't lend money as a rule, they provide services to corporations and take some risks to make their money.

Is it possible that the financial system is simply the administrative arm of the government responsible for allocating money in the economy? Their activities are more or less controlled by the government, who decide the regulations under which they operate.

The administrators get paid for their work in allocating the money, and any surplus flows back to the shareholders, who are in fact the citizens of this country (at least those who have exposure to banking shares through either pension funds or other investments).

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Hows about 100% mortgages become illegal and all mortgages MUST have a MINIMUM of 10% capital deposit?

That should Keep HPI and Wage Inflation roughly equal... I'd hope....

- Pye

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Marko

how do you square this...

As I understand it the amount of money owed in the economy far outweighs the capital saved (in the form of shares etc.)...as a consequence of money supply, the majority are slowly but surely going into debt, and the claim of the financial sector of the nations assets is gradually increasing. This is most marked in housing, where the financial sector (in the form of mortgages) is gradually extending it's claim to more and more of the housing stock.

This is a very long term trend - not just the last ten years of HPI...we have gradually become more and more insolvent as the years have rolled by - looking at average household debt (as % of household income) figures for the last fifty years will show this.

I know you STF and I think that you agree the system is wrong - I also remember you think that it has evolved naturally into this state - this may be so, but this natural evolution could be taken as the sum total of self-interested individuals doing what is best for them. Given this, I think it is reasonable to suppose that at the top of the banking world are people, with a great knowledge of how the system works and benefits them, who are consciously involved in its maintenance.

This does sound paranoid I know!! :D

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Hows about 100% mortgages become illegal and all mortgages MUST have a MINIMUM of 10% capital deposit?

That should Keep HPI and Wage Inflation roughly equal... I'd hope....

- Pye

Would that not be the tipping point for a HPC? In your Universe that cannot happen ;)

I think I would be preoccupied with having kinky sex with half the gorgeous women in the Universe whilst watching the other half cover each other in baby oil! :blink:

Excellent, but whilst doing that what about house prices :blink: BTW can I come and watch? :D

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Let`s delve a little into the oft healthy paranoia that exists here re. Vested Interests and assume there are "bigger forces" at work that can manipulate the current sitaution for political expediency.

I`ll start it off, firstly keep on keeping on being lax with credit, yes the bad debt provision would go up, but so would the profits and even if the margin between both shrunk they`d keep on lending.

Any additions?

Inflation. It's the only way but is a very risky course to take - if it goes wrong the end result is even worse than just crashing the economy now.

In the short term, meaures that could be taken to prevent the housing market falling:

- lowering interest rates

- upping stamp duty thresholds

- allowing longer mortgages (30, 35 years etc)

- adding tax benefits on mortgage payments

- increasing income tax allowances on renting rooms

- building new public transport (e.g. extending the tube in London)

etc.

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Just announce that selling a house for less than the purchase price will be considered economic terrorism. Then you can use all those fancy new laws to stop the market crashing, or shoot people if they sell for too little.

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- Higher capital gains tax and council tax for 2nd/holiday home owners.

- Tighter regulations ( more wash basins etc ) and better tennants rights for landlords.

Sorry, this should help bring on a HPC.

Edited by winkie

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As I understand it the amount of money owed in the economy far outweighs the capital saved (in the form of shares etc.)...as a consequence of money supply, the majority are slowly but surely going into debt, and the claim of the financial sector of the nations assets is gradually increasing. This is most marked in housing, where the financial sector (in the form of mortgages) is gradually extending it's claim to more and more of the housing stock.

This is a very long term trend - not just the last ten years of HPI...we have gradually become more and more insolvent as the years have rolled by - looking at average household debt (as % of household income) figures for the last fifty years will show this.

My point is simply why does it matter if financial institutions have a larger claim over the nation's assets if the financial institutions are in fact owned by a large spread of the individuals who make up the nation's population?

Obviously fat-cattery is a problem, but it is a problem in every business where there is a separation of ownership and management (in business-speak there is a lack of goal congruence which leads management to abuse their position at the expense of the shareholder).

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We should all convert to Islam. We will no longer be able to pay or receive interest.

Actually I think they have it right in this dept.

Islamic finance has gotten around that.

To avoid usury, the transaction would look like this:

1. You see a house you want to buy and go to your 'bank'.

2. The 'bank' buy the house at current market value.

3. The 'bank' sells the house to you at a multiple of the price.

4. You pay the price to the 'bank' in instalments.

It's just form over substance.

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Islamic finance has gotten around that.

To avoid usury, the transaction would look like this:

1. You see a house you want to buy and go to your 'bank'.

2. The 'bank' buy the house at current market value.

3. The 'bank' sells the house to you at a multiple of the price.

4. You pay the price to the 'bank' in instalments.

It's just form over substance.

I agree it is a nonsense. They will use market interest rates to calculate the price they charge. No doubt some people taking out these products work out the imputed rate to see if they are being ripped off.

Any idea how they unwind the transaction if you want to sell your house? Do the bank buy it off you at an inflated price and sell it on the open market? Obviously they would only sell it to the person you have agreed to sell your house to.

Seems like a lot of pointless bureaucracy.

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I agree it is a nonsense. They will use market interest rates to calculate the price they charge. No doubt some people taking out these products work out the imputed rate to see if they are being ripped off.

Any idea how they unwind the transaction if you want to sell your house? Do the bank buy it off you at an inflated price and sell it on the open market? Obviously they would only sell it to the person you have agreed to sell your house to.

Seems like a lot of pointless bureaucracy.

I think there'd be some formula for working out how much you'd have to pay the bank at any point in time if you sold the house.

I don't think a complete ban on lending at interest would help anyone. The wealthy who didn't need to borrow money would do the best out of it as they'd be able to buy even more of the productive assets in society.

Some maximum rate of interest does have a place - sometimes you need to save people from themselves.

Edit: But on the other hand, even if you set a maximum rate, you are just creating a black market for unregulated loan sharks.

Edited by newbie

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My point is simply why does it matter if financial institutions have a larger claim over the nation's assets if the financial institutions are in fact owned by a large spread of the individuals who make up the nation's population?

Obviously fat-cattery is a problem, but it is a problem in every business where there is a separation of ownership and management (in business-speak there is a lack of goal congruence which leads management to abuse their position at the expense of the shareholder).

Yes, this is the 'don't worry we owe it to ourselves' argument - however, this doesn't take into account the fact that banks create money through debt. We don't owe all this money to ourselves. There is now over a trillion pounds of personal debt in the UK, but this does not mean that there is a trillion pounds of savings from other UK citizens.

You know this STF, so I guess you are giving leading questions.

Altenatively, you are saying that because the banks have shareholders, then it all sort of balances out again. Maybe? Lucky shareholders??

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Altenatively, you are saying that because the banks have shareholders, then it all sort of balances out again. Maybe? Lucky shareholders??

That's what I'm saying. "We", the citizens, own the banks. Effectively we do owe the money to ourselves on a macro level, as we own the banks the money is owed to.

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  • 337 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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