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Guest Farticus

If Banks Fall In Depression, Will Debts Be Written Off?

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Guest Farticus

Dear All

If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts. Does this not mean that all the debts people owe to them will also get written off?

In which case should all the FTB's piling in now to borrow 20 x earnings, buy huge houses in the knowledge that when SHTF they can just default like rest of population/world???

:unsure:

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Dear All

If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts. Does this not mean that all the debts people owe to them will also get written off?

In which case should all the FTB's piling in now to borrow 20 x earnings, buy huge houses in the knowledge that when SHTF they can just default like rest of population/world???

:unsure:

...whoever buys the remnants of the imploded institution at a knock down price will own the mortgage debt and asset security (house).... <_<

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Guest Charlie The Tramp
If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts.

I think that`s very unlikely, this doom doom scenario is now going way over the top. :rolleyes:

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Dear All

If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts. Does this not mean that all the debts people owe to them will also get written off?

In which case should all the FTB's piling in now to borrow 20 x earnings, buy huge houses in the knowledge that when SHTF they can just default like rest of population/world???

:unsure:

A debt collection agency will buy the debt and hound you for years until you pay up :blink:

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Guest Charlie The Tramp
Always assume the worst and you'll never be disappointed.

The worse will be that all the secured debtors will be well and truly hooked, reminds me of that advert for Nationwide.

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Dear All

If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts. Does this not mean that all the debts people owe to them will also get written off?

In which case should all the FTB's piling in now to borrow 20 x earnings, buy huge houses in the knowledge that when SHTF they can just default like rest of population/world???

:unsure:

First off, it's very unlikely any banks will fail in the way you're thinking. A more likely scenario is that some smaller institutions will nealy fail but be takeon over by larger ones with some help from the BoE (who won't want to cough up on the gavernment guarantees to depositors if they can avoid it). Assuming a bank did go belly up properly, I would bet on hedge funds and maybe some of the IBs buying the secured debts at a knock down price and upping the recovery rates by every trick in the book. So, no, there's not a cat in hell's chance of getting away with paying your mortgage by this route! The 'best' you can hope for is hyper-inflation making it pointless for the banks to bother collecting the money in the first place.

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If as many of us predict a massive crunch is underway, many banks will go under

You really do live in cloud-cuckoo land, don't you Farticus/Thunderbox/Largely Ignorant!

The day 'many banks go under' is when UK PLC goes down as well. Almost everyone will be out of a job. The streets will be controlled by the mobs. What planet are you on, for God's sake? HPI or HPC will be the last thing on your mind. Most houses will have been burnt to the ground, in any case.

Have you checked the banks' reserves lately? Are you really stupid enough to believe that 'many banks will go under'?

p

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First off, it's very unlikely any banks will fail in the way you're thinking. A more likely scenario is that some smaller institutions will nealy fail but be takeon over by larger ones with some help from the BoE (who won't want to cough up on the gavernment guarantees to depositors if they can avoid it). Assuming a bank did go belly up properly, I would bet on hedge funds and maybe some of the IBs buying the secured debts at a knock down price and upping the recovery rates by every trick in the book. So, no, there's not a cat in hell's chance of getting away with paying your mortgage by this route! The 'best' you can hope for is hyper-inflation making it pointless for the banks to bother collecting the money in the first place.

WE'RE ALL DOOMED!!! DOOMED I TELL YE!! :o:o:o

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I think that`s very unlikely, this doom doom scenario is now going way over the top. :rolleyes:

Totally agree , there be some serious pain for some but it will not be the end.......... not this time anyway :ph34r: .

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Guest Farticus
You really do live in cloud-cuckoo land, don't you Farticus/Thunderbox/Largely Ignorant!

P

Thats why I asked the question, its called having an open mind and seeking answers?

I forgot you Socialists think you know everything ;)

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Thats why I asked the question, its called having an open mind and seeking answers?

To have an open mind, Farticus/Thunderbox/Largely Ignorant, you first have to possess a mind.

p

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Dear All

If as many of us predict a massive crunch is underway, many banks will go under, due to cash calls and bad debts. Does this not mean that all the debts people owe to them will also get written off?

In which case should all the FTB's piling in now to borrow 20 x earnings, buy huge houses in the knowledge that when SHTF they can just default like rest of population/world???

:unsure:

apart from those that were bought in the last 6 months, most houses have a significant amount of equity built up in them. mortgages are secured loans therfore banks can get most of their money back from selling houses.

current mortgage debt in the uk is just over £1trillion. total value of uk property is £4trillion. prices would need to fall some way for banks to go under.

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Guest Farticus
To have an open mind, Farticus/Thunderbox/Largely Ignorant, you first have to possess a mind.

p

My BA(Hons) and post grad qualification stand in awe at your patronising

self-righteousness ^_^

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My BA(Hons) and post grad qualification stand in awe at your patronising

self-righteousness ^_^

Sorry dude, your degree is pretty much worthless unless:

  • it's from a well established university

  • you graduated more that 10 years ago

  • it's in a credible subject

  • you achieved a good quality degree

only you know where you stand on the above.

Just like GCSEs and A-Levels, Degrees have deen de-valued to the point of irrelevance. The fact that you're banging on about it means that this fact has escaped you. I particularly liked the way you include '(Hons)'. How sweet.

Sorry dude, the ante has been upped. Being one of the 50% of school leavers to go to university is not going to cut it any more.

Mr.Mangle

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apart from those that were bought in the last 6 months, most houses have a significant amount of equity built up in them. mortgages are secured loans therfore banks can get most of their money back from selling houses.

current mortgage debt in the uk is just over £1trillion. total value of uk property is £4trillion. prices would need to fall some way for banks to go under.

Agreed.

But, don't forget that the equity available to those who are likely to run into problems is tiny in comparison to the average. The 'value' of all property may well be four times the outstanding debt but that doesn't mean that everyone has equity of three quarters. Some have 100% and others have less than 10%. That won't last long.

Also, a 50% drop (if such a thing is credible) would wipe out a previous 100% rise; a 25% drop would wipe out a 33% previous rise. Isn't gearing great!

p

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Sorry dude, your degree is pretty much worthless unless:
  • it's from a well established university

  • you graduated more that 10 years ago

  • it's in a credible subject

  • you achieved a good quality degree

only you know where you stand on the above.

Don't encourage him, mangle. He'll only have to make up other tall stories. That's how Farticus/Thunderbox/Largely Ignorant works.

p

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Guest Charlie The Tramp
Have you checked the banks' reserves lately? Are you really stupid enough to believe that 'many banks will go under'?

Reserves, also don`t forget all the deeds they hold until they get their money back.

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Guest Farticus
Don't encourage him, mangle. He'll only have to make up other tall stories. That's how Farticus/Thunderbox/Largely Ignorant works.

p

Jeeze haven't some of you people got anything better to do than make nasty little cutting insinutations about people you know absolutely nothing about. Tragic <_<

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Guest grumpy-old-man
Don't encourage him, mangle. He'll only have to make up other tall stories. That's how Farticus/Thunderbox/Largely Ignorant works.

p

good job you used his surname. ;)

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It is absolutely impossible for a bank to go bankrupt through bad debts. Imagine a bank has £10 in reserves. It borrows £90 from the central bank to lend to a customer. If the customer fails to pay the money back, the bank would still need to pay back the central bank. But the bank can't pay the central bank so it leaves the amount outstanding. If another customer comes along and borrows another £90 the bank would then have £10 in reserve and £180 outstanding. It has moved from a reserve ratio of 10% to 5.3%. The bank can continue doing this because in the UK reserves are voluntary. In the US it is a little more difficult and the bank transfers all loan accounts into a "sweep fund" overnight to avoid reserve requirements.

Banks can also "acquire the reserves they need" by borrowing from the Bank of England or the Fed. In the UK banks receive interest in the US they do not.

It is possible for a bank to go bankrupt through trading losses.

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You really do live in cloud-cuckoo land, don't you Farticus/Thunderbox/Largely Ignorant!

The day 'many banks go under' is when UK PLC goes down as well. Almost everyone will be out of a job. The streets will be controlled by the mobs. What planet are you on, for God's sake? HPI or HPC will be the last thing on your mind. Most houses will have been burnt to the ground, in any case.

Have you checked the banks' reserves lately? Are you really stupid enough to believe that 'many banks will go under'?

p

......remember Barings.....remember the financial lifeboats of '74.....these are all possible....and look at the US latest implodometer....near 100 institutions since early this year......not Harry Potter....all very real....... :P<_<:o

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