Tuesday, Sep 22, 2009

Borrowers are bailing out the banks (and the government)

Greg Pytel: author of expert evidence published by HoC Treasury Committee: Borrowers are bailing out the banks

The article points out that yesterday’s BBC Panorama uncovered a way by which the banks made borrowers (especially mortgage holders) pay for the costs of the current financial crisis.
Effectively the current high borrowing costs introduced by the banks are a stealth tax designed to repay the government help for the banks and let take them back the ownership, for free, from the government’s hands.
It is more to it than that. Highly recommended.

Posted by ant @ 03:58 PM (836 views)
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4 Comments

1. stillthinking said...

I think this well known already and also very fair. Borrowers are in a group of borrowers and they need to collectively pay for their own defaults. This is why credit card rates are so expensive.
Don't drag others into it should be the motto of the game.

Tuesday, September 22, 2009 04:35PM Report Comment
 

2. ant said...

However this is not the same thing. This has NOTHING to do about paying collectively borrowers defaults Banks have built like Albanian gangesters a pyramid scheme which collapsed. Now the taxpayers are made pay ofr this scam. For more read: http://gregpytel.blogspot.com/2009/04/largest-heist-in-history.html

Tuesday, September 22, 2009 04:47PM Report Comment
 

3. mountain goat said...

I agree with Stillthinking. Borrowing is not your right. As a business banks should be making a profit and that profit should come from its borrowers. This is not a stealth tax, this is the price you pay for borrowing money. If you don't like it don't borrow.

Tuesday, September 22, 2009 05:23PM Report Comment
 

4. ant said...

@mountain goat and stillthinking: you would be right but only if the banks were allowed to go bust.

What's happening now is that banks used a mechanism of a pyramid scheme to deplete the reserves. Bankers and "investors" benefited from that based on assets price that was bogus. When inevitable happened and the pyramid collapsed like in Albania in 1996 -1997 the government stepped in and pumped cash into a bank. Now banks are overcharging the customers to repay the government and rebuild the reserves: becoming completely private whilst retaining their "too big to fail" monopolistic and anticompetitive status.

This is nothing to do with free market economy and capitalism. The current banking system is a combination of Albanian pyramid scam followed by a socialist system of the late Brezhnev era.

Tuesday, September 22, 2009 05:32PM Report Comment
 

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