75ZT Community

Oh no were not! lol. Fortunately I don't owe anyone anything, car and house paid for, all I need to do now is get a one way ticket to Switzerland when the time comes. Or, I may drive over and leave my car there. heh heh..

As for toys, i did try to get one but she bashed me with her hand bag!!! (Rowen and Martin laugh in)...

Chartermark wrote:Sadly Trevor, history has repeated itself from 1929 and the 'Wall Street Crash'. Two far visioned American Senators formatted a bill that became part of American banking law. They were Carter Glass and Henry Steagall. In 1933 they passed the second Carter Steagall Act that prohibited banks gambling with Retail depositors savings. A piece of legislation that held good until Clinton repealed it following Republican sponsorship in 1999. It took the bankers less than ten years to repeat the '29 crash all over again.

Gordon Brown should have kept a much closer eye and legislated against the banks, but the FSA, were far too cozy with the 'Porsche & Braces' brigade - result repetitive chaos. In all fairness the Tories would'nt probably have done any more to interdict either (see geese & golden eggs).

John Maynard Keynes, the British Economist who did so much to reconstitute the American economy in the 30's once said;

'Bankers are not the sobersides of folk lore, but reckless fellows who need watching very closely'.

How right, but to have them in concerto with short sighted European Political zealots, dreaming of ideality whilst breaking peoples lives, is a sordid concoction of odds indeed.

Tonight sees the second part of The Day The West Went Bust by Robert Preston the BBC political chappie on BBC2 this evening.

Very interesting insight into how the whole mess is down to politicians.

Cheers

Mike

Absolutely Mike, and it's good to see the interest most people are taking in the Economy, now it's almost too late. Unfortunately the lessons of past political mistakes in this area are soon forgotten.

Lets hope we stay in the lifeboat now, and don't jump back on the 'Titanic'...

I keep getting this picture now of old Trevor up there, furtively stealing his way across to Teddy Bears Nursery, in the small hours, with the wind blowing and the owls hooting. Hurriedly, by light of a full moon, he buries his 'Mattres stash' under the Tomato plants and old Pollen filters.

Maybe you have found the answer Martin, invest in pollen filters, buy buy buy !

The truth is that the banks and other traders, took the toxic debts and hid them inside bundles of otherwise desirable goodies, labeled the bundles as AAA top grade buys and sold them on.. Then loaned that money to people they knew would default on the loans, and copped their sales bonus, an infinitum.. BUT -- they did not go to jail for it?????????? It was clearly fraud... Fraud is illegal... Sooo what happened to the usual course of "justice" events??? Why didn't it kick in????

And -- Having watched/read lots of programs on the various issues, it is extremely worrying that a very high proportion of the top people still don't get whats going on!!! They can't see where it will lead, or what they did wrong... And these fools are still running things!! Arghhhhh..

The only good news is, I am too old to have to don my marching gear, and once again join the people in mass protests against the greed, arrogance and stupidity of our political leaders...

People don't like the cut-backs being made now --- if they could only see what's coming ---- What HAS to come--------------- yikes....
...

Yes, they made Del Boy look saintly in his dealings

Quite right James,

The 'bundles' of agreements you refer to, sometimes running into billions were termed 'Collaterised Debt Orders', they've been around since 'Big Bang' in the 80's and are traded on the securities market, along with derivatives and arbitrage arrangements. These Special Purpose Vehicles, (SPVs) were peddled in and out of Tax 'Friendly' environs such as the Channel Islands, the Republic of Ireland, Delaware, Luxembourg the Netherlands, the Bahamas and Belize.

Towards the end of my career, we were approached to lease a very large group's filling stations, selling significant volumes of fuels. These retail outlets were offered as a leasehold structure (25 years) and on extremely favourable terms, with minimal rent deposits and no premium. From our point of view the gain was instant and the outlay minimal. Consequently the DCF (discounted cash flow return) was extraordinarily beneficial. and we pondered long and deep trying to find a fault line, in what seemed just too good to be true.

Following extensive verification, we signed. Later it transpired that by having our name (a first line mulitinational oil company) at the top of the list of supposed 'secured' deals in the package, AIG (American Insurance Group) gave the CDO a triple AAA rating, a 'true 'curates egg' in total of course!

We later learnt the 'Freeholds' were similarly fronted in another CDO, furnishing ourselves as a tenant, so that too, got the AAA endorsement.

Both CDO's had thousands of worthless mortgage deals attached. All mortgagees were offered a two year moratorium (repayment holiday). As a corollary, bad debt didn't even leech through for 30 months, enough space for a timely with drawl by the broker, doubtlessly now living very well somewhere far away on his own island.

Six years ago I foresaw this debt burdened crisis coming, as did many other Economists, fuelled by the growth of money supply into debt it was plainly there for all to see. Collectively we were shunned, and scorned for daring to suggest that this "Economic Miracle" was anything less than perfection in our time, and a definitive ending to 'Boom & Bust.

In fact I chose early retirement to discharge myself from what I saw as a spiral to ruin and an escape from hedonism and arrogance.

Simon and Garfunkel's lyrics from 'The Boxer' perhaps explain the stupidity of such gullible fools as Fred Goodwin and all the rest thus;

... 'a man hears what he wants to hear, and disregards the rest' ...

Whether there's been fraud, is probably impossible to crystalise. In commerce the old term 'Caveat Emptor' means just that, if you buy something and it's worthless, it's your fault, unless corruptive collusion intercedes. The blame lies with Gordon Brown and his oppo's, Balls being head of that list, who allowed a bunch of sycophantic amateurs to run the FSA, with very little investment or effective audit. Unless banks are legislated against they will continue to express their hedonistic vanity and hubris again and again. Byzantine facades are now their stock in trade unfortunately.

I see no way out of all this, apart from at least 20 years of stagflation and fractional growth in a repetitive cycle, as debt repayment prefacing more borrowing perpetuates. Ahead lies an exhaustives and attritional journey. Watch out for social conflagration and civil unrest worldwide, (particularly in the UK) as the effects of the above embark upon a generation, whose only aquisitional falter has been the functional closure of the cash dispenser.

Convolute this with the imminent collapse of 'The Euro', (a true achievement in the creative order of first class disasters), result a toxic and ruinous cocktail,

Reality must be countenanced, you can't buck the market, even if your name's 'Merkosy', the conglomerate holes far, far, too big to plug this time.

Like you James, I'm glad I'm nearer the exit than when I came in ...

There is a way out, nullify all personal debt, then start the whole system up again with proper rules and regulation in place. Or am I just another crank among many, of whom can be numbered, leading economists.

Very briefly --- If you nullify all the debs Mick, then the people and institutions who are owed the money will go bankrupt, I.E all the banks, mortgage Co's, Car Co's, etc, so that will effectively bankrupt the UK...

The individual monies owed is tiny compared to what the Gov owe. And when the interests rates rise, as rise they must, then people will really have cause to worry...

I didn't see the problem coming as clearly, widely, or comprehensively as Martin did, but I saw what was happening to house prices due to property speculators, and realised it had to end in tears.. But then so did the people fueling the fires, they just kept going in order to maximise their profits for as long as possible.. Again, that was criminal really...
...

James.uk wrote:The individual monies owed is tiny compared to what the Gov owe. And when the interests rates rise, as rise they must, then people will really have cause to worry...

Actually not so James I'm afraid. Since 1987 public (Gov't Debt) has risen 200%, much in line with company borrowing, as a percentage of GDP.

That of private, (household debt) has risen 450% of GDP in the same period (source Office for National Statistics). Currently UK private debt exceeds £1.5 trillion. At the latest estimate total UK Govt Debt was around the £1 trillion mark. This factor is the main reason for UK interest rates being so low, as it's rigour upon domestic mortgage repayments, would crush most households, if realistic rates applied. Much of the debt individuals racked up, was borrowed on re-mortgages based on spiralling property values.

As I said in a previous post, the money supply ran away in the period (97-2010), primarily absorbed into debt from prevalently Chinese imports, as the Yuan consistently undercut other world currencies. In effect the Chinese produce things cut-price to get our money, and then lend it back to us.

A clean slate approach to private debt held by banks Mike, would promulgate a wholesale collapse of the entire banking system as their balance sheets imploded. Liquidity would vapourise overnight - result gridlock. It's also worth noting that some of the UK banks have balance sheets, 6 times the size of British GDP.

Too many economists provide either 'paid for' opinions, or believe their own phantasies. I've seen many an objective mind blunted by the bonus culture over the years.

Visionaries such as Stiglitz, warned us long ago, but only now attract recognition.

It's not that I don't have opinions, rather that I'm paid not to think aloud. --Yitzhak Navon (Former Israeli PM)

The press sell papers by pushing the bleakest possible picture. The euro probably is doomed as all the fatal flaws in it that were so loudly predicted by the euro sceptics seem to be coming true. We have a currency with no one in control as the euro leaders like to prove every time they get together to fix the problem! The truth is a large majority of the countries in the scheme have debts they cannot repay and the only solution they can come up with is to borrow more!

Now the euro fanatics in Brussels (who very understandably want to hang onto their incredible salaries, perks and life style) are trying to scare the children and animals by telling us that the collapse of the euro will cause financial disaster and we will end up envying the residents of Zimbabwe their living standards and services.

I am sure people in Washington and Beijing are plotting right now how to shore up the world economy when the inevitable happens in Europe and how to extract a price for this assistance. Indeed I see reports that the Germans have already printed some Dmarks in preparation for the change and the Sunday Times says the Foreign Office is preparing to evacuate the British pensioners from Spain and Portugal when their banking system hits the buffers.

I am sure lots of banks (particularly in Europe) will fail but the governments will happily print some more money to recapitalise them and take them into public ownership (for only the short term you understand). Life however will go on and after a year or so of pain things will improve as they always do! Hopefully this shakeup will deliver the huge benefit of sinking the EU but perhaps that is being too optimistic……

Happy Christmas!

Zimbabwe - someone was showing me one of their banknotes - a note for 100 billion!

Be interesting to see how the lot at the summits would get on playing Monopoly - would it end up with none of them having any money?

Borg Warner wrote:Very well explained guys, I think I understand a little better now. But I'm not going to worry because I can't do anything about it.

A question though; If my bank/lender goes under do I lose my savings and they lose my debt i.e. mortgage? (I think I know the answer but?)

I read somewhere on a Banking / FSA or similar site (cannot remember where) that if a Bank goes under you are entitled to no more than £85k paid back. So if you are a Millionaire, well, you sadly won't be any longer!!

As far as the Mortgage, the Bank own the House so it would be recouped by them to counter against their losses, you would then lose your home iirc.

Mick wrote:There is a way out, nullify all personal debt, then start the whole system up again with proper rules and regulation in place. Or am I just another crank among many, of whom can be numbered, leading economists.

I have often wondered about this, because we are a World living on Debts. OUr Banks, GOv't and population all exist financially on a Debt system.

Strange how we would go Bankrupt because we would write Debts off - I mean, a Debt is something owed, you do not have it, it technically does not exist. Therefore by removing it, it does not change the circumstance. So I am completely puzzled how it would bring about Bankruptcy (Shrugs) - But then I have less understanding of the whole Global Economy than most do lol.

Then there is the whole "we cannot print money off because the Pound will lose its strength" eh? What? lol.

carlpenn wrote:I read somewhere on a Banking / FSA or similar site (cannot remember where) that if a Bank goes under you are entitled to no more than £85k paid back. So if you are a Millionaire, well, you sadly won't be any longer!!

You are unlikely to be a "millionaire" if you leave all you money festering in a bank account....

carlpenn wrote:

Mick wrote:There is a way out, nullify all personal debt, then start the whole system up again with proper rules and regulation in place. Or am I just another crank among many, of whom can be numbered, leading economists.

I have often wondered about this, because we are a World living on Debts. OUr Banks, GOv't and population all exist financially on a Debt system.

Strange how we would go Bankrupt because we would write Debts off - I mean, a Debt is something owed, you do not have it, it technically does not exist. Therefore by removing it, it does not change the circumstance. So I am completely puzzled how it would bring about Bankruptcy (Shrugs) - But then I have less understanding of the whole Global Economy than most do lol.

Then there is the whole "we cannot print money off because the Pound will lose its strength" eh? What? lol.

Well your debt is an asset to the bank and they confidently expect you to pay in back together with a modest profit. If you don’t pay it (and lots and lots of friends) then the bank runs out of money and at the very best will stop lending to anyone and so you employer dies as does your job. You and all your mates stop paying tax and the government needs to sack a few more public employees and so things get even worse….

The West has been running on debt for a good few decades. The Chinese have happily lent us the money so we continue to buy their goods, as have the Arabs so we can continue buying their oil as have the Germans so the Greeks, Italians, French and Brits will continue buying cars…..

We have happily printed money to help us out of the dodo but it has impoverished us all. When I lived in Singapore in the late 60s there were 8 Sing Dollars to the £. When we last went there in 2008 it was down to 3.2 and right now it is just above 2. My parents had a splendid 4 bed house with about an acre of garden and a live in staff of 5 in their own quarters in the garden covering a cook, gardener, driver and 2 maids funded from a managerial job. Mates going out now doing the same sort of job are grateful for a 2 bed flat with, perhaps, a part time maid…..I am not looking for sympathy but it does show how our economic strength has been pissed away of short term gratification.