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Taxpayer may get £500bn liability
Comments
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Other debts are parcelled up and sold on to others, often (rich) private investors at (say) 50% of face value - often the buyers of such debt will call the debtors and say, "I'll let you off 20% of your debt if you repay it all within 60 days".
Interesting but surely a massive gamble for the purchaser of the debt.
For example if someone bought my mortgage and approached me with an offer of 20% off if I paid it in 60 days then I am afraid I would have no other option but to laugh at them.
Maybe you were not suggesting that private investors would buy mortgage debt though? Maybe smaller debt packages like CCs etc?0 -
I wonder how many of the rioters will actually be taxpayers ?
I am and I will be there.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
ianmoticon wrote: »I'm closing my RBS accounts. I don't trust them with my money.
For current accounts, I cant recommend the Co-operative/ Smile enough.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
Interesting but surely a massive gamble for the purchaser of the debt.
For example if someone bought my mortgage and approached me with an offer of 20% off if I paid it in 60 days then I am afraid I would have no other option but to laugh at them.
Maybe you were not suggesting that private investors would buy mortgage debt though? Maybe smaller debt packages like CCs etc?
In most times, you could borrow the money from elsewhere - the investor doesn't care where the money comes from as long as he gets the debt paid back.
I've heard (anecdotally) of deals like this being struck for mortgage debt and car & personal loans.
It is a gamble but as long as you can afford to buy enough loans and you get the pricing right you should make money.0 -
Rochdale_Pioneers wrote: »So you dispute my comment that the methodology used by ONS is unreal?
Will bank loans default ata rate of 100% as assumed by ONS or will they not?
Will bank assets devalue at a rate of 100% as assumed by ONS or will they not?
You're very good at putting your witty comments about spin without bothering to answer the question. Thats called evasion - a principle tool of the spin doctor. Does it take one to know one in your case?
That's how Government accounting works AIUI - if the Government borrows £10,000,000 to build a school, debt rises by £10,000,000 but no balancing asset goes on the books for the school. I guess that's because no ready market exists for The Home Office or HMRC or whatever although I don't actually know the reason why.
As a result, if the Government assumes the liabilities of a bank, the liabilities (savings held by the bank) go onto the national balance sheet but the corresponding assets (the loans) do not. The ONS is assuming nothing about the rate of default - it's just following internationally agreed accounting rules.0 -
Generali; do you actually ever sleep? No offense - you just appear to be on here a lot and having just had a look at your post timings there doesn't seem much time where you could.In most times, you could borrow the money from elsewhere - the investor doesn't care where the money comes from as long as he gets the debt paid back.
I've heard (anecdotally) of deals like this being struck for mortgage debt and car & personal loans.
It is a gamble but as long as you can afford to buy enough loans and you get the pricing right you should make money.
Anyway, this information is pretty much the information I was looking for. I am surprised that the investor can force the debt to be paid within a particular time if there was a different agreement beforehand.
I've also not heard anything about how this global recession was affecting Australia. What's the state of their banking system, debt levels, unemployment, inflation, etc? Just curious really to see how it compares with countries we hear about all the time here.0 -
Generali; do you actually ever sleep? No offense - you just appear to be on here a lot and having just had a look at your post timings there doesn't seem much time where you could.
I've had some interviews recently and I've been up late with nerves.Anyway, this information is pretty much the information I was looking for. I am surprised that the investor can force the debt to be paid within a particular time if there was a different agreement beforehand.
It's not that the investor forces the debtor to repay (although some debts are repayable on demand. It's that the investor gives the debtor a tempting offer. How would you like to cut your debt by 10-20% merely by borrowing from someone else? Not your repayments but your actual debt level. The debtor can tell the investor 'No' if he wants to but it seems like a pretty sweet deal to me.I've also not heard anything about how this global recession was affecting Australia. What's the state of their banking system, debt levels, unemployment, inflation, etc? Just curious really to see how it compares with countries we hear about all the time here.
Banking system is stronger than many other countries' right now as they had tighter restrictions on how much could be lent and to whom.
They will face problems in future as Macquarie (and Westpac too I think) both got into deals where they borrowed money cheaply to buy 'Regulated Assets' (things like utilities companies, toll roads and airports) where the income should be predictable. The trouble is, the slowdown is so big and so quick that people aren't flying, driving and even using as much electricity so the returns from a lot of these investments has already gone to 0 and may well go negative over the next year or so.
Personal debt is pretty high in Australia (although not at UK levels). BTL is very popular here as the tax treatment is very nice indeed and there is a genuine shortage of rental places (lots of young people living with parents as they can't afford to rent who would have left home in the UK).
Government debt is net $0 - they have a debt (for technical reasons that are pretty dull which I can explain if you like or you can Google 'risk free asset') which is offset against cash they hold. The Government is running a deficit so Government debt will rise.
Unemployment rate is low at below 5% but is rising as miners and bankers lose their jobs. There are lots of the former and not many of the latter. The Government is spending a lot on public housing and infrastructure to employ builders etc who would otherwise be losing their jobs.
Inflation is 4% and starting to rise. The Reserve Bank of Australia (our Bank of England) is coming under pressure to raise interest rates which were cut rapidly. There has been no talk I've seen of quantitative easing or any other crackpot schemes.
Benefits are overall more generous than the UK IMO. You often have to pay a contribution towards the cost of medical treatment - I called an ambulance for one of the Generalissimos (he's fine) and got a bill for over $300! State education is pretty good and free except for certain classes of migrant. Sports provision is (as you'd expect) excellent and very cheap. My 2 kids (the Generalissimos) learn to swim for $48(£22)/month between them. For that we all get unlimited use of the pool (including a 50 metre pool).0 -
It's not that the investor forces the debtor to repay (although some debts are repayable on demand. It's that the investor gives the debtor a tempting offer. How would you like to cut your debt by 10-20% merely by borrowing from someone else? Not your repayments but your actual debt level. The debtor can tell the investor 'No' if he wants to but it seems like a pretty sweet deal to me.
Ah, OK, I understand what you meant now. It would be a good deal - provided you could borrow the money from elsewhere.
I've not heard mention of the Australian economy in our media so this is really interesting, thanks. The cynic in me thinks that we've not heard much because being in a relatively strong position is not very sensational.Interesting Australian news
Sorry to hear of your mild insomnia - I hope the interviews went well.I've had some interviews recently and I've been up late with nerves.
On that note, it's definately time for me to hit the sack.
Nice talking to you...0 -
Ah, OK, I understand what you meant now. It would be a good deal - provided you could borrow the money from elsewhere.
Exactly. The borrow wins and the investor wins. Whoever put up the cash for the original loan loses - in most cases that will in effect be the UK taxpayer now.I've not heard mention of the Australian economy in our media so this is really interesting, thanks. The cynic in me thinks that we've not heard much because being in a relatively strong position is not very sensational.
It's not much of a headline:
Iceland Bankrupt!
UK owes £2,000,0000,000,000,000,000,0000,000.....
Australia suffering with mild economic peril - set to get worseSorry to hear of your mild insomnia - I hope the interviews went well.
On that note, it's definately time for me to hit the sack.
They were more aptitude tests. I think they went ok.Nice talking to you...
And to you!0 -
That's how Government accounting works AIUI - if the Government borrows £10,000,000 to build a school, debt rises by £10,000,000 but no balancing asset goes on the books for the school. I guess that's because no ready market exists for The Home Office or HMRC or whatever although I don't actually know the reason why.
As a result, if the Government assumes the liabilities of a bank, the liabilities (savings held by the bank) go onto the national balance sheet but the corresponding assets (the loans) do not. The ONS is assuming nothing about the rate of default - it's just following internationally agreed accounting rules.
Yeah I know its the rules being followed. And they make sense to a point for the kind of normal state borrowing. For banks though they are patent nonsense - the notion that RBS has no assets and will lose every penny it has loaned out is laughable.0
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