75% of Lloyds owned by us, £260B of toxic debt is ours too

MrFonzerelli

dacouch wrote: »

Could Gordon Brown not ring up Ocean Finance and consilidate the debts all into one easy to manage payment?

Could Gordon Brown not ring up Ocean Finance and consilidate the debts all into one [strike]easy to manage[/strike] large unmanageable payment. :cool:

1984ReturnsForReal_2

MrFonzerelli wrote: »

Could Gordon Brown not ring up Ocean Finance and consilidate the debts all into one [strike]easy to manage[/strike] large unmanageable payment. :cool:

Or just go bankrupt & wipe them all out in 6mths....

dacouch

Could I sell my own toxic debts to the tax payer, I'm happy with the normal terms eg I pay the first 5%. Could someone have a word with the one eyed sweaty in downing street for me?

1984ReturnsForReal_2

dacouch wrote: »

Could I sell my own toxic debts to the tax payer, I'm happy with the normal terms eg I pay the first 5%. Could someone have a word with the one eyed sweaty in downing street for me?

I am happy to pay mine all back (at 1.00% & over 40 years anyway!)

econo_2

Hands up how many are still spouting early 2010 for recovery? Anyone who is, should be taken out and shot along with about 90% of parliament.

ad9898_3

Thrugelmir wrote: »

There is no reason to believe that these toxic debts will not have any realisable value in the future. So potential reduction in exposure to the taxpayer.

My fear here is the banks think/know these assets are bad. This insurance policy that the government have given the banks, in layman's terms, seems to work like this.....

You have a car with no insurance, you have an accident and write it off, in a panic you ring Norwich Union and say, 'I have no insurance with you and I have just written my car off, if I now pay a premium of £200, will you insure my written off car ? '

Now we all know that they wouldn't and would probably laugh at you before hanging up, however this is exactly what the government seems to have done.:rolleyes:

chucky

Graham_Devon wrote: »

We will never, ever get the money back for these debts, and if people think these will magically be paid off they are deluding themselves. The only people to pay these off will be us.

wrong - the asset backed securities or toxic debt held by the banks and gauranteed by the BOE will yield once they are unravalled and priced correctly.

mewbie_2

chucky wrote: »

the asset backed securities or toxic debt held by the banks and gauranteed by the BOE will yield once they are unravalled and priced correctly.

This is something I still fail to grasp. People bought loads of stuff which they didn't understand and couldn't value properly. Even after months of this they still don't know what it consists of. It's not as if they bought some impenetrable scientific equation - they bought some financial stuff, mortages and things. It's surely pretty basic.

JP45

ad9898 wrote: »

My fear here is the banks think/know these assets are bad. This insurance policy that the government have given the banks, in layman's terms, seems to work like this.....

You have a car with no insurance, you have an accident and write it off, in a panic you ring Norwich Union and say, 'I have no insurance with you and I have just written my car off, if I now pay a premium of £200, will you insure my written off car ? '

Now we all know that they wouldn't and would probably laugh at you before hanging up, however this is exactly what the government seems to have done.:rolleyes:

I don't think your analogy is quite right.

I think a more accurate analogy would be to to say that your uninsured car was being driven by your partner when it was involved in an accident. You learn of the accident from a third party but you have no idea of the extent of the damage to the car - it might be a write off but it might not. At that point, you phone Norwich Union and try to arrange insurance....

In other words, no one can say at this stage what the ultimate value of these assets will be as it depends on the extent of the downturn; and we won't know that until the economy and the housing market finally start to recover.

chucky

mewbie wrote: »

This is something I still fail to grasp. People bought loads of stuff which they didn't understand and couldn't value properly. Even after months of this they still don't know what it consists of. It's not as if they bought some impenetrable scientific equation - they bought some financial stuff, mortages and things. It's surely pretty basic.

it's related to what do you price these debts too - some are so complex many people are scared to make call on them due to the worst, worst, worst case scenario. if you compare it to something of zero value it's worth zero - that's a bit extreme but that's where we are. the banks are having to mark-to-market at the most extreme scenario.

from a less main-stream source
"But here’s the problem: Sometimes, there is no market — not for toxic investments like collateralized debt obligations, or C.D.O.’s, filled with subprime mortgages. No one will touch this stuff. And if there is no market, FAS 157 says, a bank must mark the investment’s value down, possibly all the way to zero."
http://rogueeconomistrants.blogspot.com/2008/07/sub-prime-cdos-and-mark-to-market-rule.html

here is something that i saw a while ago in the FT that gives more detail
"It is not appropriate when you intend to hold an illiquid asset to its maturity, and when you have the financial stability to do so. In those circumstances, where, effectively, there may be no real market for the asset, marking to market is inherently inaccurate."
http://www.ft.com/cms/s/0/24446364-c882-11dd-b86f-000077b07658.html