Banks stealing our savings

ColdIron

gadgetmind wrote: »

and inflation isn't a tax

Au contraire, inflation is a tax, merely indirect and deferred

gadgetmind

Anyone who thinks inflation is a tax either doesn't understand inflation, doesn't understand tax, or doesn't understand either.

And yes, I've read many arguments on the subject but think some people are trying to redefine the word "tax" to cover anything they want it to mean.

Tafia

jamesd wrote: »

Please stop making false claims about what the plan proposes.

It specifically contradicts that claim, saying in part "Under both the U.S. and U.K. approaches, legal safeguards ensure that creditors recover no less than they would under insolvency ... The Banking Act also provides the U.K. authorities with a bespoke bank insolvency procedure that fully protects insured depositors while liquidating a failed bank’s assets".

Insured depositors are all consumers and small business depositors with deposits that are covered by the FSCS, who get paid out up to the FSCS limit if a bank becomes insolvent.

And no, the Bank of England didn't grant itself those powers. The Banking Act is an act of Parliament, passed into law by our elected representatives.

The paper you're discussing is describing something different from what was done in Cyprus. Taking money from bond holders, not depositors. Bonds being a form of investment, something different from term deposit savings accounts.

The person you've linked to is an employee of a small banks' advocacy group who made false claims about what the plans would allow, presumably for the purpose of furthering her group's agenda.

The low interest rates are a major part of what is preventing a rapid crash in property prices that would do serious financial damage to boomers who think they have a secure asset in their homes. There's a cost in interest paid to get that protection, which is harming younger buyers by keeping property prices higher than they would otherwise be.

A senior economist recently called the baby boomers "the greedy generation" because in his opinion they have arranged things to their benefit, with the bills being paid by the people in their children and grandchildren's generations. Things like this government's plan to pay more in state pensions to boomers while cutting pensions for the following generations.

Yes, it's fair and right to reduce the inter-generational transfer from following generations to baby boomers by having some of it go the other way in reduced debt costs for those younger generations.

If you don't think that there are large transfers of wealth to the boomer generation from the following two, you should do some learning about the subject before replying, lest you show similar lack of knowledge or understanding on this topic to that in your original post. You might start by noticing that the older people own most of the assets (in their pension funds, pension benefit entitlements, properties and investments) while younger people own most of the debt (in their mortgages and unsecured borrowing).

It was not wise to pay off a mortgage at rates as low as those around today, it's something that makes someone poorer.

Inflation is also a particular help to mortgage holders and other debtors and the time when you were experiencing high interest rates was also a time of high inflation that greatly and quickly reduced the real (purchasing power) value of the mortgage debt.

While it's tough for a while, such times of high inflation are a great boon to the mortgage holders who can keep up.

Taxes, revenues from bond sales, interest revenue from the businesses it owns parts of after rescues, potential profits from selling them later (a form of risk arbitrage) and rescue loans it's provided, inflation, and debt term arbitrage among other things.

It'll probably continue to make an overall profit on the rescue deals unless a political decision is made to deliberately take a loss.

At the moment a fair bit is coming out of the pockets of retiring boomers, who are getting poor annuity rates because the annuity companies are buying UK government bonds at record high prices. Fortunately it's not necessary to buy annuities, so retirees are usually not forced to participate in this.

Hopefully you did know that the rescue loans have been making a profit for the government, some of which was recently transferred and used to reduce the national debt.

However you slice it, we have been taken for mugs by bankers.

Of course, they are paragons of virtue. Never would a major bank admit to laundering Mexican drug money: never would bankers fiddle LIBOR.

See snippet here:

So LIBOR matters. And it’s being manipulated like crazy. Basically banks currently ‘estimate’ their cost of funds and an amalgam of those estimates is used to compute the overall measure. But because there are huge amounts of money at stake, banks have powerful incentives to provide ‘estimates’ that are strongly biased towards their own financial interests. And those interests are quite unlikely to be the same as yours. Or, more candidly, they’re pretty much the opposite of yours.
Maybe this sounds to you like a cranky conspiracy theory. But just hear what others have to say. The US Justice Department is conducting a criminal investigation into the suspected manipulation of benchmark rates, of which LIBOR is by far the most prominent example. Regulators from Canada to Japan are also probing to see if banks have lied about their cost of borrowing. One fund manager, Tim Price at PFP Group, comments that ‘The idea you can trust the banks and [the British Bankers Association] with this is laughable.’

Are you a banker?

Tafia

jamesd wrote: »

Baby boomers didn't cause the failure. That was mainly a combination of US banks, US law and US mortgage payers and lending standards, along with assorted regulatory failures. But the choice of rescue methods here, like low interest rates, was in part to protect property values, from which people in the boomer and previous generation benefit from most because that's where the highest property values tend to be. Just because older people tend to have bigger places and no mortgage any more, until it comes to time to downsize.

It's easy to look at the low interest rates and grumble but it's worth remembering that the choice was low interest rates or a big drop in property values.

It is worth trying to recognise whether we're collectively taking or giving money to earlier or later generations when it comes to trying to judge whether something is fair or not, though. Overall the generation retiring now and for the next decade or two is getting a better deal than the one the following generations will get and it'd be good to do some more redistribution the other way so those of us who're living in the time of peak burden on those following generations might have confidence that in our dotage the bills don't cause riots in the streets and tax protests because we've imposed an unfair burden. At the moment the plans are for there to be a large increase in taxes on the following generations to pay for the boomer generation pensions - a result of much more generous state pensions and a smaller following pair of tax paying generations, combined with insufficient immigration to make up the difference.

Why the obsession with high property prices? It's barking.

Folks can't get on the property ladder and when I was buying bungalows for renovation 12 years ago, the average price was around £40 to £50K in a coastal retirement area in North Wales. Now the very same bungalows are advertised at £125K. Exactly the same property. Who gains? No one other than the money lenders. The only way to realise the "profit" is to sell and become homeless. If we sell to buy another, then that too will have been inflated.

To reveal how the value of our money has fallen, those bungalows, when built in the Sixties were on sale at £2500.

innovate

Tafia wrote: »

Who gains? No one other than the money lenders.

Whilst you bought those bungalows for renovation just out of the kindness of your heart.

jamesd

Tafia wrote: »

See snippet here:

That snippet is from the Mail, an opinion piece by Mitch Feierstein, author of the book Planet Ponzi, which says it's about "How politicians and bankers stole your future".

Tafia wrote: »

Are you a banker?

As my profile here says, I've never worked in financial services. I'm not a property developer either.

Tafia wrote: »

Folks can't get on the property ladder and when I was buying bungalows for renovation 12 years ago, the average price was around £40 to £50K in a coastal retirement area in North Wales. Now the very same bungalows are advertised at £125K. Exactly the same property. Who gains?

Property developers gain. Those who sell a property they bought more cheaply gain. Some of those who bought the properties you renovated will have gained and may realise a profit when they sell, perhaps to pay for care home fees.

Why were you claiming that there were plans to have the banks confiscate our money when there is no such plan, at least not for the amounts below £85,000 per bank and if any others, only after all other lower priority creditors like bond holders have already lost all of their money because they take higher priority for losses in insolvency?

Glen_Clark

innovate wrote: »

Whilst you bought those bungalows for renovation just out of the kindness of your heart.

If he bought them for renovation I guess he hasn't kept them for 12 years so he hasn't seen those gains from rising prices (unearned income)
If he has renovated them and sold them fairly swiftly the gains will have been from his renovation work (earned income)