UK may go bankrupt

[msu17 0]

I couldn't believe the way banking and credit was done in the UK when I was over there. Everyone has an overdraft and most of the young people at least are always in that. So many of the students at uni have massive loans so they can drink and shop and don't worry about it. THe housing prices in even the crappiest towns were sky high. It was absolutely ridiculous the complete lack of concern anyone my age seemed to show for massive amount of debt they were getting themselves into. It was common to be 10K in debt. I know the US was bad, but it seemed like more college students here had fewer loans for noneducational purposes than those in the UK.

[mawilson 2,133]

Use to admired the British for their electronics, sports cars, and English language accent. All that seems to be history

Well the accent is still there.

[Heracles 417]

The only two English speaking countries doing okay thanks to abundant resources are Canada and Australia. Boy did I take the wrong visa journey.

Edited January 21, 2009 by Aficionado

[mawilson 2,133]

The only two English speaking countries doing okay thanks to abundant resources are Canada and Australia. Boy did I take the wrong visa journey.

They are?

[Trumplestiltskin 5,791]

A Gloomy Forecast for Australian Economy in 2009

In a starkly worded quarterly outlook report, the Australian research firm Access Economics warned that the mining-led economy “will unwind scarily fast” in 2009, sending the Australian dollar and interest rates crashing.

“This is not just a recession,” the report said. “This is the sharpest deceleration Australia’s economy has ever seen.”

The report predicted that the central bank would be forced to cut interest rates to 2.5 percent, from 4.25 percent, to stimulate growth.

About 300,000 jobs will be lost and corporate profits will be cut in half, it said.

“China’s slowdown is Australia’s recession,” the report said. “Many businesses will fail, as demand gains shrink.”

[Heracles 417]

The only two English speaking countries doing okay thanks to abundant resources are Canada and Australia. Boy did I take the wrong visa journey.

They are?

Doing Okay, not good but okay. So far they have weathered the financial storm.

[Peikko 1,575]

As I understand things (which is not very well admittedly when it comes to all things to do with global economics ) but while the sale of mortgages to persons not in a position to make realistic payments and purchase said property was a bit of a dozy thing to do - that was as nothing compared with what the lending institutions did next. Somewhere along the line someone decided that one way out of this potential problem (or, just plain greedy, who knows?) was to sell the future earnings of these unrealizable mortgages. Selling property at inflated prices might have caused some severe problems, but that in itself wouldn't have led to the current crisis, after all where there is equity there is some mitigation of loss. Selling the potential profits from something KNOWING (as many did) that these profits were never realizable was like playing pass the parcel with a bomb. No one knew who was going to be left holding it when the music stopped so they had to keep passing it along hoping it wouldn't be them.

Edited January 21, 2009 by Madame Cleo

[w¡n9Nµ7 §£@¥€r 123]

Selling the potential profits from something KNOWING (as many did) that these profits were never realizable was like playing pass the parcel with a bomb.

No one wants to be the bagholder.

[mawilson 2,133]

Selling the potential profits from something KNOWING (as many did) that these profits were never realizable was like playing pass the parcel with a bomb.

That's how the banks raise capital to give you the money for your mortgage - by selling

mortgage-backed securities to investors.

You don't actually think they have trillions of dollars to give out, do you?

Edited January 21, 2009 by mawilson

[w¡n9Nµ7 §£@¥€r 123]

You don't actually think they have trillions of dollars to give out, do you?

[mawilson 2,133]

You don't actually think they have trillions of dollars to give out, do you?

Banks do the same things we do. Just like you save for a down payment and borrow money

to buy a house, a bank takes deposits, sells debt and raises equity capital to make loans.

When consumers are over-leveraged, banks do the same.

[Peikko 1,575]

No, I don't think that, but to knowingly build a house of cards? That's my problem with it, the banks allowed these crazy mortgages to go ahead knowing that it was jeapordizing their very business - just hoping that it wouldn't be their turn when the music stopped? That's such a mad thing to do - but then as I said, I am no expert

[w¡n9Nµ7 §£@¥€r 123]

You don't actually think they have trillions of dollars to give out, do you?

Banks do the same things we do. Just like you save for a down payment and borrow money

to buy a house, a bank takes deposits, sells debt and raises equity capital to make loans.

When consumers are over-leveraged, banks do the same.

Save for a downpayment? What?

[mawilson 2,133]

No, I don't think that, but to knowingly build a house of cards? That's my problem with it, the banks allowed these crazy mortgages to go ahead knowing that it was jeapordizing their very business - just hoping that it wouldn't be their turn when the music stopped? That's such a mad thing to do - but then as I said, I am no expert

That's a different argument - I agree that they shouldn't have allowed these mortgages to go ahead.

I thought you said that banks shouldn't be allowed to sell the potential profits from mortgages;

but that's precisely how they raise capital.

[Heracles 417]

No, I don't think that, but to knowingly build a house of cards? That's my problem with it, the banks allowed these crazy mortgages to go ahead knowing that it was jeapordizing their very business - just hoping that it wouldn't be their turn when the music stopped? That's such a mad thing to do - but then as I said, I am no expert

I only heard of Zero down once I came to the US. Downunder not only do you have to have a sizable deposit, you must have months of verifiable income (backed by pay stubs) as well as a reasonable credit history. You also must be a citizen or legal resident to obtain a loan from most Banks. On top of the 100 point ID check.

Banks even ask for pay stubs for credit cards let alone any other lines of credit.

Edited January 21, 2009 by Aficionado