IMF warns Britain over £1.1 trillion debt mountain

"John Redman" wrote in message news:dgkiff$i6t$ snipped-for-privacy@newsg4.svr.pol.co.uk...

But if you're going to be a pedant there isn't just petrol in a barrel of oil.

You need to take take the tax on the other fractions and calculate the weighted average.

tim

Indeed: 'lie-to-buy' is going to drive a lot of people into bankruptcy over the next few years. Then there's 'interest-only' mortgages, the modern equivalent of the endowment mortgages of the 80s.

As for banks going bust, do you really think that Brown wouldn't bail out Barclays or Natwest if they got into big troubel? Just imagine the economic chaos if he didn't.

Mark

Bitstring , from the wonderful person John Redman said

But you'll note that those are the 2003 figures, when, iirc, oil was selling for about $30 a barrel, not $70. Like I said, the duty is around $150 a barrel.

Whether a mortgage is self certificated or not, it remains a mortgage. By definition, a mortgage is a loan secured against property. Self certification does not mean that it is unsecured.

Self certificated mortgages are designed for those with adequate incomes but an inability to prove such incomes e.g. the self-employed, those with incomes heavily dependent upon commissions etc.

Even traditional mortgages carry an element of risk. People do become unemployed, sick, injured in accidents, die, etc. No matter how extenuating the circumstance, your home still remains at risk if you don't keep up the repayments.

You simply would not get a 100% self certificated mortgage. You, might, with perseverance get a 90% mortgage but 85% is more typical. 15% of £200 000 is £30 000. The thinking is that if you are able to put your hands on £30 000 then you are good for the repayments. You will also pay a premium of around 1 percentage point above the prevailing mortgage rate.

"Lie to buy" is not an option. Other checks will be made.

Disquiet there most certainly would be. Government concern there most certainly would be. However, the High Street banks are Plc businesses and as such should they become insolvent will suffer the fate of any other business. It may well be that other banks might look at a rescue package in the interests of the industry as a whole. This would involve them depositing money with the troubled bank so that it might meet its commitments. This would however, be difficult. These institutions have their own shareholders. It's a reasonable expectation of anybody that if they deposit money in a bank there will be a return. The problem is that money deposited simply to replace money already lost yields no return.

There would be no possibility of a public cash injection that would be tantamount to refunding shareholders and depositors lost money. The only allegations I can remember of a companies being allegedly "bailed out" by a government were British Leyland and Rolls Royce all those years ago. In both cases the government of the day decided that it would be against the public interest to allow these two major companies to go under. They were not however, bailed out as such. They were nationalised and their shareholders received a few pennies for each previously valuable share. Both companies were subsequently re-privatised during the Thatcher privatisations. Rolls Royce subsequently flourished and still does. We all know what happed to British Leyland.

Whether the British public made a worthwhile return on its involuntary investments, I know not.

Mel Rowing

Not if you're looking to establish the tax levied on petrol.

Doesn't make a difference; except for VAT, fuel taxes are not ad valorem.

Bitstring , from the twerp john snipped-for-privacy@my-deja.com said

(unsnipped - please learn to quote .. you can do it, even with google)

Of course it makes a difference - you had done all the figuring on 03 %ages= of costs, and then plugged in 2005 cost per barrel. You can't do that - the fuel duty did =not= go up when the oil price did (as you point out) therefore the percentages (in particular the 18%) no longer apply.

If you want to know what the $/barrel tax was =in 2003=, you can apply the 2003 %ages to the 2003 oil cost - the tax per barrel is not much changed from there anyway.

If you owe the bank a trillion however, we're all in deep shit.

FoFP

The difference I suspect is that where those mis-sold endowments can claim compensation, those claiming mis-sold self-certs will simply be told their claims are invalid because they lied on their forms about their incomes. Those that push it will probably find the cops at their door investigating fraud.

I don't think the taxpayer could afford it if the housing markets did a Japan.

Besides, it's just as deflationary if the taxpayers take a hit than if the bank's shareholders take a hit.

FoFP

Untrue. Bank deposits with accredited banks are insured to the 90% level by the state up to somewhere around 35 grand per account.

FoFP

I think you refer to the FDIC insurance to US banks.

Mel Rowing

"Mel Rowing" wrote

I assume he's talking about the **UK** scheme :-

If a bank or building society collapses, ... The maximum compensation payment is 31,700 (100% of the first 2,000 and 90% of the next 33,000).

It generally means it's secured on a house bought at the peak of a bubble by someone who can't afford it. Who would lend money in that situation?

That may be who they're designed for, but they're being _used_ by people who cannot afford the payments on any sensible multiple of their salary and are relying on house price inflation to save them. Like the aforementioned 19-year-old bar worker who was boasting on another forum about how his 250k lie-to-buy mortgage would make him a millionaire in a few years.

That's odd, because plenty of people appear to have been doing just that.

So why have they been giving mortgages to these people?

Bollocks. There's no way in hell that a democratic government would let Barclays or Natwest go bust.

Mark

I *could* refer to that, since I know about it, but in this case I'm not.

From

"Halifax plc is a member of the Financial Services Compensation Scheme, established under the Financial Services and Markets Act 2000. Where a customer has made deposits in a savings or bank account , payments under the scheme are limited to 100% of the first L2,000 and 90% of the next L33,000 of the customers total deposits, subject to a maximum payment to any one depositor of L31,700."

FoFP

Yes but this is a bond scheme funded by levies paid by member associations.

It has absolutely nothing to do with public money being shelled out to reimburse depositors who lose out when a bank or other financial institution collapses.

Mel Rowing

In message , snipped-for-privacy@my-deja.com writes

You need to give some examples of this - I have been self certing for many years, and have never come across a 100% loan. The nature of the beast is such that they wont exist.

Most houses are bought through a mortgage that is true. Most mortgages are discharged without incident.

It is not "generally" the case that houses are bought at the peak of a bubble. If that were the case then any such peak would be unobservable.

Money is lend always on the basis that it will be repaid otherwise it becomes a gift.

House price inflation does not in itself reduce debt. No matter how high the value of a house becomes the debt on it remains exactly the same. Of course if one were lucky then the house could be sold at the inflated value,the debt discharged and the balance trousered. However there would then remain the problem of where to live.

You really shouldn't take internet boasts seriously.

A £250 000 loan would cost your bar tender £1200 p.m. to maintain in interest alone. This would need to be met regularly. Where is he going to get that from? Tips? In addition his £250 000 asset would have to appreciate by 15% p.a. to be worth £1m after 10 years

By then our "millionaire" will have spent £250 000 + (10 x £14400)=£394 000 leaving him that amount short.

This involves an appreciation of property values that has not not been sustained at such a rate. Neither has any allowance been made for rthe maintenance of his property or the day to day living expenses that we all have.

If it were so easy to become a millionaire, why aren't we all such?

I think you have already had your answer to that one but if you can find me one ...

"They" haven't!

If either of these were to go bust then there would be little any "democratic government" could do about it. The question would be as to how the effects of such a calamity could be mitigated. This would not involve kissing "bye bye" to perhaps billions of pounds of public money.

I would suggest that a temporary nationalisation might be favoured. Shareholders tend to come off badly under such forced circumstances and get what their crumbling asset is worth, next to nothing.

Banks do not rely upon government bail outs so that they can lend irresponsibility. Just like any other business, they exist for no other purpose than to generate profit. They do not meet this end by nurturing feckless borrowers. In addition they are strongly regulated.

Mel Rowing