HMRC warning..

[BeeLZeebub]

Well, i just wasted ten minutes of my life reading this twaddle in the hope that someone may have commented in relation to the OP.

BL, I don't suppose you are a politician getting a back-hander from a bank per chance?
You do seem to be flogging a dead horse here. No matter how much you wriggle around, i doubt there will be many people outside of the greedy banking circle who will agree with you.

Donald Rumsfelt would be proud of you!

You know, you're right. It started off as a discussion on wealth and I'm now accused of being an apologist for the banking sector!! But criticism aimed at the sector as a whole is unjust. That said, I'll leave the horse alone ..... one last post excepted

 

[BeeLZeebub]

So you made sure not to buy your house in a boom then huh?

As it happens I've bought property when I needed/wanted to, not because it was rapidly going up in value at the time.

I have never, and never would, decide to buy a house using a loan which I could not afford to service.

I have never, and never would, decide to borrow more than the property was worth when I bought it.

And do you know why?

It's because I am not stupid or greedy or ignorant.

Now - I grant you that there are (were) many property buyers who were all or some of those, that's inescapable, but my point is that those doing the lending should not have been - for them it was escapable because they were (or should have been) experts.

Lending people more than they can afford to service? That's not inescapable, it's just stupid and ignorant, and if done for short term gains and bonuses it is just greed.

Lending people more than the asset is worth? That's not inescapable, it's just stupid and ignorant, and if done for short term gains and bonuses it is just greed.

Deciding to build synthetic financial instruments based on sliced and diced collateralised debt? That's not inescapable. Etc.

As I have said, you simply do not know if you're creditworthy - a bank can only extrapolate from your current (and short-term) projected circumstances. On a 20/25 year term, that's guesswork, pure and simple. Hence when you applied for your mortgage, you could not guarantee being able to service it - but equally it would have made no sense for the bank to have refused you the loan. Before you leap back on this being a poor excuse for the sub-prime (etc) mess, it's not a defence; it's to remind you that all lending decisions are based on conjecture (or probability, churned out by computers, but it's still conjecture), and NO expert can eliminate the fact - especially in a world susceptible to shocks and varying cycles. I dont pretend to know why some banks lent to those with no incomes - booms have a strange impact upon behaviour - but if you're saying that all banks are culpable, and employed similar strategies, you're wrong. Plain and simple. That banks have been unfairly tarred with the same brush has been my point, nothing more.

 

[ban-all-sheds]

So why was it not only the banks who lent to people who couldn't repay, or only the banks who lent more than properties were worth that got into difficulties?

Why did insurance companies, who didn't make loans like that at all, get into difficulties?

 

[JohnD]

I dont pretend to know why some banks lent to those with no incomes

I'll guess folly, greed, and knowing they had a cunning plan to sell bundles of bad loans to trusting mugs.

So that's folly, greed, and dishonesty.

all lending decisions are based on conjecture (or probability, churned out by computers

A lending decision to make loans to people who can't pay them back - you claim it was based on probability?

The probability of being able to get away with it for a while, perhaps.

 

[BeeLZeebub]

So why was it not only the banks who lent to people who couldn't repay, or only the banks who lent more than properties were worth that got into difficulties?

Why did insurance companies, who didn't make loans like that at all, get into difficulties?

I'm not sure what you're asking for the first part ... Insurance companies had plenty of exposure to the property sector, in varying forms. The thing to remember is that sub-prime came at the end of a long-boom .... all a product of ultra-low interest rates from 2001 onwards. Some argue it stemmed from a decade earlier ....

 

[BeeLZeebub]

I dont pretend to know why some banks lent to those with no incomes

I'll guess folly, greed, and knowing they had a cunning plan to sell bundles of bad loans to trusting mugs.

So that's folly, greed, and dishonesty.

all lending decisions are based on conjecture (or probability, churned out by computers

A lending decision to make loans to people who can't pay them back - you claim it was based on probability?

The probability of being able to get away with it for a while, perhaps.

We've been over this John. I'm not justfying anything .... a sub-prime loan was to an individual with a poor credit history, and yes it's based on probablity. It did not mean they could not pay it back. When a boom turns sour however, they'll be the first to default .... Get away with what?

 

[JohnD]

get away with the "cunning plan to sell bundles of bad loans to trusting mugs" of course

for long enough to bank the bonus.

... I'm not justfying anything .... a sub-prime loan was to an individual with a poor credit history, and yes it's based on probablity. It did not mean they could not pay it back.

I don't know why you're trying to make out that lending money to people who can't pay it back was anything other than stupid. Would you do it? With your own money?

 

[EFLImpudence]

http://www.cnbc.com/id/28892719

 

[sparkybird]

OMG, are you lot STILL here??

 

[JohnD]

no.

 

[plugwash]

When you make a loan and take account of the borrowers ability to pay there is some risk that the person will lose their job and be unable to pay but only a small number of people lose their jobs (and are unable to find a replacement job) in a given year so as long as an allowance is made in the interest rate for the risk of default things keep on goingat the bank.

However when you make the assumption that if worst comes to worse you will just reposess and sell the asset and make your money back and therefore you don't need to check ability to pay you will drive up the price of the asset to unsustainable levels as suckers take out bigger and bigger loans. Eventually the bubble WILL burst and those still in the game at the time it bursts (both lenders and borrowers) will lose out massively.

And then the crafty bankers created all sorts of instruments (credit default swaps, mortgage backed securities etc) which obfuscated and spread the "risk" arround the whole banking industry so when the **** finally hit the fan it did so in a MASSIVE way.

Worse still many people at least in the US were re-mortgaging their houses based on the new unsustainable values and spending that money in the general economy. So when the mortgage bubble burst there was a massive shock to the wider economic system as people who had been living beyond their means by re-mortgaging their houses were brought forcibly back to reality.

 

[ban-all-sheds]

And those assumptions and instruments made by the banks were inescapable, were they?

Or did they happen because of greed, stupidity and ignorance?

 

[Chri5]

Template threat received from HMRC today. I will not be losing any sleep

 

[ban-all-sheds]

Sounds like they have been auditing scheme providers and will use the logic of X certs = Y earnings

As long as people can tie invoices to certificates/notifications, and the descriptions of work tie up, the invoiced amount is realistic for the work done and the books all balance and everything is consistent with their visible assets and lifestyle they should have no trouble at all.

 

[Symptoms]

Blimey - looking at the timestamps of most of these posts isn't anybody doing any work (or wealth creation ).