IDIOT wrote:But the bank doesn't actually loan money?
If that's true... if the bank doesn't actually loan you the money to buy the house.... then what does the Seller get? Did S/he just give up their home to you - the mortgage borrower - for free?
Let's reverse that and say you own the home. And you decide you want to sell it. The buyer gets a mortgage - but since the Bank didn't actually provide any money, what did you get out of the sale?
If you truly believe the bank doesn't actually loan money: then I await your response with what you, the home owner, got for selling your house.
And before you say "that's what the bank lender told me": I'm not interested in what they told you. I'm interested in what you think you get if you sold your house to someone who bought it using a mortgage.
YiamCross wrote:The problem as I understand it arose when some greedy bankers started to bundle up large amounts of debt which was certain to go into default in wrappers that said grade A solid loans.
Based on the book by the same title about investors that saw the securitization crash coming and made money by shorting those securities.
Book is very good, be interesting to see if the movie holds up.
My favorite part of the book was the dinner with Wing Chow segment. I read it over and over, made the book. Wing didn't share that assessment and sued Michael Lewis for defamation. Poor Wing lost at court and on appeal. Interested to see if it is in the movie.
"Yes Burnaby49, I do in fact believe all process servers are peace officers. I've good reason to believe so." Robert Menard in his May 28, 2015 video "Process Servers".
Well now I have my vacation book! Sounds an interesting read, especially since my 'date' couldn't get off work and is going to be stuck in Austria. But that's her loss.
To be fair regarding securitization, or even selling of defaulted loans to debt collectors, a lot of Consumer Credit Agreements in the late 90's and early naughties didn't have a clause in allowing the bank to sell on the loan, and some even had a clause in saying the complete oppersite (I had one of these), I'm not casting opinion of the morality of repaying a loan, but merely pointing out some arguments used by the fmotl crew do, within reason, have merrit.
But as someone else pointed out about something else, it's a small amount overall this affects, and not the entire banking system.
Let's say a bank has 10k cash. If the persons keys in 15k, then the bank is responsible to be able to hand out its accounts. In this example, 25k. As soon as somebody asks for 11k, the bank fails.
A bank can generally make loans up to 10% give or take depending on the banks stability. In simple terms, if the bank has $100,000 in assets it can loan up to 90% of that out to make money for the bank.
What banks/mortgage companies generally do is make a loan for $X from their assets, then turn around and sell either the loan and/or the servicing of the loan to a third party to get their money back and a little profit on the transaction. So what they are loaning is their money, real money, that they are at risk for until they can recoup it, usually by selling the loan. The buying and selling of commercial paper/loans/PN's/etc has been going on since the first merchants started trading rocks. No big mystery or conspiracy. Fractional Reserve banking, as it is properly called IS NOT a new idea.
The fact that you sincerely and wholeheartedly believe that the “Law of Gravity” is unconstitutional and a violation of your sovereign rights, does not absolve you of adherence to it.
they was giving people mortgage in America who didn't work, then moaned when they didn't pay it back,
Same in the UK - they were called NINJA mortgages - No Job,No Income and no Assets.
110% mortgages were also available as well as self certified ones where borrowers could effectively fabricate their income in order to demonstrate their ability to pay off the loan.
they was giving people mortgage in America who didn't work, then moaned when they didn't pay it back,
I once had a long (but friendly) argument with a former Vice-President of a US Bank who insisted that it was the US Government that insisted that banks make these loans and that securitisation was just the banks trying to protect themselves. He insisted that very few people made any money out of the process. Mind you we were having dinner on this at the time ...
... where he was just going round the two week Caribbean cruise for the third time on the bounce!
“Anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that 'my ignorance is just as good as your knowledge.'”
Banks do make up money from thin air by hitting a few keys on the keyboard. That's a proven fact.
That doesn't make it illegal or unlawful though, and there are rules and regulations set in place that allows this.
I will disagree totally with an earlier post that said ...
"A bank can generally make loans up to 10% give or take depending on the banks stability. In simple terms, if the bank has $100,000 in assets it can loan up to 90% of that out to make money for the bank.
What banks/mortgage companies generally do is make a loan for $X from their assets, then turn around and sell either the loan and/or the servicing of the loan to a third party to get their money back and a little profit on the transaction. So what they are loaning is their money, real money, that they are at risk for until they can recoup it, usually by selling the loan. The buying and selling of commercial paper/loans/PN's/etc has been going on since the first merchants started trading rocks. No big mystery or conspiracy. Fractional Reserve banking, as it is properly called IS NOT a new idea."
The reality of this is totally opposite, and banks can, and do lend money they don't have. I can't remember the exact figures off hand, but the Banks are allowed to create money, just as long as they have between 10-20% of the amount loaned in assets. So if a bank has £100,000 in assets, it can then lend approx £900,000.
Ok that is a simplified version and many other factors must be taken into the equation but generally speaking, Commercial banking creates deposits every time they make a new loan. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans.
So just another reason why the banking industry is in such a mess and causes so much misery for people
I don't take sides, I read all the facts and then come to my own conclusions
Canada, the UK, New Zealand, Australia and Sweden have no reserve requirements.
This does not mean that banks can - even in theory - create money without limit. On the contrary: banks are constrained by capital requirements, which are arguably more important than reserve requirements even in countries that have reserve requirements.
New money is created. What the GOODF fail to understand is that the as the debt is repaid, the created money is effectively destroyed as it is negated by the debt.
If repayment is not made, that debt hole needs to be filled by the bank's own money.
LordEd wrote:New money is created. What the GOODF fail to understand is that the as the debt is repaid
Exactly - they assume because it is created by a keystroke, they are under no obligation to pay it back. Like most of their ideas they are based on misinformation.
I don't take sides, I read all the facts and then come to my own conclusions
and in 3 pages a few people, myself included, explained it somewhat
I've gone to greater depths of the question a few times, but generally I hate to get into it, if you're interested, search the forum for my posts about the Federal Reserve
Supreme Commander of The Imperial Illuminati Air Force
Your concern is duly noted, filed, folded, stamped, sealed with wax and affixed with a thumbprint in red ink, forgotten, recalled, considered, reconsidered, appealed, denied and quietly ignored.
they was giving people mortgage in America who didn't work, then moaned when they didn't pay it back,
I heard a succinct version that went something like:
Pres Clinton: Why is it that so many poor people fail to get a mortgage?
Advisor: Well that would be because the Banks won't lend to a bad risk.
Pres Clinton: Well we'll make it compulsory then ...
This thread on the securitisation seminar has been running for a while, funnily enough no mention of Tom being a speaker. They're trying to persuade that idiot applecart to 'speak' at the seminar, wasn't he / she who egged on Sinclair and cost him about £7k in costs, then Sinclair wanted to lynch them for the crap advise given, probably why Applecart won't dare show their face
The Sinclair case mentioned earlier, 1) Michael Grant Sinclair (2) Christine Ann Grant Sinclair (1) Alison Overson (2) Vincent David Overson v (1) Accord Mortgages Limited (2) Southern Pacific Mortgage Limited (Rectification or Setting Aside of Documents) [2014] EWLandRA 2013_0031-0020 (21 February 2014) http://www.bailii.org/ew/cases/EWLandRA ... -0020.html
they was giving people mortgage in America who didn't work, then moaned when they didn't pay it back,
I heard a succinct version that went something like:
Pres Clinton: Why is it that so many poor people fail to get a mortgage?
Advisor: Well that would be because the Banks won't lend to a bad risk.
Pres Clinton: Well we'll make it compulsory then ...
And the sub-prime market sector was born.
The sub-prime market existed long before Bill Clinton was president. There were some laws passed that made "redlining" illegal. This was the practice of taking a map of a city and drawing a red line, either literally or figuratively, around the poor, blighted areas of the city and then refusing to lend anyone any money on properties within that zone. This adversely affected blacks and other minorities, not to mention stifling city's efforts at redevelopment. THIS is why many poor people could not get a morgage.
What I think happened is this: in the 80's and early 90's, real estate prices were going up quickly. If a bank loaned $100k to buy a house, by the time the borrower defaulted and the lender foreclosed, the value of the house had gone up enough that they would not lose any money. Thus was born the "liar loan", in which a borrower was simply asked "How much money do you make?", with no requirement to prove it. As long as the stated income was sufficient to repay the loan, all was good, regardless of whether the borrower was really able to make the payments. The bank cared less about the borrower than they did about the property. When the housing market tanked, all of a sudden, the banks were in trouble, because the value of the homes were not sufficient to cover their loans.
I don't think that Bill Clinton had much to do with it.
That's probably why I found Big Short to be a good book because it was as neutral as possible in assigning blame.
Yeah it discussed the NINJA thing and there's a scene with a housekeeper that bought two houses on credit with both houses double mortgaged. But it also points out that through securitization, firms were able to make money by making bad loans. They ran out of people with good credit to lend to so they started lending to people with bad credit then re-selling the bad loans as if they were good loans through the bundling described.
Even in the absence of government regulations that encouraged lending to NINJA's, there was still a profit motive behind the practice.
letissier14 wrote:Banks do make up money from thin air by hitting a few keys on the keyboard. That's a proven fact.
If it's a proven fact, there's evidence to back it. Please provide said evidence.
letissier14 wrote:Banks are allowed to create money, just as long as they have between 10-20% of the amount loaned in assets
Proof please.
letissier14 wrote:it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.
I disagree... unless you're saying credit is the creation of new money. Please provide proof it's actually new money being created and not - in effect - a loan that's later paid for.
letissier14 wrote:For this reason, some economists have referred to bank deposits as ‘fountain pen money’
Please identify the economists that hold that point of view.
letissier14 wrote:Banks do make up money from thin air by hitting a few keys on the keyboard. That's a proven fact.
If it's a proven fact, there's evidence to back it. Please provide said evidence.
letissier14 wrote:Banks are allowed to create money, just as long as they have between 10-20% of the amount loaned in assets
Proof please.
letissier14 wrote:it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.
I disagree... unless you're saying credit is the creation of new money. Please provide proof it's actually new money being created and not - in effect - a loan that's later paid for.
letissier14 wrote:For this reason, some economists have referred to bank deposits as ‘fountain pen money’
Please identify the economists that hold that point of view.
See the Bank of England video "creation of money in the modern economy"
Amazingly, money is created when a loan is taken out, you are not borrowing the money of prudent savers.
Hi All
First off, I would like to apologies for the last few days, I can see how my comments were inappropriate.
I would like to thank the moderators for the fairly easy ride they gave me, and for other contributors tolerance.
For the record, Quatloos provides a valuable service in debunking freeman myths and methodology which leads to further debt and misery.
I have said before that the amount of solid investigation , evidence and logic used is incredible .
That said, I still stand by my dislike of personal attacks, in fact I believe it undermines everything that is good about this site.
To Yiam, my apologies too, although I believe the venture was ill advised, you are obviously free to go where you wish.
I can only blame another horror day at Stamford Bridge, don't worry, I'm not going tonight!
