Borrowing money - now I'm confused
Discussion
Right, so the current financial cok-up is caused by excessive borrowing. Fine.
And yet on the news just now I learn that much of the money Brown used to bail out the banks will be - yes - borrowed. And apparently we have just lent some money to Iceland to help them pay out on their deposit obligations - like we have any to lend...? I suppose that was borrowed as well.
So Brown is borrowing money to lend to Iceland so Iceland can pay back British account holders.. this is all very odd. Which part of 'BORROWING IS A BAD IDEA' is Brown not grasping?
And another thing. All this money that Brown is borrowing - if he can get his hands on it, why couldn't the banks when they wanted it?
And yet on the news just now I learn that much of the money Brown used to bail out the banks will be - yes - borrowed. And apparently we have just lent some money to Iceland to help them pay out on their deposit obligations - like we have any to lend...? I suppose that was borrowed as well.
So Brown is borrowing money to lend to Iceland so Iceland can pay back British account holders.. this is all very odd. Which part of 'BORROWING IS A BAD IDEA' is Brown not grasping?
And another thing. All this money that Brown is borrowing - if he can get his hands on it, why couldn't the banks when they wanted it?
The loan to Iceland, will infuse money into their banking system where they will be able to create more money in the economy using the multilplier effect.
Brown & BofE is creating more money to lend to the banks,,,the BofE is the only bank in the Uk who can do this in this way.....the money created by borrowing will increase the UK national debt, to be paid back by increased taxes or issuance of gilts (long term soverign debt) to be paid back by succesive generations......The flow of money like oil round the engine is required here so that the economy does not cease up.
Brown & BofE is creating more money to lend to the banks,,,the BofE is the only bank in the Uk who can do this in this way.....the money created by borrowing will increase the UK national debt, to be paid back by increased taxes or issuance of gilts (long term soverign debt) to be paid back by succesive generations......The flow of money like oil round the engine is required here so that the economy does not cease up.
Don't really understand the question....but developed/countries economies depend on some form of national debt, to pay for hospitals, health, libraries etc and other such things as going to war......if UK plc defaulted on it;s debt we would not be able to trade across the world through lack of confidencve and we would all end up, like everything else you can only get a loan/mortgage if you honour the obligation...with civilsation having got this far, it would be a shame to have to go back to live in a cave.
bluevelvet said:
Don't really understand the question....but developed/countries economies depend on some form of national debt, to pay for hospitals, health, libraries etc and other such things as going to war......if UK plc defaulted on it;s debt we would not be able to trade across the world through lack of confidencve and we would all end up, like everything else you can only get a loan/mortgage if you honour the obligation...with civilsation having got this far, it would be a shame to have to go back to live in a cave.
Wouldn't a really developed country be better being in the black and running all of the above ,or is that to easy ?MrV said:
bluevelvet said:
Don't really understand the question....but developed/countries economies depend on some form of national debt, to pay for hospitals, health, libraries etc and other such things as going to war......if UK plc defaulted on it;s debt we would not be able to trade across the world through lack of confidencve and we would all end up, like everything else you can only get a loan/mortgage if you honour the obligation...with civilsation having got this far, it would be a shame to have to go back to live in a cave.
Wouldn't a really developed country be better being in the black and running all of the above ,or is that to easy ?Simpo Two said:
Seems to me, in my naieve 1+1=2 way of looking at things, that if every country is in debt then you've got a parallel to what killed the banks. I see a country as a very big bank with lots of people in it. Eventually someone will cry foul and the whole shebang will implode, no?
The assumption is everything was under control and everything was fine...which is clearly not the case now...we have truly hit an iceberg here, which didn't seem that likely earlier while drinking cocktails.MrV said:
bluevelvet said:
Don't really understand the question....but developed/countries economies depend on some form of national debt, to pay for hospitals, health, libraries etc and other such things as going to war......if UK plc defaulted on it;s debt we would not be able to trade across the world through lack of confidencve and we would all end up, like everything else you can only get a loan/mortgage if you honour the obligation...with civilsation having got this far, it would be a shame to have to go back to live in a cave.
Wouldn't a really developed country be better being in the black and running all of the above ,or is that to easy ?Surely it depends upon which metric you are measuring wealth?
If someone has a £2m house and can afford the mortgage, they may appear more wealthy than someone with a £1m house and no mortgage?
It all depends if you can keep the payments up, as per the govts...to afford the payments, you either tax more or re structure your borrowing to pay a similar ammount back on a larger borrowed sum over an extended term.
If someone has a £2m house and can afford the mortgage, they may appear more wealthy than someone with a £1m house and no mortgage?
It all depends if you can keep the payments up, as per the govts...to afford the payments, you either tax more or re structure your borrowing to pay a similar ammount back on a larger borrowed sum over an extended term.
Governments rarely make their books balance. There are good reasons for ensuring that you don't run up debt, but equally there are good reasons for why its good thing. In general though, government is one big cyclical amount of debt. They borrow to pay for today, and usually end up not paying in the end.
But governments are borrowers as well as lenders. I am not sure how it is at the moment, but US treasury bonds are selling very well. People buy them because there will be an amount of interest in say 20 years. Not a huge amount, but a little - its safe in reality as the government is typically not going bust. This is one way to fund things.
On one hand they sell these bonds, but they work on the projection that there will be greater tax revenues in 20 years, and hence it doesnt matter. The better the way that inflation is controlled and the more volitile the market, the better the demand for bonds.
As for the US being in trillions of dollars in debt - it doesn't matter They just rely on the basis that not everyone wants their money at the same time....
For GB and his billions, its probably treasury bonds that will pay for this. There is probably a surplus and hence there will be no problem raising the money as required (where does the money go when its pulled out of the stock markets?). So its easy to shovel this back into the Banks. As plans go, its not a bad one, just wonder if its enough to keep our banks afloat...
But governments are borrowers as well as lenders. I am not sure how it is at the moment, but US treasury bonds are selling very well. People buy them because there will be an amount of interest in say 20 years. Not a huge amount, but a little - its safe in reality as the government is typically not going bust. This is one way to fund things.
On one hand they sell these bonds, but they work on the projection that there will be greater tax revenues in 20 years, and hence it doesnt matter. The better the way that inflation is controlled and the more volitile the market, the better the demand for bonds.
As for the US being in trillions of dollars in debt - it doesn't matter They just rely on the basis that not everyone wants their money at the same time....
For GB and his billions, its probably treasury bonds that will pay for this. There is probably a surplus and hence there will be no problem raising the money as required (where does the money go when its pulled out of the stock markets?). So its easy to shovel this back into the Banks. As plans go, its not a bad one, just wonder if its enough to keep our banks afloat...
It has just been pointed out on the news that the national debt is now over 100% GDP.
The more alarming thing, to me at least, was that the banks getting the assistance have promised to lend at their 2007 levels. Apparently it was a condition of the help.
FFS! Isn't that what got the country in the s
t in the first place? When are people going to realise that you cannot just live on credit!
The more alarming thing, to me at least, was that the banks getting the assistance have promised to lend at their 2007 levels. Apparently it was a condition of the help.
FFS! Isn't that what got the country in the s
t in the first place? When are people going to realise that you cannot just live on credit!Simpo Two said:
Right, so the current financial cok-up is caused by excessive borrowing. Fine.
And yet on the news just now I learn that much of the money Brown used to bail out the banks will be - yes - borrowed. And apparently we have just lent some money to Iceland to help them pay out on their deposit obligations - like we have any to lend...? I suppose that was borrowed as well.
So Brown is borrowing money to lend to Iceland so Iceland can pay back British account holders.. this is all very odd. Which part of 'BORROWING IS A BAD IDEA' is Brown not grasping?
And another thing. All this money that Brown is borrowing - if he can get his hands on it, why couldn't the banks when they wanted it?
It amuses me that one of the conditions for these proposed bank takeovers/cash injections, is that the banks will increase their lending to individuals and small businesses. I guess the Government wants to rebuild its false economy house of cards based on cheap credit!! And yet on the news just now I learn that much of the money Brown used to bail out the banks will be - yes - borrowed. And apparently we have just lent some money to Iceland to help them pay out on their deposit obligations - like we have any to lend...? I suppose that was borrowed as well.
So Brown is borrowing money to lend to Iceland so Iceland can pay back British account holders.. this is all very odd. Which part of 'BORROWING IS A BAD IDEA' is Brown not grasping?
And another thing. All this money that Brown is borrowing - if he can get his hands on it, why couldn't the banks when they wanted it?
SystemParanoia said:
i wish i could get fking credit.
bank wont even give me an overdraft ( never mind a small loan ) and ive applied once every 6mths for the last 4 years.
they can all burn in hell and insolvency for all i care *spit*
Every six months for the last 4 years? Are they trying to tell you something?king credit.bank wont even give me an overdraft ( never mind a small loan ) and ive applied once every 6mths for the last 4 years.
they can all burn in hell and insolvency for all i care *spit*
SystemParanoia said:
yes.. they're all s
i have to do all my dealings in cash and its bloody annoying having to wait.
i have over £4k flow through my bank account every month, and still nothing.
i hope they all start jumping out of windows the smug sts
Maybe that's the problem, banks have internal scoring systems seperate from external credit reference agencies which they use to score o/d's. You might have a large account turnover, but if it's purely cash transactions, then you'll be marked down on this. Banks like to see Direct Debits/Standing Orders, card transactions...etc as these give an good indication to stability and documented bill payments.si have to do all my dealings in cash and its bloody annoying having to wait.
i have over £4k flow through my bank account every month, and still nothing.
i hope they all start jumping out of windows the smug s
tsThe bank which I work for use this system. Every customer has a score which is in essence, the likelyhood of default within the next 6 months. The higher the score, the better the customer. Out of 100, anything under 40-45 generally won't score for lending...
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