portugal bail out how does it affect uk?

[petemurphy]

soo in simple terms what does it mean? do we have to provide cash? if so do we make a good profit out of it?

[elster]

No, none of the bail outs involve any cash.

[petemurphy]

elster said:

No, none of the bail outs involve any cash.

i mean any sort or money not a suitcase full of notes!

[jas xjr]

As I understand it we guarantee the loan. We borrow at a lower rate and charge them a higher one. So in theory we do make money.

Just something I heard on the radio yesterday. Not sure it is correct

[sinizter]

We will make money (assuming the above post is correct) only if they repay it.

[elster]

petemurphy said:

i mean any sort or money not a suitcase full of notes!

We act as a guarantor, we don't give them money.

[thinfourth2]

I don't fully understand how it works but I know it will result in me having to pay more tax.


But this rule applies to most things

[eldar]

elster said:

We act as a guarantor, we don't give them money.

Unless they default...

[petemurphy]

who they borrowing it from then?

if they default do we get a bit of portugal?

[Murph7355]

petemurphy said:

...
if they default do we get a bit of portugal?

Nope. We just get taxed more.

Or have to go through more spending cuts ourselves - but as the whining classes in this country don't seem to be able to swallow even minor cuts, expect more taxation.

[Busa_Rush]

It's like your mate who bought a brand new car . . . he then loses his job and has to take a lower paying job at McDonald's . . . so can't really afford the car repayments. So he borrows money from you at a low rate and hopes he'll get a better job . . . but he doesn't and now finds he owes the car payments, plus repayments to you and he's still on the same income from McDonalds.

So he borrows some more money to repay you and keep making the car payments.

It's a circle and each time he borrows more money his debt increases and the interest rate increases as he's a worse risk than he was a few months ago.

Unless he manages to change job and start earning a lot more money, there will come a time when he can't afford to repay anybody and nobody will lend him more money - hello bankruptcy. If that happens to Portugal or Ireland then the EC will have a massive problem - quite how they will deal with it remains to be seen but I suspect it's not very far away and the UK will be expected to contribute to the losses.

[singlecoil]

The most important thing is whether or not the price of vintage port and LBV is going to go down.

[Ozzie Osmond]

Busa_Rush said:

It's like your mate who bought a brand new car . . . he then loses his job and has to take a lower paying job at McDonald's . . . so can't really afford the car repayments. So he borrows money from you at a low rate and hopes he'll get a better job . . . but he doesn't and now finds he owes the car payments, plus repayments to you and he's still on the same income from McDonalds.

Good grief - you can't be one of the PH bankers - that sounds far too much like common sense!

[elster]

eldar said:

Unless they default...

Indeed, if all our debtors default. That is a lot of debt.