How credit cards & bank loans REALLY work - Learn, & this will change your whole life!!

[nuke em]

I can't find any buyers for the properties and I can't change to a fixed rate mortgage because of defaults on credit cards. Can't even put my head in the oven 'cos it's electric.

 

When the scenario you've outlined comes to pass I'm finished...

 

 

Welcome to my world. i'm wiped already

[underdog13]

Misery loves company, eh?

[nuke em]

true

[nuke em]

i got this from another site i sub to:

 

Here is a quoted message from an informed source within global banking and commerce, even reference to an important barter trade accord. The message addresses the frontier issues surrounding the demise of the USDollar. It goes, “This [Gulf Region] implementation has been lined up for a year now. The Russians, Chinese, and Gulf States are each setting up their own currency zones on a synchronized platform. Germany stays off the radar screen for the time being, but is deeply involved in the design of this entire currency ‘basket’ structure. It is about economic and political survival. The currency basket will have a precious metal core and all other components are grouped around it. There will be very sophisticated bilateral trade platforms being set up, one will be a privately run ‘barter & counter trade’ platform that will cut the banking component out altogether. What is today known as the USA will have to be re-industrialized from the bottom up in order to be a viable zone. This process will be grueling for the people living there since their standard of living will have to be adjusted to the manufacturing capacity at any given time. It is safe to assume that the creditor nations will be calling the shots. Once they convert the US$ denominated debt they are holding into hard assets on the ground, there will not be much left that is owned by the US. It is basically the same as with any Third World country. Everybody is fixated on the financial sector problems. The real whopper will be the collapse of the US military industrial complex, which happen [as a result of] France, Russia, and China driving the US military industrial sector right over the cliff.” Some remarks were made in conclusion that will not be provided. They pertain to heightened risk from the end of the US-Israeli relationship, and the consequences extending from challenges and frustration as Israel seeks another host in the current environment. Once the tipping point is reached, the nations as major players will have one chance to properly align with the power centers of the next generation. Those nations that miss the window of opportunity will suffer irreversibly an unfortunate fate.

 

 

This might be the beginning of the end for US Debt/Loan creators such as Amex, Crapo One , MBNA etc as they are all $US based Companies

 

 

 

Awe, wouldn't that be a shame ...................................................NOT

Edited January 16, 2009 by nuke em

[underdog13]

This might be the beginning of the end for US Debt/Loan creators such as Amex, Crapo One , MBNA etc as they are all $US based Companies

 

So every cloud does have a silver lining;)

[atwozee]

So what would stop the US from seizing all the gold (for instance) stored there and claiming it as property of the USA and so depriving the world’s elite of its wealth? Who could stop them? I can’t see the US lying down so easily.

[atwozee]

You don’t ask a wolf to look after the lambs now do you.

[kitchenboy]

And this released today;

 

Citigroup posts $8.29B loss, separates traditional banking business from riskier ventures

 

NEW YORK (AP) -- Citigroup said Friday it is splitting up into two businesses as it reported a fourth-quarter net loss of $8.29 billion -- its fifth straight quarterly loss.

In Citigroup's reorganization, one business, Citicorp, will focus on traditional banking, while the other, Citi Holdings, will hold the company's riskier assets.

Edited January 16, 2009 by kitchenboy
remove link

[nuke em]

So what would stop the US from seizing all the gold (for instance) stored there and claiming it as property of the USA and so depriving the world’s elite of its wealth? Who could stop them? I can’t see the US lying down so easily.

 

 

Do you mean start another war? with Bullets? no, not this time

 

plus the American Central Banksters ( the Fed banks) have gold , The Euroland central banks have gold too , China & india have a lot of gold

 

 

So you see the elite have most of the World's gold anyway

 

Our Gordon sold ours ( to the Euro Central Bank) for change ever wonder why he did that?

[nuke em]

This might be the beginning of the end for US Debt/Loan creators such as Amex, Crapo One , MBNA etc as they are all $US based Companies

 

So every cloud does have a silver lining;)

 

yes it does, in more ways than one, especially as you mentioned "silver" in your post

[atwozee]

plus the American Central Banksters ( the Fed banks) have gold

 

Exactly, and it’s all stored on US soil – now you tell me how you can stop the military might of the US from taking that gold from the bankers under special powers issued by the commander in cheif.

At the end of the day the real power is with the governments and its armed forces – they let the bankers play at creating wealth but if and when they want to take control they will and Joe public is just caught in the middle.

[nuke em]

no, less than 5% is on US Soil, plus remember Polititians are corrupt, have been, will be always be, self-serving interests only

[Stornoway]

 

:-|)

The act of flooding the market with CURRENCY is known as INFLATION. The act of draining CURRENCY from the system is known as DEFLATION. the total CURRENCY supply divided by the total MONEY supply yields our current PRICE levels.

 

So:

 

INFLATION is the act introducing more paper currency into the system, causing prices to rise as new paper competes with old paper to buy existing assets.

 

DEFLATION is the act of draining paper currency from the system, causing prices to fall due to currency starvation (ala our current real estate and stock markets).

 

So "Money Changers" quite literally change the price of MONEY by willful manipulation of the CURRENCY supply. This handy little trick is not magic, to the contrary, it is a trivial feat in any system that allows fractional reserve banking.

 

Most people think of INFLATION as an accident, or some sort of natural phenomenon of macro economics. Oh, how wrong that is. INFLATION must be introduced by an act of malice. It's measurable existence is the smoke produced by a simmering fire of hidden crime. How does INFLATION impact you? Simple. By printing more CURRENCY, the Money Changers simply purchase your MONEY from you, causing all prices to rise. As prices rise, things become less affordable, which in turn ratchets down your standard of living. You've been scammed.

 

But as bad as intentional INFLATION sounds, in a country that is supposedly honest, forthright and free, it pales by comparison to the DEFLATIONARY scandal the Money Changers have in store for you. After they steal your wealth by INFLATION, they cut you off at the knees with DEFLATION. Once INFLATION causes prices to rise,( which has just happened) people have no choice but to adjust to the new price levels. Unless you refuse to live in a house, you have to pay the price of a house. Same goes for cars, energy, food, everything. You are trapped if you must conduct trade in their currency (hence the importance of consolidating currencies, like the Euro). INFLATION also means that the price of DEBT notes goes up. Instead of a £4,000 mortgage in 1956, we now have £400,000 mortgages. The existence of INFLATED DEBT notes present the Money Changers with a uniquely profitable opportunity.

 

The [problem] is almost complete. INFLATION has run its course, now it is time for DEFLATION. With society hooked on high priced DEBT, a sharp drop in prices is catastrophic for the borrower. Given DEFLATION, a £300,000 home falls to £150,000, drowning the borrower £150,000 underwater. His wages fall, or possibly disappear, causing the INFLATED PRICE of his DEBT note to become more and more of a burden. Additionally, lower prices across the board increase the VALUE of future interest payments. Eventually, borrowers break, and their homes, cars, savings (their MONEY) is seized by the Money Changers.

 

Who are the modern Money Changers?

 

The answer is another question: Who holds the keys to INFLATION and DEFLATION in our financial system?

 

The answer: The bank of England or The Fed reserve in the USA or the European Central bank in the EU, all are for-profit run banks.

 

Now here is the rub, remember before i said that we have to have high interest rates by the end of the year, why? becuase allthough we are going through deflation now , (no one is spending, prices are dropping, can't get credit etc) WHEN the effect of all the extra CURRENCY that is being introduced into the system is felt in the our economy (and it can take 6-8 months or more to show ) that is INFLATIONARY ,almost HYPER-INFLATIONARY and the way they control that is by a massive upwards spke in the base interest rate, i can see mortgage rates being 10% at least by the end of this year

 

so i f i was you i would either

 

a) sell the props or

b) get a 5 year fixed rate under 6% asap

.

 

 

 

What a load of guff. There is no way base interest rates will be above 3% by the year end never mind mid to high teens. That is complete scaremongering and there is enough negativity around just now without nonsense like this.

 

1. The government is not talking about physically printing money. They are talking about quantative easing which is all about going into the market to buy corporate bonds. These bonds are they way in which large companies raise finance (they basically sell the bonds to investors and use the cash to finance the company). There is no market for bonds at the moment because all the investors are risk averse so the govt is looking at buying so that large companies can obtain finance. The govt's action will be in replacement of the role normally taken by investors and hence little impact on inflation.

2. Inflation is all about supply and demand not the introduction of more paper money. If demand is high then prices go up. If supply is low then prices go up. We have had problems with inflation in recent years because people have been pushing up demand by borrowing and spending what they dont have.

3. Deflation is largely caused by people deferring purchases - ie why would i buy a big new house now when I can wait a year and it will be 10% cheaper. Hence no demand for houses with too much supply = lower prices.

4. Inflation means the price of debt goes up. Wrong. Inflation means the value of your debt in real terms goes down because the value of the loan diminshes as inflation impacts. The price of the debt only goes up if interest rates go up.

 

We all need to get a grip in the UK and have a reality check. Times are tough but the world will survive. A year from now we'll be coming out the other side of a very hard recession but many of us will still have good jobs, asset prices (including houses) will be much more affordable and the world will hopefully have learned a valuable lesson about how we should be living a bit more within our means.

[Stornoway]

PS:

1. The moon landings did happen

2. JFK was shot by a lone gunman

3. It was a weather balloon at Roswell not a UFO

4. There was no image of satan in the fire at the WTC

Edited January 16, 2009 by Stornoway

[cosalt]

What a load of guff. There is no way base interest rates will be above 3% by the year end never mind mid to high teens. That is complete scaremongering and there is enough negativity around just now without nonsense like this.

 

1. The government is not talking about physically printing money. They are talking about quantative easing which is all about going into the market to buy corporate bonds. These bonds are they way in which large companies raise finance (they basically sell the bonds to investors and use the cash to finance the company). There is no market for bonds at the moment because all the investors are risk averse so the govt is looking at buying so that large companies can obtain finance. The govt's action will be in replacement of the role normally taken by investors and hence little impact on inflation.

2. Inflation is all about supply and demand not the introduction of more paper money. If demand is high then prices go up. If supply is low then prices go up. We have had problems with inflation in recent years because people have been pushing up demand by borrowing and spending what they dont have.

3. Deflation is largely caused by people deferring purchases - ie why would i buy a big new house now when I can wait a year and it will be 10% cheaper. Hence no demand for houses with too much supply = lower prices.

4. Inflation means the price of debt goes up. Wrong. Inflation means the value of your debt in real terms goes down because the value of the loan diminshes as inflation impacts. The price of the debt only goes up if interest rates go up.

 

We all need to get a grip in the UK and have a reality check. Times are tough but the world will survive. A year from now we'll be coming out the other side of a very hard recession but many of us will still have good jobs, asset prices (including houses) will be much more affordable and the world will hopefully have learned a valuable lesson about how we should be living a bit more within our means.

 

Do you write speeches for Gordon Brown in your spare time ?

[Stornoway]

"Do you write speeches for Gordon Brown in your spare time ?"

 

If you really want to know then I think Brown, Blair and Bush (and their Fiscal policies) have got us into this mess by lack of regulation and encouraging people to borrow and spend. Our country has also become way too focussed on the service sector and let the country's manufacturing industry go to the wall. But then hindsight is a great thing....

 

I took a degree in economics a long time ago but if you want to believe some of the stuff on this thread then on you go. I do however guarantee you that base rates wont be above 3% by the end of the year.

[cosalt]

"Do you write speeches for Gordon Brown in your spare time ?"

 

If you really want to know then I think Brown, Blair and Bush (and their Fiscal policies) have got us into this mess by lack of regulation and encouraging people to borrow and spend. Our country has also become way too focussed on the service sector and let the country's manufacturing industry go to the wall. But then hindsight is a great thing....

 

I took a degree in economics a long time ago but if you want to believe some of the stuff on this thread then on you go. I do however guarantee you that base rates wont be above 3% by the end of the year.

 

I do agree the three B's got us into this, I just don't believe they can get us out of it.

 

Personaly I dont think the world will ever be the same again, but thats probably a good thing.

[banker_rhymes_with]

...but if you want to believe some of the stuff on this thread then on you go

 

What's wrong with this:

 

ENRON VENTURE CAPITALISM

You have 2 cows.

You sell 300,000 of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all 400,000 cows back, with a tax exemption for 500,000 cows.

The milk rights of the 600,000 cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all 700,000 cows back to your listed company.

The annual report says the company owns 800,000 cows, with an option on 100,000 more. So, pleased with that, you Short Sell 100,000 derivative Cow Bonds to buy a new president of the United States, leaving you with just 900,000 cows.

A complete idiot from a British bank clears you out, leaving you with just 1,000,000 Cows.

No balance sheet provided with the release.

The public then buys your bull.

 

Hold on...I can see the problem...it's considerably more accurate than reality!

 

Cheers,

BRW

[Stornoway]

"Personaly I dont think the world will ever be the same again, but thats probably a good thing. :-)"

 

It wont be the same for a long time but people / banks have a short memory - 10 years from now most of the senior politicians and bankers will have retired and it will be another boom and bust. The world has a recession every 8 to 10 years;

- 2008 credit crunch

- 2000 dot com bubble

- 1991 ERM / devaluation of pound

- 1981 energy crisis

- 1973 oil crisis

etc etc

 

This recession is a bad one but we will survive it and on the other side we will be in a better place as a lot of the excess / greed will have been taken out.

[Stornoway]

What's wrong with this:

 

 

Hold on...I can see the problem...it's considerably more accurate than reality!

 

Cheers,

BRW

 

Yeh, very funny. Here's the real story;

1. for the last 8 years or so the banks have been inflating their balance sheets through securitisation (doing lots of new business, giving away easy credit and selling off chunks of their mortgages and loan books to investors). This allowed the loan chunks they sold to be taken off their balance sheets.

2. unfortunately many of the securitisation sales transacted by the banks were for quarterly periods only - ie the people who bought the chunks of mortgages could hand them back every quarter if they so wanted but normally they jut kept rolling the loans over each quarter.

3. lots of the investors took fright and handed the chunks of mortgages back to the banks.

4. lo and behold the banks dont have the money to pay back all the securitisation monies because they used the cash they received to fund even more new mortgages.

5. the banks effectively run out of cash and have to go cap in hand to the government. The bank of england then buys the loan chunks through the special liquidity scheme. However the BofE scheme is expensive so the banks only use it as infrequently as they can.

6. this takes all the surplus cash out the banking system and the banks have no money to lend.

7. some of the banks do issue longer term securitisations and other banks buy these as investments. The value of these investments goes through the floor because nobody wants them and the underlying mortgages are of poor quality. This destroys the balance sheets of many banks.

8. the banks go cap in hand to the govt for equity to repair their balance sheets

9. the banks also face heavy losses because we are now in recession, people are losing their jobs and they cant pay for their mortgages.

10. House prices crash so when the banks eventually reposess they dont get all their money back. They consequently post losses which impacts on their balance sheets and means they have even less ability to lend.

11. the banks get nervous over new loans - why would they lend 90% LTV when house prices will probably drop 20% and many people may be losing their jobs.

12. house prices crash because nobody can get a loan and every body is scared about losing their jobs. Its a self fulfilling prophecy...

Edited January 17, 2009 by Stornoway

[Tobecontinued...]

Me thinks one doth watch too much Zeitgiest.

 

I

If what they claim in that movie is true, why do people use banks?

 

Why has this never been exposed?

 

Why bother having customers if banks can "print" free money?

 

Why are countless banks and multi-nationals going down the plug hole?

 

 

I would like to see some real evidence before i consider these "accusations" as cold hard fact. Im talking about primary sources here.... not just myths and hearsay.

 

Fact is credit card companys give consumers 100% chance to pay their balances off each month but the fact is most people think they can get a good deal and pay minimum payments (which we all know barely covers interest charged and will COST MORE and TAKE LONGER to clear the balance than if they just bought the stuff outright with cash, but consumers dont see it like that they have the impression that what they are getting is something for free or something at a reduced price.Im rambling now but bottom line is if you want to pay the balance off and therefore not have to pay interest do it... set up a DD, s/o, pay it with your cashcard and then you WILL NOT have to pay ANY interest.

 

obviously banks hate customers who do this every month because the balance doesnt revolve and the bank makes diddly squat on that account. Its simply not worth us keeping the account going. People who pay the minimum as they think they are being clever and cheating the bank (alot in my experience) really have no idea that they are EXACTLY the kind of customer the bank wants.... make minumum payments miss a few then bring it up to date by paying the minimum payment. Ergo pay more interest and charges and make the bank more profit.... RANT OVER

 

 

TBC.....

[atwozee]

I don’t believe everything on this thread – but I do think some of it is relevant

 

10. House prices crash so when the banks eventually reposess they dont get all their money back. They consequently post losses which impacts on their balance sheets and means they have even less ability to lend.

 

This is the point though isn’t it – if the banks didn’t actually lend you money in the first place and all they did was manufacture credit out of thin air (because they can) then the net result is that when they repossess they end up with something of real value. This now turns credit that cannot be backed up by the banks reserves into a real property that can be sold. If they chose to sell it for less than the amount recorded against the loan then they are making a bad commercial decision aren’t they.

 

Should they be rewarded for making bad commercial decisions? I don’t think so – especially when it comes to throwing real families out of their homes so that they can make a loss - companies that run at a loss inevitably go out of business. And who really benefits from low house prices – those that want to purchase their first home and the super rich who can extend their property portfolio. Now some of the ones that buy their first home end up losing it 10 years or so down the line and the super rich scoop up more property after having sold some of their portfolio when prices were on the up.

 

There should be no bail out for the banks IMHO – once they are privatised completely we can start from scratch – this is one example where the baby should be thrown out with the bath water. Banks are run on pure greed and that greed is easily fuelled because the majority get infected with the same greed. The USA and the UK are the ones that will have to lead the way if there is ever going to be a change.

 

I would like to see a not for profit banking system with lower government taxes and a realistic approach to manufacturing but it will take a radical shift in ideas – problem is the UK has ditched industry and built it’s economic policy on making money out of money – the housing market isn’t really the right ‘industry’ to build a country on - when you scratch the surface its not a real economic policy at all.

 

Don’t get me wrong – I’m all for individual wealth but one born out of real industry and real jobs not gamblers and fortune tellers otherwise known as bankers and investors. One persons (or countries) wealth should not necessarily mean another persons (or countries) misery.

 

I will now jump off my soap box.

[underdog13]

Completely agree, Atwozee:)

[Stornoway]

This is the point though isn’t it – if the banks didn’t actually lend you money in the first place and all they did was manufacture credit out of thin air (because they can) then the net result is that when they repossess they end up with something of real value. This now turns credit that cannot be backed up by the banks reserves into a real property that can be sold. If they chose to sell it for less than the amount recorded against the loan then they are making a bad commercial decision aren’t they.

 

No. The banks cant magic up / create new loans without a corresponding entry on the other side of their balance sheet - either customer deposits or new equity or from profits. In recent years the new mortgages havent been going on their balance sheets because they have been parcelling them up into large securitisations and selling them to investors as loans. But ... the investors still have recourse to the banks because they have the right to get their cash back at some point in the future. Until recently that has been fine because there has been lots of new investors out there but now there are none and all the existing investors want their cash back. If they repossess they may not have enough to repay the securitisation investors and the shortfall comes out of their profits.

[Stornoway]

Should they be rewarded for making bad commercial decisions? I don’t think so – especially when it comes to throwing real families out of their homes so that they can make a loss - companies that run at a loss inevitably go out of business. And who really benefits from low house prices – those that want to purchase their first home and the super rich who can extend their property portfolio. Now some of the ones that buy their first home end up losing it 10 years or so down the line and the super rich scoop up more property after having sold some of their portfolio when prices were on the up.

 

The problem with the super rich is that they became greedy so yes they did sell properties when the market was rising but guess what - they reinvested into bigger property investments much of which is partly funded by debt and will be repossessed by the banks when they breach Interest and /or LTV covenants.