tag:blogger.com,1999:blog-15037609.post177616872323330672..comments2023-10-01T16:53:17.274+01:00Comments on Cicero's Songs: Property, the Banking system and the end game for the EuroCicerohttp://www.blogger.com/profile/02090838836212624633noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-15037609.post-50154098914635954142010-11-24T23:12:44.837+00:002010-11-24T23:12:44.837+00:00Well think about it. To replicate the current pens...Well think about it. To replicate the current pension would just take 1/4 of NI going into a fund. <br /><br />If you can divert 1/2, people are much better off in retirement.<br /><br />Plus the added benefit of growth, which gives the government what it really needs. Growth in taxes. Growth itself doesn't help the govenment. It's only an increasing tax revenue that works.<br /><br />However, I think its a bust. I don't think they can cut, until they are forced to. That for many is too late. <br /><br />So you need insurance, and that's a lot of very heavy saving.Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-86454463071758343552010-11-24T12:06:16.592+00:002010-11-24T12:06:16.592+00:00interesting post.
i fear that the govt is too addi...interesting post.<br />i fear that the govt is too addicted to our ni ever to allow those that have stomach for risk to invest in the ftse.<br />i agree about debts and pensions except their true horror although beginning to show now will take more time to come to the top of the agenda than the present playout of the euro's travails.<br />it is not a good time to be old now and will be far worse in the future. but that is not just economic as families seem to care less and less for their own.wallybynaturehttp://matthew9595@mac.comnoreply@blogger.comtag:blogger.com,1999:blog-15037609.post-91152930485286690262010-11-24T10:58:23.274+00:002010-11-24T10:58:23.274+00:00i will be still working if i make 80 and look forw...i will be still working if i make 80 and look forward to it.<br /><br />============<br /><br />If you want to, fine. However many don't. <br /><br />I did a little calculation the other day. Median wage is 25K a year. What would have happened if a median worker had had their National insurance in the FTSE and not 'invested' with the government.<br /><br />They would retire on an joint like, RPI linked retirement income of 21,000 pounds a year.<br /><br />Instead they have 5,000, now linked to CPI not RPI, and not even fully joint life.<br /><br />So when people say the stock market is risky, ask them if they would prefer the risky 21,000 a year, or the not risk 5,000 a year.<br /><br />Pensions and government debts are an even bigger mess than the EuroLord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-8349309329458733832010-11-24T10:37:09.197+00:002010-11-24T10:37:09.197+00:00i enjoy this blog when i pass by and i agree large...i enjoy this blog when i pass by and i agree largely with your post above as i suspect dan hannan would. you eloquently make the case that the euro cannot work because of the major differences between the national economies. in some ways you are arguing against the premise you make in the hannan post.<br />is the solution for the euro for germany to exit until all the other countries have improved so they can come back in again.<br />i am fearful because the ec in trying to save itself may ruin us all. i will be still working if i make 80 and look forward to it.wallybynaturehttp://matthew9595@mac.comnoreply@blogger.comtag:blogger.com,1999:blog-15037609.post-52199732261883869052010-11-23T10:44:37.834+00:002010-11-23T10:44:37.834+00:00Collaterialising risk eliminates their risk, unles...Collaterialising risk eliminates <b>their</b> risk, unless they buy it back. <br /><br />It passes the risk to someone else. <br /><br />It is what they should have done. Securitise and get rid of the risk and the funding issues.<br /><br />ie. When the interbank market dried up, NR went bust because it couldn't fund. If it had securitised, it wouldn't have needed to fund, and there would not have been a run.Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-67797840760654697162010-11-23T10:27:22.950+00:002010-11-23T10:27:22.950+00:00I am not disagreeing with you- it is that the bank...I am not disagreeing with you- it is that the banks thought that collateralising risk eliminated it: it did not, indeed never does.Cicerohttps://www.blogger.com/profile/02090838836212624633noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-73796081693751899362010-11-23T10:18:50.021+00:002010-11-23T10:18:50.021+00:00The banks that bought US ABS instruments were kill...The banks that bought US ABS instruments were killed<br /><br />============<br /><br />This is the point. It's not securitisation that is the issue. <br /><br />The problem is they offloaded the risk, property exposure and funding exposure when they securitised. That is a good thing. <br /><br />They then bought the risk back, which is plain stupid.Lord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-91321487598918931942010-11-23T09:33:54.310+00:002010-11-23T09:33:54.310+00:00Well yes, I agree, but my point is that it is not ...Well yes, I agree, but my point is that it is not the securitisation that is the issue, it is the collateral (i.e. the taking of Security), which were the assets that back the ABS market. These were of course largely mortgages. These were based on property values inflated by poor quality credits entering the market- a phenomenon that began in the US (which does not allow recourse to the borrower, once the collateral is returned) and which spread to the UK, which does allow mortgagors recourse to the borrower. The banks that bought US ABS instruments were killed, and the UK particularly bad. So the poor collateral became a virus across the whole market. The risk was very mispriced.Cicerohttps://www.blogger.com/profile/02090838836212624633noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-90886916864371976922010-11-23T09:09:50.088+00:002010-11-23T09:09:50.088+00:00aaLord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.comtag:blogger.com,1999:blog-15037609.post-47066914923181806872010-11-23T09:09:34.712+00:002010-11-23T09:09:34.712+00:00Then over the course of the last decade bankers be...Then over the course of the last decade bankers began to securitise their loans, that is to package them for sale to third parties. In doing so they also packaged the asset that the loans applied to. These asset-backed securities (ABS) were supposed to be safe because of the value of the collateral bound up within their structures. It is the mistake that bankers always make: that taking collateral against a loan gives them "security".<br /><br />=====================<br /><br />You've got this bit wrong. <br /><br />There is nothing wrong with securitisation. Bundling up loans, selling them to investors, and earning a fee for managing them is a perfectly good thing to do. There is small issue about compliance. Namely, do the loans being sold meet the criteria that the bankers say they do. <br /><br />So lets take NR. What would have happened if they had securitised their loans? Nothing. They would still be here. The investors in the bonds take the hit. They wouldn't have had a funding problem. <br /><br />What's the problem then? Well the banks sold off their risk, but then the management let another department buy it back and start trading it. In most cases the risky stuff. <br /><br />What the solution going forward? It's securitisation. Creation of bad banks by splitting off the good parts. Then the government sells off the good bits for cash, offsets the profits against the losses at the bad banks. The reason is that the good parts can start loaning againLord Blaggerhttps://www.blogger.com/profile/06783119146180259097noreply@blogger.com