Credit deflation and the reflation cycle to come (part 5)

[Yadda yadda yadda]

1 hour ago, sancho panza said:

#debt deflation cometh series

 

this is a hard anecdotal to write but this feels the place to put it after all these years. particuarly @spygirl as he has been banging the drum on this one for a long time

There are going to be laods like this coming and for all thsoe waiting for a cheap hosue,they're coming.

Basically an old friend of my Mums has been in touch after many years and asked her for advice/help with their BTL empire.

She bought 20 hosues/flats around the country in 2006-2008,owes about £3mn.looks like all IO,current rental income circa £15k.Was ok in 2019 with mortgage costs circa £6k.Now mrotgage costs circa £18k and with a couple of empty up for sale short on the monthly bill.

Bascially,now facing repossession and bankruptcy,including repossession of their main family home which is still mrotgaged(head hits table)......

The hosues are all over the country in the manner of southern investors in the north around that time.Apparently,she believes equity to be £500k but also tells my Mum that she's been to the 'buy now' companies but the offers are 'derisory' circa 60% of EA valueation and well below mrotgage debt.She's bascially looking to get together a group of investors to group fund her.The CEO (my Mum) was incredulous at the figures.

Having been sent the email for my view the following leapt out at me

'The model provides a good living at 3%.'

Words fail me.Genuienly,how did these people get to borrwo £3mn froma regulated institution? For anyone wondering why we're in the mess we're in you jsut need to read that.

 

 

and let's consider the repercussions here for UK banks that are on the hook here.These are legacy loans from the last financial crisis that should have been cleaned up then.The fact that they're coming back to haunt the banks now should be a worry for any Brit about what's coming.

I know on here we understand the benefit of lwoer hosue rpices for society but we know there'll be transitional pain until the marekt finds it's new level.But our economy is clearly headed for the rocks.

The bankruptcy rpocess looks like it's been forced by HMRC as I suspect section 24 caught them off guard.And with 20 houses the banks would be wary of initiating I suspect

I realsie tehy won't find much sympathy down here but lsoing everything at 70 is going to be tough to watch.a warning to us all to be careful out there.I know there's a few on here who like me, who like some elverage on their trades eg call options/scottish play (a leveraged play on hope).

For anyone thinking a credit deflation isn't coming to the UK,I'd think again.There are loads of these toxic laons about to come home to roost.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What the fuck have they done with substantial profits over 15 years?  £1 million in profit valued in 2023 sterling, excluding any growth in property value, is a reasonable guess.  Surely there are some other assets? Have they really spunked everything to the point they can't go a few months with a few voids? Fur coat and no nickers.

No sympathy, fuck them.

[Long time lurking]

4 minutes ago, Axeman123 said:

You do wonder if an attempt to patch things up with the rest of the world is going on behind the scenes, and the public are being prepared for a more responsible use the dollar priviledge (less printing and sanctions).

I`m no so optimistic ,all i see is a scapegoat for whats coming being framed ,i have been watching and posting about how the narrative was being built for months now ,at first it was just a hunch but then you could see the same coordination that we seen during COVID

I`m pretty sure i posted months ago that sometime this year that the CBDC you own nothing total control theories would be pushed by the MSM  

[Pip321]

17 minutes ago, Wight Flight said:

I think that only applies to residential mortgages.

BTL are different as they assume sale of the asset to pay off the debt at end of term.

I have 5 interest only mortgages (Halifax, 2x Skipton and 2x B Mids) and have needed to sign a declaration that I have a repayment plan (other than the property itself) on each of them when I took them out.

I think reality is when it gets to the end of the term (ie the whole term) they will demand the cash…..but what most do is remortgage and extend the term. 

[Virgil Caine]

14 minutes ago, Pip321 said:

Cheers SP…interested anecdote.

There is some real bandwidth with everything ie landlords, tenants, mums 😉, etc but the anecdote you describe is not untypical.

Basically property, low interest rates and house price growth offered an unbelievable opportunity for some to create genuine wealth. The formula was relatively simple and if you were a frugal, financially savvy type of person then you should now own property unencumbered.

What happened was some people decided 20 properties were a good idea….it never was.

I won’t advocate what I have done (for fear of being stoned😆)…but a simple and modest approach, staying in employment to earn a living whilst using rent and low rates to repay debt was fairly simple. (Or in my case building a store of cash that can be used to repay debt when it becomes tax efficient or cost effective to do so). Selling for profit rather than borrowing more and more to expand was probably my best decision.

Owning property isn't a bad asset (ignoring the rights and wrongs creating the daft prices)….but the debt should have been respectfully feared. 

Too many people seemed to think because the mortgage payment was less than the rent that the excess was for them to buy a Range Rover, eat quails eggs every day and give up their job. It wasn’t….like the rest of the world if you owe money then when you make a profit you pay that money back.

You know this….I guess your mums friend know this….even the bank knows it. It’s just a sign of the times when interest rates are 0.1% and even a covid world epidemic doesn’t stop the money rolling in.

People and banks thought they were invincible…I believe we are about to find out that they were wrong.

It is difficult to feel sympathy for those speculating in property but the truth is that if interest rates set by central banks had truly reflected the risk of borrowing most of these people would not have got in that position. On a personal level I saw low interest rates post GFC as a once in a lifetime opportunity to pay off my mortgage early and took it. Denninger Market Ticker said back in 2008 that the natural law of capitalism should be that if you get investments and the markets right you keep all the money and if you get it wrong you lose your money and potentially go bust. The constant bailouts and easy money post 2008 has been a disaster for the western world as it has corrupted that whole process. People need to learn the lesson that the banks, their governments and they themselves have fucked and are going to be a lot poorer as a result.

Edited March 27, 2023 by Virgil Caine

[Axeman123]

9 minutes ago, Long time lurking said:

I`m no so optimistic ,all i see is a scapegoat for whats coming being framed ,i have been watching and posting about how the narrative was being built for months now ,at first it was just a hunch but then you could see the same coordination that we seen during COVID

Maybe, it is just odd that the abuse of the reserve currency would be mentioned. Maybe the new narrative hasn't fully coalesced yet, or maybe they are testing out different versions. Putting on my "evil" hat, if I was in charge of messaging I wouldn'teven mention the reserve currency - just keep hammering the standard talking points "evading sanctions" "circumventing the price cap" "moving trade outside the rules based international order". 

16 minutes ago, Yadda yadda yadda said:

What the fuck have they done with substantial profits over 15 years?  £1 million in profit valued in 2023 sterling, excluding any growth in property value, is a reasonable guess. 

Only equivalent to ~£5k a month (in 2023 prices, and before tax) over that period. Even with that kind of mega leverage and a large portfolio etc, to live visibly "well" would need equity withdrawal on top off the income IMO. 

[Lightscribe]

1 hour ago, Bobthebuilder said:

@sancho panza That sounds awful, I bet there's loads who are going to be facing this soon. Why someone would buy a load of BTLs around the country and not local baffles me, not good business sense at all, logistics for one. The biggest and best BTL operation I know have all their properties in a close area to each other, they use local trades and remain loyal, that makes a lot more sense to me.

Cheap and easy credit with the 2008 chickens coming home to roost. The governments and central banks were complicit as well to keep bubble pumping (help to buy, ZIRP, stamp duty holidays etc etc).

Growth at all costs, as I said before the UK government started to include illegal drugs and prostitution in GDP in 2014, thats how desperate they were to hang on whilst selling off the last of the family silver.

It’s not a ‘bad’ creditors issue this time around like 2008 that sent the banks down, it’s much higher. It’s a governmental and central bank check mate. 

That’s why they are doing what they’re doing. The WEF, the whole shebang. 

 

 

[Noallegiance]

2 hours ago, sancho panza said:

#debt deflation cometh series

 

this is a hard anecdotal to write but this feels the place to put it after all these years. particuarly @spygirl as he has been banging the drum on this one for a long time

There are going to be laods like this coming and for all thsoe waiting for a cheap hosue,they're coming.

Basically an old friend of my Mums has been in touch after many years and asked her for advice/help with their BTL empire.

She bought 20 hosues/flats around the country in 2006-2008,owes about £3mn.looks like all IO,current rental income circa £15k.Was ok in 2019 with mortgage costs circa £6k.Now mrotgage costs circa £18k and with a couple of empty up for sale short on the monthly bill.

Bascially,now facing repossession and bankruptcy,including repossession of their main family home which is still mrotgaged(head hits table)......

The hosues are all over the country in the manner of southern investors in the north around that time.Apparently,she believes equity to be £500k but also tells my Mum that she's been to the 'buy now' companies but the offers are 'derisory' circa 60% of EA valueation and well below mrotgage debt.She's bascially looking to get together a group of investors to group fund her.The CEO (my Mum) was incredulous at the figures.

Having been sent the email for my view the following leapt out at me

'The model provides a good living at 3%.'

Words fail me.Genuienly,how did these people get to borrwo £3mn froma regulated institution? For anyone wondering why we're in the mess we're in you jsut need to read that.

 

 

and let's consider the repercussions here for UK banks that are on the hook here.These are legacy loans from the last financial crisis that should have been cleaned up then.The fact that they're coming back to haunt the banks now should be a worry for any Brit about what's coming.

I know on here we understand the benefit of lwoer hosue rpices for society but we know there'll be transitional pain until the marekt finds it's new level.But our economy is clearly headed for the rocks.

The bankruptcy rpocess looks like it's been forced by HMRC as I suspect section 24 caught them off guard.And with 20 houses the banks would be wary of initiating I suspect

I realsie tehy won't find much sympathy down here but lsoing everything at 70 is going to be tough to watch.a warning to us all to be careful out there.I know there's a few on here who like me, who like some elverage on their trades eg call options/scottish play (a leveraged play on hope).

For anyone thinking a credit deflation isn't coming to the UK,I'd think again.There are loads of these toxic laons about to come home to roost.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As me and Mrs N started to hear from people we know with leveraged BTLs struggling at the tail end of last year, the reality hit us. And these are just acquaintances facing coming trouble, not family or family friends.

When the examples move from existing on the internet to suddenly existing within ones tangible sphere the experience instantly turns visceral.

[One percent]

1 hour ago, Wight Flight said:

Oddly i recently tried to register a company with 'King' in the name.

Companies house declined it, and I had to seek permission from the Cabinet Office (which was granted)

Burger franchise?  

[Bobthebuilder]

15 minutes ago, One percent said:

Burger franchise?  

Fuck buying a cheese burger from wight flight, it would be drizzled with jus, served with a chardonnay, and cost about a thousand quid.

[wherebee]

This is one of my fears - the companies which will be inflation proof to a better degree will be taken over by PE:
 

Quote

 

Origin Energy has signed a $18.7bn takeover deal with suitors Brookfield Asset Management and MidOcean Energy after months of talks and pledged to build a giant 14 gigawatts of new renewable and storage generation in Australia over the next decade.

The Australian power and gas giant said it had entered into a binding scheme implementation deed with investors to receive $8.912 a share, split between $5.78 a share and $US2.19 a share.

 

Now you might say that's a nice uplift in value on the sale, but it crystallises a gain into one tax year (not nice at all under the Australian system) and prevents the run of dividends over a long period in retirement.

[Harley]

4 hours ago, sancho panza said:

#debt deflation cometh series

 

this is a hard anecdotal to write but this feels the place to put it after all these years. particuarly @spygirl as he has been banging the drum on this one for a long time

There are going to be laods like this coming and for all thsoe waiting for a cheap hosue,they're coming.

Basically an old friend of my Mums has been in touch after many years and asked her for advice/help with their BTL empire.

She bought 20 hosues/flats around the country in 2006-2008,owes about £3mn.looks like all IO,current rental income circa £15k.Was ok in 2019 with mortgage costs circa £6k.Now mrotgage costs circa £18k and with a couple of empty up for sale short on the monthly bill.

Bascially,now facing repossession and bankruptcy,including repossession of their main family home which is still mrotgaged(head hits table)......

The hosues are all over the country in the manner of southern investors in the north around that time.Apparently,she believes equity to be £500k but also tells my Mum that she's been to the 'buy now' companies but the offers are 'derisory' circa 60% of EA valueation and well below mrotgage debt.She's bascially looking to get together a group of investors to group fund her.The CEO (my Mum) was incredulous at the figures.

Having been sent the email for my view the following leapt out at me

'The model provides a good living at 3%.'

Words fail me.Genuienly,how did these people get to borrwo £3mn froma regulated institution? For anyone wondering why we're in the mess we're in you jsut need to read that.

 

 

and let's consider the repercussions here for UK banks that are on the hook here.These are legacy loans from the last financial crisis that should have been cleaned up then.The fact that they're coming back to haunt the banks now should be a worry for any Brit about what's coming.

I know on here we understand the benefit of lwoer hosue rpices for society but we know there'll be transitional pain until the marekt finds it's new level.But our economy is clearly headed for the rocks.

The bankruptcy rpocess looks like it's been forced by HMRC as I suspect section 24 caught them off guard.And with 20 houses the banks would be wary of initiating I suspect

I realsie tehy won't find much sympathy down here but lsoing everything at 70 is going to be tough to watch.a warning to us all to be careful out there.I know there's a few on here who like me, who like some elverage on their trades eg call options/scottish play (a leveraged play on hope).

For anyone thinking a credit deflation isn't coming to the UK,I'd think again.There are loads of these toxic laons about to come home to roost.

FFS, bad strategy, bad leveraged play, bad risk management, bad "mark to agent", etc.   You know, the stuff sensible business do.  Such leverage and risk for such a small gain.  Meanwhile a broker is giving me, me FFS, grief about buying a mildly leveraged ETF!

PS: Yes, a lot of chickens coming home to roost from finance to medical to watching "Love Island" instead of......  Like "52 card pickup" there are two ways to take pain, but the pain is taken, option B with interest.

Edited March 27, 2023 by Harley

[nirvana]

[CannonFodder]

 

How it started and how it ended - but of course western media is telling us more about china and iran protests about to take down those countries each day the last 6 months.

 

 

 

 

[sleepwello'nights]

2 hours ago, Yadda yadda yadda said:

What the fuck have they done with substantial profits over 15 years?  £1 million in profit valued in 2023 sterling, excluding any growth in property value, is a reasonable guess.  Surely there are some other assets? Have they really spunked everything to the point they can't go a few months with a few voids? Fur coat and no nickers.

No sympathy, fuck them.

I suspect that the properties were remortgaged to release equity for the deposits on more properties. The increase in house prices, certainly in the south and midlands, would have been sufficient to reduce leverage to be able to sustain the increases in interest rates to their current level.  If equity released kept the leverage high then the recent increases in interest rates would tip the landlords into losses.  

[JMD]

3 hours ago, Wight Flight said:

Oddly i recently tried to register a company with 'King' in the name.

Companies house declined it, and I had to seek permission from the Cabinet Office (which was granted)

Quality 'hand tools'(!?) by...

 

 

[Yadda yadda yadda]

4 minutes ago, sleepwello'nights said:

I suspect that the properties were remortgaged to release equity for the deposits on more properties. The increase in house prices, certainly in the south and midlands, would have been sufficient to reduce leverage to be able to sustain the increases in interest rates to their current level.  If equity released kept the leverage high then the recent increases in interest rates would tip the landlords into losses.  

The original post said the properties were purchased 2006-08. They may have released equity but if so it was for spending rather than buying more property.

2 hours ago, Axeman123 said:

Only equivalent to ~£5k a month (in 2023 prices, and before tax) over that period. Even with that kind of mega leverage and a large portfolio etc, to live visibly "well" would need equity withdrawal on top off the income IMO.

Yes, they could spend it all easily but the point is that it was very stupid. I went with a conservative £5k or so per month. Probably a bit more than that. Obviously weighted to recent years as interest rates declined and rents increased. If 70 years old they're probably getting some pension as well. Should be no mortgage to pay for their own home either. Or very little. Even if they took the initial deposit from equity they surely had repayment on their abode. If not they're even more stupid. To have bought 20 homes in 2006-08 alone they must have had a decent amount of capital to start with. They couldn't have extracted new equity every 7-8 weeks.

Even if they didn't pay down the mortgages they could easily have had £100k put aside that would enable them to survive voids whilst selling.

Anyway, fuck them.

[honkydonkey]

8 minutes ago, Yadda yadda yadda said:

The original post said the properties were purchased 2006-08. They may have released equity but if so it was for spending rather than buying more property.

Yes, they could spend it all easily but the point is that it was very stupid. I went with a conservative £5k or so per month. Probably a bit more than that. Obviously weighted to recent years as interest rates declined and rents increased. If 70 years old they're probably getting some pension as well. Should be no mortgage to pay for their own home either. Or very little. Even if they took the initial deposit from equity they surely had repayment on their abode. If not they're even more stupid. To have bought 20 homes in 2006-08 alone they must have had a decent amount of capital to start with. They couldn't have extracted new equity every 7-8 weeks.

Even if they didn't pay down the mortgages they could easily have had £100k put aside that would enable them to survive voids whilst selling.

Anyway, fuck them.

Serco will save them. 

[THE SOUP DRAGON]

23 hours ago, JMD said:

@Yadda yadda yadda I found part 2, he talks about mortgages from the 7minute mark...

I meant to answer your comment about Thompson's perceived blasé attitude. I think it's much more a cynical attitude being shown toward how the monetary system 'rules' can be changed at will. The examples Thompson gives of previous resets, in Brazil for example, are historically interesting because they show the outrageous manipulation of the currency by Brazil government, and also shows how  accepted these money experiments are by the financial system, IMF, etc.

 

 

Thanks for posting, I had seen part 1 previously but watched again before watching part 2. 

I agree completely with Clive on the benefits of having the bulk of any wealth you have in assets and to be well diversified, however I couldn't quite understand his conclusions on what would happen following the effective cancellation of debt following a currency reset. He spelt out that effectively anyone who had a mortgage would be debt free, companies would no longer have any debt liabilities and the government would be starting from a clean slate. He then went on to say there would be an almighty spending boom with all of this new found ability to take on "new" debt, I'm really puzzled with this. surely this would just lead to absolute mad inflation? with everybody simultaneously declared debt free all piling into the sweet shop at the same time.  

[JMD]

1 hour ago, THE SOUP DRAGON said:

Thanks for posting, I had seen part 1 previously but watched again before watching part 2. 

I agree completely with Clive on the benefits of having the bulk of any wealth you have in assets and to be well diversified, however I couldn't quite understand his conclusions on what would happen following the effective cancellation of debt following a currency reset. He spelt out that effectively anyone who had a mortgage would be debt free, companies would no longer have any debt liabilities and the government would be starting from a clean slate. He then went on to say there would be an almighty spending boom with all of this new found ability to take on "new" debt, I'm really puzzled with this. surely this would just lead to absolute mad inflation? with everybody simultaneously declared debt free all piling into the sweet shop at the same time.  

Yes I'd like to see Clive Thompson in a debate with a sceptic on this subject to tease out more detail and clarity.

But tbf he did describe many potential government interventions and policies to show how creative and/or scary life could become the other side of a currency reset. For example he tells the positive side of home mortgage debts effectively being wiped out because the liability will remain on the balance sheet of the lending bank but in the old-currency. However he also comments there is nothing preventing governments from taxing the gain the homeowner has made.

Remember a 'currency reset' is a loose term and in reality it is far wider - it's an economic reset. So government will also be actively looking to rescue certain sectors, and raising new taxes from property profits and redirecting those taxes into saving some (favored) bank's could happen. 

Similarly, inflation dangers could be managed, if industry/productive companies were selected and given loans, whereas service companies for example might be 'encouraged' to go bankrupt. Plus those sweet shops you mention (and other luxuries) will exist but the new-currency will probably come with spending controls... Much depends on how laissez-faire or Draconian our government wants to be, my bet would be on the latter.

Edited March 27, 2023 by JMD

[Starsend]

58 minutes ago, THE SOUP DRAGON said:

Thanks for posting, I had seen part 1 previously but watched again before watching part 2. 

I agree completely with Clive on the benefits of having the bulk of any wealth you have in assets and to be well diversified, however I couldn't quite understand his conclusions on what would happen following the effective cancellation of debt following a currency reset. He spelt out that effectively anyone who had a mortgage would be debt free, companies would no longer have any debt liabilities and the government would be starting from a clean slate. He then went on to say there would be an almighty spending boom with all of this new found ability to take on "new" debt, I'm really puzzled with this. surely this would just lead to absolute mad inflation? with everybody simultaneously declared debt free all piling into the sweet shop at the same time.  

Complete nonsense. All those debts are somebody else's assets, often pensions. So somebody gets gifted a free house by having their mortgage wiped out at the expense of somebody's lifetime savings (pension) being wiped out. It would be absolute anarchy. Many people, myself included, would  refuse to pay anybody a penny ever again, including taxes, council tax etc.

They'll have to come up with something better than that.

[sancho panza]

On 26/03/2023 at 23:38, Lightscribe said:

Things kicking off in Israel now. Well there’s never a dull moment.

It’s shaping up to look like being an interesting week.

 

There's only 10mn people in the palce.whats the protest about...?Ill get on google

10 hours ago, Inigo said:

I chartered a yacht out of Gouvia marina on Corfu a long time ago.  The owner told a story about how he had been boarded by the Albanian navy and only managed to buy them off with 200 Marlboro and a baseball cap.  He said he always kept 200 Marlboro on board, just in case.

Exactly,I've been in laods of places where fags are nearly as good as cash.you wanna bribe broder guards?fags cheaper than gold(obviously not british ones)

 

5 hours ago, Bobthebuilder said:

@sancho panza That sounds awful, I bet there's loads who are going to be facing this soon. Why someone would buy a load of BTLs around the country and not local baffles me, not good business sense at all, logistics for one. The biggest and best BTL operation I know have all their properties in a close area to each other, they use local trades and remain loyal, that makes a lot more sense to me.

This is it.Back in 07 there sotuherners buying flats in Buryand the like, unseen,off plan etc.Basolutely incredible how little real thought went into the stratgey

5 hours ago, Plan-b said:

If her IO mortgage(s) is like others I've encountered then part of the mortgage conditions would have been to have and maintain a capital repayment plan.  

Without this in place and funded that would mean being in default of their mortgage conditions with nothing like this to show after nearly twenty years and now in a falling market it's possible she may not be able to refinance hence the derisory offer so far.

Many IO mortgages are in technical default.

These are 07 vintage so Im not sure they had those rules then.

There are loads of clauses that dont get invoked tho eg margin call clauses

[wherebee]

27 minutes ago, Starsend said:

Complete nonsense. All those debts are somebody else's assets, often pensions. So somebody gets gifted a free house by having their mortgage wiped out at the expense of somebody's lifetime savings (pension) being wiped out. It would be absolute anarchy. Many people, myself included, would  refuse to pay anybody a penny ever again, including taxes, council tax etc.

They'll have to come up with something better than that.

many ancient societies used to do this debt reset on a regular basis.  It worked.  Yes, winners and losers, but it obviously held benefits for the overall society.

[sancho panza]

4 hours ago, Yadda yadda yadda said:

What the fuck have they done with substantial profits over 15 years?  £1 million in profit valued in 2023 sterling, excluding any growth in property value, is a reasonable guess.  Surely there are some other assets? Have they really spunked everything to the point they can't go a few months with a few voids? Fur coat and no nickers.

No sympathy, fuck them.

you may be too young to remember how much some people overpaid for flats and stuff in the north back in 07.I udnerstand some of them have only emerged from neg equity in the last few years(most likely flats).

Brimingham Mailbox type of £250k 07 purchase.Inner city worksop/Derby.I think there were some proper scammers working the patch back then.I forget the name of the guy but he got sotuehrn investors to part with crazy money for absolute dump houses

Wasnt looking for sympathy for them,jsut stating the reality of where were going

4 hours ago, Lightscribe said:

Cheap and easy credit with the 2008 chickens coming home to roost. The governments and central banks were complicit as well to keep bubble pumping (help to buy, ZIRP, stamp duty holidays etc etc).

Growth at all costs, as I said before the UK government started to include illegal drugs and prostitution in GDP in 2014, thats how desperate they were to hang on whilst selling off the last of the family silver.

It’s not a ‘bad’ creditors issue this time around like 2008 that sent the banks down, it’s much higher. It’s a governmental and central bank check mate. 

That’s why they are doing what they’re doing. The WEF, the whole shebang. 

 

 

QUite without the govt willingly miscalculating inflation and running Zirp,these people would have gone pop in 08

4 hours ago, Noallegiance said:

When the examples move from existing on the internet to suddenly existing within ones tangible sphere the experience instantly turns visceral.

This is very real NA.I will try and find the main lenders who are on the hook for these loans,suspect its the bad bank from 08

1 hour ago, sleepwello'nights said:

I suspect that the properties were remortgaged to release equity for the deposits on more properties. The increase in house prices, certainly in the south and midlands, would have been sufficient to reduce leverage to be able to sustain the increases in interest rates to their current level.  If equity released kept the leverage high then the recent increases in interest rates would tip the landlords into losses.  

I think a fair bit was probably used for living well, but I think the profits have been milked rather than used ot pay debt down because zirp was never going to end was it?

[Talking Monkey]

4 hours ago, THE SOUP DRAGON said:

Thanks for posting, I had seen part 1 previously but watched again before watching part 2. 

I agree completely with Clive on the benefits of having the bulk of any wealth you have in assets and to be well diversified, however I couldn't quite understand his conclusions on what would happen following the effective cancellation of debt following a currency reset. He spelt out that effectively anyone who had a mortgage would be debt free, companies would no longer have any debt liabilities and the government would be starting from a clean slate. He then went on to say there would be an almighty spending boom with all of this new found ability to take on "new" debt, I'm really puzzled with this. surely this would just lead to absolute mad inflation? with everybody simultaneously declared debt free all piling into the sweet shop at the same time.  

But that type of debt jubilee would destroy those who held the other side of that debt as an asset. There would be utter carnage. 

[Virgil Caine]

5 hours ago, wherebee said:

many ancient societies used to do this debt reset on a regular basis.  It worked.  Yes, winners and losers, but it obviously held benefits for the overall society.

The word there is “ancient”. There are over two millennia and an Industrial Revolution separating the modern world from the debt jubilees of the Middle East in the  pre classical period.

The laws of Hammurabi cover lots of things apart from debt relief. The jubilees in the codes were also largely concentrated on the farmers and traders who paid the taxes that funded the royal armies. Anyway I look forward to the “eye for an eye” laws, particularly the ones where cowboy builders get put to death or the unsuccessful surgeon has his arm cut off

https://empoweryourknowledgeandhappytrivia.wordpress.com/2017/10/12/282-laws-of-the-code-of-hammurabi/

It should also be remembered the Old Babylonian empire lasted 250 years and then collapsed.

Incidentally the modern western world has a well established mechanism for ending debt bondage not open to Babylonians. It is called Bankruptcy. 

Given that fact only debt liabilities not covered by that process such as Student Loans should really be candidates for Jubilees.

The problem in the west is that no one wants to accept that allowing the business cycle to takes its natural course is the best way to liquidate unpayable debts.

 

Edited March 28, 2023 by Virgil Caine