I can’t remember the details but there was some provision for a reduction in corporation tax which depended on committing certain profits to a charity in advance. NR did this but ensured no profit was payable to the charity. When NR collapsed it emerged that the charity involved was a tiny local one which had never been informed by NR that they were part of the scheme.
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New Financial Crisis
- Thread starter KS55
- Start date
nmc
Well-Known Member
I can remember those crazy days ..had a mate who ran his own mortgage business..What Northern Rock were operating was indeed bonkers.completely unsustainable.crazy. 125% of value deals..Wow.
I wasn't aware of the charity based tax scam
The NR scheme of giving personal loans on top of 100 per cent mortgages was crazy as you say they were lending circa 125% loan to value. B&B we’re doing buy to let mortgages secured against a residential property but individual branches could all secure against the same property - so some people had 10 or more buy to let mortgages (agreed in different branches) all secured against a single property ! Utter madness.
Match Fixer
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They got caught out by those things, not because of them. Thieving fractional reserve money printing cnuts had to pay up some time, they just got caught out a bit earlier than expected covering the fraud on the pump and dump machine, liquidity fraud ooops i mean stock exchange.Is a new world financial crash on the cards? Two US banks have recently gone into liquidation, namely Silicon Valley bank and Silvergate.
The reasons are clear:
1. The pandemic caused major slow down in economic activity.
2. Governments and Companies borrowed huge amounts to cover the workforce’s wages and other costs.
3. The Ukraine war has affected economies around the world with energy and food prices shooting up. Countries who import high volumes of these commodities are facing bankruptcy or the need for bail outs as their reserves run out.
4. The war and post pandemic restarts caused major inflation so Interest rates have risen sharply. For banks this means bond yields are going down as they hold a large proportion of their assets in government bonds.
5. The crypto market is imploding.
6. All this means that the world debt total is at an all time high which is not sustainable.
Thus the recent bank liquidations could be a turning point. Banking crises are contagious and once one bank fails the markets start to panic as interconnectiivity is high and there is a domino effect. Remember Bear Sterns and Lehman Bros.
China and S.Korea are already struggling with a major crash in property markets, the west could be next.
What can the ordinary family do? The first thing would be to spread any deposits you have around several institutions so that you do not go over the guarantee limit and in the event of a new Northern Rock you are not left with no ability to withdraw cash. Next, if you can, reduce any mortgage as much as possible as deals will be running out and new fixes will be at much higher rates.
Lastly, pray it doesn’t happen but the early signs are not good.
law74
Well-Known Member
As a rough estimate, what percentage of most banks debts be with personal mortgages?
I can see problems in the property market as people on fixed rates find those terms ending and unable to afford the new monthly repayments at the higher interest rates, leading to repossessions and only the bigger buy to let landlords being able to buy, though with the shortfall in housing stock, and people unable to afford mortgages, it is very difficult to predict what happens next.
I can see problems in the property market as people on fixed rates find those terms ending and unable to afford the new monthly repayments at the higher interest rates, leading to repossessions and only the bigger buy to let landlords being able to buy, though with the shortfall in housing stock, and people unable to afford mortgages, it is very difficult to predict what happens next.
abu13
Well-Known Member
Same here, having paid off a mortgage i have lumped the majority of the money saved into my pension and now find myself £15k less than it was 18 months ago.Getting a bit fed up with my pension , don’t put a fortune in , £250 a month but it’s been at the same value for best part of 18 months
tolmie's hairdoo
Well-Known Member
Down 630 points on Dow Futures this morning?
Worrying what else is about to go tits up in the States?
Worrying what else is about to go tits up in the States?
The chancellor is forecasting inflation to fall to 2.9% by the end of this year. That should ease interest rates and help those needing to renew mortgage deals.As a rough estimate, what percentage of most banks debts be with personal mortgages?
I can see problems in the property market as people on fixed rates find those terms ending and unable to afford the new monthly repayments at the higher interest rates, leading to repossessions and only the bigger buy to let landlords being able to buy, though with the shortfall in housing stock, and people unable to afford mortgages, it is very difficult to predict what happens next.
Blue_Lightsaber
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Down 630 points on Dow Futures this morning?
Worrying what else is about to go tits up in the States?
The biggest problem this time around isn't just inflation, but it seems to be investments in crypto and mid sized banks having the safeguards removed.
Weird thing to say but small banks are fine, and huge banks are fine. They'll still feel the ripple though but overall:
It's the regional/ mid sized ones (100 mil - 250 mil in assets) that're problematic.
Considering how important the financial sector is to the US.. I'd bet the US banks will mostly be fine.
Probably going to turn out to be the safest compared to the rest of the world.
I don't think the US will step in to help overseas banks though.
Especially those that've not really been seeing eye to eye with western sanctions on Russia. *cough* swiss banks *cough*
law74
Well-Known Member
While I have more faith in this chancellor than the previous one (or was it the one before), I still wouldn't trust him enough to agree a multi-year pay deal based on his predictions, but I can see inflation levelling out, i would think about 5% would be more realistic sadlyThe chancellor is forecasting inflation to fall to 2.9% by the end of this year. That should ease interest rates and help those needing to renew mortgage deals.