can anybody please help me out?

[Mr. Scram]

To clarify the policy for those elsewhere:

Once someone defaults on a loan in the US, the bank will take it back based on the fact that it is used to collateralize the loan.   The home is then sold through various methods, auction being a pretty common method.    The question is what to do if the amount earned from auction is different than the amount remaining on the mortgage.  This is where things get complicated, and can vary from   jurisdiction to jurisdiction.   

For instance, if the proceeds from sale do not entirely cover the loan amount, in most states, the prior homeowner is still on the hook for the amount of the shortcoming.  Only about 15 of the 50 states (mostly in the Western part of the US)  have laws on the books preventing this.   And even then, it isn't guaranteed that all of the debt secured by the home will be extinguished by the foreclosure.   For instance if the loan is a line of credit and/or a refinance, it might not be covered under these laws.   

Along the same lines, if you have more equity in your home than the remaining balance on the note, in some states, the bank gets to keep the surplus.  Or gets to keep it if you don't claim it in a certain period.   

One of the big underlying causes of the mortgage crisis was that banks were writing loans for more than the house was worth, based on future value.  The person buying the house would get a home for a certain period for only the cost of interest on the loan.   The theory was that at some period of time later, when the bank started to collect the principle part of the loan (commonly through a very large baloon payment at some point followed by higher monthly payments), that the homeowner would be able to either sell the home (and repeat the process elsewhere), or maybe their situation would change.   Many of the people who got taken in by this was looking at being able to be in a half-million dollar home for a few years for just the cost of the interest, and then move on.

What happened is that home values didn't go up as predicted.   As a result, people were not able to sell these properties and get out of the loan - and were also not able to make the balloon payment or make the increased payments on the loan because they were more than the home buyer planned for.  This resulted in a lot of properties being foreclosed on, and the lending banks losing a lot of money since this was really prevalent in California in particular which says the bank is stuck for any deficiency.   

In addition to the direct effect on the bank, it also triggered a major adjustment in home values, because now people are able to buy at auction very expensive homes for pennies on the dollar, further depressing the value of all homes in nearby areas.   

Banks also became very reluctant to lend money, which meant that fewer people could qualify to buy a home.   So if you were selling a home, there were fewer people able to buy it.  This also reduced housing values.   In many areas, homes have yet to recover to their pre-recession value.

Thanks for elaborating on my obviously way too terse remark

[Simon]

The problem is that the banks control the money. in the UK a mere 2% is state issued cash, 98% is created in the electronic systems of banks. When you borrow the money the bank "puts" the money into your account, but they don't take it from anywhere. With chains of loans propping each other up the whole thing came down pretty quickly. Unfortunately instead of treating the banks like any other business we all paid the price to keep them afloat. This was a big mistake as while on the surface lots of rules changed but basically all it meant was that people were treated as the problem and not the banks who behind closed doors carried on just as before whilst paying themselves lots of money for running their business into the ground. Any other industry would have just failed, as Iceland allegedly allowed it to happen and apparently they are doing very well.

The whole things was pitched as "if the banks crash everyone losses their money and the world as we know it ends". So if everyone was going to loose their money then the answer as Iceland demonstrated was simple: Let the banks fail, give the money back to individuals and start again. I'd have banned all of the executives from ever holding a position in a company again (any company) and start afresh. But no, we still have a broken system that we the public are paying for, in the UK this takes the form of "austerity" which basically means we are all now paying taxes but getting very little in return and while it was promised that the cutbacks would not affect front line services we all knew this was a lie (ask any of the few remaining police officers, they are all that pissed off they will be pretty blunt about it). Our health service is in crisis, crime is on the rise, disabled people are being left vulnerable, people poor scorn on Zimbabway, I think that reality is closer than we think here too. And what is all this for? so that we can pay off the debt that meant the banks could keep OUR money, so basically we have lost our money anyway. How does this happen? well what do you expect when a government is run by a bunch of old boys who all went to the same school and didn't get very good grades at that.

[woody]

The problem is that the banks control the money....

Well put!

This whole 'to big to fail' nonsense and the risks it evoked led to big profits for a couple of shareholders while the subsequent humongous losses were paid for by the rest of us. And we did learn anything? No, banks are yet again getting rules out of the way and making pre-crisis profits, while FED and ECB QE take over their bad loans. For us that means that our savings are evaporating but hey, who cares? They're gods, we're sheep.

[Simon]

Well in the UK and maybe further afield there is an organisation called "positive money" that seeks to have changes made in how money is controlled. Obviously they are banging on closed doors and talking to the deaf ears of the bankers cronies

[sony mavica]

+1
There'lll be other deals along shortly, probably in the January sales, so you have time to work out your budget so you have convertible funds available up to your self-imposed spending limit.   A few searches didn't show up any legitimate method of converting directly between PayPal and Skrill or visa-versa - they are competitors and don't cooperate - so you would be relying on the reputation of a 3rd party ecurrency exchange.  IMHO you dodged a bullet there.  Do your research before using any exchange service, or better yet, if you cant use the finds directly for planned purchases, convert in plenty of time ahead via your own bank account.

most of the money i was going to use was from giftcard to buy the laptop i get from doing surveys online  but yesterday i go one off the same site bought with giftcards from what i can see it looks to have the same specs as the other laptop i was going to get just they are selling it cheaper because they say the box is damaged

[Simon]

Oh really? Either it's more worthwhile doing those surveys where you are or you have not worked out what poor value for your time they are, been there tried it did not even get to cash in and felt brain dead every time I did one.

[vealmike]

The problem is that the banks control the money. in the UK a mere 2% is state issued cash, 98% is created in the electronic systems of banks. When you borrow the money the bank "puts" the money into your account, but they don't take it from anywhere. With chains of loans propping each other up the whole thing came down pretty quickly. Unfortunately instead of treating the banks like any other business we all paid the price to keep them afloat. This was a big mistake as while on the surface lots of rules changed but basically all it meant was that people were treated as the problem and not the banks who behind closed doors carried on just as before whilst paying themselves lots of money for running their business into the ground. Any other industry would have just failed, as Iceland allegedly allowed it to happen and apparently they are doing very well.

The whole things was pitched as "if the banks crash everyone losses their money and the world as we know it ends". So if everyone was going to loose their money then the answer as Iceland demonstrated was simple: Let the banks fail, give the money back to individuals and start again. I'd have banned all of the executives from ever holding a position in a company again (any company) and start afresh. But no, we still have a broken system that we the public are paying for, in the UK this takes the form of "austerity" which basically means we are all now paying taxes but getting very little in return and while it was promised that the cutbacks would not affect front line services we all knew this was a lie (ask any of the few remaining police officers, they are all that pissed off they will be pretty blunt about it). Our health service is in crisis, crime is on the rise, disabled people are being left vulnerable, people poor scorn on Zimbabway, I think that reality is closer than we think here too. And what is all this for? so that we can pay off the debt that meant the banks could keep OUR money, so basically we have lost our money anyway. How does this happen? well what do you expect when a government is run by a bunch of old boys who all went to the same school and didn't get very good grades at that.

Erm, no.
Whilst public sector finances and private sector wealth are clearly linked (govt. needs a healthy economy to tax), the financial crisis of 2007 isn't the root cause of the UK's austerity program.

I think many people in the UK fail to understand the difference between deficit and debt. Our politicians talk only about the former, and even the BBC's political editor (Kuenssburg) doesn't know the difference. With out a widespread grasp of these two fundamentals, it's easy to see why there is a backlash against austerity.

When our politicians talk about reducing the deficit to zero, the populous think they mean zero debt. They don't really care because they don't grasp the scale of the issue.

Deficit: The amount by which the governments income falls short of its expenditure each month or year.
Debt: The total sum of the money the government owes.

UK deficit last year was £56bn, 2.6% of GDP. It's a lot, but it was running at 10% GDP when the coalition took the reigns and austerity began.

UK debt however is running at 90% GDP. A debt of 100% GDP would mean that we're officially bankrupt. Government debt is £1.7 trillion (million million). Latest figures I can find for the interest on out debt are for 2015 (debt: £1.56trillion, 82% GDP), we paid £43 billion in interest that year. Roughly the same as our current budget deficit.

In short, we're almost broke. We can't afford our current lifestyle. We have to borrow money to pay the interest on our loan.
That is why our current government are hellbent on austerity.


You also said that increased wages would make houses more affordable. I'm afraid I think that's a little naive too. Increased spending power would merely lead to increased house prices as people spend the same proportion of their wages in an inflationary bunfight for their little corner of England. There are only two things that will reduce house prices. Thing one is a massive program of house building (see, the need for austerity above). Thing two is a massive reduction in the population (who knows, Brexit could result in an exodus!)


The assertion that the banks do not have to have money in order to loan money (quantitive easing excepted) is strawman woo of the most extraordinary kind. Sorry but that's the sort of thing I expect to hear from someone wearing a homemade faraday cage, constructed from aluminium kitchen foil. Perhaps this wasn't what you meant.

[Simon]

Yes i am aware of the difference between debt and deficit, our debt doubled when we bailed the banks out.... we need to stop the debt going up. An increase in wages may or may not produce an increase in house prices. As i already said it is now finally official figures that increase in cost of living is outpacing wage increases and we are effectively worse off than in the past as a nation. Officially figures include things like xboxs now, I can't think why, maybe because their price is sort of stable if not going down and it helps the figures. At the end of the day the market will have to settle but given the huge variation in wages and many on not enough they will never afford a house. As I explained, I bought during a slump, today I'm in the same boat as when I started 7 years ago, so yea, I think I'm underpaid. Of course if interest rates rise again then maybe that will force prices down, I think we need a combination of both, an increased pay rate at the bottom end and higher interest rates. As I said before it may mean that your just as bad off to start with but if you are clever you overpay your mortgage and quite quickly get out of debt.

the fact is that it costs an amount of money to run the country and more to run it properly, but the government won't do all that it could to collect enough tax (meanwhile the town of northampton "lost" 10m in a "loan" to a football club, it's all now being investigated but i doubt the money will ever be recovered). I can't see why my local council don't increase council tax, we have not had an increase in years above 2% that barely keeps pacer with inflation, meanwhile northamptonshire is effectively going bust with the government pulling out 60% funding (from my taxes!) I'm not sure if the deficit is actually going down, it need reversing if we are to end the doom you speak of but the BBC are the last people to actually be bothered to paint an accurate picture of fiance and technology while they simplify politics for the masses. Kunsberg is the political editor and not the financial one and I'm still not surprise that she is ignorant. The last "technology expert" I heard on the BBC basically said that if you bought a "smart" freezer the moment you plugged it in it would connect to your internet all by itself and could be hijacked by hackers. The simple fact that you would have to physically plug it into an ethernet port or allow it access to your password protected wfi first escaped this "expert".

I am afraid that banks lending money on the expecting increase in value of a property in the future is printing their own money, particularly when this forms a long chain of loan upon loan

[woody]

The assertion that the banks do not have to have money in order to loan money (quantitive easing excepted) is strawman woo of the most extraordinary kind. Sorry but that's the sort of thing I expect to hear from someone wearing a homemade faraday cage, constructed from aluminium kitchen foil. Perhaps this wasn't what you meant.

I have to disagree. Yes, you are right, banks are required to have a minimal capitalization (Basel tier 1...X) . I see two problems with that:

First the assets required, although increased since 2008, are still unreasonably low. Of course not low enough according to banks that put all their lobbying weight behind preventing more stringent rules being implemented.

Second, for capitalization we're not talking assets you can touch, like gold in a vault or buildings or machines. Assets are in complicated financial products (like the famous CDO) that get conjured up continuously by financial sorcerers in the City. These people are paid very well for a reason. Any controlling organization that is funded with tax money (FED/ECB/BoE) will not be able to keep up with that wizardry; we refuse to let them pay the salaries required to get to the same level of knowledge. Therefore we will always be light-years behind in knowledge of (the real value of) these products. In short, we don't know shit.

IMO the assertion that banks do not have to have money in order to loan money sums it up nicely. Certainly no strawman woo of an extraordinary kind. In or excluding QE.

[sokoloff]

UK debt however is running at 90% GDP. A debt of 100% GDP would mean that we're officially bankrupt.

That's not what that means. The GDP is the production of the country in a given year, while the debt is as you describe.

It may very well be the case that the current debt load is unsustainable, but there's no direct 1:1 linkage between the country's production in a year and the maximum amount of outstanding debt of the country.

[sony mavica]

Oh really? Either it's more worthwhile doing those surveys where you are or you have not worked out what poor value for your time they are, been there tried it did not even get to cash in and felt brain dead every time I did one.

i get them all the time i use like 7 websites 2 pay giftcard rest pay me paypal money  doing surveys and other things i can get like $80usd and like $45nzd gift cards or more some weeks i can make way more money then other weeks takes about 3hrs of work and i get payed about every 2-3 weeks

i heard from people i know living in the us and uk you get way more surveys and offers so you can make way more money

[Mr. Scram]

i get them all the time i use like 7 websites 2 pay giftcard rest pay me paypal money  doing surveys and other things i can get like $80usd and like $45nzd gift cards or more some weeks i can make way more money then other weeks takes about 3hrs of work and i get payed about every 2-3 weeks

i heard from people i know living in the us and uk you get way more surveys and offers so you can make way more money

What would you get paid if you spent the same time flipping burgers?

[sony mavica]

i get them all the time i use like 7 websites 2 pay giftcard rest pay me paypal money  doing surveys and other things i can get like $80usd and like $45nzd gift cards or more some weeks i can make way more money then other weeks takes about 3hrs of work and i get payed about every 2-3 weeks

i heard from people i know living in the us and uk you get way more surveys and offers so you can make way more money

What would you get paid if you spent the same time flipping burgers?

3hr maybe $35nzd

[Simon]

The surveys i filled in were long stupid boring time consuming and paid next to nothing, this is the UK you don't get anything for free just ripped off. Most of it is about bullshit branding and "how I feel"about this that and the other. when in reality I buy non branded stuff given the choice as i know that all I am paying for is branding.

[tszaboo]

UK debt however is running at 90% GDP. A debt of 100% GDP would mean that we're officially bankrupt.

Higher dept means better economy. If the economy would be bad, they wouldn't re-finance the dept with other dept. It actually means, that a country can spend other people's money for economic growth. What matters id how much you are paying for these dept.
For example, German national dept bonds for 5 years is financed at -0.37%. If they sell a billion euro of these bonds, they make money on this,while the countries' dept will show higher. Meanwhile they invest this money into infrastructure, which in return will increase the GDP.
It is not necessarily a bad thing.

[woody]

Yep. It seems we have forgotten how much money our ancestors lent and put in things like railroads, roads, telephone lines, dikes (in our case), education, hospitals, airports and what not. That infrastructure led to the prosperity that we are all accustomed to and that also paid off these loans.

Now that we are on the brink of another trillion-euro enterprise, the creation of a sustainable economy, our leaders have turned into a bunch of frightened supermarket managers. Suddenly the actual figure of our national debt seems more important than what you actually get for this debt in the long term.

Politicians both left and right used to have visions of a better world that they actively tried to attribute to but nowadays all they do is mind the shop. A vision is (at least in my country) seen as an elephant standing in front of the view. I often wonder when that became the norm.

[Simon]

I'm confused, public services which are being devastated in the UK are not investments that make money. They are services that WE ALL pay for, because free at point of service is one thing, but we all still pay in various amounts for these services. The problem is that the government does not collect tax from all that owe it. As the recent scandal shows lots of large companies are stock piling profits in offshore islands to avoid UK tax and tax around the world. So we have to pay more tax whilst going without a full compliment of services. The debt exists because we are not collecting enough taxes, the debt exists because we bailed out a bunch of rich corporations so that they can continue as before. i am afraid the system is bent because it is run by certain people.

[woody]

public services which are being devastated in the UK are not investments that make money. They are services that WE ALL pay for, because free at point of service is one thing, but we all still pay in various amounts for these services.

In a way those services do make us money. These services get us to work and back, give us internet, make us healthy when sick, feed us, shelter us etc. Yes, we all pay for that, but that is a fraction of the money involved if those services were not there and we had to pay to get them instated when needed.

I do agree with your other complaint, tax evasion. A real problem, and a really unfair one too. John Doe never gets a tax break; his income and spending are known to two decimals and fines for forgetting to declare something are heavy and speedy, while, if you have the money to pay one of those Smith, Jones and the Other accountants you are able to set up shady deals with the tax office and pay a fraction of what you are owned. Everything within the law and with help of the tax authorities. My country seems so good at this that someone on TV said it makes Luxembourg look like a kindergarten.

This not only makes the deficit much higher than needed, it completely wrecks the 'stronger shoulders carry the bigger weight' principle that is behind all taxes. It breaks society. Yes, the system is bent.

[Simon]

Nope public services do not make the country much profit at all, if the country becomes the rich that can afford private series and the poor are taken out of the economy and/or left to die then the "loss" is not to the economy represented only by the rich. Obviously I am taking things to the extreme but when you look at the UK you start to wonder. When ministers start making proposals like charging £10 a go to see your doctor (for a 10 minute slot - nice little earner) and local government score political points by refusing to collect enough tax to run their services you start to wonder. As i said earlier, my local regions government is basically broke and expect the news any day that it is bankrupt. It has also emerged that secret discussions went on about how to break the news and when, they choose now rather than try and peg on until 2019 because.............. in 2019 we will have regional elections....... so they want the bad news out of the way now.

[Simon]

oh and of course while the public purse is going bust we are handing money over to internet companies to install fibre optic because if we don't they won't install it, naturally they will make a fortune selling the service, the biggest money for old rope industry is getting handouts from the government so that it can become even richer........

[tszaboo]

I'm confused, public services which are being devastated in the UK are not investments that make money.

There is a clear and documented causation between investment in infrastructure and GDP. And another one for infrastructure and happiness. For example wide adaptation of high speed internet causes 3% economic growth.
A transport company is never going to move somewhere, where only dirt roads are.
I don't know, where your frustration is coming, but there is no need to start stretching facts and saying bullshit. Probably you are just pissed off about the UK politicians.

[Simon]

I did say that I was pushing examples to their limits, or at least I hope this situation is never a limit. It depends on who makes policies and what they want, it also depends on how close we are to an election. As i say, sure faster internet is good, but can't a massive company afford to install their own infrastructure? of course not because the share holders expect bigger and bigger payouts and success of a company is not based on how well it delivers it's services and it's customer satisfaction but how high it's stocks and shares are. So they turn to their friends in government who start a national scheme to help fund a private company updating it's infrastructure. Now if that service of telecoms had not been privatised then the government and the country as a whole would benefit from the improvements in infrastructure and the increased profits for the better service.