No post for ages - work has been busy, not that anyone follows this so no worries there. Also I had nothing interesting to say and the last thing the internet needed was more drivel.
An interesting idea was given to me today after reading a bbc article about Northern Rock being split into a "good bank" and a "bad bank".
Now as I read this all the good/reliable mortgages and business will be packaged together and sold off to make some of the bailout money back. This is a good thing.
As for the bad bank then as I read this it will exist solely to hold onto the bad mortgages. Now it was pointed out to me that these mortgages will eventually come to the end of their term. The question is what happens next? Assuming that this bad bank doesn't issue new mortgages then the people facing this will have to go to the open market to look for a new deal. So the good profitable parts of the business will eventually dwindle and leave, leaving only mortgages that foreclose or people who are unable to go elsewhere.
With my cynical hat on this seems like a very efficient way to make sure that the taxpayer is left with all the bad debt and the free market only has the reliable debt. This may be a good thing for the financials of the banking iundustry, but it does undermine the concept that the banking industry would eventually pay back the bailouts.
Now I'm not that naive, but it does seem that those of us currently without mortgages are being charged for those who drew a straight line on growth curves; which is a little unfair, but hey we already have an idiot tax in the form of the national lottery so this feels like a "not being an idiot" tax. Ah! Smug self righteousness, better than any drug I know!
Wednesday 28 October 2009
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