tag:blogger.com,1999:blog-2948538160252327076.post2169315170318426221..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: UK loan write-offs - the storm that has not yet comeAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2948538160252327076.post-57722647033208134832008-10-12T17:27:00.000+01:002008-10-12T17:27:00.000+01:00Anon, people are panicking because gummints world ...Anon, people are panicking because gummints world wide are telling people to panic!<BR/><BR/>Yes, there are losses, which will have to be split between the borrower (whether business or reckless but-to-letter) and the lender. But no house has to be demolished, no business has to go under, no bank has to fail. All that happens is that people's nominal wealth is not as big as they thought it was; the real wealth, physical, social and intellectual capital, on the ground does not have to change one bit.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-7815164661638514952008-10-11T23:36:00.000+01:002008-10-11T23:36:00.000+01:00Nice stuff as usual Alice.I would take some issue ...Nice stuff as usual Alice.<BR/>I would take some issue with what Mark says though. Obviously there is more at stake than 60 billion, because his conclusion is that there is no reason to panic.<BR/>But everybody is panicking.<BR/>What about commercial loans? Leveraged buy-outs?<BR/>Given that his conclusions are totally at odds with what you can be freely observed by all on a daily basis you must accept that his base facts/reasoning are wrong.<BR/>Our external debt is over a trillion. Where is this figure for example ? How can the banks collectively pay a billion a month when they are likely to be running at a loss for years ?<BR/>UK savings just disappeared in Iceland. This money would have been used to repay debts in the UK, the default rate whatever it was, just went up. Why a 10% default rate when we are entering a recession ? Why not 30% or 40%?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-55377944447335595582008-10-11T22:45:00.000+01:002008-10-11T22:45:00.000+01:00Plus, Mark, if we re-introduce debtors' prisons, t...Plus, Mark, if we re-introduce debtors' prisons, the problem will decrease.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-26668771885218127662008-10-11T18:56:00.000+01:002008-10-11T18:56:00.000+01:00I used the same BoE figures that you used for your...I used the same BoE figures that you used for your negative-eqity-o-meter to estimate total losses to UK banks from house price crash and arrived at the relatively modest figure of 3% write offs/irrecoverability for mortgage lending, call it <A HREF="http://markwadsworth.blogspot.com/2008/10/estimating-losses-to-uk-banks-from.html" REL="nofollow">£40 billion</A>, absolute worst case.<BR/><BR/>Mortgage lending accounts for <A HREF="http://www.creditaction.org.uk/feb.html" REL="nofollow">84%</A> of total household borrowing, i.e. the non-property related bit is £224 billion, what will the write odds on that be? 10% perhaps, called it another £20 billion.<BR/><BR/>That's £60 billion in total, call it £1 billion a month for the next five years?<BR/><BR/>From the point of view of banks these are not life-changing amounts of money. Provided they can swap 0.5% of their bonds for equity every month (or whatever dwindingly small figure it might be), it will all sort itself out, lessons will have been learned etc.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.com