[mattduke]

Can we have major inflation without interest rate increases? That might be the only way out ....

Artificial bank credit expansion allows bankers to underbid savers on interest rates for loans they offer. An economic boom occurs as savings <i>appear</i> available to entrepreneurs without the requisite voluntary reduction of consumption by society (real savings). But as the new money ripples through the economy prices rise. Rising prices force savers to demand higher interest rates, and the rates begin returning to the natural rate. There is then a tendency to "overshoot" the original natural rate, as entrepreneurs become desperate for loans to keep their uneconomic businesses afloat. A recession occurs when entrepreneurs are forced to liquidate their uneconomic activities they were lured into via artifically low rates. If the government-banking syndicate wishes to prolong the boom, they must offer more bank credit at an <i>ever accelerating</i> rate. The longer the boom is prolonged, the worse the inevitable recession. Attempts to postpone the bust forever result in hyperinflation.

[vision-master]

If the government-banking syndicate wishes to prolong the boom, they must offer more bank credit at an ever accelerating rate. The longer the boom is prolonged, the worse the inevitable recession. Attempts to postpone the bust forever result in hyperinflation.

Sounds like a bad drug habit to me.

[shakespear1]

Surely this describes the situation in the US. People there have LOTS of credit cards

[airstrip1]

A bigger rates increase would result in house repossession, bankruptcies etc.

She said the banks could survive a lot of their customers defaulting ... and would hunt them down to the ends of the earth for the rest of eternity, until they cleared their debts. Simply leaving the house keys at the bank and running away will not stop them coming after you.

She also that the defaulters would be so black-listed that their lives would be changed for ever.

It sounded like the banks know EXACTLY what to do to protect their interests whatever the circumstances.

Depends on how bad it gets. These sort of tactics are fine in a conventional slump but in a 1930's style crash the economy implodes and the banks take it up the rectum along with everyone else. They wont be able to cope with millions of defaulters any more than they were able to get back the cash they pissed away lending to Russia and Latin America in the 1990's. As for the bullshit about following people to the ends of the earth I wonder how effective their recovery process would be if people started taking refuge behind someone else's guns. Try asking a few tax men and debt collectors what it was like getting payment in certain areas of west Belfast in the 1970's and 1980's.

[Kingcoal]

£40,000! Wow, isn't that like $80K? The situation has only one solution on both sides of the Atlantic; higher rates.

[rwwff]

She said the banks could survive a lot of their customers defaulting ... and would hunt them down to the ends of the earth for the rest of eternity, until they cleared their debts. Simply leaving the house keys at the bank and running away will not stop them coming after you.

You've just heard what scared bankers sound like. Wow. Thats pretty wild.

[bellebouche]

There's another element to this personal debt story... just what steps the folks who immerse themselves in the spend-consume-spend-comsume neverending loop do when they wake up in a cold sweat one morning and realise that it can't last forever.

There are no end of TV promos for companies offering loans... to allow people to consolidate their loans! All of this new finance of course is secured on property.

The decade-long boom in house prices has meant that many people are sat on a bit of loose equity in the properties they own. It would appear to be the simplest thing to remortgage your house or at least offer up a chunk of the equity in it to clear down the debts of higher interest charging personal finance... at the 'cost' of what... well... giving away a chunk of your house.

So, that's just what people do, swap higher interest unsecured credit card debt for (sometimes) lower interest finance secured on their properties.

The marketing for this is (or at least was, I left the UK 18 months ago) pervasive... it's just so painful to think of what is likely to happen in the economy and what these people are giving up to finance a lifestyle of meaningless consumption.

[linlithgowoil]

my personal debt is coming down compared to what it used to be. the end is nearly in sight for my credit cards and my car loan is now finished (and my car will soon be gone!).

however, when i compare what i am doing (spending less, paying off debt as fast as possible, conserving, not taking on new credit, not buying tons of 'junk') and look at others - they are doing totally the opposite.

even supposedly 'poor' people in fairly low paid jobs are driving around in brand new cars and going on holidays twice a year. i know its all on credit which baffles me. it also confirms to me that most people are morons and tend not to think much farther than their next meal.

as far as banks chasing you for debt, probably best to go bankrupt. in the UK, 12 months later you are automatically discharged. 3 years after that all records of bankruptcy are deleted from your credit histotry.

[vision-master]

Personal bankruptcy laws have changed in the USA. I believe it’s a lot harder to wipe the slate clean now.

[ChumpusRex2]

She said the banks could survive a lot of their customers defaulting ... and would hunt them down to the ends of the earth for the rest of eternity, until they cleared their debts.

There's a limit to liability in the UK, so to say that they would be pursued for the rest of their lives is a bit of an exaggeration.

In the case of default on a secured loan (where security doesn't cover the debt) it's 12 years. (This includes mortgage debts).

In the case of an unsecured loan, it's 6 years.

[jmacdaddio]

An interesting saying from Donald Trump: "If I owe the bank a million dollars, I have a problem. If I owe the bank a billion dollars, the bank has a problem".

On an individual scale we have tons of people with problems. Combine them all and the banks have a massive problem on their hands. I'm amazed at how seemingly ordinary people are living the MTV Cribs lifestyle.

[mekrob]

Since so much of the loans have land and homes and cars as collateral, that in an economic crash, then the banks would be able to take those properties? So we could be looking at the elite having even more of the true wealth (land, farms, metals, etc) in the USA and world? Yippee!

[EnergyUnlimited]

Since so much of the loans have land and homes and cars as collateral, that in an economic crash, then the banks would be able to take those properties? So we could be looking at the elite having even more of the true wealth (land, farms, metals, etc) in the USA and world? Yippee!

My PERSONAL viev is:
"In case of massive surge of bankruptcies it is unlikely, that banks would repossess and resale properties on substantial scale".

What the point to take my property worth $ 1 000 000 and sell it to my neighbour (who would be a bidder) for $ 50 000 and than take his propery worth $1 000 000 and sell to me (on auction perhaps) for $ 50 000 ?
It is cheaper to do nothing!

For acknowledgment of some lunnies:
Buldozzing of both is NOT an option if MILLIONS properties are at stake.
Reasons:
- Government resistance.
- Public resistance.
- Civil war looming.

It appears that bankers are fucked (like adolescent girls are).
Such a pity, I do not owe them much...

[mekrob]

But couldn't the bankers just keep the land for themselves? Land, afterall, is actual wealth, not the paper that they lent us. So couldn't they just use the land for whatever they wanted (farming, bigger homes, open space, serfdom, slavery, etc)? Why just let everyone get by without paying you back? Especially when the people with the guns (the government/military) are backing the banks and see the banks as the victims (of morons who can't pay their bills). Makes much more sense than just giving up.

[rwwff]

But couldn't the bankers just keep the land for themselves?

Sure, they could. However, it'd be the quickest ticket to total bankruptcy they could conceive of. There's tons of reasons banks auction off properties that they foreclose on. Trust me, the last thing a bank wants is to sit on 50,000 foreclosed upon residential properties. Those things eat cash like there's no tomorrow.

If things got really, really bad, look for offered credit extensions (for a fee), early reversed mortgages, etc; anything to keep those loans on the books at least as sorta-performing. An example would be Japan; when they had their bust, banks kept those non-performing loans on their books for years and years to avoid the reality of insolvency. And I think for most of them, it worked.

[SoothSayer]

Yep, I think you're right mekrob.

Land will become the key factor in a low energy world.

It will be where the remaining resources are.

It will also be where the city gangs are not.

It will also be where the food needs to be grown ... without much petrochemical fertiliser etc and without much tractor fuel.

You will need people to do the work.



They will pay you in food in order to use your land for growing.

Yep, land is a good bet for the rich, banks, investment firms etc.

[JPL]

Hi SoothSayer,

Naarg I can't see it (subistance farming) working... (also I detect a hint af sarcism in yer tone?)

Merrie England in 2012 with jolly Yoeman & cider-swilling farm-workers, hmmmngh....

JPL

[SoothSayer]

I was being mainly serious .... I can't see the powerful giving up their power willingly.

However if they can convert their power into a new (in fact very old!) paradigm such as feudalism then they will.

It might have a different name 'tho ... "Stuctured Co-Ownership" or somesuch.

The result will still be the same ... YOU will be in the fields, and THEY won't!

A boss issues his orders for the day before going home for a nice breakfast

[vision-master]

I've seen many of these "debt" threads before. They remind me of the "I quit drinking threads". People rarely want to admit, they’ve made a mess of their lives.

FYI: I owe $500 to the credit card company!

[SoothSayer]

I've seen many of these "debt" threads before. They remind me of the "I quit drinking threads". People rarely want to admit, they’ve made a mess of their lives.

FYI: I owe $500 to the credit card company!

Huh? This thread was a "helicopter view" of the personal debt issue in the UK ... not really a discussion about personal cases.