Roger Lewis • James there is a problem with that ( only regarding the real Estate problem) as the Mortgagees in possession laws in UK and Foreclosure laws in the US do not make any provision for the conflict of interest inherent in the Fractionally reserved based banks ( Low capital exposure ) 4% in all truth ,and the
honest home owners who would be bankrupted by negative equity in a crash in which their role has been purely incidental and manipulated. ( always protect the innocent, I do not include myself in that category by the way.)
I am writing a pamphlet seeking reform of the rules of valuation on these matters in the event of wholesale collapse. My view is that the strangulation of the money supply is partly designed to force that collapse in any event my proposals would head the Banks off at the pass so to speak.

This is my basic premise.

The idea that Banks have been caught out more than home owners is perverse. The Banks have created commitments for the borrowers to them and actually not given in return what the Borrowers largely believed i.e that their Mortgage is matched by and equal deposit/ saving of another bank customer. At best the banks have 1 tenth of this covered 10% and in many cases it is more like 1 fortieth 1/40 2.5% so on a mortgage of £100,000
the bank only has capital of at most £10k at risk and in all likely hood more probably £4k at risk. Therefore in distressed sales all on going mortgage payments made should be viewed accordingly and and distressed asset sale again viewed similarly.
I,e a mortgage holder with 25k negative equity on a mortgage of 100k still has an asset worth at least 7.5 x the capital reserve the bank allocated against making that loan. I.E the borrower remains in debt for 100k a new debt of 75k is created and and the bank gets all its basic capital back has had the interest in the meantime and will still milk the original borrower through the Bankruptcy process for a further 2 years representing further pure profit.
Here are my original sketches and sources notes etc on my blog.
http://letthemconfectsweeterlies.blogspot.com/2011/05/further-thoughts-on-distressed.html

One final Link which I think points a finger at the banks and their cynical exploitation of the real economy.

http://www.guardian.co.uk/commentisfree/cifamerica/2011/may/27/economics-useconomy

This post does not do justice to this small aspect of the overall picture and in itself could fill several books.
1 second ago• Delete • Edit Comment You have 14 minutes

http://pragcap.com/10-banks-which-pose-the-greatest-systemic

Short Answer, the Banks are shakier now than they were in 2006!

An interesting article in the Guardian newspaper on how the banks are planning to chart a course out of their present Bankruptcy by infecting our own Sovereign Economies.

http://www.guardian.co.uk/commentisfree/cifamerica/2011/may/27/economics-useconomy

Rather than letting them Fail slowly taking so many innocent people with them my suggestion is we push them over the edge re build the system with a debt jubilee swap of all on shore liabilities.

As suggested here.

http://golemxiv-credo.blogspot.com/2011/05/how-to-destroy-web-of-debt.html

There is more than one way to Skin this particular Cat we need a Manx/come Austrian approach. Manx Cats have no tails ( the investment Bankers are not required at the Table of National Finance Sovereign Interests must assert their Authority. Enough is Enough!
19 hours ago

Roger Lewis • http://www.economist.com/blogs/freeexchange/2011/04/financial_markets_0?fsrc=scn/li/nw/bl/toobigtofail

Fantastic Presentation on this issue!
18 hours ago

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Ricardo Galeno • I agree, Andy.
13 hours ago

Dr. Waleed Ahmad
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Dr. Waleed Ahmad Jameel Addas • Safe as long as usury/interest is flushed out from its system and replaced with profit and loss sharing which is a more just financial system that support the real economy in the form of asset and wealth creation. See the principles of Islamic finance for more details.
12 hours ago

James
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James Vaughn • Roger, there may be one wisdom in pushing the banks over the edge. It would free up the real estate they now hold and refuse to sell at market prices. If we were to dump the entire inventory of foreclosed homes onto the market it would provide affordable home ownership for millions and clear the ongoing real estate crisis.
7 hours ago• Reply privately• Flag as inappropriate

ishtiaq
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I'm with the grip of death view on this and have been looking into the Legal Concept of Usufruct.http://en.wikipedia.org/wiki/Usufruct
Banks Take a legal Charge over the property a mortgage is secured against. The mathematics of how the Money they Create to allow the transaction to take place is an illusion, certainly the bank is somewhat less exposed than the Householder.
I am working on a Pamphlet/Paper to address the Laws of RePossession, Fixed Charge Receivership.
Here is a blog of my Notes on this they are wide ranging and so far I am thinking out loud, but the transaction from the Banks perspective when there is a repossession is something like this.

This is a theme to be developed regarding Price and Value and the Trading of Mortgage Securities and distressed asset sales as opposed to the more egalitarian course of action which would be to Create some sort of Amnesty on Mortgages ( Principal residence only and even up to a Minimum price say £250k in UK figure could be arrived at by discussion.

The idea that Banks have been caught out more than home owners is perverse. The Banks have created commitments for the borrowers to them and actually not given in return what the Borrowers largely believed I.E that their Mortgage is matched by and equal deposit/ saving of another bank customer. At best the banks have 1 tenth of this covered 10% and in many cases it is more like 1 fortieth 1/40 2.5% so on a mortgage of £100,000
the bank only has capital of at most £10k at risk and in all likely hood more probably £4k at risk. Therefore in distressed sales all on going mortgage payments made should be viewed accordingly and and distressed asset sale again viewed similarly.
I,e a mortgage holder with 25k negative equity on a mortgage of 100k still has an asset worth at least 7.5 x the capital reserve the bank allocated against making that loan. I.E the borrower remains in debt for 100k a new debt of 75k is created and and the bank gets all its basic capital back has had the interest in the meantime and will still milk the original borrower through the Bankruptcy process for a further 2 years representing further pure profit.

Other commitment bank have created beyond the reserve ratios based on trading these very profitable rights to receive mortgage payments cause the banks to be insolvent but compound the extent to which the original deceit is leveraged to the cost of the Mortgage Payer who is also the future tax payer for the government debt taken on the Save the banks from their excesses with their derivatives based upon the imaginary debt money they are licensed to create in the first place.

LAST PARA TO BE WORKED UP INTO FULL MATHEMATICAL PROOF.

The FUll Blog is here.

http://letthemconfectsweeterlies.blogsp/ … essed.html

There are very few duties that the Banks have created by precedent and they are statutorily licensed to do something basically beyond legal in any other walk of commerce. There is great potential for a great day in Court for a Test Case to challenge the basis and industry of Repossesion and its arcane and bullying laws.

Yep I am definitely a death gripper.