Me gut instinct in combination wif about 8 yrs of askin' meself wot tha f***'s goin' on, inclines me ta run wif that disclaimer ya got whacked in as ya siggy right about now.
Cool story Brah!
Speak when you are angry and you will make the best speech you will ever regret. Ambrose Bierce
No, the default destroys it. In the event of a default the security is sold and the asset (loan) and liability (deposit) are both destroyed. Even if the recovery is 100%, the asset and the liability are both destroyed when it is wound up.
A write off would be an abnormal loss.
If by default you mean a complete inability to repay then yes, but a default can just be a late payment in bank speak.
A complete write off would be abnormal for a home loan. The security and LMI stops the bank from a complete loss, but partial losses are very possible.
For a business loan secured against a company's trading record, a 100% write off or close to it, isn't such a rarity especially in the corporate lending space. Westpac almost went under in the nineties. Had some problems in the Eighties as well.
Take risks - if you win you will become wealthy, if you lose you will become wise
The theory is that increasing the money supply creates inflation and decreasing the money supply creates deflation. Winding up those loans would have contracted the money supply and caused deflation. Luckily the BoJ listened to wiser heads in the West and Zombified their banks, avoiding two decades of deflation.
Oh wait ....
Nice. The irony is that many of those banks are now some of the most secure in the world, even though they can't give money away.
Actually it's called a ledger but I doubt you've got the smarts for it.
You mean like I owe you $100 so you think you have $100 and borrow another $100 against it?
But I can't ever pay you that $100 so you end up owing $200 to someone who thinks they have $200 and has borrowed another $200 against that?
That kind of ledger?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
If by default you mean a complete inability to repay then yes, but a default can just be a late payment in bank speak.
I thought these days mortgage loans were "impaired", or "in-arrears" or "non-performing" rather than the "D" word. At any rate, yes, by default, I mean a complete in-ability to pay.
Quote:
A complete write off would be abnormal for a home loan. The security and LMI stops the bank from a complete loss, but partial losses are very possible.
Of course. However, even if the recovery of the principal is 100%, both the loan (asset) and the deposit (liability) cease to exist. Therefore money is destroyed.
Quote:
For a business loan secured against a company's trading record, a 100% write off or close to it, isn't such a rarity especially in the corporate lending space. Westpac almost went under in the nineties. Had some problems in the Eighties as well.
These days banks technically have an almost infinite line of emergency credit with the RBA, and the RBA is unconstrained in it's lending regardless. In an emergency, the banks could wrap up all of their impaired mortgages into junk MBS which the RBA could buy, solving any liquidity problem.
Terry
22 Nov 2016, 12:40 AM
Nice. The irony is that many of those banks are now some of the most secure in the world, even though they can't give money away.
For those who do not understand science and technology, and it's deflationary effects, the modern world must be truly puzzling.
You still haven't explained how the rape of our resources by foreign companies, utilising if we are lucky 1.5% of our workforce is to translate into higher house prices for you.
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
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