Mallory

been reading the Daily Fail too much!

bil

Apparantly the Fench market isn't suffering as they were very heavily regulated, unlike ours which have been getting more and more deregulated with every governmental turn.

It's no good the Tories being smug, becase IMO they were the ones responsible for setting us on the downhill road with a vengeance.

Ayone who fights bank regulation needs shooting.

Justlookin

It's a coming to them too - see problems with eurobank Dexia which is causing French Government concern.

It appears that they are fairing pretty well though because they have apparently always been pretty tight on credit. Their credit cards (French that is) are little more than debit cards according to one story I have read and big mortgage loans have been very difficult to come by.

There are of course several European countries where renting has been the norm for a long time and I would expect those countries to fare better than most

bil

Question is, how bad. Or will they mostly dodge the bullet?

Justlookin

According to the BBC News tonight no one is going to dodge the bullet unless living in a jungle and they get the benefit of real bullets or blow darts.

I suppose at least they don't have to sit and wait to see if it happens.

twyntub

I'm sure the stockmarkets will take the news very well...

Anyone happen to have $700bn lying around?

Solarwhizz

Yes, but the point is as people default somebody has to pay, so that would be the insurance Co, which is probably underwritten by a bank somewhere which insured with another company somewhere which borrowed the money from another bank somewhere, who then insured the loan with another bank and so on, oh the last bank in the Chain was probably B&B ( doesnt this sound like a chain letter, ?? hmmm perhaps thats where all the money went to the first few people who got into it!!..) SO If you all send me 1 Euro, I will invest it in Spanish property and in 4 years when I sell the property(oh and pay off the mortgage with the other money I am gonna borrow) I will pay you all back 40 times your investment. Please send this on to 1 zillion of your friends and we can all get rich """"promise"""
Absolutely rolling about with Lol

stanage2

Thank you for that.

encodeme

The obvious solution is for a sub-sub prime mortgage market to underpin the sub-prime market.
Maybe sell mortgaes to rabbits...all those burrows need.......

Solarwhizz

I love financial experts who combine innovation with nerve!!

steviedeluxe

Why Spanish banks (to an extent) have weathered the economic conditions better than their British counterparts:

santanderbank

In the early 1990s it avoided a banking crisis that forced Spain's central bank to rescue mortgage lender Banesto. Santander bought Banesto at a knock-down price and became a major institution.

After the dust settled, the government forced banks to keep a higher ratio of capital aside to cover bad debts. In the UK, banks typically make provisions to cover 80-100% of their bad debts. In Spain, banks must cover 150% of bad debts.

The Spanish government also prevented banks from disguising the level of their liabilities that are housed in off-balance sheet vehicles. By contrast, UK banks sold and run mountains of mortgages off-balance sheet, and to avoid tax, usually offshore.

Spanish mortgages are also rarely sold to cover 100% of a property's value. In the main, homebuyers must find a 20% to 30% deposit. Discounted teaser mortgages, which have become the staple of the US and UK mortgage markets, are also little known in Spain.

So while Spain is suffering a steep property price crash and is already in recession, only the smaller regional banks that account for the majority of mortgage lending are in trouble.

twyntub

There are plenty of examples of mortgages >= 100% LTV. It entirely depends on your definition of V!

steviedeluxe

You're right of course. The value of a house is really only what someone is prepared to pay for it (either outright or long-term by rental). It's not stopped the FT of all papers praising the Spanish way as one for UK banks to emulate:

ft article

I think the sad truth is that standards in UK banks/mortgage lenders have slipped over the last 20 years. IMO it started with the demutualisation of the building societies.

poshnbucks

Did all this start with those orrible French well maybe it did.......They are pushing to trouser a big big pocket full of EU cash to prop up their banks.......Heres a potted history of how it all began...............


http://news.bbc.co.uk/1/hi/business/7521250.stm

twyntub

Mmm... Mutual societies bad. Shareholders good...

Don't share the burden of mortgages amongst likeminded savers and homebuyers... Take this nice £2,000 bribe and hand over your building society to some clever people in the City.

Take the money. You know you want it... You can buy that new bathroom you always wanted or take a holiday... Don't worry about the long term effects and the fact that it'll cost you much more in the long run...

Remember, the market knows best!