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Post by jewbird on Jul 3, 2007 4:41:46 GMT -5
People are greedy and stupid?
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Post by j3aN62 on Jul 15, 2007 9:34:52 GMT -5
Why would a bank care? Most of the "money" it lends doesn't exist, so it faces no real loss... And the bank earns money from the interests paid monthly.
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Post by j3aN62 on Jul 15, 2007 15:19:33 GMT -5
Yes initial fee, plus the monthly payment : management fee, interest, principal. All that is money for the bank. And in case of foreclosure, I think they take a large fee also.
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Post by j3aN62 on Jul 16, 2007 7:30:42 GMT -5
I made myself this comment also that since the bank do us a favor by lending money (made of thin air), it's just natural we pay interest on that thin air they could have used otherwise. And insurance, in case of payment default also. Damn good business.
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Post by jewbird on Jul 16, 2007 8:50:09 GMT -5
A) All money is fiat money. B) If you don't like the mortgage terms, save up and pay cash.
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Post by j3aN62 on Jul 16, 2007 9:48:58 GMT -5
But the loans are not even fiat money any longer. If all the customers would go to the banks to get their money in paper money, the banks would not have enough paper money.
And also the banks have a monopoly on loans. The system is completely centralized. And the real estate market is artificially high also because of the loan system. In fact everything is too expensive compared to the salaries.
Very few people profit of the system.
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Post by viruslabrat on Jul 16, 2007 23:20:14 GMT -5
I think the Australian government should get rid of negative gearing. That would stop house prices climbing out of reach of people in my generation and younger and possibly cause them to fall. I really think the huge growth in the popularity of property investment these last few years is the reason why house prices have sky-rocketed.
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Post by jewbird on Jul 18, 2007 16:24:51 GMT -5
My proposals: 1) Outlaw usury. Mohammed (pbuh) and Christ both opposed usury, while under Judaism it is tolerated but only onto Gentiles. Some variant of interest-free / Islamic banking could be applied. Under Islamic banking, for example, a borrower would approach an Islamic bank to buy a car. The bank would buy the car, then re-sell to the "borrower" at a marked-up price (say 20%), requiring the "borrower" to repay the bank in instalments. The 20% mark-up is the bank's profit. If the "borrower" fails to repay, he loses his collateral. You still end up with a functioning banking system, but without the problem of usury, e.g. having total debt exceed money in supply due to the exponential effect of interest rates on debt. How is that pragmatically different than the current system? Why shouldn't people be allowed to purchase multiple properties if they can afford it and want to?
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Post by jewbird on Jul 24, 2007 6:10:13 GMT -5
Still not sure as to the definition of legitimate profit on lending vs. usury. Interest rates aren't that bad for most people and the rest have no business taking out a home loan anyway. As to outlawing people buying more than one property, that's just stupid on the level of limiting people to owning just one pair of socks.
I can understand that there's economic angst amongst younger people who make f***-all for pay. According to random jerk-offs who kept telling me to get a job, you need to have a positive attitude and "soft skills."
If you get that down, there's enough slags from broken homes who party a lot in London that you needn't ever get a place of your own.
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Post by j3aN62 on Jul 24, 2007 7:05:04 GMT -5
Still not sure as to the definition of legitimate profit on lending vs. usury. Interest rates aren't that bad for most people and the rest have no business taking out a home loan anyway. Interest rates might even look a bargain, since people were so used to pay high interest rates. But the point is that even a low interest rate from money out of thin air makes a huge profit in the end. And again, result is that the real estate prices rise artificially. You don't really understand the situation in Europe. In the US it's still possible to have a reasonable rent, but in Europe it's getting crazy in the large cities. Also if one wants to hold on a job, one cannot live in worn out places.
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Post by j3aN62 on Jul 24, 2007 7:10:16 GMT -5
[ It's now at the stage that hardly anyone (who is not a property investor) can afford to buy even a one bedroom flat the size of a shoebox without lying on their mortgage application to get a mortgage 8 times their yearly wages. A small minority is getting fat whilst normal people can't even afford a place to live. So true. I made myself this comment that it's part of the trick to have people work like slaves. If they just want to have a decent place they'll have to work at max for their employers, for just enough to pay the rent.
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Post by j3aN62 on Jul 24, 2007 7:44:42 GMT -5
To make things more real, let's just talk figures. In Paris if one wants to rent a studio, very average one (note that average price you'll get a hundred applicants), it's about 800 euros.
And you need to make at least 4 times that amount in a secure job to get accepted. Yes, so maybe earning 3500 per month just to rent a studio. And I think London is more expensive.
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Post by jewbird on Jul 24, 2007 8:18:57 GMT -5
Interest rates might even look a bargain, since people were so used to pay high interest rates. But the point is that even a low interest rate from money out of thin air makes a huge profit in the end. And again, result is that the real estate prices rise artificially. From the buyer's perspective, it shouldn't matter what the reserve ratio of the banks is or how much profit they make. As long as the rate the buyer pays is low and prices are reasonable, they're willing to go in. That's exactly what happened and hence, prices are now high. Nothing artificial about that unless you argue that the banks pump money into the real estate sector first. They do, but only when conditions are favorable for borrowers. Also, I can't imagine what form of collateral they would prefer to loan against than real estate. The expense of rent in large cities is probably due to all the people. If the internet is accurate, the powers that be are working to fix that as we speak.
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Post by j3aN62 on Jul 24, 2007 9:30:52 GMT -5
From the buyer's perspective, it shouldn't matter what the reserve ratio of the banks is or how much profit they make. As long as the rate the buyer pays is low and prices are reasonable, they're willing to go in. That's exactly what happened and hence, prices are now high. Nothing artificial about that unless you argue that the banks pump money into the real estate sector first. They do, but only when conditions are favorable for borrowers. Also, I can't imagine what form of collateral they would prefer to loan against than real estate. I think Kevin and I are the only ones who have more or less grasped the 'thin air' mecanism. I don't think you have understood it yet. For the banks it wouldn't matter if the real estate prices would double tomorrow. In fact the more they lend, the more money they make ! But for the average worker who doesn't see his salary changing much, it's another story.
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Post by jewbird on Jul 24, 2007 15:36:43 GMT -5
From the buyer's perspective, it shouldn't matter what the reserve ratio of the banks is or how much profit they make. As long as the rate the buyer pays is low and prices are reasonable, they're willing to go in. That's exactly what happened and hence, prices are now high. Nothing artificial about that unless you argue that the banks pump money into the real estate sector first. They do, but only when conditions are favorable for borrowers. Also, I can't imagine what form of collateral they would prefer to loan against than real estate. I think Kevin and I are the only ones who have more or less grasped the 'thin air' mecanism. I don't think you have understood it yet. For the banks it wouldn't matter if the real estate prices would double tomorrow. In fact the more they lend, the more money they make ! But for the average worker who doesn't see his salary changing much, it's another story. I understand the thin air concept, just not why it matters. Unless you propose to go to the gold standard, (which has its own problems) currency is going to be created either by a central bank or a national treasury. If the price of real estate doubles tomorrow, people must be willing to go into twice as much debt to purchase it. That's what really limits banks' profits is people's willingness to take out loans. If most workers can't afford the mortgage payments, hopefully they won't buy it. Meanwhile rental prices seem to me to be relatively stable and there's really nothing wrong with that. Rental prices seem to remain relatively stable.
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