So ....the Banks are getting real?

LETHAL LADY wrote: »

I still to this day cannot understand why financial institutions with staff trained in finance, economics and the rest, lent money to people who obviously, in the medium term could not afford it, can someone please explain this to me, because I reckon there is a case to be made on the part of the borrower.

To put it very simply the banks were using the mortgages they had given as assets. The more risky the loan the better for the bank as their projected income from it would include the higher interest rates they had applied due to the risk, thus increasing the "value" of the asset over its lifetime. The borrower was not really important because in a housing boom there were always more borrowers to buy repossessed houses. What was important was getting assets on the bank’s balance sheet. Especially come bonus time.

Also when deciding on the risk of potential defaults, bankers really only looked at the Irish property market for the last decade or so. As prices kept increasing they figured that even if someone did default the bank would be left holding a property that had increased in value. The potential dangers of an overheated property bubble were ignored or effectively downgraded.

The fact that most banks didn't bother to set aside the minimum necessary capital and reserves to service these debts as well as wildly underestimating their insurance risks in case of default, demonstrates how greed motivated them. This is because any money set aside would have reflected poorly on the bank's balance sheet and pointed to how risky their “assets” actually were.

Obviously though, traders could see that debts of this nature would be quite hazardous to buy so the banks would amalgamate these "filler" assets with more stable and established debt assets and sell these as complex packages rather than separately. Bankers went out of their way to ensure a lack of transparency was the industry standard. They routinely disguised losses and inflated their assets. They conflated potential risk and potential earnings until one couldn't separate them, all in the name of profit.

When I hear politicians whining that bailing out people in negative equity is a bad idea due to "moral hazard" I can't help to agree. Moral Hazard is a definite, almost palpable consequence of handouts. One need only look at the banking industry's record of sticking the taxpayer with their debts again and again, to see that those greedy cretins learn nothing the more they're bailed out.

Why it's so risky to do the same for normal homeowners I can't explain. It's not like they could be any worse!

gbee wrote: »

And not paying the banks is a best option IMO. They will survive or regroup or emerge again under a different name.

YOU, as in you personally who owes them money, might not survive s dose of flue that goes to Pneumonia because you can't afford a doctor.

or your children are deprived of a good education, YOUR own children, I think the people have their priorities just right, that's my own opinion.

So those children who do not attend fee paying schools are being deprived of a good education?

gbee wrote: »

You have to ask?

Obviously yes since I asked.

In my experience as a university lecturer I see no evidence that those who went to fee paying schools have any notable educational advantage. In the case of those who went to expensive so-called 'Grind' Schools I noted a dis-advantage as the obsessional rote learning system employed in such schools rendered their pupils nearly incapable of independent thought or critical analyse of any kind.

What I also noticed was a greater sense of entitlement among private school pupils and an unwillingness to put in the work - something State school pupils did not appear to suffer from to the same extent.

Now, I went to a fee paying school - my son didn't as quite honestly apart from the social cachet attached to such schools which appeals to the snob factor they do not perform better then State Schools - something that has been borne out by international studies.

Free schools outperform fee-paying schools

SEÁN FLYNN, Education Editor

PRIVATE FEE-PAYING schools in Ireland are performing no better than their counterparts in the “free” State sector, according to an international study.

It concludes that parents who spend more than €5,000 a year on fees in private schools are receiving no additional premium for this investment.

The report by two Israeli academics compared the performance of students from State-run and fee-paying schools in the OECD/Pisa survey of 15-year-olds in maths. It found public schools actually delivered better results when all factors, including the selective enrolment policies of some fee-paying schools, were taken into account.

The research paper concludes: “Our analysis shows that although the average score of pupils in the sample from private schools is significantly higher than the average score of pupils from public schools, the picture is reversed once the effect of the school selection is accounted for properly”.

The OECD tests Irish teenagers in maths, literacy and science to compile its international rankings of education systems worldwide. Ireland was ranked as average in maths in OECD surveys in 2000 and 2009.

Last night, Prof Danny Pfeffermann of the Hebrew University of Jerusalem told The Irish Times his research showed clearly public schools were performing better than private schools in Ireland.

Dr Kevin Denny of UCD’s Geary Institute said the results were “important for the many parents who are now struggling to pay fees for schools and wondering: ‘is it worth it?’ It is also a significant finding for teachers who work in public schools,” he said. The new findings echo the results of the 2010 Irish Times feeder school list, which tracked progression to third level.

The top feeder schools for high-point courses include several leading fee-paying schools including Gonzaga, Mount Anville and CUS in Dublin; Glenstal Abbey in Limerick and Clongowes Wood in Kildare.

However the list also indicated how “free” State schools will match or even eclipse the progression rate of some fee-paying schools if they are located in affluent areas. Community and comprehensive schools in affluent areas of the main cities all feature strongly in The Irish Times list.

http://www.irishtimes.com/newspaper/ireland/2011/0810/1224302180871.html

People are going to put paying the mortgage at the end of the queue as long as there is a moratorium on repossessions, sure why would you deprive yourself of life's luxuries when the bank can do SFA anyway. Then you can sell the Indo your story that you are an underwater struggling hard pressed squeezed middle class nouveau poor ordinary joe soap no choice but to get on the ladder or I would have missed the boat home-owner living a negative equity nightmare, and sure didnt we all go mad and aren't we all to blame and sure didn't we bail out the banks so why not us?