Image by Frantisek Krejci from Pixabay
Why Ninja mortgages could wreak havoc
In America, they call them Ninja mortgages – standing for No Income, No Job or Assets – and there is growing evidence that these sub-prime mortgages were mis-sold in their millions by lenders desperate to feed the pipeline for securitising, or packaging up, these loans by investment banks. Now legislators are looking at ways of tightening the regulations on everything from how such mortgages are sold to how they are securitised and rated by credit agencies.
In the UK there is growing evidence that sub-prime and self-certification mortgages (which do not require proof of a borrower’s income) are being mis-sold, albeit probably not on the scale seen in the US. But so far it has hardly been remarked on, never mind subject to official investigations. That may be because, unlike in the US, our house prices are still rising, so borrowers in difficulties can always sell up.
Anytime these banks come up with a way to “help” people, it never seems to help anyone but the banks themselves. It’s one thing to point to frivolous YOLO spending – it’s another thing altogether when people are using BNPL services for basic survival necessities.
The bill always comes due. For countries with mountains of debt as well as individuals with mountains of debt.
The US economy is based on consumption rather than production. So what happens when the consumer can’t consume? Will hiking interest rates to the moon really solve the problem?
“The idea there being that, instead of always focusing on consumption, we need to be producing something, too. This is why I say who somebody is having consensual sex with, what they eat for lunch, what kind of exercise they take – that’s not important to me. Someone’s policies, however, matter a great deal, and we’re still living with the ramifications of all that a decades later. Oh Sara, you’re just some kind of Kennedy apologist. Call me that if you want to. I’m just pointing out that the chickens have come home to roost. How are you going to drive an economic engine that’s like 70% based on consumption when the consumer can’t consume any more – when they’re in debt up to their freakin’ eyeballs? Think about it.”-“The economy ‘doesn’t add up’ on purpose!” https://www.buzzsprout.com/1125110/14704980
Going on this constant yo-yo cycle of inflation/recession, boom/bust, QE/QT, etc., is like yo-yo dieting: losing some weight and then gaining it back with more. It never solves the underlying problems of rampant Crony Capitalism, a rigged system, and an economy based on debt and consumption rather than manufacturing and production.
Go back to bed, America. Your government has figured out how it all transpired. Go back to bed, America. Your government is in control again. Here’s American Gladiators. Watch this, shut up. Go back to bed, America. Here is American Gladiators. Here is 56 channels of it!