Where's me money Gone.!!!!!!!

As a financial simpleton I am a bit puzzled .

The banks e.t.c. have lost many billions of our money.

So where is the money they lost,it must be somewhere unless it never existed in the first place.

In which case we have lost nothing.?

I know this is simplistic,but if I loose something it usually ends up somewhere else.:|

So where the fuek is me dosh.?

Earl

 

[website]

i stole it all all 50p of it

 

[Fergus]

I have to say I was saying the very same thing only last week-perhaps it was abducted by aliens !

 

[An Oasis]

It never existed in the first place. But if you have a chat with that odd nutter who saved the world, he'll conjure something out of thin air for you.

 

[estwig]

It's in the bathroom cabinet, next to your Steradent!!

Where you left it!!!

 

[Tej]

Nah!.. the wife took it for her own bit of SEO ( Seriously Expensive Outing)

 

[JustOneUK]

I know this is simplistic,but if I loose something it usually ends up somewhere else.:|

Earl, Normally when YOU lose something it's in the OTHER hand!

 

[Robs]

They invested it in mainly American mortgaged backed assets. i.e houses, property to people who could not afford a mortgage and generally have bad credit history or severe credit history called sub prime.

what some financial institutions did was to build up a mortgage book of clients and then sell it on to other institutions, so you had these bad assets being sold and sold going round in circles. This where the mistrust came from on the wholesale financial markets (where your bank goes to lend to you or did as the case maybe) Wholesale markets started distrust the banks balance sheets so they stopped lending to them and the banks could not make money from new mortgages, loans.

this where it gets a little tricky
So the banks cant get credit from wholesale markets so they become more reliant on the bad credit history mortgages(sub prime) but with the increase in interest rates in late 07 early 08 they started to default on them.

Then the banks mortgage assets started to lose value. it is this value of there books where being questioned by investors, the stock market and so sent share prices down on banks share price. This made them less attractive to the investors so in turn no cash flow, no cash flow no business. to add to the problem savers started to shift monies about so they would not go over the compensation level.

They also invested other investment funds, which 1 or 2 where frauds. Rbs lost £3 Bill to one of these from the caymen islands and person who owned the fund sponsored English cricket last year or year before. cant remember his name.


but the main reason they lost so much money did not do proper due diligence and did not understand the risk.

 

[.Spiralling.]

that tells us how they lost the money, but it doesn't (in the main) answer the question "where is the money now?"

 

[cjd]

that tells us how they lost the money, but it doesn't (in the main) answer the question "where is the money now?"

The money is lost. The banks gave it to people who couldn't pay it back to buy assets (houses) that are only worth a fraction of what they used to be.

In the meantime every time one of the re-packaged mortgages was sold on, the bankers took a %. The same mortgage was sold many times so many % were taken. Then they all paid themselves bonuses for being so clever.

Think of it as pass the parcel, everyone ends up with paper except one who wins the prize. But in this case the paper is dollar notes and the prize in the centre is a pile of pooh.

 

[Robs]

In assets that have very little value at the moment!

you need understand they invested(bought) the money in mortgage book assets for example lets say £3bill , those assets have been revalued and worth £1 bill at current market value but cant sell them on because no-one wants to buy them in-case the value drops. So to simplify it the money is stuck in assets that have made a capital loss.

 

[needaprint]

its all a figures game...money is not worth the leg it stands on really. lets face it - if we do a bank transfer of £100 from my account to your account...does anything physical move? no - just a number on a computer system. do they have all this money everyone has in their bank accounts phsically available - no. its a broken system from the top down.

 

The money is lost. The banks gave it to people who couldn't pay it back to buy assets (houses) that are only worth a fraction of what they used to be.

In the meantime every time one of the re-packaged mortgages was sold on, the bankers took a %. The same mortgage was sold many times so many % were taken. Then they all paid themselves bonuses for being so clever.

Think of it as pass the parcel, everyone ends up with paper except one who wins the prize. But in this case the paper is dollar notes and the prize in the centre is a pile of pooh.

So let me get it straight.:|

The money has been converted into property and not been lost.?

One assumes as in every property crash in history.The property market will recover and we all get our money back.

Just like my long suffering daughter did when she bought a flat for 60k and in a few months it was worth 37k,so she let it for 10 years and got all her money back when things recovered.

I am sure its not that simple,or rather I will be told its not that simple or maybe they have lost all the houses.

The money is therefore not gone unless someone nicked it then.

In which case it is still somewhere.Where's FRED.?:|

From my little knowledge of science Money can't disappear unless it is destroyed or nicked.?

Earl

Earl

 

[AceAce]

I have no idea about all this but i think what they are trying to say is something that may of been worth 300k is now worth 150k, the money hasnt gone anywhere, its just lost value (dont take the piss if thats wrong )

i like this 1,000,000,000,000 USD thats meant to save us all, forget where the money has gone, where are they getting that from?

 

[needaprint]

in that case of money appearing - its all virtual figures again - its printed on a printing press on paper that is worth nothing but by the time it has reached the guillotines, etc it seems to be worth something!?

 

[i234i]

**** the bankers, just give back and get rid!
stop flooding northern rock, give people money and they can put it somewhere else.

 

[JustOneUK]

(is this a crap idea?)

The banks lost billions so why not print it and give it to the banks, that would save it coming from the taxpayer. Then as the banks turn the new money onto profit (because the markets will go back up - they always do) then the printed money gets paid back and taken out of circulation. You and I lose nothing, banks have the money to lend to business, we can still actually make some interest on our savings and we all live happily ever after.

 

[Robs]

So let me get it straight.:|

The money has been converted into property and not been lost.?

One assumes as in every property crash in history.The property market will recover and we all get our money back.

Just like my long suffering daughter did when she bought a flat for 60k and in a few months it was worth 37k,so she let it for 10 years and got all her money back when things recovered.

I am sure its not that simple,or rather I will be told its not that simple or maybe they have lost all the houses.

The money is therefore not gone unless someone nicked it then.

In which case it is still somewhere.Where's FRED.?:|

From my little knowledge of science Money can't disappear unless it is destroyed or nicked.?

Earl

Earl

Yes in short the money has been converted into property but that property has lost its value, the person with the mortgage has defaulted been repossessed, now properties in America are boarded up. no buyers because no credit, value of property de values because there is no demand. its Catch 22

in theory they may get the some of money back if they start to sell the property but i don't think they will get the full value of the mortgage's at time it was taken out.

Banks stuck cant sell assets, no cash to lend to you to make a profit. Hence they need bail out to tide them over for exchange of those bad assets.

In theory someone has nicked it in terms of unsecured and part of mortgage lending is the people who default and go bankrupt, now way of recouping monies for unsecured. its bit old fashioned way of looking at it.

Banks did not keep in line with the old capital adequacy rules i.e for building societies these still exist that

25% of capital can be invested in commercial loans
and they must have at all times 50% cash adequacy in their accounts for all their liabilities(loans,mortgages) Basel II example for 1m in loans they should have 500k.

Banks only need 25% cash for all liabilities. even then they did not stick to it. Except for lloyds as they kept to a old model of doing business, I bet the chairman regrets the day he met Gordon brown to bail out Hbos

Now banks are trying to get there capital adequacies up to a decent level, the Government are sending out mixed messages by saying banks must lend but through fsa they tell them you must get your capital adequacies levels up, so now they cant lend as much. its this that politicians are keeping from Business people.

 

[Robs]

(is this a crap idea?)

The banks lost billions so why not print it and give it to the banks, that would save it coming from the taxpayer. Then as the banks turn the new money onto profit (because the markets will go back up - they always do) then the printed money gets paid back and taken out of circulation. You and I lose nothing, banks have the money to lend to business, we can still actually make some interest on our savings and we all live happily ever after.

We did three-four week ago, you probably heard it called quantitative easing. but except in exchange for toxic bad assets, until the day the banks pays the money back.

 

Yes in short the money has been converted into property but that property has lost its value, the person with the mortgage has defaulted been repossessed, now properties in America are boarded up. no buyers because no credit, value of property de values because there is no demand. its Catch 22

in theory they may get the some of money back if they start to sell the property but i don't think they will get the full value of the mortgage's at time it was taken out.

Banks stuck cant sell assets, no cash to lend to you to make a profit. Hence they need bail out to tide them over for exchange of those bad assets.

In theory someone has nicked it in terms of unsecured and part of mortgage lending is the people who default and go bankrupt, now way of recouping monies for unsecured. its bit old fashioned way of looking at it.

Banks did not keep in line with the old capital adequacy rules i.e for building societies these still exist that

25% of capital can be invested in commercial loans
and they must have at all times 50% cash adequacy in their accounts for all their liabilities(loans,mortgages) Basel II example for 1m in loans they should have 500k.

Banks only need 25% cash for all liabilities. even then they did not stick to it. Except for lloyds as they kept to a old model of doing business, I bet the chairman regrets the day he met Gordon brown to bail out Hbos

Now banks are trying to get there capital adequacies up to a decent level, the Government are sending out mixed messages by saying banks must lend but through fsa they tell them you must get your capital adequacies levels up, so now they cant lend as much. its this that politicians are keeping from Business people.

So where's all those record billions the banks made during the many,many good years gone.?

I think they should send them to China for trial.

Then we would not have to worry about bankers.

Question is will anyone ever have any confidence in banks again.?

Earl

 

[Robs]

**** the bankers, just give back and get rid!
stop flooding northern rock, give people money and they can put it somewhere else.

in a way your right, there was an article in Financial world written by the one of the directors of Coop bank saying that for a bank bailout to speedy it need to be from bottom up and not top down like it is currently, he said if every individual in the uk was given 5000 pound bond to put into a bank of their choice, it would instantly capitalise the banks. you'd gain interest from it. from this interest you would spend in turn reviving the economy.

 

[Robs]

So where's all those record billions the banks made during the many,many good years gone.?

I think they should send them to China for trial.

Then we would not have to worry about bankers.

Question is will anyone ever have any confidence in banks again.?

Earl

They spent it Earl
They either lent it out to the public either are paying it and some people who have not paid back(defualted) or they spent it on sub prime mortgage lenders or bought series of mortgage books outweighing what the have got in the bank, and the bank borrow hoping that they would make a mint from rise in value but it went up like a bonfire of money and they only managed probably saved third of it.

Yes people will get confidence again as long the fsa has got teeth and the bankers are separated from politicians. Cough cough Gordon, Fred

It seems at the moment that fsa has only got teeth with advisory firms, as they can shut them down but they can hardly shut down a bank.

 

[derek_mcgilvray]

@Robs
The cricket fraudster was Stanford!

So he's taken all the money?

 

[UKSEOAgency]

I agree - put the money into those people who have no / little money and bad debt - perhaps with a view to bringing down the overall lending / cash boost into the economy!

You will find these people would be greatful, but as they are poor with there money (or why would they have bad debt) they would instantly spend it straight into the pockets of small business, who would bank the money - or the end consumer may pay off some of the bad debt!

 

[Robs]

Derek not all the mone, there has been a couple others cant say don't think that a particular persons has been convicted yet so will have to leave you guessing.



Ukseoagency Yep if the government had done that it would of taken a matter of weeks- a few months to bail them out, not few months/years as with the current model of quantitative easing (cash injection) from issuing a money at the top as it takes longer to administer,filter down to the branches and generally only can be given when the banks are at the brink of collapse, so cost the tax payer more to save the banks.

 

[Focused]

It's gone towards paying MP's expenses!

 

[Robs]

It's gone towards paying MP's expenses!

Arrrrrrrrrrrghh! lol who know's would not surprise me.

 

[Techy]

I'm not a money person but as far as I understand venture capitalists have a good deal of it and they are sunning themselves till the storm is over, when they will buy all the apparently dead businesses for peanuts.

I watched a programme on BBC2 about 6months ago and the VC's had deals with most banks to make them loads, as the banks could not directly trade on such potential losses, however if the deal fell through the banks took all the hit.

Some VC's apparently made £100's millions per year doing this.

I know what my next course is on!!!

 

[FireFleur]

Oh bonds for the people, that is the right way to do this.

Get the bonds in, and make the banks work correctly. 1 decade on the bonds before they can be cashed, and accelerated interest on the first two years to be available from day one.

A lot of the money is tied up in corporations, they will commission a project from another corp and vice versa shuttling money around at the top, which is not great for an economy but it makes it look like they are using the money. They are not really they are keeping it in their organisations, on reciprocal deals.

Quantitative easing will punish them, but will also punish savers, but it will help with exports shame we don't produce too much in this country.

Bonds to everyone is the quick way to do this, don't give it to the banks for them to spend, they just don't spend.

 

[johndennisclarke]

It's always in the last place you look. So only look in one place and it will be there.

 

[Colin Parker]

Just skimmed this thread so forgive me if this answer to 'where has the money gone' is a repeat.

This is a simpletons guide - for I am one myself.

Firstly 'money' is effectively the same as newspapers, toilet rolls or kleenex except that it has the Queens head on it ie., it is paper, and in reality it has no value.

The value of that 'paper money' is effectively based on how much someone else thinks it is worth in exchange for what they want to exchange, sell or buy.

Just think, if you paid 'cash' you could have bought a £1 million pound house with the equivalent amount of paper that would have kept a small town wiping their a**e's for 10 years. A sobering thought.

Now, after the credit crunch and recession, you would only need enough paper to cover 7 years of a**e wiping. An even more sobering thought.

Before the credit crunch lenders thought that property prices would keep on rising and that lending to high risk borrowers at low interest rates was not risky because if they defaulted the house would always be worth more than the amount borrowed.

This naive lunacy led to a huge surge in house prices, this in turn created huge equity, which in turn led the man in the street to think he was 'rich' and he went on a huge credit card funded spending spree.

When he/she/they could not afford the monthly payments they took out loans secured against the equity in their house which the naive lunatic lenders thought was 'safe lending' because house prices would keep rising and the house equity would alwys be worth more than their debt, blah, blah, blah.

And then ... loads of borrowers ran out of toilet paper ... or money as it is also called. They had no toilet paper to pay their mortgages. Oh s**t.

That caused property prices to go into freefall and the equity in property - which was always a fantasy amount unless you sold your house and actually banked it - collapsed and along with it so did the 'security' that the lenders were 'banking' on.

So where has the money gone?

Nowhere, because it was never there in the first place.

There ends the simpletons guide to the world of finance.

 

[Dominic Taylor]

The toilet paper analogy is, er, an interesting one. I don't want to say it as it's a little crude but if a growing portion of people keep passing round a limited supply of bog roll, you know what the end result will be...

Bankers will always find ways to invent money, and for a few years nobody cared because the value of their house was going up and up and up....

 

[candy]

Money was lost at somewhere we can't find out

 

[movietub]

Money itself doesnt really exist, its not tangible. Its a medium for trading.

So instead of 'I give you by daughter for a bunch of bananas and that donkey'

Us modern people say 'I give you by daughter for £500' and providing she is not ugly and you get the money you may spend it on donkeys and bananas, likewise you may wish to buy something completely different.

But the principal is the same now as ever. It doesnt matter how much money is in the world, if you are not prepared to work or sell your daughter you will get no money and starve.

So what I'm saying is who cares about recessions? If you need some more money go and be productive and earn some. If you don't need some then it hasn't affected you anyway!

 

[stugster]

So what I'm saying is whowants to buy my daughter?

 

[movietub]

lol - I don't actually have a daughter, but I have the cash should I see one I like

Offers by PM only please. No ugly ones.