Forum menu
FYI I am not sure why you'd borrow money to invest in RBS/Lloyds using long term gilt rates of 4% when you are pretty damn sure that rates are going to be low for a long time.
I doubt they were sure of anything at the time, but as the analysis does not depend on this rate it doesn't really matter. Arguably I have been too kind to you because I should have used a zero coupon curve as I shortened the average life to take into account the partial repayments and interest. This would reduce the funding rate by a further 12bps.
a) you almost certainly are wrong and
b) why on earth are you so keen to prove that the worst recession since the 30s is somehow a good thing, unless you work in PR for a bank?
a) I don't see how you are so certain I am wrong about the key thing we are discussing at the moment, ie that the bank bailout was hugely (ie circa £10bn) profitable.
b) Where did I say the recession was a good thing, nowhere is the answer.
Arguably I have been too kind to you because I should have used a zero coupon curve as I shortened the average life to take into account the partial repayments and interest. This would reduce the funding rate by a further 12bps.
Why on earth would you bother will all that detail on the cost of funding when we don't know how much has been borrowed or what funding strategy they used in terms of maturities. Focus on the big stuff eh ? In any case if that was the result you'd be helping my argument as overall CoF would be less. As an aside not sure how much you've followed various threads on here but I have a Mathematics under and post-grad degrees and started my finance career as a trading desk quant at Goldman so a bit of bond maths is right up my Sta?e. Even less relevant was I worked as a trader in New York in the late 1980's with Dan Sparks who rose to head of the mortgage department and was featured in @gofaster's linked film when he appeared before the Senate committee.
I don't see how you are so certain I am wrong about the key thing we are discussing at the moment,
Because the analysis you use at the start and your terms of reference are so deliberately narrow that even if it does show a paper profit it's completely meaningless.
Like I said before if someone mugged me and then offered to refund me for the bandages plus 5%, I wouldn't consider the incident a profitable experience.
I don't see how you are so certain I am wrong about the key thing we are discussing at the moment, ie that the bank bailout was hugely (ie circa £10bn) profitable.
Well 6 days ago you started this thread claiming that the bank bailout had delivered "a profit of £14bn to the nation", that's now changed to "circa £10bn", perhaps at that rate if we give the thread another couple of weeks you'll accept that it hasn't been "hugely profitable" after all?
ah, your potted CV explains why you're so keen to defend banks and their activities and behaviour.
Why on earth would you bother will all that detail on the cost of funding when we don't know how much has been borrowed.
It is a 20 second calculation, the funding requirement is the amount injected which is shown in your OP.
In any case if that was the result you'd be helping my argument as overall CoF would be less
OMG, the final bit of my analysis was a reasonableness test. I looked at an interest bill derived from the "claimed" interest bill and compared it to the level of funding - therefore the lower the rate, the more likely the interest bill is to be right. So it does not help your argument, it does the reverse, it would appear your Sta?e is a dead end.
The "claimed" interest bill was from OBR figures, you know the independent part of government that have access to more detailed information and has statutory responsibilities. It is therefore a pretty solid foundation for any analysis.
Finally, thank you for your CV, unfortunately we have no openings at the moment.
I'm confused, the Tories told me that Labour ruined our economy by bailing out the banks, [b]but[/b] we made a profit on it??? Surely that's a good thing that Gordon Brown did then???
Get with the program bruv.........the state making a profit is [i]always[/i] bad.
That's why for example East Coast rail line had to be re-privatised after it kept making ridiculous amounts of profit every year for the Treasury.
The triumph of Tory-dogma over commonsense.
Ernie, please don't use "commonsense", it's a fallacy.
I get what you're trying to say, though.
[img] 
[/img]
Been focusing on the UKAR - UK Asset Resolution - as listed in the tables. They published their annual report yesterday [url= http://www.ukar.co.uk/media-centre/press-releases/2015/16-06-2015?page=1 ]UKAR 2015[/url]
The UKAR was the entity which took the nationalised Northern Rock and Bradford and Bingley assets. The government paid zero for these entities. The £41bn listed in the table represents loans made to replace market funding.
How the UKAR was funded we don't know but as it was nationalised it would not need capital just loans and these can be at a much lower cost to the taxpayer. UKAR does not pay interest as such but pays all cash flow to the government to reduce loan balances as fast as possible. Effectively this means all the profit is realised at the end as once all debt is repiad the government owns the debt-free business.
The annual report shows some different figures than do the OBR and Rothschild for payments to the government in taxes and fees and higher debt outstanding.
Also both OBR and Rothschild record the UKAR at book value whereas it seems much more likely the business/portfolio has a value above book. Thus more profit for the government/tax payer.
Annual profits are £1.4bn for 2014 vs £1.25bn for 2013. Pretty decent and these are of course taxable but in any case belong entirely to the tax payer.
Taxes and fees paid to the government where £4.4bn in 2014 and £5.6bn in 2013 = so a total of £11bn in two years.
UKAR has been selling mortgage loans at a profit (£55m profit last year) and plans a much larger sale this year I imagine after having successfully and profitably tested the market in 2014.
Overall I think the profits both current and future from the UKAR bailout are higher than shown in the tables. Also the funding cost of the support would have been much lower than for RBS and Lloyds equity stakes.
I still don't reconcile a £17bn funding cost.
Surely that's a good thing that Gordon Brown did then???
Yes, bailing out the banks was a good thing to do. Not popular but correct.
JY apart from betting Man U would finish out side the top 4 I can't think of an argument on here with you I've been on the wrong/losing side of ? So given how poorly you think my arguments are constructed you've done a mighty poor job putting your side, no ?
We are going to make £10bn plus net of costs on the bailout and we've avoided a much worse outcome had we not bailed out the banks. We are not going to make as much as they've made in the US, partly as their bailouts where much larger and partly as government policy has focused on bashing / taxing banks instead of maximizing the value of the taxpayers stakes which is what they did in the US
Anyway off to the pub, will check in again later 8)
We are going to make £10bn plus net of costs on the bailout and we've avoided a much worse outcome had we not bailed out the banks. We are not going to make as much as they've made in the US,
Disregarding your fluctuating figures for a moment... when you return in a wobbly state with a few less braincells, any chance you can you define 'we' and 'they' please?
Say for example the many people in the US who lost homes to foreclosure in the [url= https://en.wikipedia.org/wiki/Subprime_mortgage_crisis ]subprime mortgage crisis[/url], are 'they' now rolling it in?
JY apart from betting Man U would finish out side the top 4 I can't think of an argument on here with you I've been on the wrong/losing side of ? So given how poorly you think my arguments are constructed you've done a mighty poor job putting your side, no ?
The other conclusions that can be suggested is its impossible to convince you that you are wrong and/or even when you are wrong you fail to see it or acknowledge this no matter how many posters suggest it.
Perhaps you can re read some threads and decide for yourself as sometimes you are the only person who thinks you are correct, or even has that view, and the overwhelming majority are disagreeing with your view. I would cite this thread as but one example of this.
What about the recent thread where you claimed that Knights "protected" the queen
Knights are there to protect the Queen. Seems quite normal for her son to be made one. I can't see what the fuss is.
Really you think this is what Sir do today?
FWIW you are also claiming harry is her son in that post.
http://singletrackworld.com/forum/topic/arise-sir-harry#post-6959199
There is not much point debating this with you as you never admit you are wrong and then present this as proof that you were right.
Odd to read all the aggro here - ok not really it's STW
But (1) we don't know the actual cost (yet)
And (2) a little silly to consider it in isolation anyway since that ignores the cost of not doing anything - what we economists call opportunity cost 😉
Still for some rationale analysis, one can easily look here
http://www.nao.org.uk/highlights/taxpayer-support-for-uk-banks-faqs/
How the UKAR was funded we don't know but as it was nationalised it would not need capital just loans and these can be at a much lower cost to the taxpayer
Rubbish, the nature of the asset is irrelevant to the type funding, it is always debt. Governments dont have equity, but see below.
The annual report shows some different figures than do the OBR and Rothschild for payments to the government in taxes and fees and higher debt outstanding.
Because the OBR and Rothschilds separate out the Fscs laons from the loans to fund the company. This is detailed in the accounts in note 21. So I think it is still considerably safer to rely on their figures than someone with limited analytical skills on the internet.
it seems much more likely the business/portfolio has a value above book
Why? Because they sold a small book at a profit? We have no idea of the likely outcome but it isn't going to change the analysis markedly, certainly not enough to make your case that there is a substantial profit.
Also the funding cost of the support would have been much lower than for RBS and Lloyds equity stakes.
As noted above rubbish, asset makes no difference, debt is used.
THM - thanks for the reminder, I was quite disappointed when I first looked at that page but there is some gold in the "will we get our money back section there, viz:
The money needed to buy the shares was provided by longer-term funding in the form of Gilts, government bonds on which interest is payable. If this cost of financing is taken into account, the result of the sales is a combined shortfall of £530 million
Not good
The Treasury expects to recover the cash lent to Northern Rock and Bradford & Bingley, including the loss on the sale of Northern Rock plc, and the cost of the gilts issued to fund the loans
Oh look, they fund each type of asset in the same way in contradiction to what you assert.
The money needed to make the interventions was provided by longer-term funding in the form of Gilts (interest-bearing government bonds purchased by investors for periods of up to 50 years), at a cost of just under 3% a year.
So pretty close to the rate required by my analysis, which you can't reconcile.
No doubt, despite the fact my broad analysis is in line with what the FT, the OBR, Channel 4, the National Audit Office, Andrew Tyrie think, your completely contradictory position will be right.
Junky is right, you are just a right wing TJ.
JY apart from betting Man U would finish out side the top 4 I can't think of an argument on here with you I've been on the wrong/losing side of
😆
You're wrong about pretty much everything - just shows what a deluded fantasy world you live in.
Hi grum thanks for coming to play 🙂 Scottish Referendum, threat of UKIP to Labour, General Election 2015 ? What side of the argument was I on, fantasy world ?
Nice catch JY, should have been grandson of course but the meaning remains valid IMO. Is that the most significant one you can find, there must be others surely 😉
@mefty there are many ways to provide support, the asset guaranty scheme didn't require debt. The government could support UKAR with guaranties. We don't have enough information to calculate the cost of the funding, it would be nonsensical to have funded run-off loan portfolios like Northern Rock and Bradford and Bingley with long term debt. Your funding strategy should always be with reference to the type of asset being funded, or not funded if using guaranties for example. I'm happy to let the job market decide on the merits and value of my analytical skills.
@nick just trying to put the other side of the argument.
In 2009 Labour estimated the bailout would lose between £20bn and £50bn, now on the same basis we have the Tories are projecting a £14bn profit. No doubt in my mind that by 2017 the figure will be higher again. The bailouts where the right thing to do and will deliver substantial profits for the nation as well as having prevented a much more significant recession.
JY, I might prove to have been wrong about Greece, I thought they'd agree a fudge and extend the bailout. Now seems like my preferred, but not expected, outcome is that they default and leave the EU is a distinct possibility it being talked about quite openly.
huh...
OK - so I'm emigrating to The Netherlands in 8 weeks. I wonder what this will mean for the exchange rate!?
We don't have enough information to calculate the cost of the funding, it would be nonsensical to have funded run-off loan portfolios like Northern Rock and Bradford and Bingley with long term debt.
Add inability to read, see THM's link:
The final return from Northern Rock and Bradford & Bingley. The Treasury expects to recover the cash lent to Northern Rock and Bradford & Bingley, including the loss on the sale of Northern Rock plc, and the cost of the gilts issued to fund the loans, but the taxpayer may not be compensated for the risk taken on or the opportunity cost of the money lent.
Costs arising from the additional government borrowing raised to finance the purchase of the shares and loans.. The money needed to make the interventions was provided by longer-term funding in the form of Gilts (interest-bearing government bonds purchased by investors for periods of up to 50 years), at a cost of just under 3% a year.
There were loans, they were financed by gilts at just under 3% - plain as day.
[url= http://http://www.nao.org.uk/highlights/taxpayer-support-for-uk-banks-faqs/ ]nao[/url]
edit: Anyway I am off to sun bathe.
Hi grum thanks for coming to play Scottish Referendum, threat of UKIP to Labour, General Election 2015 ? What side of the argument was I on, fantasy world ?
We all agreed yes would win we disagreed on what we wanted to happen. Only you could think that you alone predicted a NO vote.
I cannot be bothered doing the rest as they are just pure fantasy and you will disagree
Nice catch JY, should have been grandson of course but the meaning remains valid IMO.
If you think knights exist today to protect the queen and this is a valid point i dont think i need any more to prove that your views are somewhat at odds with reality. At best its 500 years out of date and that is being kind. You think Mick Jagger and Michale caine and Brad have a job of protecting the queen. Its already a reductio ad absurdum
This is why you are always correct. No one on that thread agreed with your sentiment and yet you are still correct.
Of course there are loads more we could play pidgeon chess about or you could just read the reply above
No more from me I have more chance persuading the ex wife of something that I have you 😛