its lets get a shedload of debt day!

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  • its lets get a shedload of debt day!
  • jackthedog
    Member

    Oh, and the nonsense about the students loan company is just that – it’s simply the sale of a loan book whereby the treasury will convert a long term liability (default on loans) into an asset.

    It’s not simple enough for me. Can you expand on this please? Why would anyone buy what for the government is considered a long term liability? Where does the liability turn into a potential profit worthy of investing in? How does a liability turn into an asset?

    Premier Icon Northwind
    Subscriber

    The student loans book isn’t a liability (how would they sell it if it was?) It’s an asset- despite the rise in expected defaults it’s still a long term cashflow.

    There’s only 2 reasons to privatise it… 1) Sell it to your mates. Or 2) Fiddle the books- sell a long term asset to give a smaller, temporary boost today and make the budget figures look better this year, in return for a longer term loss that future governments can worry about.

    mefty
    Member

    Northwind – with your background I thought you would appreciate there are some organisations that are better set up to administer a loan book than the government

    Premier Icon Northwind
    Subscriber

    Nah, tbh I don’t agree. The SLC’s a big enough institution to justify maintaining its own standalone infrastructure (particularily as the methodology and terms are so nonstandard). And it’s a long-term return, which frankly the financial sector has grown bad at, meanwhile nobody is better placed to borrow or lend over a half-century basis than a country.

    If the government were going to cut a really good deal, and sustain the rate cap, then it could be a good option. But it’s going to be either subsidies via the synthetic hedge, (making it a long-term cost instead of a long-term gain) or it’s going to be at the expense of student borrowers. And in either scenario it’s almost certainly going to be sold for less than it’s worth.

    Premier Icon molgrips
    Subscriber

    Hang on. Student loan interest is at or below inflation, isn’t it? And with the defaults, how could it ever be an asset? And who the hell would buy it? Unless… Jackthedog is right…

    Premier Icon Northwind
    Subscriber

    There’s a load of different rates… Had to google this, old mortgage style ones are set at RPI, more recent ones are either RPI or 1% above an average of bank base rates (whichever is lower), but the new IC loans are 3% above RPI.

    o’course, that’s just the current terms- it’s pretty much a given that this would change in one of two ways if it was sold (either the hedge or removing the cap, for new and/or for existing students)

    I for one look forward to a future of retrospective interest changes, with a subsequent wave of non-payment, leading to the SLC repossessing people’s degrees from inside their brains with a chisel.

    Premier Icon jambalaya
    Subscriber

    @aa on this we agree totally, these fees are a total disgrace

    Premier Icon jambalaya
    Subscriber

    Re: selling the student loan book, of course there will be a price but with low Interest rates that price will be less tha face value, so for arguments sake of you have £100m of loans the sale price might be £90m taking into account loan terms (eg rate, length of loan) and default rate assumptions.

    Also just because a loan interst rate is set at “inflation minus” doesn’t mean it’s a bad rate as such “inflation minus” might turn out to be better than “base rate plus” or long term fixed rates

    mefty
    Member

    The hedge is a red herring as that is on the government books already by selling without the risk they will get a commensurately better price, the government borrowing rate is likewise largely irrelevant as they are looking to sell to their lenders the pension funds.

    Premier Icon Northwind
    Subscriber

    mefty – Member

    The hedge is a red herring as that is on the government books already by selling without the risk they will get a commensurately better price

    Nah, the hedge is again a way of fiddling the books- make the sale today look better than it is, at the expense of a long term cost which future governments can deal with. It’s a subsidy hidden behind a name. Classic privatisation really, privatising the asset and the profit but not the cost.

    The hedge isn’t already on the books, not really sure what you mean by that tbh… Unless you’re looking at it from a lost opportunity point of view (ie, the cap prevents us from taking more profit from interest).

    But, the falsehood there is that if we sell the SLC, we still lose that opportunity, there’s no gain there. But we end up also paying out the hedge. So it is a net loss.

    Tom_W1987
    Member

    And yet it’s happening. Some of the things that are going on seem so unlikely that people just aren’t looking for it, so they don’t see it.

    If the plans for the legal system come to fruition, it could soon be perfectly plausible that you could be arrested by G4S officer, held in a G4S cell before being transported in a G4S van to be tried in a G4S court by G4S prosecutors using forensic evidence gathered in a G4S lab, while you’re defended by a G4S lawyer, before being transported in another G4S van to a G4S prison, where you will have no choice but to to provide unpaid labour for a G4S company before eventually facing a G4S parole board and, if you’re lucky, being released into the care of a G4S halfway house wearing a G4S ankle bracelet, reporting to a G4S parole officer.

    This is the same G4S responsible for countless newsworthy failures prior to its rebrand and continues to be responsible for failures under its new flag today, the same company that reneged on its contract to provide security at the 2012 Olympics, leaving the tax payer to come to the rescue.

    Scary, no? At what point are we as a society incentivised to tackle the causes of crime when there is so much money to be made profiting from cheaply and badly managing the symptoms? And what incentive is there for a company to provide a solid defence in court when doing so would reduce the future income of its other branches?

    Unlikely? Seems it doesn’t it. That’s why we’re moving towards it. Nobody is paying attention. Just like the NHS being carved up and privatised as we type. Nobody believes it, because we choose not to look.

    Those who do choose to look are being left increasingly with no option but to take to the streets with regularity, trying whatever they can to spread the word, gain support and grow some kind of resistance to it. And what happens? They get heckled, laughed at, dismissed and derided by the very public they’re trying to help. I’ve watched it happen. I’ve been on the receiving end. It’s just astonishing.

    Where a government has come into power through some form of popular vote, fraudulent or not, and maintains at least an appearance of constitutional legality, the guerrilla outbreak cannot be promoted, since the possibilities of peaceful struggle have not yet been exhausted. – Che Guevara

    Unfortunately life is still to good for most people to care, the collective memories of how the serfs were treated prior to the two great wars are all but gone hence the apathy. Also most people are cowards, the psychology of the herd has a lot to do with it.

    mudshark
    Member

    IBM have an intensive selection procedure, I’d have thought they were paying top whack to be honest.

    Oh I started off with them, must be more fussy now?!

    I’m a project manager now. No complaints about my earnings these days, took me time to get where I am. A degree definitely wasn’t a help in getting there.

    Had I been oriented towards programming, coding etc, then I’d be earning much more

    Hmmm, our project managers earn pretty well – in fact us Technical Consultants are at the bottom of the earnings, partly because much of our work can be done off shore. I’m the only tech guy on my project based at the client site, I’m leading a team in India which will soon be 10 people. They’re charged out at 20% what I am, hard to justify my time really though definitely needed and so far the client agrees.

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