Cyprus-Forum.com

[Paphitis]

I already mentioned Unsecured Loans, in the form of personal loans and Credit Cards. That is why you pay very high interest too. BTW, you should reduce your limit. That is BAD DEBT. It doesn't benefit you.

The interest rate I am paying on my credit card is 0.5% (plus a £10 pm charge). That is half a percent. It is not a high rate at all. It is actually less than the bank itself can borrow money at and less than I can get in interest by depositing that money in an interest bearing account. It is for me GOOD DEBT - which is exactly why I maintain the card at it's maximum limit. Each month I pay the min amount off I then spend it again in order to maintain this good debt. You might not believe such a credit card exits but it does. You can not get this card / deal TODAY. It was created way back before 2008 when the base rate was 4 or 5 % and 'optimism' was high at the banks leading to them lending (creating) money at a furious rate. Whilst the UK base rate remains at 0.5% it would be madness for me to pay this debt off. There is even an outside chance the base rate couyld be set to a negative amount (unlikely but has been done in some countries) and if that happens the co op bank will have to pay ME for borrowing on this card !

There are limits to everything. The Bank has to allocate its ledger very carefully. It can't for instance issue every person with an unsecured facility and expect to remain in business.

This is true and it is effectively exactly what happened in and leading up to 2008 and it is the core of the problem we have - boom and bust cycles.

The Bank is giving you an IOU based on the collateral you have provided and ability to pay.

In the case on my credit card there is no collateral securing my loan. The bank has given me an IOT (I owe them) based on their belief that I can and will repay it. Based on their optimism that I will be able to do so. In 2004 when I took the credit card out they were VERY optimistic that I and others could and would pay this money back. Today they are not so optimistic and thus they do not offer this deal any more and are lending vastly less across the board to anyone (meaning the total amount of money in existence is shrinking). What 'society' actually needed was for them to be less optimistic in 2004 and more optimistic now - but they do not operate based on what society needs and that is why the system is problematic and leads to boom and bust cycles.

But what strikes me is how well the system actually really does work. It's very complicated and a bit of a maze, but the system is designed to give maximum growth and it has taken Billions out of a cycle of poverty. Everyone in Finance and in Business actually understand, that the more people getting out of poverty, the better the environment for Banks, Business, and Employment.

Every now and then, there will be corrections, because little bubbles develop.

What happened in 2008 was not a 'little bubble'. It was a massive crisis plunging millions if not billions of people into poverty they had not experienced before. Not just in Greece but globally. We are still struggling to recover from it some 8 years later. What is more we are in uncharted territory here. We are doing things that have never been done before, things without precedent in the 'hope' that they will work. The ratio of cash to 'ledger created money' is at unprecedented levels. The use of negative base rates in some countries is unprecedented. The billions being poured into QE are unprecedented. Even if the 'world' does manage to bring things back to an even keel again it will simply only be a matter of time until the boom cycle again returns to bust because the system makes such inevitable. That is what critics of the current system are arguing as far as I understand it.

BTW I strongly recommend this book for anyone interested in this subject.

http://www.amazon.co.uk/Where-Does-Mone ... lpage_o00_

Don't bullshit me that you're interest is 0.5% for a Credit Card or personal loan. Your interest rate is not 0.5% at all.

It's probably that for the first month, or for long term debt balance transfers, and if that is the case, you shouldn't have a Credit Card because you are being irresponsible.

Some Cards offer 55 days interest free and reward points, but it doesn't mean your interest rate is 0%. It's only 0% for those who know how to use the facility and actually pay it off every month.

After that, your interest rate is anywhere between 12 and 21%. Yes my boy, take it like a salami.

[Paphitis]

I see no apparent reason why the BoE creating money, instead of private commercial banks, would in any way effect the normal capitalist society or be a threat to entrepreneurs ...... in fact it would be exactly the opposite. A buoyant economy would provide greater opportunities. This fear that it would be like communism is ill founded!

My 'concerns' over your proposed alternative - at least as far as I understand it - is not that it would represent an assault on capitalism and it's ability to function or represent communism. My 'concerns' are more of the nature that such systems, the modelling of then, the predictions as to how they would function in reality are inherently 'un knowable' to a significant degree. I remain concerned about 'unintended consequences' would be a fair description. Having said that I do think there are serious and inherent flaws in the current system. I also think we all do kind of have a 'social duty' to try and understand and question these things (what is money, where does it come from and the like).

You have every right to be concerned.

Now imagine some nutjob getting into power - Pootin, Assad, Trump.

They have the power to wipe you out. Banks don't do that.

[Paphitis]

Paphitis:

I am wrong am I?

YES!

Then how is money "created"? So the Bank just goes right ahead and makes an arbitrary "data entry" into someone's account without collateral.

Me, Erol, Prof. Werner, the BoE, the FED and the German Central bank have all told you , but you seem to believe that collateral is a requirement to create currency and IT IS NOT.

The collateral is no more than security with a ~known value, against which they will create a debt by awarding you credit up to 80% of its current value. The banks need to protect their ledger entries in the event you don’t pay.(NPL) Your collateral can only realise its value (£’s/€’s/$’s) if it is converted into currency ...... i.e. you sell it!

It can make an arbitrary data entry and in many cases in Cyprus that is exactly what happened. The ‘collateral’ was previously mortgaged ...... the cowboy had built a property on it ..... then, the cowboy who had a lot of the original mortgage left (Invested in the New Merc. or his wife’s BMW) sold the property on, pocketed the proceeds and then duped buyer took out another mortgage on that, ...... often from the same bank!

Some were even duped into taking the mortgage out in Swiss Francs ‘.......because it had a lower interest rate!’ No mention by the banks that it was a strong currency and likely to rise in comparison with the Cyprus Pound/Euro.

My my, thank heavens you're not in charge of any Banks, because what you are saying isn't even subprime lending. It would be way beyond that.

I think I know a lot more about the creation of money than you do. Banking? ....... that would just require me to learn the procedures ........ working in a bank would be very unlikely to teach me much about money creation.

As Erol has pointed out to you ........ he has extended credit of up to £12.5K! To get that, no collateral is asked for ...... they don’t even want to know what your salary is, or the value of your property or the level of the outstanding debt.

It doesn't sound like you have any experience with lending at all.

How wrong can you be! Let me tell you a secret!

I personally took on one of THE biggest names in banking because they were trying to screw me. I had two meetings in Guernsey with their CEO/MD, Loans Director and their head of the loans department. Long story ........... but I beat them at their own game and, as the CEO told me at the time, he awarded me the largest compensation he could, (a significant 5 figure sum!) without me taking them to court! Not a bad result for someone who knows nothing about lending/banking, is it? BTW; They also paid all my expenses to get there from Cyprus, hotel bill and a very nice golf umbrella ...... which I still have to this day ....... as a reminder.

I strongly advise that you go to a Bank and inquire about applying for a Loan so that you can see what is required from you in order to be an approved borrower. You will need Collateral, and that does not sound like an arbitrary "data entry" to me.

You are still confusing getting a ‘loan’ and meeting the Banks requirements for that ‘loan’(another bit of banking subterfuge!) with the process of creating that equivalent amount of currency as a credit/debt ............ it just seems to miss you completely! They are two completely different subjects.

You see, you are either doing it deliberately or you are completely misunderstanding. It is a DEBT for a borrower, but the funds can be transferred into a link account making it an IOU. Once the funds are transferred to another account, it becomes an IOU for the beneficiary. Or it can become an IOU for another bank and that is a liability that isn't even supported by lending.

Once again you are adding two procedures together and confusing the criteria of one with the other! Your credit account, holding your debt to the bank is liability for you but it is an asset to the bank. When you transfer your loan/debt to another account it becomes New money in that account, which is an asset to the account holder but it is a liability to the bank ..... because they have BORROWED that deposit from the account holder!

Once a credit has been applied into an account, it is an IOU

.
I think you mean ....... when an account is credited with a deposit, the account entry is an IOU? If so, that is correct, see the above; it is an IOU from the bank acknowledging they owe the account holder, that amount! BTW: As you will now have provided the bank with a loan ..... did you ask them what collateral they were offering to secure the loan? You are now an unsecured creditor of the bank, ........ they have no collateral.

I'm afraid it is dead correct. The funds can transfer to another Bank electronically. That is an IOU. Have you ever transferred funds to another account or Bank? What do you think happens when you buy a property?

You are confused ........ see the above explanation.

I'm sorry, but you understand nothing at all about the Banking system. I will go further and say, that you are applying very flawed assumptions and mistruths about the Banking sector as a whole because you don't like them very much. Not many people do.

I would challenge your assumption!

As for me, I am a little more pragmatic. I know what I need to do to achieve outcomes. So I play by the rules and do what I need to do, like Billions of people around the world.

You are not pragmatic ..... you are totally confused! As you say, so are billions of others around the world ......... and many of them a dirt poor because they are mislead by the banks to believe things that are just not true.

Here is what other revered people have to say ..........

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
The Rothschild brothers of London writing to associates in New York, 1863.

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.”
John Kenneth Galbraith (1908- ), former professor of economics at Harvard.

Please go to a Bank and ask for a loan.

You wouldn't be able to get one if you don't have Collateral to begin with or are able to apply a minimum 20% deposit to buy an asset which they will take as security.

The Bank will only offer you Credit against this security. That is the only way. Therefore, no money is being created at all.

the money is backed up by this security, like it was originally backed up my Gold in the 19th Century.

When the Americans changed things with the advent of the Federal Reserve, and allowed money to be backed up by virtually anything of value, they were actually making Banking and borrowing available to the average person on the street, farmers and workers.

The alternative is Banks for the elites only. But we would not have the economic development on the same scale we have had in the last 100 to 200 years.

Erolz,

A Banking Collapse can send millions into poverty. True. But Banks in general have sent Billions from poverty to the middle Class.

In other words, don't just look at the bad. To do so, you are being biased and not seeing the facts for what they are. A lot of people do it because they want all the Banks to be torn apart. The only thing that will result from that, is that we all go back to poverty.

[erolz66]

My point was that their security/collateral was your very existence as a living human being.

Well we just talking semantics I think ? If you use word security in the same sense as collateral - then yes my existence is a form of security. However I was taking the word collateral to mean a specific named asset that could be claimed by the lender and sold by them to repay my debt to them, should I fail to meet the repayment terms. In the mafia example the 'security' is their correct belief that I would not want my kneecap broken enough to do everything within my power to repay the,. However the mafia breaking my kneecap does not in itself give them back the money they lent me and any unpaid interested owed on it. If however they were to make it clear that in the event of me failing to pay them back they would capture me, remove a kidney, sell that kidney on the black market and take the proceeds of that sale to repay the loan to me plus any owed interest, then my kidney would be collateral.

You may say the have nothing tangible to get their money back, I say they have YOU alive and kicking that they would drag to courts until they get it.

I have had experience of my family obtaining county court judgements against individuals that owe money to them and yet still failing to get that owed money from said individuals. In theory this 'system' works. The practice is very different. In fact most banks do not bother with such action themselves. They will generally sell the debt to them on to a debt collecting agency. These will typically recover owed money from those it is 'easy' to do so and write it off from those it is not so easy to do so to.

Many years ago I ran a cafe. It was at the time that electricity supply privatisation was happening and there were new supply companies springing up and sending high pressure sales people into businesses to get you to sign up with supply from them. I did sign up to get my supply from this new company but on a tariff that required my meter to be changed (because it was a tariff with different rates at different times and my meter was unable to measure such things, thus requiring a new meter). The sales man was blase about this, caring really only to get my signature on the contract so he would get his commission at the end of the month. I however was concerned about the need for a change of meter so I insisted we write it as manual extra T&C on both his copy of the contract and mine. Anyway inevitably the new supply company did start to bill me on the wrong tariff because they had totally failed to change the meter. I immediately contacted them to explain but the reality was the company was in a state of dysfunctional break down. Over the coming months I would spend literally hours and hours on the phone and in writing explaining the problem to the supply company, explaining why the bill they had sent me was wrong. I would get close to finally communicating with someone who was capable of understanding the problem, providing all the evidence and my calculations as to what my best estiamte of the bill should be (rather than what they were claiming it should be) and then find that that person had left the company and have to start all over again. As the bills arrived I would pay what I estimated the bill should have been had I of been on the correct tariff (it was impossible to be 100% sure because my meter did not record the different time bands - I ended up doing that manually myself by reading the meter through out the day and night). After 4 or 6 months of paying what I estimated was owed and still failing to get any response to the actual problem I decided to not pay the monthly bill at all as my last resort to get someone to address the actual problem. 2- 3 months after that the supply company went into administration - they were in effect unable to operate properly - unable to maintain records of a functional billing system even for normal customers let alone for someone in my situation. Through out the time before they went into administration I would get periodic calls or letters from their 'collections department' and every time I did I would once more explain the situation, provide all the evidence (the original contract - which is was clear they had no ability to find their copy of), the list of all the logs of calls and letters I had sent to try and get this addressed, my manual meter readings and the basis on which my estimate of what the bill actually should be. To which they would go away and leave me alone again for a few months. By the time they went into administration they claimed I owed them in the region of £5000. Of this maybe £3500 was actually incorrect claim (because I was on the wrong tariff) and 1.5k was electricity that I had used and did owe but had withheld as a means of trying to get them to address the issue once and for all. This debt of £5000 was sold by the administrators to a debt collection agency. They in turn contacted me and said pay up the 5K or we will take you to court. I replied that I was more than willing to pay what I owed but that the figure they had was wrong, and that I could prove it was wrong and that I would also be deducting costs from what was owed for my time given that in over 8 months of effort the supply company had singularly failed to deal with the issue. I could and did provide a copy of the original contract I signed complete with the hand written entry saying that the meter would be changed by the supplier so that I could get the tariff described in the contract, a log of the near hundreds of hours I had spent on the phone trying to contact the company (you could be on hold for over an hour only to be cut off and as the company approached administration this got worse and worse) , copies of the countless letters I had sent to the company, copies of the manual reading I had taken and the basis for my estimate for what the bill should have actually been. I made it clear I was willing to negotiate a settlement but only on the basis that someone at their end capable of understanding and addressing the issue was forth coming. I heard nothing in reply from them. I heard nothing for another 4-5 years when I was contacted by a different credit recovery agency that had bought this debt from the prior one and went through the whole sequence one more. They also did not reply and to this date I have heard nothing more about this. In the end it did save me about 1.5k in electricity bill that I did legitimately owe (minus my wasted time in trying to pay it!). So despite countless threats of being taken to court and of CCJ being made against me no action was ever actually taken, not by the supply company , not by the debt recovery agency that bought the debt from the administrators or the one that bought it in turn from them.

Now I have forgotten why I even related this story

Agreed. What is the alternative? RH’s proposal in which the Banks would have no reason to exist, while the Government itself would turn itself to a huge Banker???

The purpose of banks is not to be a means of creating money - that is a function that they have evolved into and not particularly by design as far as I can tell. Banks existed before they had such an ability and through periods when they had such a function but not exclusively (in effect). Banks have a valid role and function separate from being the only mechanism by which new money is created. Removing such function from private banks would not make them unnecessary to exist at all. It might make them less profitable but that is not the same as saying there would be no need for them at all. As I understand it at least.

There is a social need to have mechanism to create new money and extend credit. Ideally this mechanism would have a purpose of trying to avoid boom bust cycles and of trying to insure credit is invested primarily into 'GDP growing' endeavours more that ones that do not grow GDP or lead to high levels of asset inflation. The current system is flawed but it was not as bad as it is today. Pre 1970 central banks had much more means to limit and influence private banking lending / money creation that they have today. It may be that what we need is a return to these days where the function remains with private banks but with 'levers' available to central bank to influence such things. I am much less 'sure' aboput actual solutions that I am that there is a fundamental systemic problem with things as they have been in the last 20-30 years or so.

[Paphitis]

Unfortunately, there is no way to avoid boom and bust cycles. You got to remember that Banks are only facilitators. They make it all possible.

The only way to avoid boom and bust is to reprogram human beings or to clone them so that they can not be as greedy as they are.

We will see the cycle over and over. In good times, people borrow, often too much. But we have the boom cycle. Eventually, over some period, the level of borrowing becomes excessive, and people need to tighten their belts. Hence the bust cycle. During this time, debt is reduced. It is just a natural cycle which can't be broken.

[erolz66]

[Don't bullshit me that you're interest is 0.5% for a Credit Card or personal loan. Your interest rate is not 0.5% at all.

It's probably that for the first month, or for long term debt balance transfers, and if that is the case, you shouldn't have a Credit Card because you are being irresponsible.

Some Cards offer 55 days interest free and reward points, but it doesn't mean your interest rate is 0%. It's only 0% for those who know how to use the facility and actually pay it off every month.

After that, your interest rate is anywhere between 12 and 21%. Yes my boy, take it like a salami.

I knew you would not believe this That is why I provided a link

You might not believe such a credit card exits but it does

Click on the word 'does' to see the CC deal I am on. Or click here http://www.finance-central.co.uk/credit ... Card.shtml

The deal is base rate interest for life - on everything - balance transfers and purchases. For life. When I took the card out base rate was 5 or 6 % I think. For last 5-6 years it has been 0.5%. That is what I pay today + the £10pm. I know you still will not believe me. So here are some screen shots of a recent statement. First shows current balance - second shows that months interest payments. They are in two screen grabs because the full list is too long to fit on a single screen and I dont want to show all my monthly payments anyway - that is private but I absolutely assure you the bottom grab is for the same account as the top one.

bank1.jpg

bank2.JPG

Total interest for that month - £4.64 (on a borrowing of 12261.08) - plus the £10pm. Total monthly cost of borrowing - £14.64. Annual cost (assuming constant 12261.08 for whole year) including montly fee = 14.64*12 = £175.68

Annual effective interest rate including the monthly fee = 1.43%

[Paphitis]

[Don't bullshit me that you're interest is 0.5% for a Credit Card or personal loan. Your interest rate is not 0.5% at all.

It's probably that for the first month, or for long term debt balance transfers, and if that is the case, you shouldn't have a Credit Card because you are being irresponsible.

Some Cards offer 55 days interest free and reward points, but it doesn't mean your interest rate is 0%. It's only 0% for those who know how to use the facility and actually pay it off every month.

After that, your interest rate is anywhere between 12 and 21%. Yes my boy, take it like a salami.

I knew you would not believe this That is why I provided a link

You might not believe such a credit card exits but it does

Click on the word 'does' to see the CC deal I am on. Or click here http://www.finance-central.co.uk/credit ... Card.shtml

The deal is base rate interest for life - on everything - balance transfers and purchases. For life. When I took the card out base rate was 5 or 6 % I think. For last 5-6 years it has been 0.5%. That is what I pay today + the £10pm. I know you still will not believe me. So here are some screen shots of a recent statement. First shows current balance - second shows that months interest payments. They are in two screen grabs because the full list is too long to fit on a single screen and I dont want to show all my monthly payments anyway - that is private but I absolutely assure you the bottom grab is for the same account as the top one.

bank1.jpg

bank2.JPG

Total interest for that month - £4.64 (on a borrowing of 12261.08) - plus the £10pm. Total monthly cost of borrowing - £14.64. Annual cost (assuming constant 12261.08 for whole year) including montly fee = 14.64*12 = £175.68

Annual effective interest rate including the monthly fee = 1.43%

OK that is a good product.

Hope you used that money wisely and not just buy video game consoles, games, and electronics.

[erolz66]

Unfortunately, there is no way to avoid boom and bust cycles. You got to remember that Banks are only facilitators. They make it all possible.

The only way to avoid boom and bust is to reprogram human beings or to clone them so that they can not be as greedy as they are.

We will see the cycle over and over. In good times, people borrow, often too much. But we have the boom cycle. Eventually, over some period, the level of borrowing becomes excessive, and people need to tighten their belts. Hence the bust cycle. During this time, debt is reduced. It is just a natural cycle which can't be broken.

The point is to try and limit and reduce boom / busty cycles not remove them entirely. The reality is today banks are no longer simply 'facilitators' - as they now are the only or near only means used to create new money, they have a 'power' far in excess of their role merely as 'facilitators'. Why they create new money (loans) and who and why they grant these loans to (for what purpose), when they have become the sole means of creating new money (money supply), makes there role in things much greater than that of mere 'facilitators' or 'intermediaries'. When they have such a role, near exclusively, this makes boom bust cycles worse. That is the argument. Bubbles are more likely to develop and bust will take longer to recover from - because they control money supply near exclusively now (and without the controls / levers that central banks used to have to influence such things, which were largely removed from the 1970's onwards).

[Paphitis]

Unfortunately, there is no way to avoid boom and bust cycles. You got to remember that Banks are only facilitators. They make it all possible.

The only way to avoid boom and bust is to reprogram human beings or to clone them so that they can not be as greedy as they are.

We will see the cycle over and over. In good times, people borrow, often too much. But we have the boom cycle. Eventually, over some period, the level of borrowing becomes excessive, and people need to tighten their belts. Hence the bust cycle. During this time, debt is reduced. It is just a natural cycle which can't be broken.

The point is to try and limit and reduce boom / busty cycles not remove them entirely. The reality is today banks are no longer simply 'facilitators' - as they now are the only or near only means used to create new money, they have a 'power' far in excess of their role merely as 'facilitators'. Why they create new money (loans) and who and why they grant these loans to (for what purpose), when they have become the sole means of creating new money (money supply), makes there role in things much greater than that of mere 'facilitators' or 'intermediaries'. When they have such a role, near exclusively, this makes boom bust cycles worse. That is the argument. Bubbles are more likely to develop and bust will take longer to recover from - because they control money supply near exclusively now (and without the controls / levers that central banks used to have to influence such things, which were largely removed from the 1970's onwards).

Then you would limit economic development, employment and basically restrict people from doing what is natural to them.

No, it's a roller coaster and humanity has made a lot of money from the roller coaster.

Just go for it whenever you can, and then back pedal when you need to.

The power belongs to the consumer who decides the products they need and what they are going to do with the money. Often, opportunities are being provided to people to invest in what they want and over time these individuals will become more wealthy. That is the whole point of it all.

The power belongs to the Central Bank. Banks are only Businesses that have to abide by the Financial Regulations they operate under. Their performance is monitored by the Central Bank.

Banks can only create money when you offer them Collateral. As I stated earlier, I am not talking about consumer credit products like Credit Cards. All other debts a supported by a Security. That's how it has always been.

[erolz66]

OK that is a good product.
Hope you used that money wisely and not just buy video game consoles, games, and electronics.

Of course I did / do - what could be wiser that snorting it up my nose ? <-- that is a joke btw.

The point I was trying to make by revealing my CC situation, was the way Banks behaved in regards to lending (creating new money), who they lent it to, under what terms and for what ultimate purpose was literally a function of their 'optimism' , or lack of it, about the future at any given point in time. There is no way I could get a similar deal today from the same bank, not even remotely close. Now in my case for the purchase of a car that is not that big a deal. But this change in 'optimism' by the banks has a very real impact on the economy in general. Let me give a better example, one that also explains why I came close to not being able to service my CC debt even on such favourable terms.

My brother runs the family business. Fast food cafes - a second generation business originally built from nothing by my father and mother. My brother and I jointly own an asset (a building), that provides part of my income. My brother wanted to use this asset as collateral to fund expansion of the family business (that I was not involved in). I agreed to let him use it as such and even though he was looking to borrow less than his half of it's value I had to also separately agree, because if he defaulted and I had not agreed, the lender could not force the sale of this asset to recover their loan. So I agreed, even though technically there was no upside for me and only potential downside. He is my brother. All fine and dandy. My brother borrowed money for his business against this asset, with my separate consent for him to do so. This was back in the 90's. Anyway come 2004 or 5 my brother refinanced this loan with Allied Irish Bank. At that time banks were falling over themselves to lend money and capture existing loans - like the CO OP bank CC deal for example. My brother understood the term of the loan was 25 years. Come 2008 everything changed. Allied Irish Bank used a 'technicality' to decide that actually they did not want to be lending to people like my brother and that the 25 year term my brother thought was 'solid' became a 1 year notice to repay the loan in full. This would have involved selling the asset at the worst possible time in a fire sale mode (meaning that there was also a high chance that the loan my brother had that was when he took it out less than half the value of the asset would probably have ended up bing more than half - thus representing more loss to me than just having to sell at the worst possible time). What is more it threatened to bring down this 2nd generation business entirely - leading to loss of jobs for around 10-12 people, loss of rent on retail units, loss of income to suppliers and so on and so forth. Basically the destruction of a valid viable business that had paid its bills and debts without fail for two generations. All on a 'whim' of the bank - who post 2008 decide that it did not want to be in the loans on commercial premises market any more. So of course my brother sought to refinance the loan with another bank. Remember the asset was , even in the depressed post 2008 market worth more than the loan. It was a nightmare. No banks were interested at that time in providing such a loan, even with collateral worth more than the value of the loan and that was producing income in excess of what the repayments for that loan would be and a two generation credit history of the business as being able to meet it's obligations. Things were very bleak indeed for my brother, for his employees, for his suppliers. At the very point in time where real economic activity like that of our families business was most needed was the very same time the banks put that all at risk on a 'whim' - basically on a change in their 'optimism' about the future. Now my brother is a remarkable guy (imo) - and he moved mountains , found ways forward that were way 'out of the box' and worked like a dog under constant stress and pressure and luckily he avoided this catastrophe. Today the loan is refinanced at a new entrant to the UK banking scene (Metro Bank) and the worst is over. But things came very very close to destroying a viable valid business and all the real economic activity that it produced, all as a result of the change in 'optimism' of the banks. Many other viable business were not so lucky and were forced into closure at the very time when 'society' most needed the economic activity they produced making the 'bust' cycle even worse than if they had not been forced out of business.

This then is the 'problem' described at a micro level but that was acting the same way at a macro level. In the lead up to 2008, when the economic sun was shinning, Banks could not lend money fast enough, to anyone and everyone and for any purpose (including snorting up your nose) fuelling and inflating the bubble that was soon to be burst. When my brother could easily get a business loan secured against an asset, Banks, all of them, were falling over to give him such. When the bubble created in part by those same banks burst, he could not get a loan, from any of them, and indeed Allied Irish Bank sneakily 'too back' a loan they had previously given - putting at risk a 2nd generation viable business.