And now we have got more people working harder than ever, spending more than ever, which looks great, which looks great, but if you're not actually benefiting from what you're spending, if you have to spend the money on childcare costs,
So, if you need money now and you want, and most importantly, you can give it in the future, then you can proceed to considering the parameters of the loan that you will be given.
Banks are constantly coming up with new loan products: they vary rates, change conditions, "simplify" procedures, "return" interest, "refinance" something — in other words, they are engaged in marketing. The essence remains the same: you are being sold money for money.
The main postulate is that there are no cheap loans.
With a low rate, it is always very difficult to comply with all the rules for obtaining it and, most importantly, fulfilling loan obligations. The "fine print" there is especially small and insidious. Here, for example, is a typical footnote in the contract when calculating the bid:
"The 11.5% rate becomes effective on condition of timely/proper payment of monthly payments during the first 4 months (with a loan term of 12-18 months); the first 8 months (with a loan term of 19-36 months)…»
Everything seems to be clear, the rate is 11.5% per annum. But we look a little higher: "The rate: 24.9-38.9% per annum (with a loan term of 12-18 months), 22.9-37.9% per annum (with a loan term of 19-36 months)..."Everything is fundamentally changing. You take out a loan at a rate (averaged for simplicity) of 31%, and if you do not delay payments within 4 months, you will receive an 11.5% rate for the remaining term and the remaining loan body.
So the Bank of England has the responsibility of making sure there's enough of this money in the system. The requirements for banks to hold a specific amount of reserves has changed many times since 1947. At that time, banks needed to hold a minimum ratio of 32% of reserves, cash, or Treasury Bonds to deposits.
When we talk to businesses, they get it pretty intuitively. Governments often shut down these experiments The Bank of England may of course decide that this is a threat to the stability of sterling. At the moment they are reserving their right to take an opinion on it. They've sent us all their rules and regulations and we've got a team of lawyers to give loads of work pro bono, to say, "Right, we'll work on this and we'll make it as watertight as we possibly can.
I think that has to start happening in the UK, because we're in a demand-side recession, rather than looking at crisis of supply. You have to have a system where credit is put into productive avenues, where credit is put into building high-speed rail links, into building houses rather than giving people money to inflate the price of houses.
Time and time again over the past thirty years, we've seen private debts being transformed into public debts, and ultimately the price of that debt is being paid by the public in the debtor country. This is why spending cuts are necessary.
Have you heard that the Federal Government is about $280 billion in the hole? Banks receive large safety nets from the government. The taxpayer guarantees $85,000 as deposit insurance. And the Bank of England provides liquidity insurance in case a bank runs out of reserve currency. Someone wrote that a big investment bank is like a giant vampire squid wrapped around the face of humanity.