How much can you borrow?

Plissken

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If this seems a bit like plugging my blog, then feel free to delete it (or tell me, and I'll delete it).

Anyway, the Irish economy can charitably be described as "completely fucked", especially as it is on the danger list in Europe with stuff like national debt being downgraded. The reasons are long and complex, but a lot of it is shared with the UK, a banking sector taking massive risks on property developments that were hugely overvalued. The effect is the same, the fat cat bankers make off with loads of cash and the poor sod in the street is left to pick up the pieces.

Chief among the culprits was a guy called Sean Fitzpatrick. He was the Chief Executive, then Chairman of Anglo Irish Bank.

Last week, Fitzpatrick was declared bankrupt in the Irish courts. He owes around ?150 million to his creditors. Anglo Irish is the biggest creditor at ?110 million.

He has estimated assets of ?50 million, with ?45 million in investments, and ?1.23 million in various bank accounts.

He is currently appealing against ?2.8 million of tax liabilities in relation to capital gains and income taxes.

As far as I can see, his salary while Chairman of Anglo Irish Bank was ?539,000.

So, for perspective, he managed to take out loans that were almost 300 times his own salary. Loans which are now being paid off by the Irish taxpayer.

In response to these numbers, I knocked up a quick calculator. The average salary in the UK is ?25,896. Under Seans rules, a person on that salary can borrow ?8,526,942.63. And argue with the taxman about paying ?161,429.61 in tax.

Decided to put it up on the web, so you can feed your own salary in and see exactly what the equivalences are if you tried to borrow money.

http://www.micait.co.uk/mikelanders/bankrupt.aspx

I'm thinking of going down to Anglo Irish and asking for the dosh, to be honest.
 

MWF

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It's as it's always been. One rule for the haves, one rule for the have-nots!
 

otispunkmeyer

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its the same everywhere, the closer you work to the money the easier it is to obtain wads of it for doing a job no harder than many others, and the easier it is to make off with said money.

dont banks practice fractional reserve lending? where they can lend aroun 10 times what they actually have stocked in the vaults? if i tried to sell you something i didnt have....that might be fraud. to the banks. normal business.

money was supposed to be for the facilitating of buy and selling of goods... not to be bought and sold itself. its pretty fucked up i think, but thats how it is... theres some mental maths involved too, basically keeps most people from ever deciphering what the shit is actually going on in a bank (derivates et al)... show a lawyer or a bunch of politicos some equations for derivatives and they'll just be completely stumped.

and i hate how the banks term these things products.... like its something manufactured and tangible. its just vapourware.

also, me n my gf tried to lend to buy a flat.... we were paying over half the cost upfront. that was a ?60k deposit.... higher than whats been said on the radio lately... which is a 37K deposit average. we wanted to borrow 40k.... nope, no go. and toghether 40k is about what we earn. so we couldnt even lend 1x our earnings.
 
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Steve Levin

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dont banks practice fractional reserve lending? where they can lend aroun 10 times what they actually have stocked in the vaults? if i tried to sell you something i didnt have....that might be fraud. to the banks. normal business.

I don't think that's quite the rule; rather, the banks can only loan out 90% (in the US, I believe it's 94%?) of the money they have; they have to keep the balance liquid to address any withdrawals or to deal with various losses (loan defaults, etc.)

But I'm pretty sure as powerful as banks can be they haven't been given license to print money, which would be what you're describing :)

Steve
 

Plissken

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I think the banks have been trying to reduce what is covered by fractional reserve though, in order so they can play the casino of the markets and make really big profits. All in the name of reducing regulation, naturally.
 

NecroJoe

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I don't think that's quite the rule; rather, the banks can only loan out 90% (in the US, I believe it's 94%?) of the money they have; they have to keep the balance liquid to address any withdrawals or to deal with various losses (loan defaults, etc.)


I don't believe that is correct. I think it is that they can be 10-1, but what got them in trouble was being 30-1
 
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