The government doesn’t bail out you

Oct.09, 2008 in Market Outlook

The problem with all this bailout is that everyone has a perfectly legitimate case to ask “why not me”.

For example I have a buy to let property that was financed through Bradford and Bingley. This bank got nationalized with my tax money and now the govt. have my mortgage that they transferred into Northern Rock.

Now the govt. have bought down interest rates and every bank has lowered its variable mortgage rate - except Northern Rock who, owned by the govt. want the mortgage transferred.

Meanwhile my county council have lost millions of my council (local services) tax by holding it in Iceland. The central govt are refusing to honour it so I’ll have to pay more tax to make up the difference.

On top of that I have credit card borrowing that I was happy with because it was easily covered by equity in property.

Obviously this situation is my responsibility, and I’m happy to bear it. However, I’m seriously NOT happy to be bailing out banks, covering lost taxes, seeing no benefit of interest rate cuts in my mortgage AND having MY credit slashed with the remaining credit interest rocketing up from 6%ish to 28%ish.

Personally I don’t give a flying squirel if my mortgage supplier went out of business. Someone would have picked my mortgage up. Why does it have to be picked up with my taxes and then I get screwed as the one who is irresponsible?

There is no market for buy to let mortgages any more and yet I know that in and of itself my property will easily cover the mortgage. I’m not part of the defaulting people that caused this mess.

However, if the govt. think they can bailout big banks and incompetent councils and leave me to pick up the entire bill they are wrong. I can’t.

If banks want my tax money and then want to screw the living daylights out of me for interest on that tax money (after all they’re only liquid because of loans and equity stakes from the govt. that don’t cripple them) then they can forget it.

And I can tell you. If I’m thinking about turning my back on my debts, which I’ve always taken very seriously, then I can’t be the only one.

I’ll play ball if the govt. and the banks do. I’m happy to repay my debts but not if they want to suddenly reign in lending to me and introduce ludicrous rates that reflect their need to make money again rather than being reflective of the rates govt. have introduced to help everyone.

Be very careful thinking that the worst maybe over because there is a whole tranche of middle class people who can’t be squeezed like this. And remember that it was the middle class squeeze that led to hyper inflation and Nazi govt in Germany.

BE WARY - VERY WARY

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