Not all banks are evil?

  • Not all British banks are evil?
  • It is a good argument to show that the whole purpose of bundling together many mortgages to sell to others, is to reduce the effect of the number of defaulters. This relatively small number of defaulters on their mortgage payments makes the bundle more attractive to potential buyers and keeps the price high.

The unstated assumption is that the great majority will not default. This has been largely true in Britain. But it is not true in America. There some bundled mortgages were largely for mortgagees on low, or very low, incomes. They defaulted in large numbers. This created a panic, where even the relatively safe bundles fell in price. All this did have a knock-on effect in Britain.

Fundamentally, the charge is that banks were not being responsible to their original mortgagees by selling on these mortgages in bundles to the highest bidder. The banks may well have avoided a loss created by the falling value of the mortgages they gave to their customers. But the loss did not entirely disappear. The last holder of the bundle may will have bought at a very low price; but this still could produce a loss.

All this produces an incentive to evict defaulting mortgagees and sell the property to the highest bidder, and so recoup some of the loss. So, who ultimately suffers most? It is the original mortgagee. In the coming year all tax payers may also have to pay more as well.

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British Airways Strike Breakers.

British Airways: Strike Breakers!
Following an abortive attempt last October in the high court to stop management reducing the number of cabin crew from15 to 14, the trade union Unite has returned to the high court. The union has also called another strike, and is currently balloting it’s members. This strike could start on March 1st. 
What has complicated this ongoing conflict is a set of 15 cabin crew being suspended for naming and shaming on Facebook 40 pilots who have volunteered to be trained as cabin crew if a strike happens. The relatively well paid pilots may well belong to another union; although some may belong to no union. Historically, strike breakers were the relatively poorly paid; some imported from Ireland. A further complexity is that non-flying staff, including baggage handlers and check-in staff, are also being retrained as cabin crew. The pilots are to get 3 days retraining: the other staff 3 weeks.
This flurry of activity by both management and union produces a conflict on many levels. There is the legal level in the high court, attempting to reverse last October’s decision in favour of management. There is the level of inter-union conflict over strike breakers who are already members of a union. There is the suspension of 15 staff, who risk discipline or dismissal. There the prospect of major job loss if the number of cabin crew on long haul flights are reduced. There is a 2 year pay freeze. Finally, new recruits to staff may be paid at a much lower rate than existing staff.
This does present management as acting aggressively. But the union, by returning to court, can also be seen in the same light. This is not surprising as there is much at stake here. Protecting jobs conflicts with the need to reduce costs. Underlying these current conflicts are longer term concerns. Is British Airways down-sizing; is it attempting to join another competitor? This scenario paints a more radical loss of jobs. This produce a feeling currently of job insecurity.  
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