The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
In practise, this tends to strain the credulity of even the most soundly sleeping financial regulator.
Friends come and go. Enemies accumulate.
You pay the expenses and taxes through a consumer loan, not a mortgage.
Economics is politics by other means
Think about a negative-amortisation loan as an interest-only loan plus some fictional interest. This extra interest increases the bank's assets but not its liabilities, compared to an interest-only loan at a correspondingly lower interest. It's free funny-money for the bank, in that it comes with no funding cost - no extra liabilities means no need to borrow more from the CB.
Taxes don't work like that, because they have to be paid in real money, not Monopoly money. So a consumer loan to pay taxes actually increases the bank's liabilities, making it less attractive on paper.
(That, and mortgages typically come with stickier strings attached than consumer loans.)
Of course there are no regulations that a sufficiently incompetent or corrupt regulator cannot fuck up. Foolproof systems do not exist in economics, and even if they did nature is ever at work improving the stock of fools. But as a first line of defence, property taxes are not bad.
by Frank Schnittger - May 23 28 comments
by gmoke - May 19 5 comments
by redstar - May 12 18 comments
by redstar - May 14 16 comments
by redstar - May 6 50 comments
by Frank Schnittger - May 2328 comments
by gmoke - May 195 comments
by redstar - May 1416 comments
by redstar - May 1218 comments
by redstar - May 650 comments
by In Wales - May 31 comment
by Luis de Sousa - May 113 comments
by gmoke - Apr 292 comments
by talos - Apr 2949 comments
by ManfromMiddletown - Apr 245 comments