Where Does It Go? - UK Money Blog £

A very informative YouTube video on how the sub-prime market rocked the UK, ending up with the nationalisation of Northern Rock.

It includes a very easy to understand guide on how the banks planned out the sub-prime lending scheme, using Collaterised Loan Obligations (CLO).

The Collaterised Loan Obligations bankers used are less regulated than normal banking.

How The Banks Bet Your Money UK & US part 1

Basically bankers borrow money at a low rate from say pension funds, then buy sub-prime mortgages which gave an income greater than the low interest they were paying. This gave an estimated 26% a year return on investments per year. Big figures for a greedy banker.

It’ll be similar if you used a 0% credit card to buy a buy to let flat - whilst you have tenants you earn enough money to pay off your credit card bill and make a good amount of profit - but if for some reason your tenant cannot pay, you’re left with debts you cannot afford.

Of course, it didn’t end up like that. The banks even leant to people with no asset, jobs or capital, so often they had a specific term for them - NINJA (No Income No Job or Assets) - a derogatory term used by high income bankers to describe the sacrificial lambs that would provide their bonuses. When those NINJA’s couldn’t pay their mortgages, the income for the CLO dries up and the banks are left with huge loans to pay off. Ergo - the Credit Crunch.

If you thought that was informative, the other parts of the programme are available here:
Part 2
Part 3
Part 4
Part 5

One of the first cutbacks in reviewing my budget was my mobile phone - by the end of the contract this had risen to £35 a month after a half price deal had finished 12 months before.  I’ve always been on contract and have never tried pay-as-you-go, so thought I’ll try it out as a way of keeping track of my expenses.

£35 may be pittance compared to the girlfriends bill (£90 last month) but still felt unnecessary as I rarely used all my free minutes (I use email much more)

This didn’t stop 10 minutes of polite “No”s to the 3 salesman trying to convince me to take out a new contract.  I felt 18 months is a long time for any mobile phone contract at the moment, particularly with new deals coming out.

One of the big pluses with a contract phone is that you get a new phone out of the deal, but my Sony Ericsson’s performs well (well it takes calls and texts - thats all it has to do really innit? ) and I’d still be contactable.

Naturally if you use a phone more than I do, you may want to consider a contract, but I’m always conscious that the companies make their money on the contracts, not the phones.

3 my provider tried to sign me up to the £15 a month 300 anytime minutes or texts, which gives you 300 minutes or texts or some combination of the two.  This works out at 5p a minute or text.

I’ll compare this is the Pay-As-You-Go 12p a minute I’ll be on, but know I’ll be a lot less likely to use the phone with this rate upon it.  If I use the phone more than 125 minutes a month, I’ll be better off on the pay-as-you-go.

Am I just being kooky not wanting to be tied to a contract?  I just feel having the money coming out of my account kind of forces you to use the phone more.

Tags: budgeting, mobile phones, 3, contracts, tips