Real Estate /
Banks in Poland selling fewer mortgages in 2011, down 49% [285]
except for the fact that banks don't have 'cash' they have an ability to create money to lend
The banks cannot create the cash until they own/secure the asset. The asset is not secured until the bank gives the money to the vendor. The vendor "HAS" his money. The money has to exist before the bank can leverage it to a larger amount. Hence money/cash is provided by the bank , but you say the banks have no cash!!!. If the bank leverages the asset/interest, by selling it on to 10 different companies then fraud has been committed which explains a lot of the present financial crises. In your world it must be permanent credit. Were you an IT consultant for the EU?
Private debt is not really the main problem, even if you cannot pay your mortgage you are not going to owe the banks 380 billion euros like Greece or 1.9 trillion euros like Italy.
"If the bank leverages the asset/interest, by selling it on to 10 different companies then fraud has been committed which explains a lot of the present financial crises."
This by the way is the "Ponzi scheme", the house/land exists and still has its individual worth and is an asset, whether the value goes up or down is immaterial.
I love this anology of the debt crises:-
It is a slow day in a little Greek Village.
The rain is beating down and the streets are deserted.
Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day, a rich German tourist is driving through the village,
stops at the local hotel and lays a €100 note on the desk, telling the hotel
owner he wants to inspect the rooms upstairs in order to pick one to spend the night.
The owner gives him some keys and, as soon as the visitor has walked upstairs,
the hotelier grabs the €100 note and runs next door to pay his debt to the
butcher.
The butcher takes the €100 note and runs down the street to repay his debt to
the pig farmer.
The pig farmer takes the €100 note and heads off to pay his bill at the
supplier of feed and fuel.
The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks
bill at the taverna.
The publican slips the money along to the local prostitute drinking at the bar,
who has also been facing hard times and has had to offer him
"services" on credit.
The hooker then rushes to the hotel and pays off her room bill to the hotel
owner with the €100 note.
The hotel proprietor then places the €100 note back on the counter so the rich
traveller will not suspect anything.
At that moment the traveller comes down the stairs, picks up the €100 note,
states that the rooms are not satisfactory, pockets the money, and leaves town.
No one produced anything.
No one earned anything.
However, the whole village is now out of debt and looking to the future with a
lot more optimism.
And that is how the bailout package works
