Its called managing their bank accounts wisely. There is a little known bankers loophole that is legal, and if you structure your accounts well (easy as a phone call) you can tap into “reverse compounding interest” by utilizing a special type of an account, and it will reverse the aging of interest and create from $15,000 to $50,000 + EQUITY per year instead of that being interest paid.

See this great company out of california, that sells the mortgage solution software called “Mortgage Secret Planning Software” that teaches and instructs you all the way to payoff. There is no refinance needed and they will not try and offer mortgages unless you request one.

See the website: http://www.mortgagesecret.us

Reply: You are right that the best way to avoid grief in the housing market is to plan your finances sensibly. This site does not recommend any particular commercial solution and I have not checked out the offer you refer to, on which people would need to take advice to satisfy themselves of how it worked and if it is good value.

Interesting post (as always).

But as a taxpayer, what worries me is that we could bail out the shareholders for very little benefit to us.

Of course, we all feel sympathy for the grannies who are sitting on devalued shares from demutualisation. But let’s remember, to all intents and purposes, it was a windfall for them in the first place.

And in any case, the bulk of the shareholders are not grannies. In fact, a good chunk of them are now meat eating hedge funds who have picked up the smell of taxpayers’ blood in the water (cf G Soros 1992). They have bought in because they reckon they can face down Brown and Darling (and btw in the process they’ve also kept the share price off the floor). One of the leanest meanest funds around now owns 6.2%.

Obviously, none of us would start from here, but I’d favour something like the Anatole Kaletsky plan- a clear statement that all loans (including that rolled up penal interest) must be repaid by end-Feb, backed with a legislated plan to nationalise on 1 March if necessary. If it comes to nationalisation, the depositors to be paid out, the assets to be sold- even if we have to take a discount- and the operational platform sold or closed down.

However we cut it, we taxpayers are likely to take a loss, but the shareholders must surely lose everything first.

I’m fed up with politicians using my taxes to make sharp operators rich.

Reply: I would not have started from here, as this blog makes clear. I would not have let Northern Rock get into the position it reached, and would not have needed to guarantee deposits in the way the government had to, as readers of this blog in August and Septemebr would know. My latest piece just tries to think through the options for the government, given what they have done. As you say, there is only one way to nationalise the bank without compensating shareholders, and that is to first withdraw the Bank of England credit and then be prepared to take it all over for

The shareholders should receive nothing if it is envisaged that the liabilities exceed its assets. It is not the taxpayers job to bail out the shareholders of a profligate company. It sends all the wrong signals.

In this matter it would appear that there is

NR are borrowing at penal rates.

To pay those rates, the money has to come from somewhere.

It isn’t the shareholders. NR are not issuing more shares so there is no new money coming in.

Depositors have and are leaving. The borrowing requirement from the government is going up.

That leaves one choice. NR has no choice but to increase its mortgage rate. Then the mortgage payers will on a whole try and leave. When they leave, NR can start paying off the government loans.

The balance, is to not force people into bankruptcy, just to force them to leave ship.

Nick