Subprime Returns: Have the Banks Learned Nothing

-

The financial headlines are quietly echoing 2007 again — rising subprime exposure, this time not in housing, but in car loans, credit cards, and corporate debt. Barclays, for example, has heavy exposure through auto finance and consumer credit, while at the same time taking on major borrowing to buy assets.

On the surface, everything looks stable — employment figures are holding and markets remain calm. But underneath, debt quality is deteriorating. More borrowers are defaulting, and the secondary lenders feeding these loans are tightening terms. It’s the same story told a different way: when credit expands faster than income, cracks appear.

The subprime problem isn’t just about bad loans; it’s about systemic dependency on borrowed money. The banks profit while the public absorbs the risk. And when markets tighten, the ripple effect always lands hardest on ordinary households and small investors who trusted “safe” institutions to manage their savings responsibly.

It's not just the UK.

I recently posted about the Hong Kong property markets and debt related to HSBC bank and other lending institutions who have increasing corporate debt on their books.

Bank of England recently increased banking deposit guarantee to £110,000.  Is that telling us something about their concerns around the banking system.

Isolated these seem to be just another banking story lost in other headlines.  Coupled together, they show an alarming trend of systemic banking issues.

So what’s the lesson? 

Don’t wait for the system to protect you.

Be Your Own Bank

Becoming your own bank means learning to use the same principles banks use — liquidity, leverage, and control but in your own life. Instead of borrowing to consume, you build income-producing assets.

You create your own cash flow, keep reserves for opportunity, and let compounding do the heavy lifting.

Banks make money from lending and reinvesting. You can too by building multiple income streams, investing monthly rather than annually, and putting your profits back to work. The goal is financial independence, not dependence.

Be your own bank, means you stop living on borrowed confidence and start managing your wealth with the same precision the banks do.


Read more indepth at Subprime Returns Article. 


Comments

Post a Comment

Popular posts from this blog

The Rising Strain on Hong Kong Property Loans

-
 Recent headlines claimed “$35 billion of bad loans at HSBC Hong Kong ”   but that figure isn’t supported by the data.  The truth is subtler yet far more telling.  Hong Kong’s property market slump is squeezing bank balance sheets, exposing credit fragilities and testing regulators’ ability to contain contagion. This commentary corrects the record, explores what’s really happening inside HSBC’s Hong Kong loan book, and maps the early-warning signs for investors, entrepreneurs, and policymakers watching Asia’s financial pulse. The Headlines vs The Facts While the headlines claim $35 billion of bad loans, the data doesn't form part of any official fillings.  What is verifiable though is: Hang Seng Bank (63% owned by HSBC) reported HK$25 billion (~US$3.2 billion) in impaired property loans — up 85% YoY . The entire Hong Kong banking system holds around US$25 billion in non-performing loans — a two-decade high. HSBC has US$32 billion in Hong Kong commercial re...
Read more

Is The UK Entering A Doom-Loop?

-
 Switch on the news and all you hear is doom loop.  In this article let's look at what a doom loop is, how it affects us and how we can benefit from it. What is a Doom Loop Imagine standing in a hole and trying to dig yourself out.  The more you shovel the deeper the hole gets. This is the situation governments find themselves in - not just the UK but Japan and some EU countries. Why? Governments borrow money to manage the day-to-day services that they provide.  They pay interest on the money with repayments covered through the income they generate with taxes.  The surplus cash is invested into innovation and infrastructure. When the economy slows, less tax income is generated and the interest rates for borrowing go up making more and more expensive to borrow money. The government is left with two options - reduce expenditure and/or increase taxes. Facture in, difficult to control inflation and central banks keeping high interest rates, the economy struggles to ...
Read more

The Side Hustle Economy: A Symptom of a System Under Pressure

-
Image
Side hustles used to be a bonus. A way to earn a little extra, pay off a bill, or save for something special. Not anymore. According to the Daily Mail, one in four people now has a side hustle , yet the average income works out to just £6.60 per hour  barely half of the national average wage of £12.21. And that statistic tells us everything we need to know about the state of the economy. People aren’t juggling two or three jobs because they want to.  They’re doing it because the cost of living has climbed faster than wages, inflation has eaten into savings, and financial stability feels further away than ever. But here’s the uncomfortable truth: The problem isn’t the side hustle. It’s the way the side hustle is built. Most people choose side hustles that: rely on trading time for money offer very little scalability depend entirely on personal output create more stress, not freedom Selling second-hand clothing, freelancing, content creation, bas...
Read more