Tuesday, November 29, 2005

Strange happenings on the trains

I take a train (well two actually) to work every day and again on my way home. Yesterday evening, due to some strange promotion, every second person in my sardine can, oops, I meant carriage, was carrying a six pack of 500g Onken Natural Biopot set yogurt. It was quite amusing watching these people's expressions and antics as they tried not to drop the 3kg load of yogurt every time the train lurched forward or came to a screetching halt. I really wish I had a camera and the space to use it in, as it would have made a very funny photograph.

Then this evening I was in my sardine can, erm, carriage, which sounded like it was full of whinging Americans. One particularly loud guy (I kept looking for where he managed to hide his megaphone) was whining about the fact that the Christmas gift his cherished wife had hinted would be suitable this year was terribly expensive.

What he actually said was that "I'll need a second mortgage to buy her that!", and "The way she spends money I'll be needing a third mortgage to cover my second mortgage". Which got me thinking about second mortgages and mortgages in general.

I did some checking and in the UK you can generally only have one mortgage for a property, and the term of the mortgage cannot extend past the lifetime of the borrower. In Japan a mortgages of over 100 years with the obligation spanning a few generations are fairly common, although a property can only be used as colatteral for one mortgage at a time.

In muslim countries Islamic law forbids the payment or reciept of interest so they have a couple of alternatives. Firstly there is the Murabaha mortgage, where the bank buys the property and sells it to you immediately at a higher price and then you pay the bank back in installments. This technically bypasses the whole interest issue, but if you ask me, its playing with sematics really. Then there is the Ijara mortgage, where the bank again buys the property, but then they lease it to you. You pay rent and a bit of the capital each month until the property is paid off.

Then we come to America where for some reason you can take out a mortgage on real estate which has already been pledged as collateral for an earlier mortgage. The second mortgage carries rights which are subordinate to those of the first. There are even third mortgages on top of second mortgages. This sounds a bit surprising until you realise that America as a whole owes (at the time of writing) $8,102,530,522,238.62 or looking at it another way about $27,204.22 per person. you can find more details at the American National Debt Clock website. America functions on debt and would crumble without it. This has inspired me to look further into national debts and per capita borrowing and who owes who, and how much, but that will be in another post.

Strange what you can learn when you overhear a conversation on a train.


Blogger Ann said...

what a literate, thoughtful blog you have.

the bit about the "bazaar" diner was fun

9/4/08 06:42  

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