am
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Post by am on Jan 13, 2016 22:46:37 GMT
IMHO Ratesetter is the least likely to collapse in a crash - moderate interest rates, moderate risk. Others have Bot-tastic headline rates and may be less safe. Jack P Ratesetter are dependent on their provision fund which is a massive £17m. The last time I checked it was all in one bank. Not sure if the govt will be able to bail out the banks again, so the provision fund might drop to £75,000. What would be a safe alternative? Ultra-short dated gilts?
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adrianc
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Post by adrianc on Jan 13, 2016 22:53:38 GMT
What would be a safe alternative? Ultra-short dated gilts? Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders?
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am
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Post by am on Jan 13, 2016 23:12:31 GMT
What would be a safe alternative? Ultra-short dated gilts? Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders? Not (financially) liquid enough for the RS provision fund.
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ablender
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Post by ablender on Jan 14, 2016 0:01:10 GMT
What would be a safe alternative? Ultra-short dated gilts? Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders? Fishing hooks and a fishing line would probably be more useful. You can always eat the fish raw.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jan 14, 2016 1:42:58 GMT
Ratesetter are dependent on their provision fund which is a massive £17m. The last time I checked it was all in one bank. Not sure if the govt will be able to bail out the banks again, so the provision fund might drop to £75,000. What would be a safe alternative? Ultra-short dated gilts? That would work. I was just thinking of spreading the amount across a few different banks, just wouldn't want £17m in the 2016 version of Northern Rock.
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mikes1531
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Post by mikes1531 on Jan 14, 2016 4:34:57 GMT
The SS 'stress test' linked above is, IMHO, a bit of a joke. It's intended to be an illustration of the benefit of their Provision Fund. It would be OK if it were current, but it isn't. The loan shown as their largest one is no longer their largest one. The size of the PF used in the calculation is months out of date. It was a good idea, but SS haven't bothered to keep it up-to-date. The problem has been pointed out to them on a number of occasions, but they've chosen not to try to update it. They obviously aren't concerned about its accuracy. Maybe nobody cares, but I don't think the regulator would be very pleased if it were to be pointed out to them.
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pikestaff
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Post by pikestaff on Jan 14, 2016 8:35:37 GMT
IMHO Ratesetter is the least likely to collapse in a crash - moderate interest rates, moderate risk. Others have Bot-tastic headline rates and may be less safe. Jack P Ratesetter are dependent on their provision fund which is a massive £17m. The last time I checked it was all in one bank. Not sure if the govt will be able to bail out the banks again, so the provision fund might drop to £75,000. - are you able to comment on this? It occurs to me that because the beneficial owners are the lenders we might each individually get up to £75,000 FSCS cover on the fund, but that this would depend on what other exposure we already had to the bank. Have RS had any advice on the position?
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adrianc
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Post by adrianc on Jan 14, 2016 8:36:02 GMT
The SS 'stress test' linked above is, IMHO, a bit of a joke. It's intended to be an illustration of the benefit of their Provision Fund. It would be OK if it were current, but it isn't. The loan shown as their largest one is no longer their largest one. The size of the PF used in the calculation is months out of date. It was a good idea, but SS haven't bothered to keep it up-to-date. The problem has been pointed out to them on a number of occasions, but they've chosen not to try to update it. They obviously aren't concerned about its accuracy. Maybe nobody cares, but I don't think the regulator would be very pleased if it were to be pointed out to them. "to some extent or another"...
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pikestaff
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Post by pikestaff on Jan 14, 2016 8:49:32 GMT
Some random musings:- 1. If true p2p then lenders are not lending to the platforms themselves, but to the borrowers on the other side of the platform. That means there's no "bank run" risk, and no leverage risk (but these might be balanced by the lack of FSCS cover). 1a. Which is not to say that a wave of defaults could not have a negative impact on a particular platform's ongoing business, and possibly confidence in the wider industry. 2. The type of lending / product needs to be considered. Unsecured consumer lending is very different to asset backed lending which is different again to SME lending etc. 3. Consider what type of crash(es) could occur, how likely they are, and what the impact might be on the borrower you're lending to. 3a. Personally speaking I think a "global crash" is unlikely, but I think about risks associated with US / UK stock market corrections (both toppy); Brexit (and probably another referendum on Scottish independence); sudden oil price rises; China slump; deflation; more Eurozone trouble; unexpected inflationary pressure (QE unwinding?) leading to an interest rate spike; UK property market slump. Of course with any of them there will be some degree of associated collateral damage. 3b. Of that list I think none are likely, but the most likely are US / UK stock market corrections, Brexit leading to Scottish independence and more Eurozone trouble. They're not necessarily unconnected. 3c. If a significant crash of some kind does occur the biggest risk is likely to be that central banks and governments don't have much, if anything, left in their toolboxes to deal with it. What could a platform do about any of this, assuming it had enough advance warning and acted correctly? I suspect that the answer is not much more than "tighten up on lending criteria". The one thing I'd add is that, while markets (eg the stockmarket, property) are prone to crashes, real economic activity tends to change by less and more slowly. I'd be more worried about p2p lending on property than other types of p2p, and I'd be most worried about platforms combining the riskier end of property lending with potentially-unsustainable promises to lenders. For those happy to take the risk, make hay while the S un S hines.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Jan 14, 2016 10:17:08 GMT
At least property has some value whereas unsecured business or personal loans are more likely to become worthless with a major crash. What goes down comes back up eventually so it may take time but a total loss is unlikely. Most of my money is in Investment Trusts with long histories of dividend increases, so I never sell in a downturn, but I don't become depressed when the valuation drops either. Every investment is risky but hoarding cash will be worthless in the long run once inflation gets back to normal levels and stops being held down by artificially low interest rates for political advantage.
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Post by yorkshireman on Jan 14, 2016 10:19:41 GMT
What would be a safe alternative? Ultra-short dated gilts? Gold? I’ve still got some in my portfolio.
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am
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Post by am on Jan 14, 2016 10:43:13 GMT
RS wants its provision fund in a liquid non-volatile asset class, so that the money is there when it's needed. While gold has been historically negatively correlated with most other asset classes, which is a plus point, it is also pretty volatile.
If I understand correctly a proportion of the provision fund's assets are in non-performing loans. Does anyone recall how deeply they are written down in the accounts?
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Post by ablrateandy on Jan 14, 2016 11:47:12 GMT
What would be a safe alternative? Ultra-short dated gilts? Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders? I remember a call with a client once before a bond issue and the markets were particularly horrible. After giving him a rundown I flicked to my Bloomberg screen where it showed a full summary of the NASDAQ with every stocks highlighted in red apart from two that were still green. The only two positive stocks were Smith & Wesson and HJ Heinz. At least it gave us a chuckle.
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ilmoro
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Post by ilmoro on Jan 14, 2016 12:00:08 GMT
Depending on the size of crash we're talking about, have you considered bottled water, tinned food and camping-gaz cylinders? I remember a call with a client once before a bond issue and the markets were particularly horrible. After giving him a rundown I flicked to my Bloomberg screen where it showed a full summary of the NASDAQ with every stocks highlighted in red apart from two that were still green. The only two positive stocks were Smith & Wesson and HJ Heinz. At least it gave us a chuckle. Probably predictable. Two things in the event of global meltdown the survivalists would needs - lots of guns & beans 
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Post by ablrateandy on Jan 14, 2016 12:01:06 GMT
God bless 'merica.
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