Monday, Mar 26, 2007
READ THIS!!!
Guardian: We have nothing to fear but Wall Street
It is now becoming clear that there was fraud on a pretty massive scale. There will be more mortgage lenders filing for bankruptcy and, no doubt, some class-action lawsuits.
Posted by inbreda @ 09:37 AM (265 views) Add Comment
18 Comments
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1. lvmreader said...
Finally, a mainstream analysis of the real reason.
CDS, ladies and gentleman, MBS, CDO fuelled all this.
2. royston said...
He's right, you know!
3. Rep013 said...
Excellent article, very pertinent to the state here in the UK.
Which way will it all go?
4. lvmreader said...
If you look back at some of the articles I posted over the last several weeks (specifically on monetary policy), you may see I talked about this.
Some more predictions:
5. geed said...
This gives me hope that the UK will soon be facing a similar situation, arguably it is happening already. The tide is painfully turning as the media propaganda machine is running full steam ahead at present with "nothing to be seen here, move along" type stories. Every now and then an article like this crops up and I realise that I am not going insane, and maybe, just maybe I have not lost my financial marbles.
6. japanese uncle said...
R: Well done, Larry! Nice piece of article!
E: Thank you, governor sir.
R: It's the right time for us to drive deadly fear among those stupid millions, that the house market will really crash.
E; Yes, sir. Indeed, it it high time we went on reaping, isn't it? We have been holding this for quite some time. Sub-primers in the US and those idiots in this country are the same creatures. Its was all clear to us that they wouldn't be able to catch up monthly repayment sooner or later. But no alert was mentioned by the media including us and banks were all too happy to give away six-digits mortgages to factory workers and clerks. It was an impressively well-coordinated campaign wasn't it, sir? Only the governor of your influence could do this, sir. Now is the time for the long-awaited fusillade of fear, isn't it, sir?
R; But there is an exception. As you may know there is a dangerous website called HPC They are formidably hardheaded bunch of guys.
They are speaking the TRUTH. I can't put up with them!
E: They are insignificant among the big boys, sir. And your instruction seems to have been utterly thorough. Look Daily Express is still singing the praise of the property boom as of this day.
R: No, they haven't yet heard my instruction as my errand was loafing on the job.
L: But your colums didn't mention anything about it, but just driving them mad, saying house price is going up because of the underlying economic rationale. Those retarded millions cannot see what the real problem is, and take on massive motrgages, beyond any .
7. royston said...
"Palley's solution to this dilemma is quantative measures to regulate the supply of mortgages" (i.e. credit controls)
Credit controls can't really fix the problem though. Banks will concentrate lending on those with equity (which protects them against price dips), so that there will be little reason for prices at the medium and top end of the market to come down at all. If the BTL brigade continue to have unfettered access to mortgages, the bottom end will not correct either. All that would happen is that those without property or equity would find it even harder to get on the ladder.
What we need is credit rationing - better access to credit on better terms for home-owners, with poorer terms and access for investors and speculators. Maybe we even need a government grant scheme to subsidise first-time buyers. (I bet Gordon would choke on his porridge at that idea).
8. tyrellcorporation said...
Royston, there is nothing Gordon would like more than to create a new tranche of client state automatons who are reliant on state handouts. He'll probably attach some sort of join-up clause though that ties you in for voting for him for the next ten years.
BTL is certainly key to the market now though and IR rises are key to making these guys sweat and start to sell. Yes they bleat on about being in it for the long-term but that's just bravado and they'll sell-up pretty sharpish if things start to get tight or the market takes a downturn.
9. mrmickey said...
When people finally realise that their being robbed blind I suggest as a substitute to fox hunting we bring in banker/polititian hunting it's perfectly humane for the fox and will provide hours of fun for the hunt followers. Could also be televised on a pay per view basis, i'd watch it.
10. lvmreader said...
@tyrellcorporation - well siad. I agree.
The last thing this country needs is special access for certain groups.
Govt should not give special subsidies to preferred groups (who are perefectly capable of lookin after themselevs) in the free market. Big Govt is what gets us into big trouble in the first place.
We clearly need protections for the very young and very old, but everyone else (provided certain basic laws to protect minorities from mob violence) has to fend for themselves. Otherwise we get a nation of handout-junkies.
Let the feckless suffer the consequences of their stupidity and let them be a lesson to future generations.
We must equally seek to punish in the most severe terms (and I mean Category A prisons) those executives of banks who abetted fraud. This will be THE only clear way to fix this mess for at least 20 years. We need plea bargaining and asset seizures. Let those crooks "rat each other out". Prisoner's Dilemna.
11. Shipbuilder said...
But sure the Guardian's a lefty socialist liberal paper - why would we listen to it?
12. royston said...
tyrellcorporation / lvmreader,
Even if we can squeeze out the BTL brigade, how do we fix the bloated prices higher up the chain? They are totally out of line with long-term historical averages - as I see it, either 1) you restrict demand (i.e. credit) and slow / reverse HPI or 2) you inflate everything else at a faster rate than HPI. Inflation is clearly happening in some areas that the PTB currently choose to ignore - but at a slower rate than HPI.
What is likely to happen if interest rates rise enough to have a substantial effect (i.e. if they rise sharply)? Houses of the over-stretched will be repossessed and sold relatively cheaply at auction. Those who's mortgage payment are a low fraction of their income will simply ignore the market and not move, since the market will not provide the inflated price that they have come to expect, i.e. the market will go thin. (If people were rational, they should use this as an opportunity to move up. But, then again, if people were rational, bubbles wouldn't happen in the first place!). In a thin market, supply will be driven by repossessions and deaths (and BTL repossessions could be substantial). Whether this will lead to a major correction in house prices depends on the level of demand. The impression I get from this website and the media generally is that there are a lot of people wanting to buy if only they could just afford it. Unfortunately, these circumstances do not spell major price correction to me.
I accept that my proposal is radical and may not be (probably isn't) the solution, but the current situation is so f*#@~d up that we have to start exploring radical ideas.
13. cyril said...
If house prices start to go down, lots of people could survive say 20% drop in prices before they're in negative equity, assuming they haven't remortgaged up to the hilt.
The problem is that investment in houses has kept the economy afloat because of the amount of borrowing it has encouraged (£1.3 trillion and counting). Once people can't borrow any more it will all begin to unravel. People will have to start working for a living again, and this is not easy if we are competing with other countries like China (or anywhere else really).
14. paul said...
Working for a living?
We haven't done that for years!
15. lvmreader said...
@royston
I do believe that you will find that when lending criteria are re-applied and cheap money dries up (an d money is only used to represent PRODUCTION of some good or service), you will find that a lot of the problems of alleged supply and demand disappear. Many folk with actual savings, will then be able to get on he housing ladder fine, many others will be ruined.
I concur and admit that the fallout from this potential scary situation is almost unfathomable in terms of civil unrest, but our EgoManiac Dynamic Duo (Blair & Brown) have ruined this country.
When people think that UK exists in its own little bubble, they are dreaming. Our relatively strong currency allows us to import food and raw materials very cheaply. Wihtout it, it is questionable how long this country could stand. Our nominal populatin is probably only 15-20million in terms of what we can support here, so the bigger fear is currency collapse.
With a currency collapse, inflation gets to Zimbabwe levels. Pound vs Dollar is a pointless comparison.
Let us look at who we import food and raw materials from. We need to set things in order before a bigger disaster.
Everyone needs to understand how big the picture is and how things link together. Gordon Brown is an economic criminal. Tony Blair is a War Criminal.
A shooting war in the Straits of Hormuz will cause inlfation to increase, oil futures soar in value immediately. Worse still, we run the risk of the rest of the world refusing to trade with us for supporting Imperial wars.
Remember in 1975 we had to borrow £20billion from the IMF (FY2005) to support the currency.
16. mrmickey said...
I wonder if the neu labour version of the stasi read this website, we all might be getting a visit in the early hours soon.
17. sovietuk said...
mrmickey I am just itching for a New Labour canvasser to come knocking on my door . It will be his last time.
18. lvmreader said...
The Emperor not only has no clothes, he is butt naked and has warts