Wednesday, Apr 25, 2007
An avalanche of fraud made this mess and an avalanche of defaults will end it
Bloomberg: Subprime `Liar Loans' Fuel Housing Bust With $1 Billion Fraud
Lack of supply was it? Too much demand? Not enough space?
It was FRAUD, simply and plainly. Coupled with lax monetary policy.
Remember everyone, Japan has a land area of 378,000 sq. km compared to the 245,000 sq. km of the UK, a population of 127m compared to the UK's 60m, is mostly mountainous and only has 20% of it's area available for habitation. Their property market has been in the toilet for 17 years.
And that is with a powerful manufacturing economy. So for all those wondering how long this particular drubbing will take UK plc to limp out of the answer uis >17yrs.
Posted by lvmreader @ 11:27 AM (175 views) Add Comment
13 Comments
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1. Whiteknight said...
Why have self-certified loans not been categorized by the regulators as reckless and negligent lending?
2. Darren said...
I like the comment at the end "I have a master's degree. I'm not stupid"
errr... well yes actually you are stupid.
Looks like US degrees are just about as dumbed down as ours or is it the other way around.
3. lvmreader said...
Same reason why journalist are allowed to "pump and dump" housing as an asset class.
Gordon Brown isn't as on the ball as many think.
4. japanese uncle said...
The simple answer is that regulators and the fraudsters are serving the same master. In the event of failure after plenty of exploitation and misery of some of the public, can be nicely settled by simply saying, 'Sorry mate. We've done our best, but we cannot oversee everything. Some bad guys escape our attention. After all we are all human.'
5. Scott said...
I have been to Japan. Tokyo is still very expensive but other areas are very cheap. However, unlike the UK, you do not need to live within Tokyo's quadrant of the country to work in Tokyo because their trains are awesome. As an example, you could commute from Kyoto to Tokyo. They are 300 miles apart but with stops, it takes 2 hours, but they are building a direct line to be finished in a few years that will shorten it to 1 1/2 hours.
6. Scott said...
Call me stupid, but if I was a fraudster I would be stealing money, not buying debt.
7. Whiteknight said...
Yes. Both true.
However futile I will keep mentioning that journalists must (just as with stocks and shares in the professional market) state what their position is when they write an article. (and locking it all up in trust and making spurious comments is still a hanging offense).
I guess there will only be justice if there is a signifcant resolve by a group of people NOT let those who were on watch at the time melt away into the background.
There is only justice as long as there is resolve and force to prosecute.
8. george monsoon said...
Ireland, Spain, Australia, and the US.. Why can't it be the UK that is crashing!!!!
Come on, before too long, I will be too old to get a mortgage
sorry guys, I don't hold the same speculative views as most on here. I have only one aim. Buy a house at an affordable price. Although I have a passing interest, I don't much care about the bare bones of economics.
9. harold said...
It really is pathetic:
Come on into the sweet shop kids and have a party.
What?! You ate all the candy?! Naughty kids, bad kids - I only said "party", not "indulge". Now you'll just have to sweep up my yard for the next 10-15 years to make up for it (chuckle, chuckle... what a bunch of suckers).
10. David20040_0 said...
Everywhere but the UK is crashing, that is because the UK is an island. And I really don't care about Japan comparisons anymore.
Housing will not crash here, end of.
11. dobber said...
Scott,
Fraud is not just stealing money there are many ways in which fraudsters operate.
If you were the lender and the BTL buyer came to you with the proposition to buy a two bedroom box for £200k telling you they have a 15% deposit which is one of your conditions and part of your security. When in fact they have negotiated a discount from the builder of 20% to cover the stamp duty and legals etc as well and got a valuer to put a fraudulent value of £200k on a property that they know has a market value of £160k, then this is quite simply mortgage fraud.
You as the lender are now fully exposed and have been defrauded into lending money.
The BTL buyer has taken a fraudulent risk with your money that does not belong to him, that is a crime.
12. enuii said...
In the U.K. the headline should read "Liar Loans Fuel Housing Boom".
13. lvmreader said...
@David20040_0
Last time I looked, Japan was an island too. With over double our population a smaller proportion of habitable area. Or am I missing something?
I guess you were just being sardonic? Because the other explanations for your comment are not flattering.