Wednesday, Apr 30, 2008
A house of cards
The Guardian: A house of cards
"Despite the lurid headlines, the government must not bail out the housing market: its own process of self-correction should be allowed to continue"
cif does tend to attract quite a lot of comments so it might be interesting to check back later and see where the groundswell of liberal opinion is heading. In the past I've found a lot of the comments to be suprisingly pro HPI! Maybe they've all got investment properties they're worried about.
Posted by becky @ 12:31 PM (1093 views) Add Comment
12 Comments
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1. planning4acrash said...
Ehem, the housing market is NOT being bailed out! The banking system is. This article should have said that a contraction in the money supply is the result of markets re- pricing risk and should be allowed to continue, unfettered!
2. planning4acrash said...
Resources have been mis allocated, and the market is constantly seeking an equilibrium, fought against by vested interests. The dot com crash, sub prime, all natural market responses to failed monetary policy.
3. dohousescrashinthewoods said...
"Gordon Brown and Alistair Darling must [...] recognise that any baling-out of the financially reckless, [...] will be [...] electoral suicide"
I for one won't be voting for a government that panders to the reckless by robbing the prudent. Time people learnt a sharp lesson in personal responsibility. I've been learning the hard way for a decade that here in the UK sensible behaviour does not lead to beneficial outcomes.
4. letthemfall said...
Good to read the occasional hard-hitting article. I wonder how many people have been pulled into this bubble. I don't suppose it is as big as, say, the South Sea bubble, but it's clearly bigger than the dotcom or indeed the last housing one. But we can note that the wad of money shoved at the banks has not really changed anything - mortgages are still going up and getting scarcer. The credit crunch is still with us and remain so, barring some lunacy from the govt, until the debt is unwound; by which time houses will be priced according to their value - a long way below current levels. And I can't see anything the VIs and other assorted crackpots can do to change this.
5. dohousescrashinthewoods said...
p4ac - good point, but I fear the headlines will continue to chime that "Gordon brown is saving homeowners by lowering interest rates"
1. Gordon Brown is not lowering anything - the BoE is independent, remember?
2. The BoE's actions are intended to provide liquidity, not lower mortgage rates. (actual outcome is a different discussion)
3. Banks are repricing risk, so liquidity and interest rate cuts are not direct drivers of mortgage rates.
4. The BoE (David Fairyflower notwithstanding) say they are keen to raise rates to stay on top of inflation.
5. Gordon's only part in this is to put falling house prices into CPI in order to steer the BoE's hand.
Let's face it, an "independent" Bank of England that has both its objective and its guiding data determined by government is "free to operate" in the same sense that a marble is "free to roll" wherever it wants, given a drainpipe and gravity. Tell 'em to independently follow the number and then control the number.
6. Adrianvincent said...
This guy (Rob Williams) sounds like he's a regular on here: "property porn".
7. uncle tom said...
"and will continue to fall by up to 30 or 40%"
Slowly the media is beginning to agree with me...
..all I want to see now are the words 'at least 40%'
8. inbreda said...
All comments under the article are in complete agreement so far!
I wonder if this has anything to do with the fact that greedy BTLers who kept MEWing to buy and constantly leveraging upwards, now own numerous properties thus forcing numerous to rent. i.e. by buying 30 properties, and pricing 30 people out of the market, and forcing those 30 to rent they have created a situation where the number of people who want a crash outnumber those that don't by a factor of 30 (or whatever the real factor is - but you get my point)
9. last_days_of_disco said...
Even the guardian says so, it must be true! ;-)
10. planning4acrash said...
The banks are yet to complete milking the tax payer. This will be expressed as in the interest of taxpayers until banks have exactly what they want. They will then bring down Brown and start a new agenda with Cameron or whoever.
11. This comment has been removed as it was found to be in breach of our Blog Policies.
12. eyeoftheweasel said...
Inbreda, you might well be right about more of the UK public wanting a property price crash than not wanting one.
However, I suspect that within the not-so-hallowed walls of the Houses of Parliament there are a considerable number of MPs dabbling as amateur BTL landlords. This disproportionately high representation of VIs will want to keep stoking the bubble (or at least slowing its deflation) for as long as they can, regardless of what the public really want.