Thursday, Apr 17, 2008
Discount rate dilemma neatly laid out
ConservativeHome: Why the taxpayer will lose on the ... mortgage securities swap scheme
Good logic by Dr Andrew Lilico over at ConHome...
If the BoE offers to pay too much for the mortgage crap, they are subsidising the banks at the expense of the taxpayer.
If the BoE offers too little, then either a) the banks won't take up the offer, or b) people will see this as a sign that not even the BoE has any confidence in the housing market, thus exacerabting the price crash.
It's lose-lose time, folks!
Posted by mark wadsworth @ 01:50 PM (643 views) Add Comment
18 Comments
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1. titaniccaptain said...
Round of applause for Mark Wadsworth..........bloody well found
2. whiteknight said...
It turns out we all purchased a house on some ludicrous multiple. Its funny - i don't actually see mine but there you go.
3. titaniccaptain said...
Could we take our income tax bills the bank as proof that we have shares in said bank???????.............And then say we want to sell the X amount on the tax bill?????? lol
4. titaniccaptain said...
Just a minute............have we all lost the plot on this site??????????????? Potentialy BILLIONS are being given away..............of our money.........What about the NHS what about Schools???????? And also the groups that are most vunerable like pensioners and the disabled...............we throw money at the F#cking Banks when they cry and try to prop up a market that enslaves us in debt.............Is it me or is something really not right here infact this is B#llocks.......Sorry about my language today as im sure you can see I am fuming....This is a country where the disabled and old have to pay for their care and have to sit and watch the inequality of life as they get less and the rich get more and some of them do more protesting than able bodied people like myself. It is also a country where the banks hold the power and the people are not in control of the banks its the other way around....................THIS COUNTRY IS A JOKE
5. mrmickey said...
Looking at it another way I suppose there are banks out there that still have healthy balance sheets and are going to be feeling a bit cheesed off that their weak competitors are going to be bailed out.
6. mark wadsworth said...
TC, if you want to know what will happen, look at Japan between when their credit/asset price bubble burst in the early 1990s and now. The government nationalised the debt, as a result of which government debt to GDP ratio went from very little to 180% now. Economic growth has been weak ever since and inflation non-existent. Although I doubt the latter will happen here ...
7. This comment has been removed as it was found to be in breach of our Blog Policies.
8. titaniccaptain said...
@Mark Wadsworth
And the uk has virtualy no industry except the service industry................
9. titaniccaptain said...
@Mark Wadsworth
And the uk has virtualy no industry except the service industry................
10. wiltshire said...
I honestly don't think it's going to make much difference what they do because I think the housing market is mortally wounded now. I cannot see people flocking back to the housing market in big enough numbers now to save it. Sentiment must have taken a hell of a battering so far this year and will continue to do so for at least the rest of the summer. I think people will be extremely cautious before considering buying anything for a long while yet. Additionally if the media start trailing the story that the government have saved the day, many BTL-ers will probably take that as an opportunity to sell up quickly which could lead to a huge expansion of the numbers of properties for sale and thus a driving down of prices.
Bottom line is you cannot inflate a bubble this much for a decade and then save it's skin within a matter of weeks.
11. sold 2 rent 1 said...
The Tories would have done the same though.
Let's not fall for the trick "We wouldn't have done this if we were in power".
12. Unplugged said...
@TC. Something really isn't right. How can everything be so back to front? Socialism for the rich! I question whether Lab/Con/Lib aren't all part of the same group.
Come on, have our leaders really learn't so little from history as to be so incompetant? Our knowledge of social sciences, economics, technology and so on is greater than ever before. Has the UK lost control of its borders? Does mass immigration benifit the economy? Or has government been increaseing immigration for other reasons? The UK has/had a strong culture which is now being broken down so we can't stand together. There are now so many issues that society doesn't know where to look next!!
http://eutruth.org.uk/eu200bn.htm
http://eutruth.org.uk/euconst.htm
How many readers have actually been bothered to look into the EU treaty? How about the treason act being modified after a number of prominent people had committed treason? Take a look into this and I think you'll start to find out some worrying facts. There is some truth here.
http://en.wikipedia.org/wiki/Demos_%28UK_think_tank%29
http://en.wikipedia.org/wiki/Julia_Middleton
Conpiracy clap trap or not these things at least need to be talked about. And it IS relative to house prices. I reckon house prices have been diliberately inflated to further the aims of the EU/communist party/NWO/whatever.
Many on this blog seem to think that they'll make a fortune on BTL or get the house of their dreams when prices fall by 50%. Do you really think its gonna be that straightforward. No way.
13. This comment has been removed as it was found to be in breach of our Blog Policies.
14. hpwatcher said...
@titaniccaptain
the ice berg, the ice berg!
15. titaniccaptain said...
@S2R1
Well said
@hpwatcher
Im cooler now had my rant
16. Unplugged said...
@titaniccaptain. Agreed, things really aren't right. How can everything be so back to front?
Have our leaders learned so little from history so as to be so incompetant? They understand more about social sciences, economics, technology etc than ever before. Socialism for the rich maybe? Do we actually have three main parties or just one? Think about it.
Does immgration really benifit the economy? Have the government lost control of our borders? Are they just forcing Immigration on the UK to destroy our previously strong social fabric so that we cannot oppose them?
Anyone actually taken a proper look at the EU treaty? How about the changes to the treason law? There seems to be some truth here and if so think there is cause for concern.
Take a look before you dismiss this:
http://eutruth.org.uk/lisbontreaty7.pdf
http://eutruth.org.uk/tentruths.pdf
http://en.wikipedia.org/wiki/Julia_Middleton
http://en.wikipedia.org/wiki/Demos_%28UK_think_tank%29
17. Unplugged said...
Socialism for the rich. Thats their common purpose.
18. letthemfall said...
wiltshire:
I think you're right; I can't see houses bouncing back now. The question is how much of a bailout will the govt offer the banks and how much, if any, is justified. Is it a case of staving off something akin to a depression, like Japan. How will the banks react to extreme measures? Markets seem to panic in response. The banks avoided taking emergency loans in case it made it obvious they had problems. Meanwhile in the USA, house prices are still falling despite all the money thrown about by the Fed. Stand by for more bad headlines.