Sunday, Jul 27, 2008
Hutton feels the pain
Guardian: A week that taught me home truths about the housing crisis
In today's housing market, you don't argue with a potential buyer. Selling our house required us to exchange and complete in seven days and of course we agreed. The house price surveys don't convey the scale of the crisis in the market or the price falls.
Posted by quiet guy @ 09:31 AM (1129 views) Add Comment
12 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. paul said...
"We need interest rate reductions and fast."
Nope. The housing market needs that - the economy really, really doesn't. Runaway inflation will hurt.
"We also need some government-initiated form of reinsurance for new mortgage lending"
Two things - if this involves giving lenders more money, then that's been tried with the Emergency Liquidity Scheme. Didn't work. If this is making banks pay to indemnify each other (similar to Lloyds of London), well they tried to initiate that a couple of weeks ago but (surprise surprise) they didn't want to take Mervyn up on that one!
"We need the RMBS market re-opened by a combination of creating a clearing corporation and the Bank of England being more generous about offering potential lender-of-last-resort facilities to the market."
Oh dear. A clearing corporation like Freddie Mac and Fannie Mae perhaps - seeing how well they've worked in the US? The BoE being more generous to mortgage lenders. Hmmm. Isn't that exactly what got us into this mess?
2. Brutal Deluxe said...
Its not suprising he calls for "interest rate reductions and fast."
His wife Jane Atkinson has a property business "First Premise"
3. Cheekie Charlie said...
"American houses were 25 per cent too high last year, ours were 50 per cent too high."
Then let it happen!
4. letthemfall said...
I don't believe that house prices have fallen anything like a 1/2 to 2/3 the amount they need to - not where I live anyway. It is not clear what dropping interest rates would do. A danger is this would stop the correction in prices - although that hasn't happened in America - and so maintain the huge inequalities that have grown up during the house bubble. The biggest beneficiaries would be debtors: the losers would be savers. And low saving is supposed to be one of the economy's biggest problems. Cheap money has caused the problems. I don't see how more cheap money will solve them. On the other hand I suspect that interest rates will make little difference in the short term: debt has to be repaid and until it is the economy will contract.
5. mark wadsworth said...
"Cheap money has caused the problems. I don't see how more cheap money will solve them."
Exactly.
Hasn't WIll H been a Nulab cheerleader so far? He's changed his tune a bit.
6. Dbcreed said...
One encouraging thing in Hutton's article is the "insider" infomation in column four " A couple of insiders" ( in Treasury?)" justifying the government's laissez-faire activity, have told me there needs to be a substantial correction before creating any American-style interventions to stabilise the market." The problem is that will be a change of government before the housing-market bottoms out and an incoming Conservatives would rush to prop house prices up by lowering interest rates etc.Brown might try the same thing to save himself.
7. Andyh said...
I suspect that his concern in stopping the collapse of the housing market is motivated by the fact that his wife is a property developer with a string of inner city properties. Also very odd to hear a man who has hardly ever had a good word to say for the US talking up their system of market support. My how your priorities change as you grow up.
8. Jimmyb said...
I think the government are misjudging how many people actually want prices to fall. Don’t they realise that everything is rocketing in price and needs to come down and to do that they need to keep the money supply tight and ride out the storm. If they let it go then wages must be allowed to follow and they can’t blame anyone for wanting more money, public or private sector.
9. beartil2010 said...
These guys are cheap money junkies... they don't like going cold turkey. 'Just gimme me some more man!' even though everything they say doesn't make any sense and will only hurt more in thelong run.
10. icarus said...
He's worse than bankers asking for bail-outs. He's a statist who argues that everybody will benefit from chucking money at the banks.
"I'm not saying all this to benefit the bankers, I'm saying it to benefit the man in the street, although I realise it will help the bankers too....and, er, maybe it will help them to a greater extent than it will help the man in the street".
If the US has taken the kind of aggressive action that Hutton would like to see here, he should specify how that action has helped the US to avoid recession and house price meltdown.
11. Markus said...
On one hand he is stating the obvious, as there are some correct observations here, like that the houses in UK and US are completely overvalued and that both countries are "saturated" with personal debt. Unfortunately there are some very wrong conclusions. Essentially he says he wants the crazy bubble to be saved by interest rate cuts. Not only will these not work as far as saving the bubble is concerned. They will destroy the meagre savings that the British have! The lack of savings to counterbalance all that debt is the core of the problem. The debt has to go. And it can only go the hard way after years and years of not wanting to listen!
12. paul said...
"Its not suprising he calls for "interest rate reductions and fast."
His wife Jane Atkinson has a property business "First Premise"
Ah, now that's interesting. And a complete corruption of journalistic integrity.