Monday, Aug 11, 2008
The current crisis is the natural result of the mammoth housing bubble.
Telegraph: This credit crisis is like the plague and nobody is safe yet
''...With house prices falling, banks face further writedowns that will restrict their ability to lend. This problem cannot be cured by injections of liquidity. The nature of the problem has changed from one essentially about liquidity to one about bank capital, and now also about aggregate demand...''
Posted by hpwatcher @ 09:42 AM (643 views) Add Comment
7 Comments
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1. Stevie Dee said...
"I remain convinced that much lower interest rates will be needed to get us out of this mess - and even this will not stop the process, but merely prevent a recession from turning into a disaster. And once the situation has stabilised, radical reform of banks and the regulatory system will be needed to prevent us getting into this situation again. But that must wait. For now, survival is the name of the game."
Comforting Words!!! But the answer is to divorce the housing market from the clutches of the corrupt - The Game is Up!!!
2. mark wadsworth said...
The answer is better economics education, liberalising planning laws, replacing existing property/wealth taxes with Land Value Tax and making the BoE truly independent and scrapping the MPC.
3. Eternal Sceptic said...
To quote someone else in another context: "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
Perhaps of life as we know it? and like the plague it will wipe out a lot of people.
4. Stevie Dee said...
MW, tax? why tax? free up domestic housing, enlarge housing stock, and allow the commercial sector/properties (shops & business) to run freely. Governed by the success or failure of the businesses, as more successful businesses will superceed old/failing businesses. As for the gentrified or the elite in society, provide them with their designated areas, again open to the free market. Let the big boys play with the big boys, and let the common worker & families be provided with secured housing. You could be a millionaire one day and then a pauper another. But the security & welfare of any society or civilization in my view profits from a more orderly affair. It also makes for a happier society. This current experiment is coming to an end. With this control, it will bring about more liberalised planning laws. But like with this BTL fiasco, the government (with bi-partisan support) need to enshrine certain doctrines or covenents in any initially act, to maintain and uphold the very reason for its being, free from corruption and to maintain and encourage the welfare & prosperity of society.
5. stillthinking said...
Making the BoE independant just means removing BoE appointments from voters. I think, even with the current disaster, that voters should have control of all monetary policy. Good luck with the Land Value Tax. By the way, why don't the Tories point the finger at New Labour as the trigger for the crash with the capital gain tax changes ?
6. Stevie Dee said...
MW, further thought, with the housing market blocked as a point of speculation/investment. Then there are many more avenues for the successful in society to invest their money. As GB would call it "a diverse portfolio". As this world becomes smaller, and having the advantage/privilege of being a multi-cultural society & heritage although at times stained, the UK still have the opportunity of turning this to our advantage. The net result is more wealth creation & job creation, utilizing the real potential, not the pretence of this failed housing boom. Israel is a very good example, whereas the UK is bigger and better (biased opinion obviously).
7. str 2007 said...
IMO lower interest rates will only work if you stop people borrowing more.
Otherwise you start the process all over again al USA 2001 onwards.