Wednesday, Jul 08, 2009
Lending to be regulated?
BBC: UK to reform financial regulation
"New powers will be proposed to curb bank lending and prevent asset bubbles, such as the housing boom undermining the real economy. "
What? I thought houses prices are an indicator of the economic health of the Country. When they go up, we're all rich! Unermining the real economy? - are these guys on drugs? Sorry, feeling particularly sarcastic this morning.
Posted by phdinbubbles @ 07:27 AM (451 views) Add Comment
3 Comments
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1. paul said...
If you read more closely through, you can see whose pocket the FSA still firmly resides in.
There will be no cap on lending multiples. Instead the banks will use what Turner describes as "the sophisticated tools to measure affordability (which have served the banks, the UK and taxpayers so well in the recent past).
Now we hear that there will be no separation of investment and retail entities either.
So actually no reform of anything at all. This is the patsy BBC trying to make the government sound tough on risk and tough on the causes of risk while simultaneously doing nothing.
2. inbreda said...
not a worry Paul - when inflation takes off and the bond markets force interest rates up, the affordability measure will be the key to destroying house prices. They will live by affordability - they will die by affordability.
3. mander said...
The idea is to find a way to identify and limit "asset bubbles" such as the housing boom, without causing too much damage to the wider economy.
So in their view by not alowing asset bubbles the wider economy will affected. But how can we make money if not by creating wealth manipulating the house prices?