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Posts posted by Wad

  1. Last week I was just beginning to get a feeling that maybe the bottom in the financial markets would be around 31 March but only after another 25% lurch down.

    Given what I have read this weekend and more especially having read some excellent posts on HPC I feel I may be being to optimistic.

    Frankly this could spin completely out of control if the right downs are so bad that people are shocked into a panic.

  2. This is getting bad look at this Telegraph article published in the last hour!


    But another urgent situation is now looming: banks are about to report their results for 2008. It has become clear over the past few weeks that those numbers are going to be far worse than thought, after a brutal fourth quarter of last year when some banks lost billions of pounds.

    RBS alone could report a loss of about £20bn, which would be the biggest UK corporate loss in history, beating the £15bn loss notched up by mobile phone giant Vodafone in 2005.

    Meanwhile, HBOS, which owns Halifax and Bank of Scotland, is understood to be sitting on so much bad debt that the Government is concerned that its acquirer, Lloyds TSB, will not be able to continue to lend to customers unless it is given more help from the Government.

    As I thought, this new bailout is all about getting the banks through their year end reporting season and only secondarily about getting lending going again. I read elsewhere that Northern Rock is to get £10bn to make it a 'good bank' so it can start offering mortgages again.

    This is not getting better - its getting worse.

  3. Thrifty Thurday anyone?

    I will NOT be taking my wife out to lunch, I will NOT be buying a 60' plasma TV, I will NOT be buying a car or a house or indeed anything that day. I suggest we should all do a Thrify Thursday - a sort of return to 'half day closing' like the old days.

  4. My son got a letter from B&B offering to release him from his mortgage without him having paying the redemption penalty.

    He's a £125k IO on house worth about £350k (3rd house).

    No payment problems, safe job (senior grade teacher) about £35k for 40 weeks work!.

    Why are they trying to get the cash? He seems reasonable bet, unless its IO bit. He's hoping inflation and inheritance will pay off capital.

    When B&B went bust did gov. keep mortgage book or did that go to Santander?.

    Should he take their offer?.

    He's got 5% fixed for next 8 years (originally 10 years) - any better deals?

    I am sure that 5% fixed for the next 8 years is still a pretty good deal even though Bank Rate has fallen. I would stick where he is for the time being until he can finance to something better. I cannot think of any banks currently offering 10 year fixed at a high LTV - can anyone else?

  5. Tricky times these. No obvious short term trade even though I am pretty certain that the long term trend is to much lower levels.

    I agree. Metaphorically I have crawled into a hole and pulled a big stone over the hole until the storm passes over my invetsments My only activity over the next 7 days will be emptying my bank accounts of all cash.

    I just have a horrible feeling this bailout is not going to go smoothly. I think Parliament may demand to have safeguards in place before the next phase of the bailout and also demand to know exactly where the money has gone that has already been pumped in. Indeed, the Govt may in the end be forced to nationalise everything before the accounting year end if they do not get the plan through ASAP.

    Surely a possible exposure of £200bn credit insurance is not going to go through with opposition? Vince Cable is on TV as a write and he is certainly asking some pretty pertinent questions. More emergency questions in Parliament perhaps.

  6. if she thinks its worth 200k let her buy you out @ 200k, then just rent it from her.

    I know you said it in jest but in fact that is a well established practice where two equal share business partners decide to go their separate ways.

    Typically, what happens is that the firm's accountant plus two independent lawyers (one appointed by each party) sit down in a room together to hold an auction and the parties come in and bid against each other to buy the business starting at £1. Each party must prove they have the finances to buy the other out. The bidder that bids the highest price gets the 50% of the business they do not own and pays the other party. The shares are transferred immediately upon payment.

    This way, any dispute over the value of the business is resolved via the price setting process. In addition, the either party may agree to allow another bidder to enter the bidding for their share plus the remainder of the business.

    It seems to me that painterman might be best advised to use this route to resolving this dispute with his wife and it would avoid any later accusations of him taking advantage of his wife's weaker position in a court of law if the price of houses starts to rise again or he sells it for more later.

    A clean break via transparent price setting process rather than a valuation may be wiser in the long run here.

  7. I am pretty sure the UK is going to do the same thing as the Fed.

    The BoE will buy Gilts at the long end. I dont know why long Gilts prices dropped a bit today but it seemed illogical to sell long Gilts when the Govt on both side of the Atlantic are telling everyone they intend to do quantitative easing. As the 3 Month T Bill rates in the UK are already down at sub 1% and cannot go much lower it only makes sense for BoE to buy long Gilts as part of the quantitative easing process.

    In addition the Telegraph is suggesting that Govt may also swap long Gilts for toxic debt on bank balance sheets. Not sure what rate of exchange they would choose but the banks would then get good liquid Gilts on their balance sheet and the toxic debt would be shuffled off the market until things recover. A decade from now the Gilts would be swapped back again and the toxic debt put back on the bank balance sheets when it has recovered in price or perhaps just sold off and the losses dribbled back on to the bank balance sheets via a P&L hit.

    As long as the hit was not too big no one would notice. A sort of nationalisation but not as we know it but needs to be done so the banks accounts can be signed off at 31 March 2009.

    The detail of this plan is all going to be completed and ready to go by next Monday.


  8. FT Alphaville saying the following:

    A flurry of rumours abound. Talk that Barc won’t be included in the putative UK government bad bank scheme; talk of monoline exposure; and talk of the impact from the downgrades on credit card companies to which Barc is exposed.

    Looks like no one really knows but their Deputy Chairman resigning worried people:

    Last week, Sir Nigel Rudd resigned as deputy chairman of Barclays amid rumours of a spat with chairman John Varley over the valuation of certain assets on the bank’s balance sheet (a notion which has been dismissed by friends of both Rudd himself and Barclays).


  9. TBH - this seems pretty sensible of KPMG. It says in the article they want to avoid sacking good people just because their work has turned down. Better to share the pain around - as long as it is done fairly.

    I used to work for one of their competitors and I well remember in 1993/4 coming into the office one day and finding 20% of my colleagues had been sacked. The way they did it was shocking. They just ran their finger down the employee list and asked who was not actually out of he office working on a client billed project today. Anyone who by sheer chance who did not happen to be on a job that day got sacked even if they had been working solid for the last six months.

    Lots of good people were culled and then they recruited a load more just two years later at great expense.

  10. Go to the Land Registry website and type in the address in to the search box here:


    You have to pay £3.00 but I always download the deeds to check the owner is also the landlord of place I want to rent. If in doubt also download the plan of the grounds of the property for another £3.00 just to check you are gettng the whole property for rent. I had a LL who tried to rent me a property but keep the garden back as he was planning to start building a house there - 20 feet from my kitchen window.

    If it is a company that owns the house/flat I go to Companies House and download the company accounts and the list of directors to check them out. Again you will have to pay a little but well worth it for peace of mind.


    Also check the owner is on the voters roll at the address he/she has stated as their residential address.

    In addition type their name into Google and keep searching into your LL background. It is amazing how much you can dig up on someone quite legally on the internet. Finally, I also go to the local council website and check for planning applications on the property. A few LL try and rent a property out while going through the plannng process - very disruptive for you.

    I have never done a formal credit check but I beleive it is possible to get public records on people declared bankrupt or with CCJs via the Courts Service. Anyone know how?

    I also do this kind of in depth searching on people who I am thinking of buying property from.

  11. I live in Worcester on and off throughout the year and I hav to say the place really needs the jobs. The City reminds me a lot of York when I was a child 30 years ago. Very post industrial, high benefits culture, nice place architecturally, decent schools but very very depressed and needs a lot of redevelopment.

    Still cannot understand why there are 10 estate agents office grouped around Foregate railway station. Surely the place can only support 2 - 3?

  12. This proposal is not new because it is already quite commonly implemented and has been for many years in some countries. It is called an annual wealth tax or capital tax.

    Basically, anannual charge of 1 - 2% per annum imposed on total wealth would amount to imposing a negative interest rate if official central bank interest rates were set to zero. Not surprisingly, Switzerland has a wealth tax like this where their interest rates have been historically very low.

    I support the idea of removing all taxes on income and capital but imposing a land tax (and pollution and congestion tax) as the least distortionary way of taxing the economy as has been discussed on HPC front page a few days ago.

  13. ARGH myths! the UK is the worlds 5th largest exporter, we just behind Germany, and china isn't that far ahead of either of us! And as an exporter per head we are bigger than china. A crashing pound is great news as we may be able to overtake Germany and move further up the ranks...

    We are far from screwed....Think of poor ireland, spain, bulgaria and everyone else who exports MUCH MUCH LESS

    Scotch Whisky is our second/third biggest export. A high value product that employs very very few people to make as most of the value is accrued by it just sitting in a big shed in Scotland maturing for 10 - 20 years.

    I have thought for a good few years that the UK should turn itself into a much more dynamic and vibrant version of Switzerland. Neutral in its foreign policy, low tax, high quality of life, excellent health cand education systems, high value added industries, with a safe and secure and properly regulated banking system which is the centre of the world financial world. It should be open to all immigrants who can prove they have something to add, can fund their own health and social security costs and are law abiding with a willingness to adopt UK customs and laws.

    Its not hard to do it just needs plannning and implementing properly.

  14. Bad Bank = Bad Idea

    There is only one solution here.

    Nationalise every single UK bank without compensation to shareholders, sack all the senior directors and bar them from working in finance ever again, confiscating any assets they have personally gained in a manner that might be considered illegal and potentially imprison a few as examples to the rest.

    Keep the banks running under new management without the stupid salaries for failure, take the hit for the bad debt on the chin by bankrupting any customer who can't pay, then replenish the banks with new capital and at some point re-privatise them.

    The system needs to be sterilised in my view.

    The market will force them to do it in the end. Remember, no Govt can buck the market for ever. The market is saying that a lot of debt wil never be repaid and in the end it wil have to be written off. Govts can ony support the hosung and banking market for a limited mount of time then its game over.

    Govts learned this in currency markets now they will learn it in housing, equity and debt markets too.

  15. The idea of getting toxic debt of bank balance sheets was actully done in the Brady Bond Latin Amercian debt crisis. I have it on ood authority that what happened then was the bad debt was eventually stuffed into unsuspecting pension fund and other dicretionary accounts. The banks sorted through the debt - kept the good stuff and the dross was offloaded to unsuspecting private investors via their pensions and other investment funds they held.

    The underperformance in these funds only came through over many years. I shave strongly suspected for some time that this current toxic debt bill will eventually be parked as an 'investment' in the pubic pension system of some countries.

    We do not have a funded public pension scheme in this country so Got will have to buy it directly.

    The better solution would be to force the bansk to write it down properly then force bank subordinated bond holders to convert their bonds into equity in the banks - hence increasing bank capital and diluting existing bank shareholders. No new Govt money required but invetsors and bank managements take the pain.

    Every time Govt injects capital into the banking system the holders of bank bonds receive a transfer of value as the quality and rating of the bonds increases when the probability of default falls. Let the banks go bust I say and then start agan. Just manage the social consequence sof bank failure by guaranteeing depositors - not bailing out wholesale invetsors and management bonus pools.

  16. Sign of the times - a few years ago when I first started looking at HPC the weekly Location, Location, Location always resulted in a 200 post thread. Now there is hardly any comment. We lost interest, we all know it is over, there is no going back now.

    I must say even Kirsty and Phil do not seem as ebullient as usual. I wonder if this will be the last ever series?

  17. Its fairly normal to ask for these references - but in return I do a lot of anonymous digging on LL before I sign. It is amazing how much you can find about someone and their financial status all perfectly legally and for a few quid.

    On LL references I do the following:

    1. I ring my bank and ask them if they would be prepared to certify I can afford rent of £xxxx (the EA never bothers but just do an Experian check)

    2. I ring a friend who is titled and tell the EA to email them (the EA never bothers because the title frightens them).

    3. I tell the EA I have no employer but they can email my lawyer if they want (the EA does this usually and my lawyer just emails something non commital for their file).

    It not a big deal but if you kick up a fuss then they get suspiciuous.

  18. This is getting very very serious. Just seen on Sky 3800 job losss rumoured at Grattans catalogues. That is a lot of jobs in one go in one place. I thought catalogues woudl be pretty resiliant.

    There are thousands and thousands of people out there losing jobs. I did not think the post Xmas layoffs would be this quick but you can see what happened. Everyone came back from Xmas - management meetings, accountants phoned, bansk manager informed, redundancy decided upon.

  19. It became relatively common back in the early 1990s crash - but as other posters have said the banks only did it reluctantly and onl;y because they feared they would get people walking away from NE mortgages otherwise.

    I certainly had friends in the City who were in effect chained to their NE mortgage. Most only escaped when City bonuses started up again and the got decent lump sums that allowed them to pay off the deficits.

    A few people out of London took 10 years to escape and one did eventually default so she could move and take a job. Funnily enough the mortgage company tried to get their money back about 6 months ago - but it was well past the 7 year deadline.

  20. I always simultaneously send a copy of my written offer to both the EA and the owner of the house by hard copy mail and if I feel particulalrly concerned get a receipt for the letters I send from Post Office counters.

    I write SUBJECT TO CONTRACT in capital letters at the top so that it cannot be used as the basis of a legally binding contractual offer and I make it clear in the body of the letter the conditions that have to be fullfilled before a formal offer will be made (e.g a survey, sight of the HIP).

    This way I do not need to worry that offers have been passed on.

  21. I do not like or agree with anythng I am going to write below but if the Govt is hell bent on 'quantitative easing' or printing money to get us out of this mess I suggest the following direct route that will circumvent the banking system.

    1. Drop the Bank Rate to zero and offer a 2% APR mortgage to everyone;

    2. Guarantee that no one with a mortgage will ever be in negative equity by issuing a 100% price guarantee that writes off any residual mortgage if a house is sold for less than the value of the mortgage; and

    3. A guarantee that your mortgage rate will be cut to zero if you lose your job.

    This way people have more money to spend in their pockets and have absolutely no fear of losing money if they buy a house. This will get the housing market going again along with consumer spending. The banks will not need to be involved and their balance sheets will shrink dramatically as everyone moves their mortgage from the bank to the Govt.

    I hate these ideas but frankly I can see this as being the ultimate plan that will be forced on the Govt and the only one that voters will vote for. If I were Prme Minister and facing an election this is exacty the plan I would imlement. I might need the IMF to come in 6 months later but at least I have another 5 years in power!

  22. Read the small print everyone. This is NOT to help what most peole would define as a small business. It is designed to help quite large buinesses that are deemed to be too big to fail because they will create unemployment in an area with high unemployment already. In other words, areas with a marginal Labour seat in them.

    Sorry to be party political but I am tired of this double speak. This is not about small business it is about saving large manufacturing companies that employ a lot of people.

    Typically, companies accepted for the scheme will be those considered of significant importance in their local community - such as high street stores or firms in areas which already have high levels of unemployment.

    EDIT: Who wil decide who gets money and who is allowed to go to the wall? It will be subject to intense lobbying efforts and smacks of picking winners and nationalisation of the commanding heights.

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