CharlieChuck

I'm probably wrong, but: If someone - A- puts £100 cash in a bank. Bank Assets £100, liability £100 payable to A The bank then lends £90 to B which B withdraws, then Bank Assets are still £100 (£10 cash, £90 in loan to B ) , Liability still £100 payable to A. another bank shows an asset of £90, and a liability of £90 The amount in circulation is now £190, money hasn't been created, it's been double counted. If A tried to withdraw his £100, he can't, the bank doesn't have it. It relies on people not withdrawing money at the same time. edit : got rid of smilie

I was wondering the same, but , haven't Northern rock borrowed the money to repay others institutions whose 3 month loans were due. Would this balance itself out?

"It's different this time"

I saw this too, he really was a horrible, arrogant sod. i don't usually wish ill to anyone, but I hope he gets all he deserves. If his portfolio is valued at £8m with £5.5m against it, it will only take a 30% fall to wipe out the equity. If, as I suspect, he has new build flats in his portfolio the £8m is probably an over valuation, and any attempt to firesell would quickly leave him in the red.

I saw it (we can only get bbc1 on kitchen tv). He was 57 and had been sold a 8 year mortgage for £65,000. I think the payments were about 800, and his income was 1300 a month. You had to feel a bit sorry for them as they'd so obviously been mis-sold.

There's a lot of assuming averages and means here, but in the sixties, for an average mortgage of 25 years, if 2 parties contribute for 5 years and 1 for 20 years, then there's 30 years worth of average income over 25 years. Fast forward to now, 1 party 10 years + both working for 15 years, there's 40 years worth of averge income. You can't compare the lending multipe of average income then with now, it must be higher.

This is comparing average earnings against house prices. Traditionally only 1 parent worked, however in a lot more households now, both parents are working, so the mean level has been pushed up. I don't know what the new mean level would be, but we're certainly along way above it.

I'd agree with viewing the house first. Also, by meeting the seller you get an idea of what their situation is and how desperate they are to sell.

General Elections always seem to be on a thursday, so I'm going for a 15th November GE, with a 0.25% base rate cut in november, followed by 5 years of recession.

lloks like you can watch it live here http://www.bbc.co.uk/mediaselector/check/p...wm=1&bbwm=1 I havent got sound on my pc though

very funny, especially liked the "quote"

A lot of 1 year savings bonds with high rates have appeared over the past week by various banks/building societies (some paying around 7%). While these seem tempting, I'm taking the view that these institutions need more cash deposits to shore up their liquidity, because of the interbank lending problems. Maybe, it's worth looking at the lowest paying accounts for a short amount of time? or NS&I. In the times yesterday was a table showing all the major banks and their levels of deposits and loans and reliance on money markets. I can't find it on their website, however lloydststb & natwest appeared to have the lowest ratio about 5%, whereas bradford & Bingley wasn't much behind northern rock.

Does anyone know if interest owed by them but not yet paid, is covered by the scheme or just the balance? I'm guessing it's just the balance.

Our breadmaker goes through 3 cycles. First the kneading, then warming while yeast rises, then baking, each takes about an hour. The first and third cyle would I guess, take the most electric to do. I'd reckon nearer 20p, though that's a complete guess. Taking into account yeast, flour and the other bits I worked out about a year ago it was costing 40-60p a loaf. Add electric onto that and the fact the loaf's smaller, and it's not really saving much money. It is a lot nicer though.

I switched most of my trackers & managed fund ISA to gilts & bonds at the end of july, using the same provider it still keeps it tax free, and when you think the stock market's fallen enough, switch it back to your trackers. If the stock market falls, gilts usually rise. I'm not sure how safe corporate bonds are now though?

36 years old Bought in 2001, sold in 2004 (thought the market had peaked ) Now happily renting with GF, we can afford to buy somewhere small in an ok area, but I'm happy to wait a few years or more to see what happens. If I'm going to work long hard hours for 20 years, I want to live somewhere decent. It's not much to ask, is it?. If prices don't come down in 2-3 years, then I'll emigrate.

I think, it can only create a certain amount of plucked out of air money, depending on the reserve ratio of how much deposits it has. If it also borrows wholesale money and lends that, then it doesn't affect the reserve, so it can offer a lot more loans, in effect just making a margin on them. In terms of repossessions, in the case of lending out if thin air, after the house is sold and offset part of the debt, the bank has no liability to another party and would show the loss in it's accounts (or hide it). But, when it's borrowed off the money market it still has the liability to repay, plus it has to show the loss. So borrowing money wholesale is riskier to the liquidity of the bank if it goes wrong (which it is).

I have and I am. It's only a few hundred pounds left from an old account, but I'm moving it anyway. The whole things like a chain reaction, share price falls a lot, people panic and draw money out, share price falls more, ...

A very interesting and well thought out post. I won't miss unaffordable housing, but I will miss a bit of midriff.

Although you get tax relief on the way in, you may get taxed on the pension when it's paid to you (depends on how much other pensions you have). If you will be paying basic rate tax on all of the new pension, then you'll be no better off, probably even worse off as there's a 1% annual charge on the stake holder pension. You haven't mentioned if you already use the cash ISA limit of £3,000 a year. If you don't, this would probably be the winner.

In the most recent auction there's 6 flats in the same block in Colchester. All up for aution by the mortgagee, all sold for around £ 145,000. I just had a quick look at the purchase price for one of them, £246,995 in april 2006. ouch. http://www.houseprices.co.uk/e.php?q=7+hen...hester&n=10

An estate agent selling off his BTL portfolio. This must be proof that prices are set to drop.

Firstly newbie here, hello all, Here is my own personal experience of this "great home owning democracy". In 2001, after years of struggling to save a deposit and having the embarrasment of moving back home at the age of 27 for 2 years, I managed to buy a house. Well a house is a bit of an overstatement. It was a 1 bedroom starter home (i.e. very small) in one of the cheapest parts of oxfordshire. I had a reasonable job, but needed a 4xsalary mortgage to buy it, cost £78,500. At the time I was terrified of a price crash, I knew then the houses were overpriced, I knew some people who got bankrupted in the last crash and history seemed to be repeating itself. Yet the prices were still rising. In 2004 I sold the house for £120,000 (53% increase in 3 years), I partly sold because I was convinced prices were about to crash and partly to move to the north to live with my girlfriend. I didn't buy at that time, I thought I'd wait for prices to go down first. 3 years later, we're still renting, I could use the profit I made on the house (plus additional savings & interest) as a big deposit towards buying a house, but there's so much uncertainty, and I'm terrified of paying £150,000 for something that's going to be worth £100,000 in 3 years. Lastly, my old next door neighbour just sold his 1 bedroom house for £152,500. In some ways I'm gutted by losing money by "chickening out" 3 years ago, but my money's in the bank, it could have gone the other way if prices had been allowed to drop. £152,500 for a 1 bedroom house? it's doubled in price in 6 years. What sort of income multiplier must these people be on to afford it? The world's gone mad. It's not even a great area to live, 100 metres from a pylon, I had a car stolen and another vandalised 3 times (in 3 years). Prices can't keep rising, I don't believe they'll stagnate ( it could take 10-15 years to make them affordable). There's only one way they'll go, how fast and when though, is the real question.