PricedOutNative Posted July 18, 2007 Share Posted July 18, 2007 (edited) Talking to people about the tidal wave of economic difficulties that are heading our way in the next couple of years including: Increased Oil price & associated price increases on dependant goods (just about everything) An economic recession Real wages going down A generation trapped in tiny flats by giant mortgages A common response I get is: "Couldn't" the government somehow force lenders to write off some of people's debt?" Lenders are going to have it very tough themselves when they repossess defaulters' homes, only to find they are worth much less than the original mortgage (how much of this could they cope with before the whole system comes crashing down?) Maybe it would be in their interest to offer lenders the option to pay back only part of the mortgage? (Edit SP) Edited July 18, 2007 by PricedOutNative Quote Link to comment Share on other sites More sharing options...
Minos Posted July 18, 2007 Share Posted July 18, 2007 Talking to people about the tidal wave of economic difficulties that are heading our way in the next couple of years including:Increased Oil price & associated price increases on dependant goods (just about everything) An economic recession Real wages going down A generation trapped in tiny flats by giant mortgages A common response I get is: “Couldn’t the government somehow force lenders to write off some of people's dept?” Lenders are going to have it very tough themselves when they repossess defaulters’ homes, only to find they are worth much less than the original mortgage (how much of this could they cope with before the whole system comes crashing down?) Maybe it would be in their interest to offer lenders the option to pay back only part of the mortgage? They already do in a way. It's call IVAs and bankruptcy. Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 (edited) I'm becoming more convinced something like this is going to have to happen; a typical example: Two teachers I know 'own' a two bedroom house, their interest only mortgage is 1400 GBP on the old rate, now she's pregnant, so her income will go down considerably for a while, the mortgage will jump up when their 2005 fixed rate comes to an end. When I ask why they stretched themselves so much they reply as teachers they expected to be able to buy a small house in their early 30's and they thought their pay would increase at the rate it was doing a few years ago (everyone was doing it). This situation must be very common, the only way out I can see if for some dept to be written off! Edited for SP Edited July 18, 2007 by PricedOutNative Quote Link to comment Share on other sites More sharing options...
Leonard Hatred Posted July 18, 2007 Share Posted July 18, 2007 I’m become more convinced something like this is going to have to happen; a typical example:Two teachers I know ‘own’ a two bedroom house, their interest only mortgage is 1400 GBP on the old rate, now she’s pregnant, so her income will go down considerably for a while, the mortgage will jump up when their 2005 fixed rate comes to an end. When I ask why they stretched themselves so much they reply as teachers they expected to be able to buy a small house in their early 30’s and they thought their pay would increase at the rate it was doing a few years ago. This situation must be very common, the only way out I can see if for some dept to be written off! Christ Almighty. And I thought I had it bad! Quote Link to comment Share on other sites More sharing options...
Wait & See Posted July 18, 2007 Share Posted July 18, 2007 Christ Almighty. And I thought I had it bad! Quote Link to comment Share on other sites More sharing options...
Minos Posted July 18, 2007 Share Posted July 18, 2007 Not being picky but it's debt not dept. Bugs me. Quote Link to comment Share on other sites More sharing options...
azogar Posted July 18, 2007 Share Posted July 18, 2007 now she's pregnant, so her income will go down considerably for a while, just as a point of fact - the above depends on how long she is off for, 6 months off should be at full pay Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 They bought their house for around 310,000 in the 'not so nice part of St Albans', funny as her parents ( both teachers) bought themselves a 1930's 3 bed semi in the nice part of St Albans in the 1970's without problem. Something's got to give! Christ Almighty. And I thought I had it bad! Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 Child care costs are significant, unless she can rope in the grandparents I guess! just as a point of fact - the above depends on how long she is off for, 6 months off should be at full pay Quote Link to comment Share on other sites More sharing options...
r thritis Posted July 18, 2007 Share Posted July 18, 2007 Not being picky but it's debt not dept. Bugs me. Actually, you are being picky. Quote Link to comment Share on other sites More sharing options...
scott666 Posted July 18, 2007 Share Posted July 18, 2007 When I ask why they stretched themselves so much they reply as teachers they expected to be able to buy a small house in their early 30's and they thought their pay would increase at the rate it was doing a few years ago (everyone was doing it). Ah yes, the public sector benefitees of Gordon's little pre-election bribery, conned into voting nu-Lab back in but first to squeal like little piggies in the below-average-wage-rise aftermath. Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 Ah yes, the public sector benefitees of Gordon's little pre-election bribery, conned into voting nu-Lab back in but first to squeal like little piggies in the below-average-wage-rise aftermath. That’s a significant part of the working population; he will have to fix it somehow, it’s on such a scale that something fundamental will have to be done, it will not be feasible to have so many people ‘homeless’. Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 18, 2007 Share Posted July 18, 2007 bankruptcies (debt write-offs) are an inevitable consequence of a borrowing-correction. 2 thing come out of this - (1) the profligate house pruchasers of the past can't borrow again for years to come (2) more significantly and more importantly, the financial institutions themselves, tho mostly able to ride out the losses (small compared to the profits of last 15 years let's not forget) DO HAVE STANDARD OPERATING PROCEDURES TO DEAL WITH INCREASED RISK IN THEIR LENDING PORTFOLIOS. THEY JUST LEND LESS MONEY OUT USING HIGHER IRs AND STRICTER LENDING CRITERIA. Otherwise known as the money-taps being turned off. This, and to what extent it happens, will dictate price falls. Of course if the govt bails people out then that will reduce confidence in the economy (getting the financially capable to bail the unastute out, essentially lessening individual responsibility) and will have long run bad affects on the country's wealth. I hope this does not happen to any significant degree. Quote Link to comment Share on other sites More sharing options...
Minos Posted July 18, 2007 Share Posted July 18, 2007 That’s a significant part of the working population; he will have to fix it somehow, it’s on such a scale that something fundamental will have to be done, it will not be feasible to have so many people ‘homeless’. I recently read somewhere that 50% of treacles and 25% of geezers are employed by the state now. Quote Link to comment Share on other sites More sharing options...
lets get it right Posted July 18, 2007 Share Posted July 18, 2007 (edited) Yes, not a problem. Government will simply bail out everybody whose property falls in price. Or maybe only those who bought in the last year and are in negative equity? Who would they choose to bail out? Which bank's customers. The ones who have been rash and lent sub-prime? Or the good guys that have been prudent. In the last crash/recession lots of people had this daft, I mean really, utterly, pathetically daft idea that the government would ride to everyone's rescue. Guess what - they didn't. It's electoral suicide to raise taxes from the 80% of people in the country who have not got a debt problem to bail out the 20% that have. Think about it, what kind of a message would it send. Maybe one like 'Live for TODAY! Who gives a f*ck about TOMORROW! Tomorrow never comes and, if it does, WHO CARES! The government will bail us out. BORROW Brothers BORROW! Let others' taxes repay your borrowings! Edited July 18, 2007 by Lets' get it right Quote Link to comment Share on other sites More sharing options...
lets get it right Posted July 18, 2007 Share Posted July 18, 2007 That’s a significant part of the working population; he will have to fix it somehow, it’s on such a scale that something fundamental will have to be done, it will not be feasible to have so many people ‘homeless’. Yep, EXACTLY what they said last time. My brother ended up giving the keys back and living in a caravan. That couldn't happen again though ... surely not? Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 (2) more significantly and more importantly, the financial institutions themselves, tho mostly able to ride out the losses (small compared to the profits of last 15 years let's not forget) DO HAVE STANDARD OPERATING PROCEDURES TO DEAL WITH INCREASED RISK IN THEIR LENDING PORTFOLIOS. THEY JUST LEND LESS MONEY OUT USING HIGHER IRs AND STRICTER LENDING CRITERIA. Pity, was sort of hoping the banking industry would get the sort of beating it would not forget for a hundred years… Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted July 18, 2007 Share Posted July 18, 2007 They're not Maths teachers are they? Quote Link to comment Share on other sites More sharing options...
Leonard Hatred Posted July 18, 2007 Share Posted July 18, 2007 They're not Maths teachers are they? Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 They're not Maths teachers are they? Geography & PE (or whatever it's called these days) Although I'm not sure having a numerate degree helps too much when you enter the world of house buying it’s all a ‘confidence’ exercise. Quote Link to comment Share on other sites More sharing options...
?...! Posted July 18, 2007 Share Posted July 18, 2007 This thread pains me. Imagine if I was working for a Korean bank and looking for somewhere to invest a huge sum of money. Why the hell would I invest in a country where the government was in the habit of allowing people to steal my money? Why the hell would the government do the one thing garanteed to destroy the only decent growth industry this Island still offers the wider world? Force lenders to write off debt? Is the same as Robert Mugabe's infantile policy of forcing retails to half their prices. . Quote Link to comment Share on other sites More sharing options...
Selling up Posted July 18, 2007 Share Posted July 18, 2007 Why the hell would the government do the one thing garanteed to destroy the only decent growth industry this Island still offers the wider world? Absolutely. The market is going to solve this bubble in the same way the market has solved every previous bubble. Quote Link to comment Share on other sites More sharing options...
PricedOutNative Posted July 18, 2007 Author Share Posted July 18, 2007 Absolutely.The market is going to solve this bubble in the same way the market has solved every previous bubble. But this bubble is not like previous bubbles, when it pops we could be looking at a financial melt down. Look at Yugoslavia and the huge international debts that country had before its disintegration. Quote Link to comment Share on other sites More sharing options...
JoePublic Posted July 18, 2007 Share Posted July 18, 2007 Think about it, what kind of a message would it send. Maybe one like 'Live for TODAY! Who gives a f*ck about TOMORROW! Tomorrow never comes and, if it does, WHO CARES! The government will bail us out. BORROW Brothers BORROW! Let others' taxes repay your borrowings! Isn't that basically what the average Joe thinks already ? It certainly is from what I've seen/heard about what others get up to .... Quote Link to comment Share on other sites More sharing options...
Selling up Posted July 18, 2007 Share Posted July 18, 2007 But this bubble is not like previous bubbles, when it pops we could be looking at a financial melt down.Look at Yugoslavia and the huge international debts that country had before its disintegration. Yes, I grant you it may not be as simple as I make it sound! Quote Link to comment Share on other sites More sharing options...
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