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Accept It - The Force Is Too Great


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My point is that 2.5 years away from an election this government is not going to stand by and watch a credit crunch screw their chances of a 'historic' fourth term. Especially and particularly Mr Brown. So, let loose the dogs of inflation. He will bluff and bluster and manipulate the figures - he'll do whatever is necessary - sack Mervyn King - take over the BOE himself - introduce a wages and incomes policy (ahh, happy memories!) ... all I am saying is the party is not over yet and I would not understimate the measures this bunch of jackals will take to keep things afloat.

I agree that Brown and co are a bunch of jackals but they are largely toothless to prevent the inevitable.

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My point is that 2.5 years away from an election this government is not going to stand by and watch a credit crunch screw their chances of a 'historic' fourth term. Especially and particularly Mr Brown. So, let loose the dogs of inflation. He will bluff and bluster and manipulate the figures - he'll do whatever is necessary - sack Mervyn King - take over the BOE himself - introduce a wages and incomes policy (ahh, happy memories!) ... all I am saying is the party is not over yet and I would not understimate the measures this bunch of jackals will take to keep things afloat.

Starting to feel depressed now 'Lets get it right'.

NuLabour & Brown are a bunch of snakes, but the sentement issue, as mentioned a few posts ago, is the key to a full on crash.

I still believe the tide has turned on HPI, but I also know that Brown is a total deperado who will do anything to save himself.

An IR hold today should be a done deal though.

Edit - Spelling.

Edited by Wait & See
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My point is that 2.5 years away from an election this government is not going to stand by and watch a credit crunch screw their chances of a 'historic' fourth term. Especially and particularly Mr Brown. So, let loose the dogs of inflation. He will bluff and bluster and manipulate the figures - he'll do whatever is necessary - sack Mervyn King - take over the BOE himself - introduce a wages and incomes policy (ahh, happy memories!) ... all I am saying is the party is not over yet and I would not understimate the measures this bunch of jackals will take to keep things afloat.

Inflationary environment - everyone worse off ... therefore less income to pay towards mortgages

Credit crunch - lenders far more picky and this will not change with a rate cut, even 1%

Spectre of recession - people don't spend

Sentiment - down the toilet

It matters not what politicians or the press say if you cannot get the mortgage. The people who actually can get a mortgage will be waiting not buying.

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fwiw i think there will be a rate cut, but it won't make an ounce of difference to the threat of HPC. The Fed have been cutting rates manically and the US property market is still in free fall.

Banks can't/won't lend to just anyone anymore.

The world has changed.

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No idea. But then again I don't think the economies have much in common. Also, that was then. This is now. This is the UK. This is New Labour 2.5 years away from an election. This is a government that will do anything to hold on to power and to 'protect their record'.

They are not going to stand by and watch the housing market crash and a recession kick off. They will do anything to stop that.

Like the yanks now. Freezing interest rates for mortgage payers for 5 years - pretty radical eh?

Think Gordenron won't follow suit. He may even trump them.

I certainly think the question is not whether Gordon will do anything (no matter how destructive in the long term) to keep things limping along till election time, it's whether or not he can . . .

I'm very much on the fence at the moment myself, I don't think I've ever been more neither than I am now. If I had to take a view I'd say 5-10% falls in total over the next year or two on average (30%+ falls on new builds and some areas and largely flat for other areas and family homes) and all the corrupt invention Gordon's vicious little mind can muster that'll limit the nominal falls to that kind of level while ******ing the real inflation rate so the falls are worse in real terms and scuppering sterling.

Gordon's definitely going to do something though, the BoE's independence will be revealed as the sham it is.

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The banks! They can't wait to get lending again! They just need a sign from the government that they will be bailed out and moral hazard is not an issue.

The government, via their mouthpiece, the BOE will provide the sign at precisely 12.00 today.

This will be followed by a great rejoicing throughout the land.

Christmas - and all the debt it involves - will officially be back on and in January re-mortgaging will be back to business as usual.

Come forward you indebted slimeballs. Bring me your debts and I will increase them. Bring me your greed and I will sate it. Bring me your payslip and I will help myself to a large chunk of it. But, most of all, bring me the deeds to your house and I will put a charge on them.

:lol: Too true! :(

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Guest The_Oldie
I may well do. I don't want to watch the first 6 months of 2006 happen all over again - while I am out of the market.

Good luck.

I shall keep my cash in the bank though. No amount of VI spin in the media, or on these forums, will, in my opinion, prevent the inevitable.

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I think they may drop rates alittel. Not to save the housing market but to try and limit the fall out.

A small cut will give those not over extended (me for isntance) a few more quid to save (some) and spend(more).

It may also save a few peple from going over the edge.

The stupid ones will go under, but it's probabaly a case of cutting if the tail to try and save the dog ,trust me I know, my dog is at home with stitches :-(

the tail in this case are the people with no equity who have borrowed up to the hilt and the more stupid buy-to-let'ers.

I am also increasingly of the opionion taht control of tyhe UK exchange rate is not really under the control of the UK goverenment anymore than inflation is. As China.US trade imbalance seems to be driving everything.

SOoner or later somewthing there has to snap, I personally think it will the artifically inflated chinese stock market (Chinese Citzens cannot invest outside china causing massivbe over inflation in prices - what we call a bubble) when that goes there will be about 400 million very pissed middlr class chinese ....

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Let's Get It Right,

Why won't you respond to the CREDIT CRUNCH counter-argument to your theory?

Stop ignoring the elephant in the room.

I have - post at 10.16.

To reprise - my argument simply is that this government will do whatever it has to to keep the balls in the air. Bunging 30 billion to Northern Rock for example. This has worked. The balls are still in the air. Runs on other banks averted.

Making the BOE drop rates? Of course!

Pumping liquidity? Yes. Sending the banks a clear message that they will be dug out of the holes they are in. Message on its way today at 12.00 and the great British public can spend, spend, spend again.

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Guest portwinestain
The banks! They can't wait to get lending again! They just need a sign from the government that they will be bailed out and moral hazard is not an issue.

The government, via their mouthpiece, the BOE will provide the sign at precisely 12.00 today.

This will be followed by a great rejoicing throughout the land.

Christmas - and all the debt it involves - will officially be back on and in January re-mortgaging will be back to business as usual.

Come forward you indebted slimeballs. Bring me your debts and I will increase them. Bring me your greed and I will sate it. Bring me your payslip and I will help myself to a large chunk of it. But, most of all, bring me the deeds to your house and I will put a charge on them.

The government won't bail out all banks covertly or otherwise. Moral hazard is still in place. Also,it's the taxpayers who do the bailing, so it's a political hot potato.

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Guest X-QUORK
I have - post at 10.16.

To reprise - my argument simply is that this government will do whatever it has to to keep the balls in the air. Bunging 30 billion to Northern Rock for example. This has worked. The balls are still in the air. Runs on other banks averted.

Don't you understand? The BoE rate means very little now, the inter-bank lending rate Libor is what counts...and that is now decoupled and much higher. Knocking off a quarter percent of the base rate might have a small impact on sentiment, but it won't make loans any cheaper or easier to get hold of.

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The government won't bail out all banks covertly or otherwise. Moral hazard is still in place. Also,it's the taxpayers who do the bailing, so it's a political hot potato.

I haven't heard one word of serious criticism of the government's actions over Northern Rock. Carping about being slow to react yes - but criticism of using taxpayer's money to bail them out - if they hadn't we could could have had a run on the whole banking system - no.

There is no moral hazard. No price to pay. Inflation is high, we all know that. We buy food and put petrol in our tanks and pay ever increasing taxes. Yet, against this backdrop, IRs will be lowered in about 1.75 hours. What moral hazard? Do what thou wilst shall be the whole of the law.

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The banks! They can't wait to get lending again! They just need a sign from the government that they will be bailed out and moral hazard is not an issue.

The government, via their mouthpiece, the BOE will provide the sign at precisely 12.00 today.

This will be followed by a great rejoicing throughout the land.

Christmas - and all the debt it involves - will officially be back on and in January re-mortgaging will be back to business as usual.

Come forward you indebted slimeballs. Bring me your debts and I will increase them. Bring me your greed and I will sate it. Bring me your payslip and I will help myself to a large chunk of it. But, most of all, bring me the deeds to your house and I will put a charge on them.

You keep waffling on, but keep swerving dodging and waving your hands in reply to the question that deystroys your thesis.

The fact is that the commercial banks dont care who wins the next election, they do care that they just got there fingers burned by handing money out like confetti. Thus what ever the GOV\BOE do today, the private and commercial banking system will still be highly reluctant to lend to anyone without a very good credit rating, which contrasts with 2005/06 where all that was required to aqcuire credit was proof of pulse.

You completly ignore that there is another force at work the most powerfull one in our society. The force of profit. Private profit seeking banks will not return to the lending orgy they indulged in for the last 5 years for some time, regardless of what the CB does.

It is private organisations with their own interests at heart who will decide the cost of borrowing and that cost is set to reamain much higher than it has over the last 5 years. It is not the housing bubble that is popping it is the credit bubble that has burst. It is not a question of when the credit bubble bursts it allready has for all to see. Thus HPI is dead as the dodo.

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Don't you understand? The BoE rate means very little now, the inter-bank lending rate Libor is what counts...and that is now decoupled and much higher. Knocking off a quarter percent of the base rate might have a small impact on sentiment, but it won't make loans any cheaper or easier to get hold of.

Staight back at you, as they say. Don't you understand? There are millions of people with good credit histories still able to borrow as they want/need. When they drop IRs today this will release the sentiment genie from the bottle and off we go again. Sure, people with chequered credit histories will find it harder to get credit, but house prices are set at the margins. It only takes 2 buyers with good credit histories to make a market.

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You keep waffling on, but keep swerving dodging and waving your hands in reply to the question that deystroys your thesis.

The fact is that the commercial banks dont care who wins the next election, they do care that they just got there fingers burned by handing money out like confetti. Thus what ever the GOV\BOE do today, the private and commercial banking system will still be highly reluctant to lend to anyone without a very good credit rating, which contrasts with 2005/06 where all that was required to aqcuire credit was proof of pulse.

You completly ignore that there is another force at work the most powerfull one in our society. The force of profit. Private profit seeking banks will not return to the lending orgy they indulged in for the last 5 years for some time, regardless of what the CB does.

It is private organisations with their own interests at heart who will decide the cost of borrowing and that cost is set to reamain much higher than it has over the last 5 years. It is not the housing bubble that is popping it is the credit bubble that has burst. It is not a question of when the credit bubble bursts it allready has for all to see. Thus HPI is dead as the dodo.

Let's say, for the sake of discussion, you are right and also that the BOE drop rates today. I presume Mervyn and his mates are not complete fools. If the price of borrowing is detached from the base rate - why would they bother?

Why would a gang of leading economists and an ex-chancellor sit around on Newsnight last night discussing whether the bank would drop rates or not? If it is blindingly obviousl that base rate is now irrelevant, surely they would have been discussing that?

You said I ignore the force of profit. Actually I think you are. A bank that does not lend money is a bank that does not make profit. Are you under the illusion that if I wanted to get a mortgage now I couldn't?

Edited by Lets' get it right
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Staight back at you, as they say. Don't you understand? There are millions of people with good credit histories still able to borrow as they want/need. When they drop IRs today this will release the sentiment genie from the bottle and off we go again. Sure, people with chequered credit histories will find it harder to get credit, but house prices are set at the margins. It only takes 2 buyers with good credit histories to make a market.

Just because you've a good credit score doesn't mean you can borrow a million quid for a house if you only earn 40k does it.

It probably does mean that you can borrow 140k though.

Who are these 2 buyers - Gordon and yourself? (Only joking)

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No, the government does not have the power to keep the market going up.

I don't think anyone heard you maybe if you shouted real loud like eric pebble?....no they still would not listen, or, more accurately, want to listen. It is frustrating some times isn't it.

The UK government has changed during the past decade and has imposed much more control on the population, ie we have become more of a totalatarian state, but this control has not imposed itself on the financial sector, in fact it has been the opposite with deregulation of much of the city.

Previous governments in this and other countries have tried to take on the financial markets, with some of these previous regimes in much more control of their financial market place, all have failed.

Why hasn't Mugabe's government been able to tackle inflation? He has much more power over the market than Brown.

Someone famous once said "you can not beat the market" or similair. I've forgotten who it was.

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I don't think anyone heard you maybe if you shouted real loud like eric pebble?....no they still would not listen, or, more accurately, want to listen. It is frustrating some times isn't it.

The UK government has changed during the past decade and has imposed much more control on the population, ie we have become more of a totalatarian state, but this control has not imposed itself on the financial sector, in fact it has been the opposite with deregulation of much of the city.

Previous governments in this and other countries have tried to take on the financial markets, with some of these previous regimes in much more control of their financial market place, all have failed.

Why hasn't Mugabe's government been able to tackle inflation? He has much more power over the market than Brown.

Someone famous once said "you can not beat the market" or similair. I've forgotten who it was.

I can't help thinking bringing Bob Mugabe into it is not helpful. As far as I know we haven't, for example, gone out and destroyed our farms.

I think your point about a totalitarian regime is well made. And a totalitarian regime can do whatever they like. Black is white. Credit is good. Interest rates are low. Borrowing is good for everybody.

Orwellian it may be. It is, unfortunately, true.

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I don't think anyone heard you maybe if you shouted real loud like eric pebble?....no they still would not listen, or, more accurately, want to listen. It is frustrating some times isn't it.

The UK government has changed during the past decade and has imposed much more control on the population, ie we have become more of a totalatarian state, but this control has not imposed itself on the financial sector, in fact it has been the opposite with deregulation of much of the city.

Previous governments in this and other countries have tried to take on the financial markets, with some of these previous regimes in much more control of their financial market place, all have failed.

Why hasn't Mugabe's government been able to tackle inflation? He has much more power over the market than Brown.

Someone famous once said "you can not beat the market" or similair. I've forgotten who it was.

*nods*

A few politicians or central bankers cannot hope to match the wisdom of billions of people making free choices about what they want to buy and sell to each other and what they find valuable.

Politicians ask people what they want and then steal to give it to them. Two problems with this - theft costs a fortune and profuces nothing and more importantly people don't have a clue what they really want most of the time until they have to pay for it personally.

We have a onrushing totalitarian state because Osama (or someone) declared war on the banksters who run everything. They shit themselves at the thought of not being able to hide what they do from the world and made plans to take over in a more overt way. Bankers can't beat the market either, long term.

Edited by Injin
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Guest grumpy-old-man
Staight back at you, as they say. Don't you understand? There are millions of people with good credit histories still able to borrow as they want/need. When they drop IRs today this will release the sentiment genie from the bottle and off we go again. Sure, people with chequered credit histories will find it harder to get credit, but house prices are set at the margins. It only takes 2 buyers with good credit histories to make a market.

it's not the people with good credit histories that create crashes though, it's the ones with poor credit ratings. Very important difference & often a basic floor in many peoples arguments.

These poor credit worthy people will not get the better rates (if there any available, because as X-QUORK pointed out, it's all about LIBOR now :P )

So, to sum up, it's the ones that can't pay we should be looking at, not the ones that can afford to pay. ;)

Edited by grumpy-old-man
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dont know if you noticed, but the interest rates charged by banks to mortgage holders are now detached fromt he BoE rate.

They charge a proper margin, they charge a fee up front to offset any teaser rates advertised, and now, they need a RISK PREMIUM to satisfy any investors who might like to buy the mortgage tranches.

PLUS as there is a shortage of cash, they are very picky who they lend to.

NO, they have no control over the housing market any more.

Indeed, a cut will be more about helping keep banks in the black and the financial sector greased (we need it to keep working) rather than being something aimed at housebuyers.

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http://www.telegraph.co.uk/news/main.jhtml.../08/ntax108.xml

Disposable income at lowest level in 10 years

By Harry Wallop, Consumer Affairs Correspondent

Last Updated: 1:52am BST 08/10/2007

Disposable income is at its lowest level for a decade, as taxes, housing costs, phone bills and travel expenses eat into salaries, researchers says.

Can someone tell me how the Telegraph says this "While the average household gross income has climbed over the past decade from £34,796 to £53,835 in 2007" when the ONS says the average household income is under £30K a year here ONS household income?

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