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The End Of Unregulated Lending

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Public money bailouts are leading to much stricter financial regulation.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Which could mean all sorts of unintended consequences,

1. House prices come down...but then stay down for a long, long time.

2. Mortgages become so tightly regulated and so expensive that, without the attraction of rising house prices, many people simply choose to rent. Many others, with blemished credit ratings, have no choice. Owner occupancy declines and the UK property market looks increasingly like the German model.

3. The City of London fades back to the smaller, fuddy-duddy enclave it was in the 70's.

4. "My house is my pension" becomes a sick joke. The only thing that is a pension is a pension. And as these are now in short supply there'll be a lot of seventy year olds in full time employment.

5. A credit card, of any colour, becomes a real status symbol.

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whie there is big goverment there will be credit bubbles

its as simple as that

True. Credit bubbles are just part of the business cycle. You can't legislate them out of existence. This one just got out of hand because central bankers like Greenspan got the monetary policy disasterously wrong, probably by succumbing to lobbying from investment and mortgage banks. It will be spoken about in Economics 101 for decades.

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True. Credit bubbles are just part of the business cycle. You can't legislate them out of existence. This one just got out of hand because central bankers like Greenspan got the monetary policy disasterously wrong, probably by succumbing to lobbying from investment and mortgage banks. It will be spoken about in Economics 101 for decades.

i can, wouldnt even take much time

simple mandate via law that the BOE puts up interest rates when more credit is created than destroyed

and put down interest rates when more credit is destroyed than created

simple

but if i was the PM then i wouldnt do that, as i would be signing away the most powerfull tool i have

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Public money bailouts are leading to much stricter financial regulation.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Which could mean all sorts of unintended consequences,

1. House prices come down...but then stay down for a long, long time.

2. Mortgages become so tightly regulated and so expensive that, without the attraction of rising house prices, many people simply choose to rent. Many others, with blemished credit ratings, have no choice. Owner occupancy declines and the UK property market looks increasingly like the German model.

3. The City of London fades back to the smaller, fuddy-duddy enclave it was in the 70's.

4. "My house is my pension" becomes a sick joke. The only thing that is a pension is a pension. And as these are now in short supply there'll be a lot of seventy year olds in full time employment.

5. A credit card, of any colour, becomes a real status symbol.

Sounds good. How do we vote for that? Can we have signorage by and for the public good as well?

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simple mandate via law that the BOE puts up interest rates when more credit is created than destroyed

and put down interest rates when more credit is destroyed than created

I read a far better version of this in a BoE pdf publication...

http://www.bized.co.uk/virtual/bank/econom...pol/history.htm

As you can see, what you propose (roughly) has already been policy.

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Public money bailouts are leading to much stricter financial regulation.

I sincerely hope so! A return to a system that values work and saving would be good for the country if not a little painful while we cold turkey from the debt binge.

Greenspan got the monetary policy disasterously wrong

In 2001 it was re-inflate to avoid recession at any cost after 9/11 and dot con, well here we are and the cost is just becoming apparent...

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True. Credit bubbles are just part of the business cycle. You can't legislate them out of existence. This one just got out of hand because central bankers like Greenspan got the monetary policy disasterously wrong, probably by succumbing to lobbying from investment and mortgage banks. It will be spoken about in Economics 101 for decades.

YES -- They lobbied REALLY HARD -- It will possibly/eventually come out. Don't think that all this came about by magic. The US Banks/Mortgage/Lending Co:'s spent HUNDREDS OF BILLIONS OF DOLLARS LOBBYING CONGRESS AND THE SENATE. THIS IS FACT. Similarly, in the UK HUGE amounts of Lobbying have also occurred over the years.......... Much is still to come out. Anyone ut there able to elucidate?

This is very important - - So much has been done on the quiet/in secret -- this is an interesting and important area of research for an ambitious [and SERIOUS non-partisan] journalist..... Any takers out there?

Edited by eric pebble

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As you can see, what you propose (roughly) has already been policy.
Do you mean these policies are already supposed to be in place and acted on? If you do mean that then obviously they failed, thanks to the FSA no doubt.

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Do you mean these policies are already supposed to be in place and acted on? If you do mean that then obviously they failed, thanks to the FSA no doubt.

No.

I mean this was the alleged policy from the late 70s to the late 80s (according to the link I posted). One might argue that the peak before the last house price crash was caused by abandoning exactly the policy of targeting broad money.

The FSA came into existence in 1997 when Brown stripped the Bank of England of its regulatory role.

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Regulation has failed, let's have more regulation. :rolleyes:

Yes, they probably will interfere more. No they definitely shouldn't.

The problem we face is because of regulation. Regulated banking, mandated money, legal tender and all the other gun waving, prison threatening nonsense that make up our whim based, almost entirely imaginary financial system.

I'll say it again - you cannot regulate the mega wealthy.

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Regulation has failed, let's have more regulation. :rolleyes:

Yes, they probably will interfere more. No they definitely shouldn't.

The problem we face is because of regulation. Regulated banking, mandated money, legal tender and all the other gun waving, prison threatening nonsense that make up our whim based, almost entirely imaginary financial system.

You might be onto something here,the banking system has been regulated so that only the big bankers are able to lend moey with interest....so lets get round the interest bit.

If joe public could get in on the act,then the bankers face more competition and the borrower will get less punitive terms.

Of course what we have now is a consolidation exercise for the Big banks,so the solution really is MORE competition.

I'm sure something like a commission-based borrowing system could be workable.i.e like a foreign currency exchange.

you borrow £1000 over 24 months at 5% of borrowed amount as commission.

total payable is £1050....divide by 24......no more adjustable rates...fully sharia compliant,no problem

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whie there is big goverment there will be credit bubbles

its as simple as that

Bubbles have always happened even under the gold standard. The Tulip mania, South Sea Bubble et al happened in a vastly different era. To suggest it's a result of big government is wrong in light of the historic presence of bubbles.

I suspect they're more a result of certain monetary conditions allowing the basic speculative nature of people to run wild. People love getting money for nothing. So, you splash an extraordinary amount of cash into the system through credit, trade, or some other fake prosperity and people start speculating. Easy money is probably only slightly less compelling than easy sex.

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you borrow £1000 over 24 months at 5% of borrowed amount as commission.

total payable is £1050....divide by 24......no more adjustable rates...fully sharia compliant,no problem

Under Sharia law you cannot borrow, what happens with a house purchase is tha the bank buys it for say £200k and then sells it to you without interest for £300k

In that way eveyone is happy God, Bank and the borrower :ph34r::ph34r: is able to keep all his hands and fingers

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During the early 90s, lenders were given a serious rollocking about their lax lending during the late 80s.

They promised to tighten up and not allow it to happen again.

The promise lasted about 4 or 5 years if I remember correctly - basically until prices had hit rock bottom and started rising again.

It'll be no different this time.

Memory span of a goldfish then....

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True. Credit bubbles are just part of the business cycle. You can't legislate them out of existence. This one just got out of hand because central bankers like Greenspan got the monetary policy disasterously wrong, probably by succumbing to lobbying from investment and mortgage banks. It will be spoken about in Economics 101 for decades.

Imagine a rectangular tub full of water:

Shake it up violently - i.e. hype it, inject ramping, liar loans, tv property porn etc etc. -- and you get big choppy waves.....

Fix it so it CANNOT be shaken up violently - and the waves will remain calm.... They will roll a little up and down - but overall -- not too much turmoil...

End of.

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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