First Time Buyers' Strike

[tara747]

Can I just say THANK YOU to all potential FTBs for finally seeing sense and going on strike! See what happens! OK, it may be because the banks won't give out the money but anyway. All the potential buyers I know are now very bearish, it is marvellous!

[S S]

Can I just say THANK YOU to all potential FTBs for finally seeing sense and going on strike! See what happens! OK, it may be because the banks won't give out the money but anyway. All the potential buyers I know are now very bearish, it is marvellous!

it may be because the banks won't give out the money

I think you have hit the nail on the head.

It doesn't matter what price a house is at the moment the banks don't want your business.

Unless your a Housepricecrash forum poster with a big deposit saved and a portfolio of shares. Like all the FTBs!

[md23040]

My flight to London this morning was cancelled, thanks to that FTB strike. Is it em that caused that wee Airport outside stroke city to close.

Thoughts it was governemt related, looks like the HPC is getting dirty...

[tara747]

it may be because the banks won't give out the money

I think you have hit the nail on the head.

It doesn't matter what price a house is at the moment the banks don't want your business.

Unless your a Housepricecrash forum poster with a big deposit saved and a portfolio of shares. Like all the FTBs!

I don't think it matters much at this stage. The banks have done us all a huge favour by tightening up their lending - here's hoping it lasts.

[S S]

I don't think it matters much at this stage. The banks have done us all a huge favour by tightening up their lending - here's hoping it lasts.

Banks are looking after themselves, I don't think they do favours.

They will make it last as long as they can, banks will make even more money over the next 10 years on the back of the credit crunch. Any excuse to charge you more, in turn everything you buy will have the new "credit crunch" tax added on.

It will be fun to hear the excuses why anyones private pension didn't return what they thought it would. "Do you remember the credit crunch, they where the days".

[tara747]

Banks are looking after themselves, I don't think they do favours.

They will make it last as long as they can, banks will make even more money over the next 10 years on the back of the credit crunch. Any excuse to charge you more, in turn everything you buy will have the new "credit crunch" tax added on.

It will be fun to hear the excuses why anyones private pension didn't return what they thought it would. "Do you remember the credit crunch, they where the days".

Yes, I know, but they are unwittingly doing us all a favour. House prices will go lower as credit gets more difficult to obtain. Hopefully savings rates will continue to increase.

[S S]

Yes, I know, but they are unwittingly doing us all a favour. House prices will go lower as credit gets more difficult to obtain. Hopefully savings rates will continue to increase.

Putting aside how much you pay for your house, to fund the balance is approx 25% more expensive.

To finance £100k today is £583 pm @ 7% interest only, last year to finance the same amount was £470 pm @ 5.64% interest only.

Borrower is £113 pm worse off. Not to mention the massive fees in todays mortgage market.

The banks are not unwittingly doing anything, they know exactly what their doing.

No matter how much you finance, £25k, £50k or £200k to buy your new cheaper house the bank is making 25% more in interest.

I hope they don't try to do ftb's any more favours.

Who knows, next year it could cost 50% more to mortgage the same amount, all worth waiting for.

As for savings rates any I've seen advertised have conditions attached, you have to open a current account with fees attached, you can only save a max of £2500 per year and the interest offer only lasts for a year. The others are 50% linked to stock market performance and I wouldn't put much money in there at the moment.

Edited July 17, 2008 by statinstoinker

[Wolverine]

Yes, I know, but they are unwittingly doing us all a favour. House prices will go lower as credit gets more difficult to obtain. Hopefully savings rates will continue to increase.

I don’t feel house prices can go much lower especially when FTB’s are now facing a huge loss in equity due to no fault of their own!

If the banks would start to open avenues for FTB’s instead of closing them out of the market we may see benefits in the housing market. After all the majority of people want to own their own home at some point in their lives so they can have family etc...

The credit crunch is not only affecting the housing market but it affects everyone’s lifestyle and if it lasts for the longer-term we will begin to see more & more couples not having children due to the cost of living etc...

I can understand views & opinions about house prices being so high, banks should not have lent money more than people could afford, cost of living in NI has been so cheap compared with other parts of the UK for so long, but do we all not want the economy in NI to grow and the standard of living to be good??

[cacot]

I apologise that this is a rant, but Wolverine you have annoyed me today.

I don’t feel house prices can go much lower especially when FTB’s are now facing a huge loss in equity due to no fault of their own!

Sorry! I am going to be a FTB and I haven't bought a house yet. This mean if I wait till house prices fall to the level they should. I will not face negative equity, or at least shouldn't. Secondly, I cannot afford a house at current prices not properly afford. I would get by but that is the life my mother and father did. I went to Uni (as did my wife) so that I could get a better life within a higher salary bracket. I do not work harder to be able to give it to some greedy businessman/housebuilder for an object that carries a value far lower than they are trying to sell it for. I am currently browsing and will wait for the sales as we do with all commodities. Houses have the supply and demand side but we are not talking about a situation where there is 150 limited editions. PropertyNews shows an abundance of empty homes ready to be bought when the price and time is right.

If the banks would start to open avenues for FTB’s instead of closing them out of the market we may see benefits in the housing market. After all the majority of people want to own their own home at some point in their lives so they can have family etc...

1st child on the way and am actually very glad I don't have a mortgage that may be adjusting, costing me more than I earn. The fact that I am waiting means I have a greater level of Financial security. I also rent from my wife's parents so I have rent security too. I don't waste money, that means I pay as little as possible for each thing I buy. Remember how when you go to a car dealership and you are soo glad that you haggled the extra £500 off, or the TV set you got on sale for £300 instead of £500. Try multiplying those numbers by 500 or 1000. That is exceptional joy right there. I do not have a spare £200 000.00, If I did I would not go and waste it either, I would set it aside and retire early. People who are trying to perpetuate the high prices are trying to enslave people into working harder and longer. They are greedy! Random Joe Bloggs doesn't care if his house devalues if it means the next one he buys does too. Negative equity is a curse brought by those who tried to make money out of peoples homes.

The credit crunch is not only affecting the housing market but it affects everyone’s lifestyle and if it lasts for the longer-term we will begin to see more & more couples not having children due to the cost of living etc...

See above. I am having children and I made that decision when I saw house prices coming down. We have been waiting till we bought a house to start, but it has taken so long for the numpties to stop overspending and the banks to stop lending ridiculous multiples of cash. The house prices coming down is a good thing, what was allowed to happen over here in the last 2 years without proper regulation is the problem.

I can understand views & opinions about house prices being so high, banks should not have lent money more than people could afford, cost of living in NI has been so cheap compared with other parts of the UK for so long, but do we all not want the economy in NI to grow and the standard of living to be good??

YOU CANNOT LIVE OFF DEBT!!!!!

The economy cannot be driven by debt, not perpetually. Eventually the debt must be paid back or something else must happen that makes NI sooo great that all the money is worth it. NI is good, but not that good and I see nothing ahead that will ever make it so.

You talk as if you understand how this all works but I am sorry I feel you do not!

You have become a victim through trying to make a fast buck. The gamble didn't pay off.

[Wolverine]

Doccyboy, its ok for the President of RICS saying that the prices were high even in 2005!! If someone like this knew they were high and the banks are getting have been accepting valuations done by RICS why didn’t he do something then?? Also, he would have no concerns with the credit crunch due to the salary he receives!

As for a mortgage on a £450 house, people were purchasing houses to this cost as a result of making profits on the property they had purchased so yes I know people who have bought houses at this price and even more!

I feel the media is doing nothing for the economy as every day more doom & gloom is reported in relation to the current environment and this is having a worse affect on people hoping to purchase houses as they will hold back until its too late and the prices which are at rock bottom will begin to rise again not drastically rise but slowly and the day will come when people will say "we should have bought that house then"!

[Monkey]

After all the majority of people want to own their own home at some point in their lives so they can have family etc...

so you cant have a "family" in rented accomodation?

most of my friends (25-32 years old) do not want a family, the ones who have kids we unplanned "accidents" the others just simply do want to have kids, but i would imagine money would be a deciding factor

[cacot]

Doccyboy, its ok for the President of RICS saying that the prices were high even in 2005!! If someone like this knew they were high and the banks are getting have been accepting valuations done by RICS why didn’t he do something then?? Also, he would have no concerns with the credit crunch due to the salary he receives!

I agree with this part wholeheartedly, they should of done something.

As for a mortgage on a £450k house, people were purchasing houses to this cost as a result of making profits on the property they had purchased so yes I know people who have bought houses at this price and even more!

More fool them for spending what they could have saved.

I feel the media is doing nothing for the economy as every day more doom & gloom is reported in relation to the current environment and this is having a worse affect on people hoping to purchase houses as they will hold back until its too late and the prices which are at rock bottom will begin to rise again not drastically rise but slowly and the day will come when people will say "we should have bought that house then"!

True they might say

"Gosh that cost me £5000 (or £15000) more than I wanted to pay for it"

Or they might be found saying

" Oh look that house I could have bought for £450k will only cost me £275k or even £225 if I haggle"

I know which I'd be more concerned/happy about hearing!

[Wolverine]

so you cant have a "family" in rented accomodation?

most of my friends (25-32 years old) do not want a family, the ones who have kids we unplanned "accidents" the others just simply do want to have kids, but i would imagine money would be a deciding factor

So your friends who have had kids are accidents - nice one Monkey I hope you say that to them!!

I never meant that everyone who have or want to have family needs to own their own home, yes they can rent but you never own your own property so most landlords have restrictions to what you can do with the rented accommodation!

[Wolverine]

I apologise that this is a rant, but Wolverine you have annoyed me today.

Sorry! I am going to be a FTB and I haven't bought a house yet. This mean if I wait till house prices fall to the level they should. I will not face negative equity, or at least shouldn't. Secondly, I cannot afford a house at current prices not properly afford. I would get by but that is the life my mother and father did. I went to Uni (as did my wife) so that I could get a better life within a higher salary bracket. I do not work harder to be able to give it to some greedy businessman/housebuilder for an object that carries a value far lower than they are trying to sell it for. I am currently browsing and will wait for the sales as we do with all commodities. Houses have the supply and demand side but we are not talking about a situation where there is 150 limited editions. PropertyNews shows an abundance of empty homes ready to be bought when the price and time is right.

1st child on the way and am actually very glad I don't have a mortgage that may be adjusting, costing me more than I earn. The fact that I am waiting means I have a greater level of Financial security. I also rent from my wife's parents so I have rent security too. I don't waste money, that means I pay as little as possible for each thing I buy. Remember how when you go to a car dealership and you are soo glad that you haggled the extra £500 off, or the TV set you got on sale for £300 instead of £500. Try multiplying those numbers by 500 or 1000. That is exceptional joy right there. I do not have a spare £200 000.00, If I did I would not go and waste it either, I would set it aside and retire early. People who are trying to perpetuate the high prices are trying to enslave people into working harder and longer. They are greedy! Random Joe Bloggs doesn't care if his house devalues if it means the next one he buys does too. Negative equity is a curse brought by those who tried to make money out of peoples homes.

See above. I am having children and I made that decision when I saw house prices coming down. We have been waiting till we bought a house to start, but it has taken so long for the numpties to stop overspending and the banks to stop lending ridiculous multiples of cash. The house prices coming down is a good thing, what was allowed to happen over here in the last 2 years without proper regulation is the problem.

YOU CANNOT LIVE OFF DEBT!!!!!

The economy cannot be driven by debt, not perpetually. Eventually the debt must be paid back or something else must happen that makes NI sooo great that all the money is worth it. NI is good, but not that good and I see nothing ahead that will ever make it so.

You talk as if you understand how this all works but I am sorry I feel you do not!

You have become a victim through trying to make a fast buck. The gamble didn't pay off.

CamtheScot good to hear from you.

If you wish to get by in life that is your decision but when you do decide to purchase your first house how will you know it will not drop further? Will you listen to the media as most others are doing? Know what they say about that 'never believe everything you read in the tabloids!'

Glad to hear your first child is on the way and I hope everything goes well but do you not think you should be providing for you future son or daughter some financial security rather than living of your wife’s parents and waiting, for nobody knows how long, to purchase your own home? It’s also a good thing the house prices are decreasing as you and your wife would never have had children then??

I may not understand the logistics of most of it but you need be careful that house prices may be at its lowest!!

Also, yes I may have gambled but the land which I bought was purchased from family in 2000 and I not only have a house on it but I still have the security of 2 building sites - so understand the facts before you make statements!!

[cacot]

CamtheScot good to hear from you.

If you wish to get by in life that is your decision but when you do decide to purchase your first house how will you know it will not drop further? Will you listen to the media as most others are doing? Know what they say about that 'never believe everything you read in the tabloids!'

Actually I am a teacher and it is part of my job to show that the words the press say and the numbers they put out are very often false or misleading. I am able to retrieve my own information from the source documents and draw my own conclusions. You may have noticed some of my earlier posts detailing % drops over a variety of different time periods. Also, to clarify, I said I did not want to just get by in life, that is what my parents did. We live within our means, that is very different to just getting by.

Glad to hear your first child is on the way and I hope everything goes well but do you not think you should be providing for you future son or daughter some financial security rather than living of your wife’s parents and waiting, for nobody knows how long, to purchase your own home? It’s also a good thing the house prices are decreasing as you and your wife would never have had children then??

We may have left it longer as we are still young, but that is all part of being a responsible parent and allowing your child to grow up in a secure home environment. I said I had rental security, i.e. I pay a fair rate and it will not be hiked without due notice. Also I do work on the house as an added bonus for them.

As for providing financial security or understanding the dynamics of markets, I am a Mathematics graduate and as such understand the likelihood of trends to repeat in cycles.

I may not understand the logistics of most of it but you need be careful that house prices may be at its lowest!!

I do understand the logistics of it. It is not impossible, but I am sure most on this forum would agree, as well as most economists, share traders, banks, surveyors and EAs, that we have not yet reached the bottom of the drop and will not do till at least the end of 2009.

Also, yes I may have gambled but the land which I bought was purchased from family in 2000 and I not only have a house on it but I still have the security of 2 building sites - so understand the facts before you make statements!!

Sorry you said in an earlier post.

The current market at present is not very positive in relation to the sales of properties.

I bought land with outline planning permisson in the boom era to build my home and realised that i could get 2 houses on it. I applied for another house got the outline permission and put both the house I was building up for sale and the site up for sale.

You said boom era. I assumed 2005 onwards. Also if your family sold it to you at boom prices then that's got to hurt relations now. Another thing I only count 2 houses mentioned in the initial post, now you are talking about your house and 2 sites. Which is it?

I did this in May 2007 and since then have finished the house and moved into it but it is still for sale as i have not got one viewing either on the site or the house.

My house was at the £450,000 region and I have recently dropped £60,000 of it with some outside hope that I might get a viewing but no luck.

What my problem is, does people not realise the money it cost to buy land in the market boom and the money it costs to build a 2700 sq ft house? The value which my house is on the market for now is the amount it have took me to purchase the land build the house so I am no better of if I sell the house, but if I sell the site I will not have to go through the process of building but finacially I would be worse off.

Doesn't sound as if you are quite as secure as the more recent post suggests, but I'll accept if you got another site agreed that could make a difference.

Trust me, I have plenty of financial understanding and comprehensive financial security lined up for myself and my family.

[tara747]

Where do I start!!!!

Putting aside how much you pay for your house, to fund the balance is approx 25% more expensive.

To finance £100k today is £583 pm @ 7% interest only, last year to finance the same amount was £470 pm @ 5.64% interest only.

Borrower is £113 pm worse off. Not to mention the massive fees in todays mortgage market.

The banks are not unwittingly doing anything, they know exactly what their doing.

No matter how much you finance, £25k, £50k or £200k to buy your new cheaper house the bank is making 25% more in interest.

I hope they don't try to do ftb's any more favours.

Who knows, next year it could cost 50% more to mortgage the same amount, all worth waiting for.

As for savings rates any I've seen advertised have conditions attached, you have to open a current account with fees attached, you can only save a max of £2500 per year and the interest offer only lasts for a year. The others are 50% linked to stock market performance and I wouldn't put much money in there at the moment.

Have you not read this forum! I want to buy a house with really high interest rates - the more IRs go up, the more prices come down! I want to buy with a huge deposit (well on the way to that one), borrow as little as poss at a high IR and pay it off as quickly as poss. The higher the IR, the greater the incentive to have a short mortgage and - even better - overpaying makes a bigger dent in £100K than £200K, no matter what the IR! Also, the lower the price, the greater my deposit will be as a % of the price of the house.

Please - we have been over this again and again. I am asking you nicely not to insult our intelligence any further.

I don’t feel house prices can go much lower especially when FTB’s are now facing a huge loss in equity due to no fault of their own!

If the banks would start to open avenues for FTB’s instead of closing them out of the market we may see benefits in the housing market. After all the majority of people want to own their own home at some point in their lives so they can have family etc...

The credit crunch is not only affecting the housing market but it affects everyone’s lifestyle and if it lasts for the longer-term we will begin to see more & more couples not having children due to the cost of living etc...

I can understand views & opinions about house prices being so high, banks should not have lent money more than people could afford, cost of living in NI has been so cheap compared with other parts of the UK for so long, but do we all not want the economy in NI to grow and the standard of living to be good??

Yes, prices can go much lower. Just watch.

I think you've got it the wrong way round. HIGH house prices affected people's lives in a bad way. Now they are getting cheaper, that is a good thing! Young people will have a far better start in life if their house is cheaper, is that so hard to understand?

Yes, we want the economy to grow but that will not happen through buying and selling houses and getting further into debt. And as for standards of living - see my paragraph above. Standards of living will improve dramatically if this HPC makes houses cheap enough. Then people will have more disposable income to invest in PRODUCTIVE things, like businesses. This is the basis of a healthy economy.

YOU CANNOT LIVE OFF DEBT!!!!!

The economy cannot be driven by debt, not perpetually. Eventually the debt must be paid back

Exactly.

Doccyboy, its ok for the President of RICS saying that the prices were high even in 2005!! If someone like this knew they were high and the banks are getting have been accepting valuations done by RICS why didn’t he do something then?? Also, he would have no concerns with the credit crunch due to the salary he receives!

As for a mortgage on a £450 house, people were purchasing houses to this cost as a result of making profits on the property they had purchased so yes I know people who have bought houses at this price and even more!

I feel the media is doing nothing for the economy as every day more doom & gloom is reported in relation to the current environment and this is having a worse affect on people hoping to purchase houses as they will hold back until its too late and the prices which are at rock bottom will begin to rise again not drastically rise but slowly and the day will come when people will say "we should have bought that house then"!

I agree with you about the RICS - it is a real shame that this was allowed to happen - but please blame them, the govt, the banks, the FSA and the BOE etc who created this huge bubble and the subsequent mess. Don't blame the potential FTBs who were priced out a long time ago and are waiting patiently for the bottom of the cycle before buying.

So your friends who have had kids are accidents - nice one Monkey I hope you say that to them!!

I never meant that everyone who have or want to have family needs to own their own home, yes they can rent but you never own your own property so most landlords have restrictions to what you can do with the rented accommodation!

We do not intend to rent forever - we are simply waiting for the bottom (or near it) before buying. This will have a huge positive impact on our financial security for the rest of our lives and we will be gald that we waited. Our reward will be a home which is better and in a nicer location than we could have got at the top of the boom (or even now). Don't you think that we are just being sensible? Or is there something wrong with this plan?

Glad to hear your first child is on the way and I hope everything goes well but do you not think you should be providing for you future son or daughter some financial security rather than living of your wife’s parents and waiting, for nobody knows how long, to purchase your own home? It’s also a good thing the house prices are decreasing as you and your wife would never have had children then??

Cam is providing financial security for his family by waiting to buy a house within his means and taking on a lower mortgage. Do you think that having a mortgage is a sign of financial security? How many current owners are in danger of repossession? How secure do you think they are?

Edited July 17, 2008 by tara747

[VedantaTrader]

Doccyboy, its ok for the President of RICS saying that the prices were high even in 2005!! If someone like this knew they were high and the banks are getting have been accepting valuations done by RICS why didn’t he do something then?? Also, he would have no concerns with the credit crunch due to the salary he receives!

As for a mortgage on a £450 house, people were purchasing houses to this cost as a result of making profits on the property they had purchased so yes I know people who have bought houses at this price and even more!

I feel the media is doing nothing for the economy as every day more doom & gloom is reported in relation to the current environment and this is having a worse affect on people hoping to purchase houses as they will hold back until its too late and the prices which are at rock bottom will begin to rise again not drastically rise but slowly and the day will come when people will say "we should have bought that house then"!

Calm down! We have got lots of timdon't worry you ll not miss the next leg up. We have between 5-7 years before prices can even think about rising. If the government and CB's keep making mistakes for the sake of political expedience then we could see prices stagnating for a decade. The problems are very similar to Japan...only we are in much worst position to deal with them...

The BOJ, and the Japanese Government tried to bail everyone out, and printed huge amounts of money,however, there was a battle between private sector and public sector. The public sector tried to stimulate using all sorts of failed methods such as keynesian style stimulus checks, and the private sector (the banks) didnt lend,despite attempts at pumping liquidity from the government,sound familiar? SO we have the central banks lowering interest rates and pumping the system with excess liquidity, but we have the bank lending rates increasing the interest rate on debt. They are doing every to turn away business...

Bernanke has been going on about the FED will provide liquidity where it is needed. But it hasnt done any good. IN short the reason for this, is that it is not a liquidity problem, it an insolvency problem. Banks need to be allowed to fail. I said it months ago, but Allied Irish and Bank of Ireland will go under, of course they will be nationalised....

Barclays, RBS have so much exposure to MBS junk, Washington Mutual are insolvent, MBIA,AMBAC the biggest bond insurers are insovent,as are Wachovia, CITI have a trillion USD off balance sheet MBS, Fannie and Freddie are insolvent...I think we are going to be surprised about how many banks fail.

I am not being doom and gloom and I think the media have a responsibility to report what is happening. The vested interests were only too happy to go on TV and talk "up" house prices when times were good, now when the tides going out, why should the media all of a sudden censor the reality....

House prices will fall between 30-60%. A good average will be 40% but I think....but some places will fall 60% from peak.

[azogar]

sorry for going ot peeps but...

VT (or anyone who's interested) have you been watching the forex today (euro vs usd) there is an epic battle going on around the 1.58 mark at present.

the 3 month chart puts it into perspective:

http://uk.finance.yahoo.com/currency/conve...;amt=1&t=3m

right back to hp's..............

Edited July 17, 2008 by prophet-profit

[VedantaTrader]

sorry for going ot peeps but...

VT (or anyone who's interested) have you been watching the forex today (euro vs usd) there is an epic battle going on around the 1.58 mark at present.

the 3 month chart puts it into perspective:

http://uk.finance.yahoo.com/currency/conve...;amt=1&t=3m

right back to hp's..............

Its been in a range for a while. It seems to keep failing at around the 1.60 levels. There are two options, and I m sure one will happen...either it will move higher or lower, Kiddin...Another failed attempt,perhaps a move down to 1.50, before another move up...

[tara747]

sorry for going ot peeps but...

Yes, please can we get back to HPs - I have noticed your 'investment' posts creeping into more and more threads PP!

[azogar]

Yes, please can we get back to HPs - I have noticed your 'investment' posts creeping into more and more threads PP!

sorry

[Traktion]

Not too much to add here, that others haven't already said.

Many of these arguments are ones which we have discussed, at length, over the last year or more. I'd suggest reading some of the older threads, if you wish to build up an understanding of the position which many of us take. There is history, cycles, standard deviations and the current state of affairs all to consider. This is why we can say, with confidence, that the market is highly likely to continue to fall for many years yet.

Also, be careful not to put the cart before the horse; if the prices hadn't been pushed so high in the first place, there wouldn't be a crash now. This crash, and all the associated misery, is the result of the boom. Be careful not to be too short sighted and think otherwise.

[tara747]

Traktion, you are right. I probably was going over old ground in my post - but at least it gives new peeps a bit of entertainment!

Good point on the cart and horse - the boom caused the bust. Govt/banks/BOE/VIs/FSA/Kirstie and Phil etc caused the boom. Therefore, Govt/banks/BOE/VIs/FSA/Kirstie and Phil etc caused the bust.

Edited July 17, 2008 by tara747

[YoungFTB]

Barclays, RBS have so much exposure to MBS junk, Washington Mutual are insolvent, MBIA,AMBAC the biggest bond insurers are insovent,as are Wachovia, CITI have a trillion USD off balance sheet MBS, Fannie and Freddie are insolvent...I think we are going to be surprised about how many banks fail.

VT I agree that the banks should be allowed to fail, I have a question though

If the banks are allowed to fail then surely people would lose faith in the whole banking system?

I.e. like 1929 when people rushed to take out their money resulting in bank run after bank run? Am I completely off the mark with this though? I get the impression that all these bailouts are trying to prevent a similar scenario from happening again.

[tara747]

VT I agree that the banks should be allowed to fail, I have a question though

If the banks are allowed to fail then surely people would lose faith in the whole banking system?

I.e. like 1929 when people rushed to take out their money resulting in bank run after bank run? Am I completely off the mark with this though? I get the impression that all these bailouts are trying to prevent a similar scenario from happening again.

IMO, as long as the govt protects deposits then people should feel safer. I know I would. In an ideal world...