Wednesday, April 23, 2008

The British real estate market is on life support

Enough With The Cuts, Already

Rising Libor puts the Fed and the Bank of England in a tough spot. The $100 billion liquidity-injection is the biggest bailout in the BOE's history, and it was granted without public input or Parliamentary authorization, just like the Bear Sterns transaction. The bankers call the shots while the public picks up the tab. The BOE's action puts to rest the idea that “the worst is behind us”. It isn't; in fact, recent estimates suggest that the losses to the banking system could exceed $1 trillion. There's still a lot of carnage ahead.

Posted by malct @ 08:07 AM (1476 views)
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17 thoughts on “The British real estate market is on life support

  • “Libor is one of the world’s most important financial indicators. It serves as a benchmark for $900 billion in subprime mortgage loans that adjust — typically every six months — according to its movements. Companies globally have nearly $9 trillion in debt with interest payments pegged to Libor, according to data provider Dealogic.”

    The BOE is considering creating a British-style Fannie Mae to kick-start the flagging housing industry by providing government-backed loans. The private sector will not be a big player in the housing market for the foreseeable future.

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  • Am i missing something here? Sorry if this has been pointed out before but it strikes me there is a bit of govn hypocrisy here. I mean on the one hand the gov have an “ask” that cuts in rates are followed by the lenders and on the other they themselves aint playing ball with NR. Similarly they want the repo man to stop banging at the door (which i believe is the type of meddling that merely exasperates the situation anyway – but be that as it may) and isnt NR larging it in the repo stakes?

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  • sold 2 rent 1 says:

    Once this inflation spike is done, we are looking at a deflationary depression like no other.
    The inflation spike might be big too – maybe 20-40pc as the prices of goods catches up with money supply growth.

    But in the end if lenders don’t want to lend and borrowers don’t want to borrow, the money (debt) supply that has been growing for 60 years will start to shrink and then collapse

    Is it time for change yet?
    Not yet?
    OK lets have some more destruction then.
    Change can only ocurr from the depths of destruction.

    WE ARE CHANGE

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  • planning4acrash says:

    Parliament should revolt! The people should revolt! They’ve spent almost $200bn now without parliamentary approval. Why the hell aren’t we all blocking traffic outside the BOE?

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  • planning4acrash says:

    S2R, I found a great Ron Paul audio clip that I’ll post on Sat morning, great stuff. Argues quite rightly that we are suffering, not from problems with capitalism, but that we are living in the essence of a centralised command and control economy. Inflated money supply is not capitalism, it is centralised control, bail outs are not capitalism, it is central control. This is corporatism, corporate fascism if you will, dressed up as a libertarian social democracy. Media is a powerful thing!

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  • I like the way that the government has got the banks and building societies to ‘promise’ that repossession will be the last thing that they try. Phew, what a relief.

    It’s clearly going to be the last thing – they aren’t going to do anything else afterwards, are they? And they’ve not promised, so far as I’m aware, not to do it fairly quickly if anyone defaults.

    Much spin going on with all these announcements.

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  • I refer to a message i posted earlier in the week. The banks are only using this emergency funding to look after there own position, the Government seem to think the banks will be using thsio as fuel for the loan markets. It seems to me that there is a big mismatch between the governments thinking and the banks thinking. This will result in the economic problems that we have forseen still materialising, but possibly the taxpayer will be worse off.

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  • scary to think this is only 3 months into the downturn!

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  • It’s sad to think that the BoE has come to this – I thought like the ECB the BoE woud play its card straight and fair and tell it like it is

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  • sold 2 rent 1 says:

    P4AC, Looking forward to the Ron Paul video

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  • sky breaking news – March mortgage approvals lowest since records began

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  • japanese uncle says:

    I should like to repost the following:
    —————————————————————
    If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. (Thomas Jefferson)
    —————————————————————
    If someone including the punk who happens to be the tenant at 1600 Pennsylvania Avenue, dares to call one of the Founding Father of his own nation, an ‘outrageous conspiracy theorist’, so be it.

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  • planning4acrash says:

    Kind of. Tho, this isn’t a down turn, its a monetary crisis that is likely to trigger a downturn. The scary thing is that the downturn has not yet come to pass. That is why many of us here keep talking about 2009 and beyond.

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  • mark wadsworth says:

    That $1 trillion looks about right (give or take 100%). Bank losses from sub-prime in the UK will be about £50 bn worst case, times that by ten for USA, Spain, ANZ, RoI and so on.

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  • Katfish “It’s sad to think that the BoE has come to this ” sadly ‘this’ is what the BoE always has been, a deception.

    With sincere apologies to those who caught it a few weeks ago, here’s a writer’s lighthearted look at the history of BoE and a few related issues from February 2006. Perhaps more important than ever now that more of us are waking up.

    (the april archive seems to be blocked by an mp3 file so I couldn’t simply refer to it, I’ve reported it to the webmaster)

    Ponerology and the Pound – Humanity’s Worst Invention

    “The world is a dangerous place to live, not because of the people who are evil,
    but because of the people who don’t do anything about it.”
    Albert Einstein

    For some reason, thinking of bad inventions, my thoughts first turned to money. But then money in its original form as an enabler of the exchange of goods and services, is, or at least was, a good thing. It is when money is itself traded as a commodity that problems arise, especially on the international markets. In this context, I suggest humanity is in an advanced stage of delusion accelerating towards unstable, unsustainable insanity.

    Alongside this and in reality part of the same phenomena, are the mountains of debt which overshadow mankind’s very existence here on earth. Of course, all of this is very vague and very broad and right here we are looking for an invention, something we can isolate and pin down as not just a bad idea, but the one which has most negative influence on the planet. Humanity’s Worst Invention.

    So amidst cries of “off with his head” and “we can’t print that”
    I am proposing that The Bank of England is in deed the invention we are looking for.

    Of course there are at least two Bank of Englands, in perception terms that is. There is ‘our’ Old Lady of Threadneedle Street, the symbol of power and security, part of what being ‘British’ is all about. We can all get on with our personal stuff knowing the Pound is being safely looked after. Sadly, that is where the delusion begins and where the ‘other’ bank hides, the bank who’s shareholders MPs are not allowed to raise questions about in parliament. Check back on the real history if you need to. The origins of The Bank of England are anything but English and ‘our’ Pound is anything but safe.

    How a foreign (Dutch) king in 1688 managed to invade England by sea, and march an army from Devon to London as part of ‘The Decent on England’, depose the existing king, become king of England himself and somehow get this recorded in history books as ‘the glorious revolution, should make us all a little sceptical if not deeply suspicious. But of course William didn’t do this all on his own.

    Six years later the same transnational conspirators that had put him in ‘power’, came up with a brilliant loan plan to finance William’s obsession with war on France. The Bank of England was born and William’s obsession became the national debt. The loan was secured against future taxes on the British people who although never expected to repay the capital, pay the interest on it to this day. But that’s only part of the story, after all this is the worst invention and it does get worse.

    The government’s responsibility to provide currency was handed over to The Bank of England, perhaps the best printing job any ‘printer’ ever had, totally beyond comprehension. Not only this but also the right to charge the government (read ‘the people’) interest on the money printed. Madness? I think so. Over time money was printed with less and less security or fractional reserves so the money loaned actually didn’t (and doesn’t) exist until the loan is made. If it looks like a fish and smells like a fish it probably is a fish. A Yahoo search on fractional reserve banking today returned ‘about’ 336,000 entries. Millions of wide awake people are quietly weighing up the form and deciding what to do personally.

    And there’s worse to come, words like siphon, drain and plughole come to mind. It’s the interest, the interest on the loans, they never ever print the interest. Think what this means. If for instance and simplicity, ten people borrow £1,000 each for a year at 10% pa., the £10,000 is created out of nothing. At the end of the year they all pay back (or should if they could) the £1,000 they each borrowed plus £100 interest. So the bank has the £10,000 which was created out of thin air plus £1,000 interest which has been extracted from the genuine common wealth of the people. This has been going on for well over three hundred years.

    Gradually, no matter how hard we work, or how clever we are, fundamentally real wealth disappears from society and is replaced with debt, virtual money. Try playing the board game Monopoly with the bank taking back £200 each time you pass GO. Last time I checked more than 97% of the UK’s currency was debt, only existing in computer software. Virtual reality?

    The practical everyday effect of this is to boil the frog. Slowly over the years basic human values and concerns for each other and our environment are replaced by competitiveness, greed, selfishness and a lust for acquisition, power and wealth. Meanwhile, many millions of us in the so called developed world are avoiding or rather masking poverty with increasing debt.

    Last for the moment, but by no means least, once the Bank of England invention was up and running, it was a relatively simple matter to re-invent it all over the world in almost every country. This was of course in effect one of the principle functions of the British Empire. Eventually humanity developed a global version, the World Bank with its cousins the IMF and WTO with all the well reported ecological, humanitarian, economic, ethical and humanity threatening implications.

    But this was not before the same movers descended on the United States of America and created the Federal Reserve system in the image of the Bank of Amsterdam, sorry I meant England. At the time of writing, the US treasury secretary John Snow has recently (6th March) told Congress that rather than default on its obligations the nation is delving into pension funds to avoid hitting the $8,2 trillion debt limit.

    ‘The Fed’ will stop reporting on M3 on Thursday March 23rd, (whilst Congress is on a spring break) and only days after Iran’s intended new oil bourse may start trading oil, anybody’s oil, in Euros on 20th. This may expose the madness totally with dire consequences for us all.

    But what sort of people could create and perpetuate such a monster? Surely, some have said, behind these evil men must be something more, aliens perhaps or even reptiles from another dimension. This may be so, who really knows?.

    However, according to Andrew M. Lobaczewski, Ph.D in his soon to be published book Political Ponerology: a Science on The Nature of Evil adjusted for Political Purposes, from Red Pill Press, the answer is much closer to mankind. It’s in our genes, or more accurately, it is what is not in some peoples genes.

    Apparently a small percentage of humanity lacks the normal restraints of conscience, empathy, guilt or shame. At the same time not all are violent but most have the ability to mask their psychopathy with a facade of sanity and charm. Many will be reading this essay. Hi there!. How’s it going?.

    These people naturally gravitate into positions of power and influence in politics and commerce, where, once established they gradually modify the rules and laws to create a world that suits them. Compliance with their new world is rewarded with material success and so previously ‘normal’ humans adopt psychopathic behaviour in order to survive and prosper in a contrived and hostile environment.

    This I suggest is not a possibility, not a projected scenario or another ‘what if?, this is history. We, with help from our friends Mr Apathy and Mrs Complacency have lost control of our world to a minority group that have us suspended in an Orwellian, Huxlian dreamlike state, and, as ‘they’ are really part of ‘us’, their invention really belongs to humanity.

    “All that is required for evil to prevail
    is for good men to do nothing.”
    Edmunde Burke

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  • Katfish – if Ponerology and the Pound is too creative for, try this RAW clip from UK Parliament records.

    “The idea of Montagu Norman as Governor simply terrifies me”. Those were the men who ran the independent Bank of England for virtually the first half of this century and made such an appalling mess of the British economy. They helped to bring Hitler to power and brought Mosley marching down Threadneedle street with his blackshirts. Now, some of my idealistic hon. Friends want to give back those powers to that source. That seems to be an incredible misreading of British history. Those were the special priests who ran the Bank of England.

    here’s the source:-
    http://www.publications.parliament.uk/pa/cm199394/cmhansrd/1994-01-28/Debate-2.html

    why do we keep making the same mistakes?

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  • Katfish – try this from UK parliament records :-

    “The idea of Montagu Norman as Governor simply terrifies me”. Those were the men who ran the independent Bank of England for virtually the first half of this century and made such an appalling mess of the British economy. They helped to bring Hitler to power and brought Mosley marching down Threadneedle street with his blackshirts. Now, some of my idealistic hon. Friends want to give back those powers to that source. That seems to be an incredible misreading of British history. Those were the special priests who ran the Bank of England.

    http://www.publications.parliament.uk/pa/cm199394/cmhansrd/1994-01-28/Debate-2.html

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