Saturday, April 12, 2008

UK on a knife edge

Lending market crisis ‘will leave thousands of owners in the cold’

A perfect storm is coming: housing crash, City job losses, political crisis & blame game, pound devaluation, decline in UK Norths Sea oil and gas production... can anyone here help me with a good news?

Posted by confused76 @ 10:25 AM (2024 views)
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33 thoughts on “UK on a knife edge

  • The Olympics will come to dominate the news and help us all forget for a while.

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  • I’m starting to think that some people only add links to articles which simply repeat the same “facts” and figures and comment as the previous 20 articles posted here so that they can add their own little comment which says “I am 100% right and every person, organisation or media outlet who gives a contrary view is wrong and will be mocked and ridiculed”.

    I predict that house prices are going to go up. There. Now, in about five or six years time I can come on here and state with lots of smugness “I told you so! I called it! House prices are going up! None of you believed me but now I’ve been proved right!”. That’s about all most of you have done on this site since it was created…………indeed, someone here a few weeks ago claimed – with no hint of sarcasm or humour – that they “called” a reversal in HPI in 2004. Well, if you “called” it in 2004 you didn’t freaking call it, did you!

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  • renting2 – “The Olympics will come to dominate the news and help us all forget for a while” UK Plc will be bust before the London games not after them with bumbling Brown and dithering Darling at the helm. As for running around the track in China we’ll be lucky to see the athletes for the smog.

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  • Sorry, that’s all the ‘good news’ I could come up with!

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  • The CML Chairman says “Compared to the actions of the Federal Reserve in the US our central bank stands accused of being cautious and slow”. Two questions: (1) have the Fed’s actions resolved the US housing crisis? (2) Have the Fed’s actions helped out its friends on Wall St? Answers on a postcard.

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  • Plenty of good news out there.. just look for it…

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  • “Plenty of good news out there.. just look for it…”

    An example, please, that is relevant to this blog?

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  • Because the only way would be up… I wonder what you guys will do when we reach the floor and this is the case.. so much of your identity has been polluted with doom and gloom you’ll start to feel that you need it! The same thing happens to prisoners needing their cell so Im told. This is your prison.. the door is open if you choose to step outside.. None of this matters and in the long run we’re dead anyway. I put it to you that spending youre time worrying/moaning about finance is not the best thing. I guarentee on your death bed you will wish you hadnt been so self indulgent…

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  • Pecker,

    Do you work for the government? Your philosophy is *exactly* what the current incumbents would like us to accept.

    The current economic malaise doesn’t just affect me – it will affect our children as well. Your deathbed scenario is interesting but overlooks that fact that, as a nation, we have been loading big debts onto the next generation. It’s not just about me me me.

    When we “reach the floor”, I’m going to buy myself a property with a big smile on my face.

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  • @pecker – it’s a forum for debate and opinions primarily on the UK housing market nothing more

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  • See your point. But I would be happy with a fair priced house, further than that I suppose I’m pretty content.
    What I see is a continuing cycle of financial problems foisted upon us, which adversely affects everybody. Ignoring it won’t make it disappear.

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  • The housing issues will sort themselves out as will all the other financial issues. It may be painful depending on the circumstances of the person in question. I have felt very negative over the past few years but not any longer. We have these cycles and supercycles and maybe this debt based economy collapsing will mark the end of several decades of a system which simply didnt/couldnt work, but so what!!??. My point is that there is nothing really new under the sun and that all of the “problems” that are out there can be traced back to the human condition of being self interested or to put it another way just plain greedy. Despite what some posters have suggested on this site.. we all are no differnet since we are all self interested (but our circumstance may make us feel that we are different). You couldnt do anything to prevent this housing bubble and you WILL NOT be able to prevent the next bubble. Unless you can work out how to change peoples basic instincts (you cant by the way) I suggest give up moaning about them…

    So either partake in bubbles/greed or dont and dont worry about them, just quietly negociate them and relax. But not getting involved and then becoming bitter about it makes you no different to the people you slate (say BTLers)

    I am a potential FTBer, and in theory at least im also a potential BTLer ( I dont fancy this since it seems like quite a crappy “job”) but I make the choice whether or not I am bitter and hence spiral in being a negative moaning old sap.. I choose not to, because it would make me feel bad.. If anyone does choose to then more fool them. I simply do not believe that there is any significant % of genuinely socially minded people on this board! How many of you do good works, give lots of money to charity, get your hands really dirty?? None!! Me neither! Know who you are!!

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  • Perhaps the good news is that the US housing market is ahead of the UK, and the CML had a short space of time to learn and get their act together. This seems to be evidenced by more sensible LTV multiples on offer and more scrutiny of self cert loans.

    Steven Crawshaw (as mentioned elsewhere on this site) is plainly trying to improve the financial state of B&B who have made mistakes in their business model. I guess the good news is that B&B have learned an important gearing lesson without being wiped out in the process (so far, that is).

    Life is a learning process, it remains to be seen whether Darling and Brown can adapt in time to save their bacon! They haven’t done too well recently.

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  • OK… here is the good news
    because of global warmng we will not need to fly to Spain for holidays and will make champagne in Kent

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  • alan I agree – if the US hadn’t been flashing warning signals on the lenders’ radars they’d probably be extending even more ridiculous mortgages right now, can you imagine it – “Friends Mortgages – For Groups Of Five Friends or More Looking To Be Together”.

    pecker, what are you on about? It is because we are socially-minded people that we are on this board.

    Is high house prices good for the community?

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  • @pecker

    I agree with a lot of what you have to say. It seems to me that many people on this site seem positively gleeful that the crash they’ve been ‘predicting’ is finally here, Like it’s some sort of egoistic vindication that they were ‘right’ all along. ‘Us’ against ‘them’ mentality – which causes most of humanity’s problems. Many people will lie and say that they’re not self interested, but face it, we all are. The glee with which people say that they’re going to buy at the bottom and laugh ‘mwaaa haa haaa’ is indicative of a lack of compassion for the people who will suffer greatly from the current shift in the financial paradigm. Saying ‘it’s all their own fault’ and ‘they deserve what they get’ is another manifestation of this. We’re all selfish bastards. Some of us choose to deny the basic survival mechanism of selfishness – but it’s there in us all. The current financial mess is an outward expression of mankind’s inner selfishness / greed and fear.

    Also, the criticism of the politicians – fair enough, say they’re imcompetent, that’s an easy scapegoat, you can blame Brown and Darling, but that’s just absolving yourself of taking responsibility for the mess the financial system is in. Could you have managed / forseen and stopped the financial mess? Could anyone on this site have done a better job without the benefit of hindsight? I doubt it. Easy to sit in your armchair and point fingers of blame and condemnation. Builds one’s little self-righteous ego up no end does that.

    We need to be working hard to learn lessons from this. Fundamental lessons about ourselves, about human nature and how we contribute to the world in which we live. Are we part of the ‘problem’ or part of the ‘solution’? Are we ‘critics’ or ‘contributors’?

    We need to stop aspiring to ‘show off’ lifestyles. We need to live in a small houses. Drive a smaller, economical second hand cars. Stop taking flashy foreign holidays, live in a conservational manner. Stop the greedy and unsustainable consumption – it’s using up all of the resources and destoying the planet.

    Rant over. Apologies if I wandered off topic there. Too much coffee this morning 😉

    Philippo

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  • “I am a potential FTBer, and in theory at least im also a potential BTLer” pecker

    Seem like a bitter BTLer to me – I can’t really see another reason for post, which thrashes about without saying anything of substance. Inflation-related asset bubbles cause colossal damage to society (what caused the French Revolution? for example). As Paul suggests, this is one factor which motivates many of the regular bloggers on this site.

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  • To add to confused’s good news, here’s some more: because sterling is heading south at a rate of knots you can have a UK holiday instead.

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  • mark wadsworth says:

    13. Confused76, that would be nice if it were true, but unfortunately it isn’t, there isn’t going to be any more warming for the forseeable. Is that good news or bad news?

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  • ” Mr Crawshaw also said that there was inadequate state support for mortgage borrowers who fell into difficulties. He said that the Government should bear the short-term cost of schemes to help homeowners under threat of repossession in order to get “tangible longer-term returns”. ”

    I’m trying to get my head round this quote – can anyone enlighten me as to what he actually means by “tangible longer-term returns”
    – does he mean the government bailing out the insolvent so they can go on paying tax and not claim housing benefit?

    There will be an issue with excessive numbers of repos – far more than last time – and I suspect we will see a lot of homeowners morph into tenants without moving out. However, I think the scale of the problem will be too big for the government to play the role of landlord.

    Certainly we should not see taxpayers cash used to compensate the lenders for their reckless lending.

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  • Pecker. Moaning is what us Brits do best. So if someone doesn’t like it they can go to a country where everything is rose tinted, and a “nice day” is had by all. We are seeing rampant corruption on a global scale, and being told to smile and get on with our lives because we’ll be dead soon is just the sort of selfish, hedonistic attitude thats going to get our children into the financial difficulties they face when trying to find a home.

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  • “Certainly we should not see taxpayers cash used to compensate the lenders for their reckless lending.”

    We should not, but I fear we will. Basically the government/banks (one and the same, as far as I can tell) want to avoid bad debt, which obviously affects profits. What better then to sell this as support for the cash-strapped homeowner. For sure it will happen. How will it be paid for? They’ll just print the money and we will all pay for it via inflation.

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  • Yerhavingalaugh says:

    Have you considered the potential threat of the pound/euro parity scenario? Thousands of Victor Meldrews returning to the UK from ClubMed land as the spending power of their pensions disappears down the plughole!!! Blimey, well I suppose they can always find a recently vacated BTL flat as those highly skilled, friendly and virtuous Polish builders disappear back home. I suppose if they wait long enough they might even be able to buy back into the UK market. Not sure the managers at the NHS will be relishing the prospect though.

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  • I for one will not be paying to subsidise ANYONE who has bought in to this fools market. This move would destroy what we have left of a fair society.

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  • Yerhavingalaugh says:

    Hardly good news but we will no doubt see the return of thousands of grumpy old Victors from ClubMed land as the pound/euro parity scenario plays out and the value of their UK pensions disappears down the plughole! Still they can always return to their favourite pastime of having a good old fashioned ruck with their neighbours over the position of the garden fence, always assuming they can afford to buy back into the UK property market. I suppose the really distressed can always pick up a nice BTL recently vacated by a friendly and virtuous Polish plumber heading back home.

    I wonder if NHS Managers have factored this into their spending plans.

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  • There are more prudent people in this country than debt ridden (witness the queues outside National Rock). If Labour decide to sacrifice the prudent on the altar of house price inflation they’ll definitely be out of office for at least one generation (I think they will be anyway the way things are going but sacrificing the savers will never be forgiven).

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  • To paraphrase Obi One:

    “who’s the bigger moaner: the moaner or the moaner who moans about the moaner?”

    Just teasing pecker, that made me laugh! 🙂 Laughter is positive isn’t it?

    I think moaning is a release for the fact that, as you quite rightly say there is so much you can do nothing about. However, it is still frustrating and needs some form of expression. So if you want to view this “moaning” positively, look at it as group therapy 😉

    I’ve tended to filter out the superficial to see the real gems of information that appear on this site on a reasonably regular basis. It’s not all bad.

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  • Note the IMF is discussing selling 4 trillion dollars worth of gold in order to float the banks. I’m guessing the longterm tangible benefits will accrue to new gold barons in Saudi Arabia? Landlords will be taxpayers of Dubai? Or perhaps Beijing? After all, when American industry started collapsing and out-sourcing in the name of economy Japan bought up a large portion of the physical plant and went forward from there to own a large chunk of production and US assets. And recently Dubai bid to own America’s seaports. Bush would’ve let them too if people had gone spare over it. Why not British [and the world’s] banks owned by the Middle East — or whoever buys the IMF a way out of it’s crisis? On that score, isn’t it interesting that the pound is suddenly being allowed to “float” it’s way to oblivion? Preliminary to joining the euro for a little comfort in numbers and in anticipation of oil being traded in euro currency?

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  • mark wadsworth says:

    I’ve just read the full article in the hard copy, it’s a timeless classic, the CML (guilty of special pleading) are warning/threatening that net mortgage lending will halve. Well, I should bloody well hope so too!

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  • uncle tom:

    I think “tangible long-term returns” is waffle for saving the neck of Crawshaw and the VIs whose financial position looks shakier by the day. What he is implying is not just an increase in benefits but injecting free money into the system. As others have pointed out, this would mean a big jump in inflation, which of course is one way to deflate asset bubbles without nominal prices falling – but not without considerable cost. But my tentative feeling is that the govt cannot do much to prevent the inevitable (short of doing something really crazy): markets gather their own momentum. Recall the hapless Lamont’s efforts during the ERM debacle. I seem to remember he added a couple of points to the interest rate in the afternoon in an effort to stop the pound crashing, then dropped them later that evening and left the ERM. There is something Lamontish about Darling.

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  • ‘There is something Lamontish about Darling.’

    Yeh, white hair, black eyebrows & both handed a terrible position by their predecessors.

    Lamont couldn’t do anything to stop the slump in the early 90’s . This time round with BTL, enormous mortgages, credit debt & personal loans the downward force on House Price’s & economy will be too great for policy makers to overcome. Politicians always think they can buck the market but they just get trampled on. There will be a stampede to sell property and a continuation of high retes of insolvencies & business failiures. ‘No more boom & bust’ the man with a PHD in history said …… laughable.

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  • theboltonfury says:

    i always think pecker talks sense. I hate this government, despise BTLers and want all EA to go 15 rounds with Tyson, but he’s right. We are all so utterly inconsequential that it doesn’t matter what we think, che sara’ sara’.

    I do like a moan though, and also like a good argument. It’s not like I can write to my local MP for any reasoned response so instead, I let you lot know what I am thinking

    my dog has just eaten one of my landlords chickens by the way. Looks like I may be forced to buy after all the mood he’s in right now!

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  • it_is_going_with_a_bang says:

    Ah don’t let anyone put you off moaning or wishing a financial curse on the current economy. You only live once and right now if you don’t own a house the chances are you never will unless the housing market crashes.

    So wish away. But obviously keep your priorities of whats important in life realistic.

    The power of talking things up or down should never be underestimated. Ever.

    I still think Pecker is actually logging onto the wrong website. But there you go its a free world.

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