Sunday, May 18, 2008

Credit Crunch Over????

Credit crunch fails to produce the feared economic catastrophe

So what next?? The central bans are pumping money in and banks now have cash ... and are making profits from oil etc etc. Is this it now then - what of all the govt debt. My next door neighbour is an ex bank manager for Barclays and now an IFA for SME's, he says that this was only a liquidity problem and the bank bailout was right. He says now back to business and the credit boom can carry on???

Posted by waitingfor hpc @ 09:21 AM (1677 views)
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10 thoughts on “Credit Crunch Over????

  • A rubbish article from a rubbish columist.

    There is a period of economic readjustment going on. There will be people who overshoot as much as there will be people who undershoot.

    It’s early days yet, just watch what happens next.

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  • The Times has a very Express-like feel to it. Anatole Pollyanna is skilled at specious reasoning it seems to me, although the closing paragraph does suggest he thinks the situation is still pretty bad for us. Plenty of optimistic observations on the various economic indicators but no mention of debt, which after all is what has caused the problems in the first place. And he attaches a ridiculous level of importance to the US tax rebate.

    It’s worth considering the unlikely possibility that credit will suddenly become freely available again. Imagine what that would do to many people. Imagine the huge transfers of wealth that would continue to occur. I don’t hold with conspiracy theorists, but in the case of such a scenario I would begin to. Poll tax anyone?

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  • Now correct me if i’m wrong but I thought these were not bank bail outs but loans that had to be paid back, what happens when the banks are required to pay the money back? the libor rate has just gone up again which suggests that the credit crunch is far from over.

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  • The fact that Kaletsky is writing about “credit crunch” in the past tense; as though it is all over says a lot about Kaletsky.
    In many ways I’d be more than happy for Kaletsky to be right as I’m getting a little sick of Gordon Brown hiding behind the credit crisis.
    The fact that Brown’s economic miracle has fizzled out as soon as house prices started to cool and consumers had reached debt saturation point is little to do with the credit-crunch and the sooner his years as chancellor are revealed for what they were, the better.

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  • See Kaletsky wrote this article on May 5 inflation and the libor rate have increased and Mervyn King’s doom laden ‘nice decade’ is over speech effectively ruled out rate cuts in the coming months. Talk about been overtaken by events…

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  • Anatole (wise after the event) Kaletsky shows his real colours on the rare occasions that he isn’t writing about some economic surprise, pretending that he saw it coming.

    Those colours are plain and simple – he hasn’t a clue.

    Of course there will be economic fall-out from the credit crisis, severe fall-out; but the game of consequences will take years to play out.

    A good example of the delayed effect will be those in the BTL camp who have several properties but are not too deeply mortgaged, have rents that just about cover their loans, and try to sit out the storm.

    They will finally be caught in perhaps three years time, when rents gradually fall to match the sustainable level of house prices, leaving them with a severe income shortfall relative to their mortgage payments, and no capital to draw on.

    To put some numbers on that:

    House worth £200k at peak typically rents for £900 pcm gross (5.4% yield)

    60% mortgaged, the nett rent and mortgage interest payments are roughly the same.

    Same house after crash now worth £120k can now only command a rent at the sustainable yield of 7% = £700 pcm

    BTLer is therefore left with zero equity and monthly deficit. Multiply for a portfolio and the landlord’s position becomes impossible.

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  • He doesn’t seem to know that the US job figures are out of kilter, due to the adjustments not working when the balance switches from positive to negative (and vice-versa). The Non-farm payrolls will almost certainly be readjusted to show a loss last month.

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  • whiteknight says:

    These clowns (and they are clowns) have one gear only.

    Remember – they would rather pretend this little “event” would go away – then they can get on with the business of pretending it never happened and they are still the genii they thought they were.

    They are far, far from it.

    Let them keep talking.

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  • Our money masters have understood that it is far better to keep the people impoverished and employed, in any form, than the let unemployment drain the welfare state and leave idle people to cause trouble.

    That is what inflation is going to do – it is going to impoverish workers, and it is also going to erode the value of welfare payments that people prefer to stay in low-paid jobs than go “on benefits”.

    This is the macabre genius of the fiat money system. It allows the people to be “kept busy” while they are robbed.

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