Tuesday, April 5, 2011

Perpetuating the TBTF mindset

Interest rates were cut to save house prices – and banks

An unknown blogger makes the case that we must prop up house prices to save the financial system. This is one of the clearest examples of house price spin I've ever seen.

Posted by quiet guy @ 01:02 PM (2100 views)
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7 thoughts on “Perpetuating the TBTF mindset

  • general congreve says:

    Not sure I see it as spin, the guy is telling it how it is. Interest rates are ultra low to prop up house prices and stop banks from collapsing. Inflation has been let loose to bring move general prices higher and therefore make housing cheaper relative to everything else, while keeping the nominal value of housing where it is so banks stay in clover and get their (devalued) ,oney back so the books balance.

    Only issue with this is that with wages stagnant, the cost of living goes up faster than inflation and therefore levels of housing affordability and economic growth prospects become even worse, thereby ensuring a fall in house prices anyway. You’re painted into a corner you [email protected] f4ckers!

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  • letthemfall says:

    Well we’ve heard all this before. There’s an element of truth in it but it is typically assertive in its predictions and no doubt typically wrong, or half-wrong.

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  • Atham Mouli says:

    Just the usual pretence that everything is actually under control…

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  • mark wadsworth says:

    LTF, there is no truth in his assertions whatsoever, like I keep saying, even if house prices fell by half and every borrower in nequity declared himself bankrupt and walked away, total losses to banks would be 15% to 20% of their total assets, all of which could be safely mopped up with debt for equity swaps so no ordinary depositor loses a penny.

    The banks would not ‘collapse’, banks do not ‘collapse’, worst case, they can’t repay their bonds at 100p in the £, well big deal, that’s called ‘investment risk’.

    This is just the usual Homey progaganda “Bail us out or the economy gets it” blackmail. As to this “[a house price crash] would more than wipe out the savings of millions” no it f-ing well wouldn’t, all my savings are tied up in cash so I wouldn’t lose a penny.

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  • I think he means the share price would collapse,however,bear stearns/lehmans and various icelend banks did collapse but average jo’s deposit was safe

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  • The bankers have “privatised profits and socialised losses” of BTL speculators, [Debtors] who continue to benefit from profits, by not taking any losses, and by pushing those losses onto society at large via the government.

    So FTB’ers money is being stolen, by our government, to pay to keep the banks assets, or other peoples houses, massively overinflated, ensuring FTB’ers can never afford their own house.

    We know it was undisputed fraud behind the manipulation of rising house prices.

    But without the bank bailouts, house prices would have crashed by over 50%
    Which would merely return houses to their long term median affordability. A return to a free and fair market.

    Instead the VI’s are trying to transfer this debt onto FTB’ers.

    Thats just theft isnt it?

    Why should people who do not own property bail out the banks?

    Should we work for another decade for nothing?

    No Capital? A debt slave? That apparently is absolutely fine with you.

    You are incapable of looking at the problem from the perspective of someone who is priced out of housing. And yet, you dare to comment on the ‘social implications’ that a reduction in house prices would bring to those who would be facing negative equity.

    Why isnt the government committed to tax changes that spread the pain of deficit reduction fairly?

    Your figures look extremely suspect to me, as well.

    You do not make the distinction between ‘Owner Occupiers’ and BTL.

    Can you back up your doomsday scenario with figures?
    Didnt we read that as much as 80% of mortgage loans made by HBOS, under James Crosby were so called ‘liar loans’, yet the various bank’s will still not let the LTV figures into the public domain.

    The UK is not democratic it is a Corporate-ocracy. And you are one of their mouth pieces.

    I believe Under 10% of the UK homeowning [owner occupier] population would be facing negative equity if a 50% housing crash occured

    An important difference between this bubble and the late-1980s bubble is that this time there are a lot more buy-to-let speculators. These people are highly leveraged (their debts are high relative to their assets) so small changes in asset prices make a big change to their situation. As it becomes more difficult to borrow money, many of these people will find that they cannot refinance at affordable rates when their ‘teaser’ rates come to an end. The long term average Base rate is at 5%. When IR rise again these BTL Speculators must sell their properties or the bank will repossess.

    When IR do increase, the BTL investor, will not be in the position of the owner occupier homeowner, [with negative equity but an affordable mortgage,] who can afford to hang on as long as he doesn’t lose his job, or move house.

    The BTL speculators will have to lower their price to sell.

    Proudhon criticized big capitalist property from the petty-bourgeois position and dreamed of perpetuating small private ownership…….
    [Everything New Labour DIDNT do]
    “We do not hesitate to assert that there is no more terrible mockery of the whole culture of our lauded century than the fact that in the big cities more and more of the population have no place that they can call their own. The real key point of moral and family existence, hearth and home, is being swept away”
    The most notable characteristic of a FASCIST ideology is the separation and persecution or denial of equality to a specific segment of the population.
    The preferred class lives in relative comfort, while the oppressed class lives in a Fascist state.
    Labour’s Fascist State.
    Millions of us have already worked for over a decade for nothing. No capital. Unable to get ahead in life. Forced to waste tens upon tesn of thousands of pounds in rent. And we are so beyond sick of this, it beggars belief.
    Its theft. Plain and simple.

    You know what? We are past caring.

    Why should anyone who does not own property even bother going to work in this godforsaken Feudalistic country?

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  • Can we look forward to the next decade of 300% house price inflation and can he explain why mortgage approvals are half what they were in the boom, even with interest rates at an historic low for past two years?

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