Friday, May 4, 2012
But we all have to pay for it except the banks
Families must accept share of blame for Britain's woes
“People say to me, 'it was the banks’. I say, 'hang on, the banks had to lend to someone’,†he said. “People feel in a sense that someone else is responsible for the decisions they made. Of course, if banks don’t offer credit, people can’t take it. [But] there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls. Some people are unwilling to accept responsibility for the consequences of their own choices.†... Mr Hammond was a successful businessman before entering politics, amassing a multi-million-pound fortune from interests including property development. But he insisted it was right to highlight the role played by household borrowing, including mortgages.
Posted by quiet guy @ 05:25 PM (3066 views)
14 thoughts on “But we all have to pay for it except the banks”
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nickb says:
And unlike the banks an individual does not make £100,000s pure profit on each mortgage regardless of the future path of prices. If I borrow £150k on a mortgage I can expect to pay back at least £300k over the term, whilst it costs the bank perhaps a few hundred pounds max, say £500. The £150k principal repaid will be netted off to zero leaving the bank with £145,500 pure profit. Suppose Im out by a factor of 10 on the bank’s marginal cost of a mortgage. That would still make the rate of profit 2,900%. A business model unmatched anywhere else in the economy outside of organised crime.
Oh, hang on …
N
Mikthe20 says:
Ah, but nickb an individual DOES make £100,000s pure profit on each mortgage if the housing market is rising quickly! This is why so many people took them out – to make money, not to live in a home. These people were interested in pure profit, the same as the banks, and therefore deserve blame.
Dude says:
the 1% trying to blame the 99%
dill says:
Of course, if banks don’t [can’t} offer credit, people can’t take it
Wave goodbye to a large portion of your perceived wealth, Mr. Hammond.
Striebs says:
Mr Hammond is obviously right that many people are responsible for their own downfall but many are not .
However , it’s crass in the extreme to lecture people who can’t earn enough to make ends meet through no fault of their own .
So far as I can see the Govt have done nothing since they came to power 2 years ago .
mark wadsworth says:
NickB, exactly.
It turns out that the bankers (and to some extent depositors and bond holders) are the big winners from Home-Owner-Ism. For every £1 paper capital gain over which the Baby Boomer parents are rubbing their hands so gleefully, waffling on about “having a pension/something to leave to the children” (two mutually exclusive things), the children are worse off by £2 cold hard cash.
So if you want to deflate the banks, all you have to do is prevent speculation in the rental value of land, which is something which LVT-man can sort out in his afternoons off (in between bringing derelict sites back into use, lifting the tax burden on business & workers, encouraging efficient use of existing buildings, funding a Citizen’s Income etc etc).
mombers says:
And in other news, patients to blame for choosing the wrong doctor
stillthinking says:
What’s wrong with patients picking the doctor? I’d love to be able to do that.
This is an unpalatable truth. Those that borrowed did so because they thought they would be quids in. What’s wrong with people in the UK? Is nobody capable of deciding and taking responsibility?
If you want somebody to pick your doctor, I’ll do it. Good luck with that.
drewster says:
What a load of drivel. People have no choice but to take out large mortgages if they want to buy a house. You can’t blame them for high house prices.
magnifico says:
@ Drewster
I think those people are a relative minority. The Credit madness, with consequent HP inflation, was created by BTL and people stretching themselves to pursue the very British obsession with ” being in the right postcode”. Add to these those foolish individuals who believed increasing prices meant more available cash ( mewers) and the almost criminal way in which banks were perpared to lend any sum to anyone prepared to fill a fraudolent self-assessment form and you begin to see.
markj69 str05 says:
The lenders:
The financial industry had absolutely no regulation. Internally or externally. Purely driven by greed. Uncontrolled short term profiteering by those that are responsible for vetting a good investment – THE EXPERTS! Responsible for safe management of the banks money (Ha).
The borrowers:
Variety of FTB, ladder movers, BTL, and invenstment companies. The former 2 purchasing the most expensive thing in their lives, just to live in (A home), most of which were probably brain-washed by the media drivel that house prices only ever go up, and combined by the approval of said EXPERTS, extending their finances beyond affordability. The latter 2 purely in it for investment.
Both sides were negligent. However, the onus should be on the EXPERTS. After all it is their job to manage these contracts day after day. Unlike Mr Joe Average, who has very little experience in these things.
markj69 str05 says:
‘British households that borrowed too much money must “accept responsibility†for their role in the current economic troubles…’
This statement from a goverment minister in the same article that discusses the BOE, hmmmm, double-speak for ‘Expect an interest rate rise’ perhaps!
letthemfall says:
And the bankers carry on paying themselves fortunes on the grounds they make so much money from a market heavily rigged in their favour.
As for borrowers taking responsibility, how about some responsibility from the bankers who relentlessly market their “products” so they can go on making a fortune.
clockslinger says:
The Defence Secretary went on to say that it was also no longer the case that politicians could be held accountable for their actions in any way. “It is time the electorate who voted for people like me took responsibiliy for their own ignorance” he said.
“Politicians have to be elected under the present pretence” said Mr Hammond. “People misguidedly believe that simply by casting a vote for self regarding incompetents such as myself they are actually participating in a democratic process”. “In fact, they legitimise a widening chasm of inequality and a system that ensures the accretion of yet more wealth to the very richest;myself being a good example of this phenomenom”.
He concluded by blaming the feckless attitude of many voters, “Rather than burn the chain stores and banks of their masters, or organise and riot, the average elector is more than happy to whine and do nothing whatsoever to bring about meaningful change. We intend to ensure this continues when we hand over the role of policing millions of such tame electors from our friends in ACPO to our sponsors from Halliburton” Mr Hammond confirmed.