Idiot American Congressman

[Wade Garrett]

Some Republican is voting against the injection of money into the banking system because he 'believes totally in the free market'.

 

Is that the same 'free market' that is now crippling the western world. What a right-wing tw*t.

[saint lard]

226 TO 207 against,

 

Democratic yes-141.against -94

 

Republicans yes-66, against- 132.

 

The house of reps is considering taking another ballot,due to some changing thier minds.

 

Complete fook up and farce,i mean it's not important is it.

Edited 29 September, 2008 by saint lard

[Weston Super Saint]

LOL.

 

More proof that Americans are madder than a box of frogs

[Guest Hacienda]

Some Republican is voting against the injection of money into the banking system because he 'believes totally in the free market'.

 

Is that the same 'free market' that is now crippling the western world. What a right-wing tw*t.

 

Eh?

 

They are bang on correct. You cannot have a free market only when it suits yoy.

[equalizer]

Eh?

 

They are bang on correct. You cannot have a free market only when it suits yoy.

 

Considering the Americans are the main cause of the financial crisis eg. by giving mortgages to out of work people ffs! They should take responsibilty, IMO.

[Weston Super Saint]

Considering the Americans are the main cause of the financial crisis eg. by giving mortgages to out of work people ffs! They should take responsibilty, IMO.

 

To be fair, our Government's current policies are very similar aren't they? Ie they are giving housing benefit directly to the unemployed person, rather than directly to the person renting out the house [to cover the rent]...

 

Isn't this the same thing as giving them a mortgage, and the choice whether to pay it or not??

[EastleighSoulBoy]

Eh?

 

They are bang on correct. You cannot have a free market only when it suits yoy.

 

Oh yes you can! In America anyway.

[Wade Garrett]

Eh?

 

They are bang on correct. You cannot have a free market only when it suits yoy.

 

You cannot have a 'free-market' that is unregulated and allowed to act at will. The consequences are there for all to see.

[equalizer]

To be fair, our Government's current policies are very similar aren't they? Ie they are giving housing benefit directly to the unemployed person, rather than directly to the person renting out the house [to cover the rent]...

 

Isn't this the same thing as giving them a mortgage, and the choice whether to pay it or not??

 

Didn't realise they did that but then again that is tax payers money so its budgeted for to a certain degree, plus they don't have to pay it back like a loan. The banks should have known what they were letting themselves in for. They dish it out like sweets hoping to gain on the interest payments. They don't want you to pay your credit card bill in full every month. Egg cancelled thousands of people's cards, the ones who paid there's off each month. The thing is banks borrow from each other so if one goes down it continues to the next like a domino effect. Prices go up, people stop spending and so it continues, until like now the banking world goes into melt down!

[Weston Super Saint]

Didn't realise they did that but then again that is tax payers money so its budgeted for to a certain degree, plus they don't have to pay it back like a loan. The banks should have known what they were letting themselves in for. They dish it out like sweets hoping to gain on the interest payments. They don't want you to pay your credit card bill in full every month. Egg cancelled thousands of people's cards, the ones who paid there's off each month. The thing is banks borrow from each other so if one goes down it continues to the next like a domino effect. Prices go up, people stop spending and so it continues, until like now the banking world goes into melt down!

 

True, THEY don't, but somebody somewhere will have a mortgage to repay...

[bridge too far]

I think you'll find WSS that if tenants don't use their housing benefit to pay their landlords they'll get kicked out, whether it's a private landlord or a council / housing association.

 

It's not quite the same as lending an unemployed person £200K to buy a house knowing full well they can't afford to repay the mortgage. A number of so called Financial Advisors have been 'done' in the UK for making fraudulent mortgage applications for clients, inflating their incomes, because the market is better regulated here.

 

I know this for a fact as my daughter is on the panel working with the police to crack down on mortgage fraud.

[toofarnorth]

Just what i need. Will be putting my house on the market in February and moving back down south, so no-one will have any money to buy it. :-(

[TopGun]

This is going to cause big **** but I have no doubt the plan put forward was creaky because of the speed of it.

[Al de Man]

Will be putting my house on the market in February and moving back down south

 

That's your train fare covered at least.

[Wade Garrett]

That's your train fare covered at least.

 

Not post privatisation it ain't.

[anothersaintinsouthsea]

Eh?

 

They are bang on correct. You cannot have a free market only when it suits yoy.

 

Actually they're not correct. People generally misunderstand the true meaning of "free market". "Free" markets are markets that are free from barriers to economic efficiency not markets that are free from government regulation. In this case under-regulated mortgage lending and debt-trading has caused an almighty ****-up - the unfettered market was itself a barrier to a "free" market. Effective regulation, like rules to limit sub-prime lending, would have prevented these barriers.

[Thorpe-le-Saint]

Some Republican is voting against the injection of money into the banking system because he 'believes totally in the free market'.

 

Is that the same 'free market' that is now crippling the western world. What a right-wing tw*t.

 

Exactly, I believe I heard one say that it would start the "Slippery slope to Socialism"...funnily enough, Socialism is what the word needs right now!

[fish fingers]

Excellent decision, this will correct the situation in a more effective way than just covering it up with tax payers money. Will be tough short-term for sure. A victory for Milton.

[toofarnorth]

That's your train fare covered at least.

 

At least I bought it in 2005 so if the value falls by 25% i'll still not make a loss, but its a bit of a nervey time ahead. Hope the American thing does go through so its their tax payers that take the burden and not ours. If this doesn't go through Mr Brown will be forced to come up with soem ideas of his own at our expense.

[bridge too far]

At least I bought it in 2005 so if the value falls by 25% i'll still not make a loss, but its a bit of a nervey time ahead. Hope the American thing does go through so its their tax payers that take the burden and not ours. If this doesn't go through Mr Brown will be forced to come up with soem ideas of his own at our expense.

 

Better that the Government intervenes than sits back and does nothing if such a situation arises.

 

As happened with Northern Rock and now B & B (although the taxpayer risk is non-existent with B & B). The alternative would be a wholesale meltdown and that would affect us all far, far more.

 

The government was criticised at the time for the action it took over Northern Rock but now all parties agree it was the right thing to do.

[toofarnorth]

Better that the Government intervenes than sits back and does nothing if such a situation arises.

 

As happened with Northern Rock and now B & B (although the taxpayer risk is non-existent with B & B). The alternative would be a wholesale meltdown and that would affect us all far, far more.

 

The government was criticised at the time for the action it took over Northern Rock but now all parties agree it was the right thing to do.

 

Yes I agree that government intervening is approapriate. I was just inferring that I would rather the US come up with a bail-out so hopefully we dont have to..

[OldNick]

Better that the Government intervenes than sits back and does nothing if such a situation arises.

 

As happened with Northern Rock and now B & B (although the taxpayer risk is non-existent with B & B). The alternative would be a wholesale meltdown and that would affect us all far, far more.

 

The government was criticised at the time for the action it took over Northern Rock but now all parties agree it was the right thing to do.

and after they did it, they did what to stop the short trading happening again? Nothing, and just let them carry on the same way. it is negligence, but of course the government needed the taxes to come in on the back of all the madness going on.I sold my house 3 years ago to downscale price as I could see it was going to be a pack of cards to try and save a lot of my gain, I moved a year too soon I know. Now if I could see it and many of other people could why didnt the powers there to protect us. Of course it was just another cosy club where the governemnt who were running the economy on stamp duty , capital gains, vat etc could not get off the roundabout as they were worried about their ratings and how clever their financial prudence was . The bankers in the city were left to get on with just buying these toxic packages as it was a passport to 7 figure bonuses and they didnt care who got hurt as they are now insulated from the hurt.

My daughters partner was made redundant yeaterday they have bought a house and are to be married next year. Im fairly bitter about all the people who should have reigned us back 2-3 years ago and just stood and watched and now are trying to blame world pressures not the fact that they should have stopped it. The oil going up and food prices have nothing to do with the credit crunch

[Wade Garrett]

and after they did it, they did what to stop the short trading happening again? Nothing, and just let them carry on the same way. it is negligence, but of course the government needed the taxes to come in on the back of all the madness going on.I sold my house 3 years ago to downscale price as I could see it was going to be a pack of cards to try and save a lot of my gain, I moved a year too soon I know. Now if I could see it and many of other people could why didnt the powers there to protect us. Of course it was just another cosy club where the governemnt who were running the economy on stamp duty , capital gains, vat etc could not get off the roundabout as they were worried about their ratings and how clever their financial prudence was . The bankers in the city were left to get on with just buying these toxic packages as it was a passport to 7 figure bonuses and they didnt care who got hurt as they are now insulated from the hurt.

My daughters partner was made redundant yeaterday they have bought a house and are to be married next year. Im fairly bitter about all the people who should have reigned us back 2-3 years ago and just stood and watched and now are trying to blame world pressures not the fact that they should have stopped it. The oil going up and food prices have nothing to do with the credit crunch

 

Exactly what I'm saying. The 'free' market does not work. It's all very well Gordon Brown saying this in his speech last week, but he should have done more to stop it from happening in the first place.

 

This goes beyong politics though. The Tories would have done little to regulate City practices as they have wet dreams about the 'free' market.

 

Building an economy on unrealistic house price rises is foolish. Forgive me if I don't feel sympathy for people who tried to cash in on the housing market by buying to let. All they did was fuel the housing market and make it nigh on impossible for anyone to get their first foot on the ladder. Forgive me if I don't feel sympathy for the City bankers who have trousered a fortune with their irresponsible trading, but may now lose their jobs (I'd prosecute them for fraud).

 

I do feel sympathy for the average working man/woman. It is us who will pay for all of this. Higher taxes, worse public services, greater job insecurity.

 

Thanks a lot you greedy bastards.

[No 2 to Maybush]

Better that the Government intervenes than sits back and does nothing if such a situation arises.

 

As happened with Northern Rock and now B & B (although the taxpayer risk is non-existent with B & B). The alternative would be a wholesale meltdown and that would affect us all far, far more.

 

The government was criticised at the time for the action it took over Northern Rock but now all parties agree it was the right thing to do.

 

At what point would you call "enough" to Government intervention though BTF? "Privatise the profits and socialise the losses" doesn't appear to be a very sensible approach to managing the country's economy to me. Just how much debt has the individual taxpayer got to become responsible for through these nationalisations before we question the strategy? UK PLC is up to its neck in debt. Are you happy for your children, and your children's children to have this debt burden on their shoulders? Because that's the situation we are in. The off-balance sheet PFI debt we have is horrendous and that is just one component of the off-balance sheet debt this country has.

 

Don't believe the figures given out the government regarding our debt - they only give the current account deficit that is on the books, not what is hidden. Visit the website of the Bank of International Settlements (BIS - the bankers bank) and look up the total owed by UK PLC. It's frightening.

 

The root cause of this situation, irrespective of the profligate chancers who have creamed money off the top, is fractional reserve banking. As long as the Bank of England and the other commercial banks are allowed to create money out of thin air at a rate of 10:1 new money to deposits, then you have a never ending spiral of both inflation (increased money supply) and devaluation. End fractional reserve banking and we might be able to start again with a currency that actually has some value attributed to it.

 

On that basis I welcome this crash in the hope that we will hit bottom and be able to start again.

[bridge too far]

I'm so sorry to hear about your daughter's partner's redundancy Nick. I do hope he manages to find something else soon.

 

With regard to the banking crisis, I think the fact that all 'western' banks are going through the same problems shows that no government in the west foresaw the effects of the US sub-prime situation this time last year.

 

That says more, I think, about the western governments' advisors than it does about the governments of whatever hue.

[CabbageFace]

Why should the tax payers bail out poor lending/buisness decisions of multi-millionaire toffs?

[Crouchie's Lawyer]

Why should the tax payers bail out poor lending/buisness decisions of multi-millionaire toffs?

 

Plain and simple answer is that it is going to affect the tax payer anyway. We wont have to pay extra taxes pur se so if this is the way to sort out our economy then im for it

[EastleighSoulBoy]

At least I bought it in 2005 so if the value falls by 25% i'll still not make a loss, but its a bit of a nervey time ahead. Hope the American thing does go through so its their tax payers that take the burden and not ours. If this doesn't go through Mr Brown will be forced to come up with soem ideas of his own at our expense.

 

As long as you keep a steady hand on your rudder and do not choose, or get forced to, realise your assets then negative equity will be a storm which can be rode out.

[CabbageFace]

Plain and simple answer is that it is going to affect the tax payer anyway. We wont have to pay extra taxes pur se so if this is the way to sort out our economy then im for it

 

It wont sort out the economy. The thing that ****ed it was banks in the first place. I would say **** them and let them go out of buisness, every other buisness would have to pay with bad buisness decisions, but the goverment have to bail them out to keep the multi-millionaire fat cats happy and screw over the hard working normal people.

[Crouchie's Lawyer]

It wont sort out the economy. The thing that ****ed it was banks in the first place. I would say **** them and let them go out of buisness, every other buisness would have to pay with bad buisness decisions, but the goverment have to bail them out to keep the multi-millionaire fat cats happy and screw over the hard working normal people.

 

Ok so if banks go out of business, what happens to all the mortgages and thus homes that the mortgages are on in the UK? The banks are being kept in business as opposed to say for example your local DIY store, as there is more depending on it than just a few people having to drive a little further on Sunday morning to the next DIY store. They let the banks go out of business and there would be huge problems. People losing money left right and centre. Houses being repossessed even though mortgage payments had been kept up to date. The government would have to step in anyway. Prevention is better than cure, even if the medicine tastes like sheet.

[Crouchie's Lawyer]

I also agree that it is the banks faults. Having worked in a bank and mortgage broker, I have seen first hand (although not as severe as what the Yanks have done) what the problem is and where its come from. The problem lies in the fact that the industry even though heavily regulated, is obviously not regulated enough and the 'city boys' have taken advantage of this. The main problem lies within the fact that most lenders over here lend in the US too, and they are even less regulated over there. A lot of cowboys have lent money to people who seriously shouldnt have been given money and consequently this has caused major issues.

[OldNick]

I'm so sorry to hear about your daughter's partner's redundancy Nick. I do hope he manages to find something else soon.

 

With regard to the banking crisis, I think the fact that all 'western' banks are going through the same problems shows that no government in the west foresaw the effects of the US sub-prime situation this time last year.

 

That says more, I think, about the western governments' advisors than it does about the governments of whatever hue.

I understand your loyalty to this government BTF, but please do not insult my intelligence about a global problem.In fact you are doing yourself a great disservice because you are very very bright and shouldnt fall for that nonsense.it is not just the American sub prime market, that is just a smokescreen. We as a nation have borrowed and been alloewed to borrow for many things and gone well beyond our means.

NO2 to Maybush is spot on the government has hidden so many of its borrowings with the PFI scheme that we dont know what TOXIC debt they have behind the scenes.

Who was overseeing our own financial people lending 125% mortgages? The British balance book is far worse than the US's as they have products resources to sell wheras we have veryt little left.Go to a car boot sale and see all the tables filled with cheap plastic toys and Franklin mint plates etc and that is a microcosym of where our oil revenue wasted has been wasted for decades.

The governemnt is supposed to be our custodians and this one has let you me and our children down.

[TopGun]

I also agree that it is the banks faults. Having worked in a bank and mortgage broker, I have seen first hand (although not as severe as what the Yanks have done) what the problem is and where its come from. The problem lies in the fact that the industry even though heavily regulated, is obviously not regulated enough and the 'city boys' have taken advantage of this. The main problem lies within the fact that most lenders over here lend in the US too, and they are even less regulated over there. A lot of cowboys have lent money to people who seriously shouldnt have been given money and consequently this has caused major issues.

 

This is a good post. I also have a friend who is a risk manager in the City for a Canadian investment bank. Despite the fact that Canadian banks have been more conservative generally he tells me they are in trouble in two ways:

 

1. Affected by general credit crunch and business slowdown which has seen them fire 400 traders over the past few months.

2. Lending to other institutions they thought were robust but which have subsequently lent money on again in more speculative circumstances for higher returns. Some of these are now bad debt.

[OldNick]

Ok so if banks go out of business, what happens to all the mortgages and thus homes that the mortgages are on in the UK? The banks are being kept in business as opposed to say for example your local DIY store, as there is more depending on it than just a few people having to drive a little further on Sunday morning to the next DIY store. They let the banks go out of business and there would be huge problems. People losing money left right and centre. Houses being repossessed even though mortgage payments had been kept up to date. The government would have to step in anyway. Prevention is better than cure, even if the medicine tastes like sheet.

If the banks go bust the mortgages will get paid to whoever picks the companies up. The assets are still there similar to Northern Rock the athorities take it on.Forget not that not all the morgages are defaulting and so it is only a percentage of the take,There are some good profits to be made for the banks left standing.

[TopGun]

Why should the tax payers bail out poor lending/buisness decisions of multi-millionaire toffs?

 

Two options, neither good.

 

1. Banks are allowed to fail and so does wider economy, businesses etc. Citizens get hit with lost jobs, savings, pensions, houses etc.

2. Banks are helped by state intervention even though they are not worthy of it in many cases. Possibly means citizens keep jobs, savings, pensions and houses. But taxpayer will be hit down the road as government will need more cash to pay interest at least on extra state debt burden until economy recovers.

 

Second option is marginally better than the first though has no guarantees. The merchant bankers who made hay for the last 20 years and are now out of the system are the bastards who have won despite setting up this particular fall.

[Crouchie's Lawyer]

This is a good post. I also have a friend who is a risk manager in the City for a Canadian investment bank. Despite the fact that Canadian banks have been more conservative generally he tells me they are in trouble in two ways:

 

1. Affected by general credit crunch and business slowdown which has seen them fire 400 traders over the past few months.

2. Lending to other institutions they thought were robust but which have subsequently lent money on again in more speculative circumstances for higher returns. Some of these are now bad debt.

 

Correct. Its point two which is essentially the stem of the problem. I lend you £100 and you agree to pay me back £150 for the pleasure. You then lend that £100 to Mr X who you advise has to pay you back £160 (so being a middle man you make a tidy tenner). That person decides to sell it on to the next and so on, until you get Mr Z who is borrowing £100 but paying back £200 for the priviledge. Mr Z is more than likely a sub prime client and when he fails to pay his debt because the rate is too high and he is normally cr*p at paying bills the domino's all fall backwards, ending up with me not getting my £150 from you.

 

This is why so many financial companies and banks are struggling.

 

Im no genuis, but I (having worked in this sector) could easily design a system which is near fool proof and a system which could not be fraudulently adapted. Firstly every mortgage application requires atleast a 15% deposit, income MUST be proved by either accounts (self employed) or wage slips. Benefits can only be taken into account if they will be received for life of mortgage (ie if your kids are 16 and you have 25 years left on mortgage, you cannot include child benefits of child tax credits in your income) and more importantly, bank statements must be cited so the companies can assess the person has the capacity to pay the mortgage.

 

The main problem comes in with credit cards and bank loans. These are even less regulated than mortgages. And for all the negative press mortgages get. Credit cards and loans seem to get off scott free. Most applications dont even require proof of income!

[Crouchie's Lawyer]

If the banks go bust the mortgages will get paid to whoever picks the companies up. The assets are still there similar to Northern Rock the athorities take it on.Forget not that not all the morgages are defaulting and so it is only a percentage of the take,There are some good profits to be made for the banks left standing.

 

And you think if most of the banks go under that the ones left standing will stand?

[Baj]

No, judging on history they will not only stand but they will be in an infinatley stronger position than they were before the crash.

[Weston Super Saint]

Im no genuis, but I (having worked in this sector) could easily design a system which is near fool proof and a system which could not be fraudulently adapted. Firstly every mortgage application requires atleast a 15% deposit,

 

And in one easy step you destroy the housing market not for one or two years but for decades....

 

The whole housing market relies on first time buyers 'getting on the ladder', thus people moving onwards / upwards / downwards.

 

You impose a minimum of 15% deposit and 90% of first time buyers are 'priced out' of the market, and the whole system grinds to a halt...

[bridge too far]

I don't understand Economics (and, since they constantly disagree, I don't think economists do either) but I found this article in the Guardian today to be quite thought-provoking:

 

http://www.guardian.co.uk/commentisfree/2008/sep/30/wallstreet.marketturmoil

 

Have you ever played 'What If'? I'm trying to think through what would happen if all banks went bust. I'm not getting very far, but I really can't imagine life without some sort of banking system. I was listening to people this morning saying they were going to convert their savings into gold bars. I thought 'stupid people, they're acting like lemmings'. Then, when I couldn't log into my bank account, I started to panic. Turned out it was routine maintenance lol.

 

I believe the whole expansion of the credit market started in the 80s when regulations were relaxed by the incumbent government. I hope that tight fiscal rules are introduced and soon. But, as we've seen this week, as soon as governments threaten these rules, the bankers take fright and the share prices, especially in finance houses, fall.

[Wade Garrett]

And in one easy step you destroy the housing market not for one or two years but for decades....

 

The whole housing market relies on first time buyers 'getting on the ladder', thus people moving onwards / upwards / downwards.

 

You impose a minimum of 15% deposit and 90% of first time buyers are 'priced out' of the market, and the whole system grinds to a halt...

 

Or prices come down accordingly.

[Baj]

I was listening to people this morning saying they were going to convert their savings into gold bars. I thought 'stupid people, they're acting like lemmings'.

Actually, that's one of the smartest things they can do if they have a lot of savings to protect. Check out the stable price of gold over any time period you care to look at, and compare it to any of the major currencies.

[bridge too far]

And in one easy step you destroy the housing market not for one or two years but for decades....

 

The whole housing market relies on first time buyers 'getting on the ladder', thus people moving onwards / upwards / downwards.

 

You impose a minimum of 15% deposit and 90% of first time buyers are 'priced out' of the market, and the whole system grinds to a halt...

 

Another relevant factor is the buy-to-let market. Bradford & Bingley was the main mover and shaker in this field.

 

What is happening in that market is that firstly the increase in buy-to-let transactions bumped up property prices, particularly at the 'bottom' end fo the market, thus pricing out most first-time buyers.

 

Because of the expansion of this sector, there is now a glut of rental properties (swollen also by potential house sellers renting out their houses because they have to move / are waiting for prices to rise). So rental properties are not realising the income they once did and the owners are defaulting on the BTL mortgages.

[No 2 to Maybush]

But, as we've seen this week, as soon as governments threaten these rules, the bankers take fright and the share prices, especially in finance houses, fall.

 

That's because they would have to come clean with the amount of debt they are holding.

 

Look, the only reason why we have this "freeze" in the money markets is because the banks are playing "chicken" with each other. They all need to borrow money in the short term to pay the interest in the previous short term loan they took out to pay the interest in the previous short term loan, etc, etc, etc. Its been going on for years, except that now they are all hopelessly overleveraged to the tune of 40:1 debt to equity. Its a house of cards, and the ones with the biggest exposure (ie largest debt) are the most likely to fold, like B&B. Its a death spiral really, that can only be resolved if the debt is purged from the system, which gets me back to my original question: how much debt should you, as a taxpayer, and your children, and your children's children, be expected to take on in order to resolve this situation? If the whole shebang goes t i t s up then the debt will have to be wiped and we can start again. Otherwise we are at the mercy of the central banks and their heinous use of Compound Interest on their loans, which will take forever to pay off. The latter seems to be the way Our Glorious Leader wishes to take us.

[toofarnorth]

Another relevant factor is the buy-to-let market. Bradford & Bingley was the main mover and shaker in this field.

 

What is happening in that market is that firstly the increase in buy-to-let transactions bumped up property prices, particularly at the 'bottom' end fo the market, thus pricing out most first-time buyers.

 

Because of the expansion of this sector, there is now a glut of rental properties (swollen also by potential house sellers renting out their houses because they have to move / are waiting for prices to rise). So rental properties are not realising the income they once did and the owners are defaulting on the BTL mortgages.

 

That being said in many areas people who are letting are having quite a good time of it. No-one can raise funds to buy property and as a result are driven to let. Where I live average rents have gone up by 15% in the last six months alone. Obviously the value of their property is falling but extra rent certainly reduces the immediate impact.

[bridge too far]

No.2 - I don't know . If the taxpayer bears the risk now, he / she could reap the reward in years to come if the markets are reformed and recover, surely?

 

I think, with B & B, taxpayer risk has been nullified by the requirement for 'the banking industry' to pay back the taxpayer if the debt hasn't been eradicated in x years? That's what spooked the banks in the UK yesterday, wasn't it?

[Crouchie's Lawyer]

And in one easy step you destroy the housing market not for one or two years but for decades....

 

The whole housing market relies on first time buyers 'getting on the ladder', thus people moving onwards / upwards / downwards.

 

You impose a minimum of 15% deposit and 90% of first time buyers are 'priced out' of the market, and the whole system grinds to a halt...

 

Or prices come down accordingly.

 

Wade answers the question. House prices are predicted to fall approximately 25% this year and potentially up to 50% when prices eventually bottom out. At this price first time buyers will have more of a chance. I had to scrimp and save 3 years ago and we got family help. If this is the only way people can get on the market, then its the way it must go. Half the problem has been because first time buyers have been offered stupid mortgages of 90% all the way up to 125% and having never owed a property before, and with most still being fairly young, niave and not so keen to give up their social lives have defaulted on their mortgages.

[bridge too far]

That being said in many areas people who are letting are having quite a good time of it. No-one can raise funds to buy property and as a result are driven to let. Where I live average rents have gone up by 15% in the last six months alone. Obviously the value of their property is falling but extra rent certainly reduces the immediate impact.

 

Here, there is a glut of rental properties and rents have fallen.

[toofarnorth]

Here, there is a glut of rental properties and rents have fallen.

 

As with everything to do with property I guess it dpends on location. Where I live has always been very short of property, so now the fact that many more are looking to rent has just made it worse. Plus its a small University town and the university has increased its intake of students who have added to the pressures on the limited housing stock.

[Saint In Exile]

That's because they would have to come clean with the amount of debt they are holding.

 

Look, the only reason why we have this "freeze" in the money markets is because the banks are playing "chicken" with each other. They all need to borrow money in the short term to pay the interest in the previous short term loan they took out to pay the interest in the previous short term loan, etc, etc, etc. Its been going on for years, except that now they are all hopelessly overleveraged to the tune of 40:1 debt to equity. Its a house of cards, and the ones with the biggest exposure (ie largest debt) are the most likely to fold, like B&B. Its a death spiral really, that can only be resolved if the debt is purged from the system, which gets me back to my original question: how much debt should you, as a taxpayer, and your children, and your children's children, be expected to take on in order to resolve this situation? If the whole shebang goes t i t s up then the debt will have to be wiped and we can start again. Otherwise we are at the mercy of the central banks and their heinous use of Compound Interest on their loans, which will take forever to pay off. The latter seems to be the way Our Glorious Leader wishes to take us.

 

What's worrying is that this should be simply a normal recession cycle. However, with the current but understandable concern surrounding the banking sector we are tettering on the edge of not just a worldwide recession but a collapse to rival the great depression.

 

It's accepted that one of the major causes of the great depression was debt... 1920's America relied on cheap credit. This encouraged short term growth but created high levels of debt. Once a recession cycle began and prices became deflated these high levels of debt became unservicable with businesses having to layoff staff, banks who had financed the debt began to fail as debtors defaulted on loans and mortgages and, worried by this, depositors began withdrawing funds. The US government attempted to stave off the crisis with guarantees and federal reserve regulations but failed.

 

Bank failures then snowballed as banks called in loans which borrowers, including other banks, could not repay. Banks then became more surcumspect in their loaning and built up their capital reserves, making fewer loans. This increased deflationary pressures and the whole recession cycle spun out of control and became the biggest single economic depression of modern times.....

 

Sound familiar anyone??