Tax Payer could prop up mortgage market

Generali

mr.broderick wrote: »

Where is generali?

Coo-eee! Here I am!

mr.broderick wrote: »

I mentioned a couple of months back that something absolutely incredible was going to happen to the mortgage situation and this was it.
Heard whispers of this a while ago...Amazing stuff...

It wouldn't surprise me if the Govt tries to get something like this going. I just don't see it working. The problem is, where does the money come from? If the Government is going to fund this then they can either print the money or borrow it.

If they print the money then the whole thing is self defeating as the extra money they print devalues the rest of the money stock so they are in effect taxing holders of cash and people with fixed incomes (eg pensioners). If they borrow it then that reduces the money available for other sorts of borrowing. Like mortgages for example.

After all, the total amount of money borrowed = the total amount of money saved as they are exactly the same thing just from different viewpoints.

It's a great idea if you happen to be the former Boss of a bank holding massive mortgage assets and want to help your old muckers out. It's probably not such a great idea if you're one of the poor schmucks that have to pay for this nonsense, ie the rest of us.

PS Don't believe all this rubbish about 'inflating our way out of trouble'. We can try it but it's never worked yet and won't work this time either. Inflation causes huge distortions in the economy and the higher it gets, the worse these become. People end up spending more effort on trying to maintain their wealth and spending power than they do on actually doing something productive.

Snooze

Generali wrote: »

It wouldn't surprise me if the Govt tries to get something like this going. I just don't see it working. The problem is, where does the money come from? If the Government is going to fund this then they can either print the money or borrow it.

If they print the money then the whole thing is self defeating as the extra money they print devalues the rest of the money stock...

You're right, but this is exactly what the Fed is doing iirc - trying to print their way out of trouble and as this country has a nasty habit of copying whatever the US does, I can see it happening. Don't forget that we've already been paying for the NR bail-out by having fuel at £1.20-1.30 a litre (and anyone that disagrees with that "conspiracy" is incredibly blinkered imho).

As per usual though, we'll all just moan about it for a bit, sign a few petitions and then get on with life as normal. :rolleyes:

R

bubblesmoney

looks like this stupid scheme to prop up property prices with tax payers money is going to go thru and help the irresponsible spendthrifts who stretched themselves too far and bail them out and the banks who lent irresponsibly at the cost to savers and tax payers. !!!!!! have i been saving for, maybe all of us should be imitating the spendthrifts and expect free bailouts. is it time to pull money out of banks and buy gold, wont this bailout devalue currency and govt bond ratings???? see this

baby_boomer

Desperate governments facing electoral defeat used to play dangerous games with interest rates.

Now that option has been removed, this is the alternative - and equally dangerous IMHO.

In some ways we are copying the US government with their extended support for Freddie Mac and Fanny Mae. Both governments are hoping to get away with it - fingers crossed.

The FT

"...In other words [the US government], by doubling down on its great government-sponsored enterprise gamble, will either get away scot-free, for the time being, or else be forced to hand taxpayers a bill amounting to many hundreds of dollars per household..."

It's estimated at a a 5% chance that it will cost US taxpayers $100bn :eek:

brit1234

steadysaver wrote: »

It is so frustrating that the government want to keep the hpi going. Clearly they are not raising enough money from stamp duty at present.

http://www.thisismoney.co.uk/news/article.html?in_article_id=447845&in_page_id=2&ct=5

Below is a link to a Evan Davis interview with Caroline Flint the Housing Minister this month. He repeatedly asks her aren't price falls good for first time buyers which she refuses to answer.


7 1/2 minutes in.
http://news.bbc.co.uk/today/hi/today/newsid_7499000/7499124.stm




:exclamatiHave a stress ball with you while listening, her lack of replies to any questions, annoying tone of voice will make you angry.:mad:



In America they have set a lobby group against this sort of government tax payer interference of propping up poor lending and bad practice of speculators. Here is my thread on there site. Maybe we should start one too?

http://forums.moneysavingexpert.com/showthread.html?p=12752985&posted=1#post12752985