How Dumb can the Government get?

Guy_Montag

ad44downey wrote: »

They don't care any more. They know they're going to lose the next election so they're going to fook the economy up so that Tories will have a nightmare tying to sort the mess out.

You are assuming the Labour Party act as an individual, but they aren't. If Brown loses the next election his career is over, same for some others. A few may reckon this is their best hope, but unless they are in a very safe seat the could be heading for the dole office too.

If I was a labour mp, I'd be looking to ditch brown & blame all the current stuff on him, meanwhile, I'd be begging the banks to stop investing in oil futures with the money from the SLS & start lending to the proles again.

If I was brown, I'd just do the second bit.

If I was a bank, I'd take every penny HM Govt throw my way & invest in oil/gas futures.

tomstickland

It's not proving popular on the "have your say" forum:
http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5168&edition=1&ttl=20080729131416

dopester

mystic_trev wrote: »

The Crosby report will also say that Britain should avoid US-style government-backed agencies to tackle the funding crisis.

http://www.ft.com/cms/s/0/3e588326-5ce3-11dd-8d38-000077b07658.html

All Governments are pretty dumb imo.

There are always distress sales and property auctions in even the best of times. Under bullish circumstances, however, there are fewer bargains to be had, and those that are available are so much work to uncover that the time they take probably offsets the profit potential they provide. But the situation can be far different in a slump.

As asset values fall in a highly politicised economy, protracted efforts are made to avoid allowing the normal market channels to reflect the fall in prices. Prices for homes, office buildings, hotels, and other properties tend to decline slowly while the credit crunch pushes greater numbers of marginal borrowers into default. This means that there are often great deals to be had in distress sales, liquidations, and auctions. Especially from the government.

Unlike private liquidators, who generally have a strong incentive to realise the greatest possible value from the properties they dispose of, government liquidators have little or no personal incentive. As a consequence, they are often slow to dispose of properties, and those they do sell are seldom well advertised.

(Sections cover: Freddie Mac, Fannie Mae, Resolution Trust Corporation, Department of Veteran Affairs, Department of Housing and Urban Development, Internal Revenue Service, US Marshals' Office)

The FDIC

According to well-informed sources in Washington, the FDIC still holds some properties taken from banks that failed in the 1930s. As this suggests, historically the FDIC has not been a good place to pick up bargains because the FDIC has had a policy of holding assets until their nominal prices recover to match the FDIC's original liability. When you consider that, at 5 percent interest, the present worth of one dollar forty-five years from now is just about ten cents, you can see how unprofitable the FDIC's policy of holding assets has been. It totally ignores the basic economic fact that a dollar many years from now is worth less than a dollar in hand.

If the FDIC accounted for the present value of money, as it may have to do as money becomes scarcer, it would most probably loosen its grip on repossessed properties and auction them in lots accessible to small buyers.

• The Great Reckoning (1994)

leftieM

I don't think anything that radically affects the taxpayer or the housing bust is going to happen.

http://www4.u.tv/BusinessNews/index.asp?iNewsID=122842&dtmDate=29/07/2008

In this article it concludes that

.....when (Crosby) completes his report in time for the autumn, he "may yet recommend that the government should not intervene in the market, on the grounds that such intervention would create more problems than it would solve".
His report concludes: "The persistence of current market conditions could have significant implications for the economy. Even less desirable, however, would be interventions that distorted these markets and prolonged any recovery process. The costs of action need to be set against those of inaction."

dopester

leftieM wrote: »

I don't think anything that radically affects the taxpayer or the housing bust is going to happen.

http://www4.u.tv/BusinessNews/index.asp?iNewsID=122842&dtmDate=29/07/2008

In this article it concludes that

You're right. Banks hate to lend in to falling markets anyway. The champagne socialists can not stop the property crash, nor continue to enslave younger generations to come in paying for their high-life with ownership of incredibly over-valued property.

The timidity of the banking system appears to have been general and widespread. Indeed, the 1939 survey found that over half the reasons given for credit refusals by banks were "bank policy"; only a third were because of "the condition of the borrowing concern."

- Michael A.Bernstein,
The Great Depression

With the value of real estate collateral falling, the true market value of construction and other real estate loans will fall. Bankers and other lenders, like their predecessors of 1929, will not wish to magically turn one dollar of cash into a loan worth just eighty cents, much less sixty cents. When the value of collateral falls, and the public's demand to hold cash rises, even easy money at the Fed may not stop deflation.

A common feature of economic slumps is credit revulsion. Even good borrowers find their welcome mat withdrawn. When the music stops, the attitude of lenders hardens. Banks will slash credit and call loans even to good customers. They will be driven to do this, in part, because of growing demands to hold cash. When the public raises its demands for currency, the banks have no choice but to shrink.

Austin_Allegro

Amazing - the (righteous) outrage by the posters is of the like I haven't seen before, especially on a BBC site, which normally has its fair share of interventionist 'government orter' comments. There seems to be a real sense of anger growing about the way the economy is being (mis)handled at the moment.

mewbie_2

No one voted for GB. He is devoid of any saving graces. When you can think "Tony wasn't this bad", then things aren't going too well.

The end for this government was scrapping the 10p tax rate.

tomstickland

The "have your say" section of the bbc website has been showing a high level of anger and frustration with several government orientated topics recently.

m00m00

Kübler-ross stage 2 in full flow

Pobby

Who the heck thinks that basing an economy on hpi and lunatic lending is in anyway sustainable?