Mortgage bail-out rallies markets, Light at the end of the credit crunch tunnel.

justpurchased

http://news.bbc.co.uk/1/hi/business/7603387.stm


"Investors hoped the largest bail-out in US history would prop up the country's housing market and ultimately help to end the credit crunch, analysts said. London's FTSE 100 index and key markets in Japan and Hong Kong rose about 3.5%. "

With shares in banks going through the roof. Do we think this has got rid of a lot of the sub-prime risks posed to the UK banks?

ad9898_3

I think the damage this will do to the "free market", will have far reaching consequences, of course Gordon will be frothing at the mouth thinking this is the way to go, with his short term vision (i.e. to save his own skin), medium to long term this will be very damaging, watch this space.

justpurchased

ad9898 wrote: »

I think the damage this will do to the "free market", will have far reaching consequences, of course Gordon will be frothing at the mouth thinking this is the way to go, with his short term vision (i.e. to save his own skin), medium to long term this will be very damaging, watch this space.

Can you explain why?

ad9898_3

Socialising losses, while privatising profits is not a good thing, it can cause "moral hazard", which is bad for everyone, also this can't be good for the dollar and now the american taxpayer has been saddled with $2.9 trillion of liabilites, America has virtually admitted it is bankrupt.

justpurchased

ad9898 wrote: »

Socialising losses, while privatising profits is not a good thing, it can cause "moral hazard", which is bad for everyone, also this can't be good for the dollar and now the american taxpayer has been saddled with $2.9 trillion of liabilites, America has virtually admitted it is bankrupt.

But is it not America’s problem?
Surely it is a good that it will not be taking some of our banks with it?
It is not financial melt down we are looking for, is it?

ad9898_3

justpurchased wrote: »

But is it not America’s problem?
Surely it is a good that it will not be taking some of our banks with it?
It is not financial melt down we are looking for, is it?

The ups and downs in America usually have an impact on the wider world, us included, unfortunately for Gordon we do not have the clout to do what the US government have done. It depends now what the US government do with those liabilities as to what effect it will have here, dont forget our banks are inextricably linked to markets in America but lets just say our best interests here won't be their top priority

You have to remember that this whole "credit crunch" (I like to call it credit normality), was caused by the collapse of the housing market over their.

justpurchased

ad9898 wrote: »

dont forget our banks are inextricably linked to markets in America.

You have to remember that this whole "credit crunch" (I like to call it credit normality), was caused by the collapse of the housing market over their.

But judging on the performance of our banks on the stock exchange there is a lot of confidence and this had taken away a large worry.

Also was it not the losses caused by the American market that caused the problems over here.
It may be good news for some of the people struggling on one of our banks SVR.
I am not saying they should go back to 100% & 125% mortgages. But surely 10% deposit to get a good rate will be good for current borrows and new borrows alike.

Dan:_4

ad9898 wrote: »

You have to remember that this whole "credit crunch" (I like to call it credit normality), was caused by the collapse of the housing market over their.

The credit crunch was casued by the sharp rise in defults on US subprime mortgages, thanks to all the lax and inappropriate lending.

Also worth noting that US subprime mortgages was far worse then the UK, High LTV mortgages sold to people with low income, poor credit history and zero deposit with an introduction fixed rate period as low as 1% in some cases.

justpurchased

Just had a look in the FTSE 250, builder’s shares in double digit gains also.

dudleyboy

Dan: wrote: »

Also worth noting that US subprime mortgages was far worse then the UK, High LTV mortgages sold to people with low income, poor credit history and zero deposit with an introduction fixed rate period as low as 1% in some cases.

Indeed, although I wouldn't be too sure about that last bit Dan.

With people buying additional properties using the imaginary equity in their existing ones, I think Buy-To-Let and self-cert Lie-To-Buy in this country will be just as bad as US subprime if not worse.

I guess only time will tell.

justpurchased

dudleyboy wrote: »

Indeed, although I wouldn't be too sure about that last bit Dan.

With people buying additional properties using the imaginary equity in their existing ones, I think Buy-To-Let and self-cert Lie-To-Buy in this country will be just as bad as US subprime if not worse.

I guess only time will tell.

Sorry I do not see that, it is the American way they have to do it bigger and better than anyone else. Even housing bubbles!