Lehmans

moanymoany

It seems to be a 'chicken and egg' situation, and it's not new. Back in 1964 when my in laws bought their house my fil said the idea was to buy to the max and then a bit more because inflation would soon mean you could breath again. They did just that, living in the dining room of their knew big house until they could afford to furnish the rest. Their £5k house is now worth half a million.

More money available for mortgages means more competition and pressure on prices to rise. In those countries where housing is viewed differently the cheap money has not sent house prices spiralling out of control.

With the demise of mass rental - all those lines and lines of Edwardian terraces were built to let out, usually by large trust funds, and later post WW2 council housing estates - the desire to buy has been encouraged as the route to riches rather than owning your own HOME.

I remember, back in 1962/3, my mother saying that people were mad to buy their own homes because they had to do all their own repairs. This is something we are seeing now. I've watched an old guy say he needs his house insulated NOW! If he lives in his own house he must have lived there for a while, I doubt that he has only just bought. He should have insulated his house before now. It is hardly a this year idea. If he had bought the loft insulation a roll a month over the past five years he would have been able to insulate the street! Twenty years ago we put in cavity wall insulation!

I feel very sympathetic towards those who have bought in the past few years and are going to find themselves in negative equity or unable to pay their repayments because the recession has taken their jobs or they have had wage cuts. They believed the hype - are there any of us who hasn't done that at some point, hopefully learning not to go there again - and they are going to suffer. The big guns have spent billions persuading people to buy and to spend, no-one is going to bail these people out as suddenly it is all their own fault.

Going now -

Walletwatch

Had to get in to work early (to sort out trades with Lehman), so took a cab at 6:15 - the cabbie that dropped me said he had dropped somebody to Lehman earlier at 5:30 in the morning...

ad44downey

carolt wrote: »

Reading the analysis this morning, am struck by the fact that none of the papers dare state the true cause of the events unfolding - not 'the credit crunch', but the fall out from criminally loose lending, by the banks, and gambling between banks on the value of bits of paper guaranteed by this lending, ON OVERVALUED HOUSING.

This whole sorry mess is a result of the banks encouraging one of the biggest ever housing bubbles. Whilst bank regulation is certainly going to rise to the top of the agenda immediately, is the advisability of house prices doubling or trebling in 10 years going to be addressed????

.

Hopefully in the aftermath of this affair banks will have learnt a salutory lesson about lending to any old fool, houses will be affordable to most people. And you should be able to get a cheap second hand Ferrari or Aston Martin too.

manhattan

horseinhatman wrote: »

Reaction must less than expected. Go back to bed.

Fcuk going back to bed!

Theres more too see here! :beer:

Kez100

chucky wrote: »

and which 7 to 9 banks will close in the next 24 hours then?

I guess it was/is a possibility but only if none of the other dominos received backing. I hope some have and it leaves Lehman as an example whilst not further hitting the innocent in all of this.

Nikkster

chucky wrote: »

just to add a bit excitement - Lehman haven't actually filed for bankrupcy yet.

not saying it won't when NY opens but it hasn't yet, so nothing happening yet - disregard what most of the media are saying...

Going against the last bit (sorry!)
http://news.bbc.co.uk/1/hi/business/7615931.stm

beaujolais-nouveau

chucky wrote: »

and which 7 to 9 banks will close in the next 24 hours then?

Not in the next 24 hours but it looks as if it might be Countrywide: just as soon as Bank of America has transferred all its bad debts and those of newly-acquired Merrill Lynch into Countrywide, it will let Countrywide go bankrupt. Bank of America will keep the bits that still make money but default - or, in the name of Countrywide, default - on everything else.

BWAHAHAHAH - Bank of America has "paid" 50 billion or something for Merrill Lynch but this isn't in cash - dear me, no - Merrill Lynch investors will receive Bank of America shares instead of money.

RecoveringAlcoholic

chucky wrote: »

and which 7 to 9 banks will close in the next 24 hours then?

Can I predict The Icelandic Banks within the next 24 weeks?

Pobby

Well onr thing is for certain. I am learning a big lesson about greed here.

beaujolais-nouveau

chucky wrote: »

just to add a bit excitement - Lehman haven't actually filed for bankrupcy yet.

not saying it won't when NY opens but it hasn't yet, so nothing happening yet - disregard what most of the media are saying...

Less than an hour after you wrote that,

Lehman Brothers files for bankruptcy
http://www.guardian.co.uk/business/2008/sep/15/lehmanbrothers.creditcrunch

Is the US Republican mass media still leading with stories about lipstick on pigs - I must find time to check?