Where do I go now? My saving plan is ruined.

a7man

Hyperinflation would/could have been caused by the falling pound if the govt didnt react and lower interest rates, spiralling the UK into a bigger mess. The fact is people need to start spending again, if people sat on all their money all the services and shops would collapse.

The govt have highly trained financial expert advisers, who know a hell of a lot more than anyone on here. You dont have any specific figures to show what they based their decisions on so as easy as it is to moan about what 'could' happen, the newspapers who are blowing this out of proportion, as they have with everything else isnt very convincing.

SGE1

Old_Slaphead wrote: »

What drivel !

It's the fact that mortgage interest has been so low that it's driven property prices up to an unsustainable level.

The government, builders, estate agents and banks have all been complicit in this (cos they've made loads of money at the property buyers expense).

As regards interest rates for savers - don't forget it's us that provide your mortgage. If we stop saving there's no money for your loans and mortgages so you, for a change, would have to save to fund your own purchases.

What planet do you live on? Your grasp of basic economics is poor indeed.

1) Property prices have been driven up by easy credit, not cheap credit. Bad risks defaulting is what has caused the property crash.
2) The Government doesn't control house prices. This isn't the 21st century conspiracy you'd like to believe it.
3) Savers don't provide the majority funds for mortgages. Mortgages lenders are largely funded via wholesale markets.

Anyway, I don't have a mortgage. And I do fund my own purchases. I'm just not as a selfish and obnoxious as you are.

Old_Slaphead

SGE1 wrote: »

What planet do you live on? Your grasp of basic economics is poor indeed.

1) Property prices have been driven up by easy credit, not cheap credit. Bad risks defaulting is what has caused the property crash.
2) The Government doesn't control house prices. This isn't the 21st century conspiracy you'd like to believe it.
3) Savers don't provide the majority funds for mortgages. Mortgages lenders are largely funded via wholesale markets.

Anyway, I don't have a mortgage. And I do fund my own purchases. I'm just not as a selfish and obnoxious as you are.

I live on planet Earth.

You may be justified (who knows) in calling me obnoxious but I'm not sure about the selfish bit (can you explain ?)

In response to you points :-
1) Granted property prices were driven upwards by easy credit but there's no denying that the cost was also historically very cheap. The greatest houseprice inflation occurred between 2001 and 2006. At no point during that time did the bank rate reach 5% and the basic rates charged were the lowest for over 30 years. I know a number of people who were remortgaging to fund, cars, building extensions, holidays etc during that time because funds were so (historically) cheap. Loans (not mortgages) at 4.9% were not uncommon.

2) Did I say the Gov't controlled house prices? I think not. They undoubtedly had a vested interest (ie lots more stamp duty, feelgood factor, boost to economy of people realising equity etc etc) in high house prices.

3) Grossly excessive funding via the wholesale markets is one of the major reasons why banks have gotten into trouble. Clearly that is now no longer 'de rigeur' and banks are looking to a much lower level of leverage on retail funds. The retail investor becomes therefore much more important to the bank. Given this scenario and that the Gov't is lending money to banks at 12% (Barclays paying more to Middle East investors), I think it's totally inconceivable that banks will be able to pass baserate cuts on to borrowers and maintain any serious level of profitability.

cos69

a7man wrote: »

...... The govt have highly trained financial expert advisers, who know a hell of a lot more than anyone on here. You dont have any specific figures to show what they based their decisions on so as easy as it is to moan about what 'could' happen, the newspapers who are blowing this out of proportion, as they have with everything else isnt very convincing.

Nah - I have come across this well informed chap called David Cameron who does not agree with you, I have heard it said he also pays a shed load of financial experts for advice. Made an interesting speech this morning at the LSE
http://www.conservatives.com/News/News_stories/2008/12/David_Cameron_Put_the_choice_in_the_hands_of_the_people.aspx

SGE1

Old_Slaphead wrote: »

I live on planet Earth.

You may be justified (who knows) in calling me obnoxious but I'm not sure about the selfish bit (can you explain ?)

In response to you points :-
1) Granted property prices were driven upwards by easy credit but there's no denying that the cost was also historically very cheap. The greatest houseprice inflation occurred between 2001 and 2006. At no point during that time did the bank rate reach 5% and the basic rates charged were the lowest for over 30 years. I know a number of people who were remortgaging to fund, cars, building extensions, holidays etc during that time because funds were so (historically) cheap. Loans (not mortgages) at 4.9% were not uncommon.

2) Did I say the Gov't controlled house prices? I think not. They undoubtedly had a vested interest (ie lots more stamp duty, feelgood factor, boost to economy of people realising equity etc etc) in high house prices.

3) Grossly excessive funding via the wholesale markets is one of the major reasons why banks have gotten into trouble. Clearly that is now no longer 'de rigeur' and banks are looking to a much lower level of leverage on retail funds. The retail investor becomes therefore much more important to the bank. Given this scenario and that the Gov't is lending money to banks at 12% (Barclays paying more to Middle East investors), I think it's totally inconceivable that banks will be able to pass baserate cuts on to borrowers and maintain any serious level of profitability.

1) You're talking about circumstances: a lower than average interest rate didn't cause the downturn, it just happened to be the context after which a downturn occurred, but they are not causally linked. It's people's ability to borrow money they shouldn't have been able to, which caused the increase in demand, and so inflation of house prices. Anyway, the BoE sets interest rates, and focuses on inflation, so even if you were right, you cannot blame the Government for this.

2) See above: you seemed to imply that this was all the Government's fault. Even if they do have a vested interest in something, it doesn't mean they cause it.

3) Banks' profitability will for sure be damaged, if they pass on the cuts, but given that many of them have been thrown a massive lifeline in the first place, the scenario of slightly lower margins is far more advantageous than the alternative, which would have been complete collapse.

Old_Slaphead

Please read my lips....I did not say or imply that the Government caused it.

That doesn't mean, however, that IMO, the Gov't acted responsibly in allowing it to happen on their watch. I believe, they could have imposed stricter controls on the banking system to mitigate the effects of the 'meltdown'. But that's another story and way off topic!

a7man

cos69 wrote: »

Nah - I have come across this well informed chap called David Cameron who does not agree with you, I have heard it said he also pays a shed load of financial experts for advice. Made an interesting speech this morning at the LSE
http://www.conservatives.com/News/News_stories/2008/12/David_Cameron_Put_the_choice_in_the_hands_of_the_people.aspx

You expect him to agree with Labour? Whatever Labour did he would argue against it...

a7man

Old_Slaphead wrote: »

Please read my lips....I did not say or imply that the Government caused it.

That doesn't mean, however, that IMO, the Gov't acted responsibly in allowing it to happen on their watch. I believe, they could have imposed stricter controls on the banking system to mitigate the effects of the 'meltdown'. But that's another story and way off topic!

You might be able to say that if this wasnt a Global problem...

Old_Slaphead

a7man wrote: »

You might be able to say that if this wasnt a Global problem...

That may well be the case but BY FAR the worst excesses have been in the UK and US. The bailout required required (to date) as a proportion of GDP has been higher in UK than anywhere else. I recognise that things may change as the situation unravels.

I did say that the Gov't, with foresight could have mitigated, not prevented, the meltdown. Clearly property prices in US, UK and Spain had reached unsustainable levels.

rotate

The goverment could have taken many actions to prevent the house price bubble from getting out of control including making buy to let less financially advantageous,compared to buy to live in.
However they wanted to engender a feeling of wellbeing in the population to keep them spending and keeping the labour goverment in power.
How they could not see this collapse happening is beyond me and only helps prove their utter incompetence.
If you think the situation is bad now,wait until they start fiscal easement.This is is just another term for turning on the printing machines and flooding cash into the economy.This is not scaremongering there is a B o E committee looking at this now.
This will cause the collapse in overseas confidence in sterling as do not forget we run a huge deficit in our overseas brought on by years of excess and a goverment that has allowed manufacturing to collapse and out of control financial services run by get rich quick spivs to be seen as our future.
This deficit is funded by foreign goverments and individuals holding sterling.
When they see the goverment printing money they will bail out of sterling.The pound will collapse,inflation will go through the roof and savings will become worthless.
Then we will all become beholden to the goverment for our survival.