Coalition ready to let property values fall

Degenerate

Graham_Devon wrote: »

Nope.

I agree to an extent. But the point is, Ireland and the US have seen much bigger drops and continue to do so, in house prices.

Yet their banks are still operating.

You couldn't have chosen three better examples to prove my point. All those countries did indeed have serious problems with their banks due to falling property prices, all of them continue to pay a heavy price.

Japan opted to conceal their losses with accounting tricks. Google "zombie banks" for more info. The resulting lending freeze from their crippled banking sector was a substantial cause of their "lost decade".

Ireland opted for what, in relative scale, is the mother of all bail-outs (google NAMA). Not sure how that one is going to turn out. Eurozone membership may seriously limit their ability to sustain the support. Their economy continues to suffer.

The US went for a mixed approach. $700B of bail-out cash (google TARP), an ongoing bail-out "conservatorship" of Fannie Mae (which underwrites most US residential mortgages), and relaxation of mark-to-market accounting rules.

(Personally, I'm very much in favour of the "big lump of bailout cash" approach, and opposed to accounting tricks, as it's the only approach that maintains the banks as properly functioning entities able to provide the credit needed to support economic activity.)

Graham_Devon

That's still not the point. They are not insolvent, and they continue to operate.

Why would the UK be different?

Anyway, the housing problems were caused by the banking problems....if you listen most on here

Thrugelmir

Graham_Devon wrote: »

That's still not the point. They are not insolvent, and they continue to operate.

Why would the UK be different?

Anyway, the housing problems were caused by the banking problems....if you listen most on here

You've over simplfied the position. As what matters is where the poor quality lending lies and not all of it is with UK retail lenders. The US banks were here in force in the boom years through their various UK mortgage subsidaries.

A large proportion sits with B&B and NR. So is underwritten by the UK taxpayer.

The other bank which has a material exposure to poor lending is HBOS. Where the taxpayer is exposed as well , due to the £185 billion SLS facility. Although part of Lloyds it is only a subsidary so could be cut loose and allowed to go under.

Banks such as HSBC and Nationwide lend conservatively along with Lloyds.

Santander is of course Spanish.

Degenerate

Graham_Devon wrote: »

That's still not the point. They are not insolvent, and they continue to operate.

Because of the bailouts. Prior to that they most definitely were on the edge of insolvency.

Why would the UK be different?

We aren't. Just like those countries, we had a property crash, and it led to bank insolvency. Fortunately, good stewardship saw it off. That doesn't mean that it wasn't a problem, and that we can happily repeat the experience.

Anyway, the housing problems were caused by the banking problems....if you listen most on here

It's a feedback loop. One leads to the other, whichever came first.

Gorgeous_George

The ConDems have been with us for just over 2 months. We've had 2 maniacs on the loose (Bird and Moat) and been embarrassed in the World Cup.

House prices crashing would be the first good thing to happen since Jeffrey Archer went to prison

GG

Herbie_Hancock_I_wish

Dates back to 2008 but fair enough.
http://www.power-to-the-people.co.uk/2008/09/gordon-brown-house-price-inflation/

So using the old style, ooops excuse me, rates, a couple on a joint income of not a great deal of money could afford to have bought something rather than an over priced piece of junk it might buy today.

200% rise? Possibly, a bit more where I live.

Emy1501

I can't remember keeping house prices high being one of the main agendas of any of the parties in the election campaign. Given a choice of supporting education, health or Housing I suspect house prices would be low on peoples list.

The tories have be re elected after crashes before. As long as the recovery is on track by the next election they will be able to blame any problems in 2010-2011 on the previous lot.

Always seemed likely to me that what is being suggested was always going to be the way forward for the next 18 months or so.

Emy1501

Degenerate wrote: »

Because of the bailouts. Prior to that they most definitely were on the edge of insolvency.


We aren't. Just like those countries, we had a property crash, and it led to bank insolvency. Fortunately, good stewardship saw it off. That doesn't mean that it wasn't a problem, and that we can happily repeat the experience.


It's a feedback loop. One leads to the other, whichever came first.

Our property crash had nothing to do with our banks becoming technically insolvent and their seems little evidence that another crash of 25% or so would make them insolvent.

Degenerate

Emy1501 wrote: »

Our property crash had nothing to do with our banks becoming technically insolvent and their seems little evidence that another crash of 25% or so would make them insolvent.

Please do enlighten me as to how things work in the alternative reality you inhabit.

Degenerate

Emy1501 wrote: »

I can't remember keeping house prices high being one of the main agendas of any of the parties in the election campaign. Given a choice of supporting education, health or Housing I suspect house prices would be low on peoples list.

Directly, no, but avoiding economic collapse and the wipe-out of our £100B equity stake should be pretty high on anyone's list if they wish to reduce the national debt and be able to fund education, health, housing etc.