Bank of England warns of tougher curbs on mortgage lending

ILW

lemonjelly wrote: »

Wouldn't disagree. I did think I'd highlighted the irony in my post with the at the end.

Believe me, I work in the advice sector & have seen the debt mountain grow in an unsustainable way for 13-14 years. I have known for some time that the good times were built on unsustainable consumer borrowing, & it couldn't last.

I believe that both borrowers and lenders are to blame. Borrowers repeatedly asked for more debt, & took on additional debt without fully knowing/understanding the implications or given thorough thought to the repayment of their debt.

Lenders doled out cash irresponsibly, without taking into proper avccount borrowers other responsibilities or ability to repay. In many cases, lenders employed dubious, unethical and questionable tactics in order to get people to take on more debt.

But I do like to throw in the occasional funny too if I can...:)

If the BoE either did not see it coming, or decided to just let it happen, it does make you wonder what they actually do all day to justify their salaries.

chucky

ILW wrote: »

As a long term strategy, I would suggest that if as a country we had encouraged people to save rather than run up debt over the last decade or so, then the financial crisis we are now in would not have been nearly as bad.

you could argue that the standard of living of the majority of the country would still be in the 1990s if that was the case...

but that's a whole new discussion for a different thread...

ILW

chucky wrote: »

you could argue that the standard of living of the majority of the country would still be in the 1990s if that was the case...

but that's a whole new discussion for a different thread...

In what way is the standard of living better now than it was in the 90s?

Apart from more stuff and more debt.

chucky

ILW wrote: »

In what way is the standard of living better now than it was in the 90s?

Apart from more stuff and more debt.

lots and lots of ways - there is more wealth than there was 20 years ago.

the wealth is generated from debt but there is still more wealth.
this can't be denied.

DervProf

chucky wrote: »

i don't completely get this thing about savers are hard done by Mr Prof...

I`m not really saying that savers are "hard done by". It`s just that I`ve never known average savings rates being so far behind inflation. And for the past few years (pre credit crunch), the BoE have supposedly used IRs to keep inflation under control. They now seem to be using IRs to keep bankpruptcy under control.

I`ve always been a saver. When I say that, my aim is to always spend a penny less than I earn, and try and build up savings to fall back on during leaner times, or for my retirement. I don`t want to make £££ in interest, I simply would like to see what I`ve saved maintain it`s value, without having to resort to gambling, or buying up property that other people would like to buy, but can only afford to rent from me.

Old fashioned approach ? Probably. My definition of "prudent" is certainly a lot different to Gordon Brown`s definition.

mbga9pgf

Yes, but the debt has to be paid back, meaning at some stage, our quality of life has to decrease below the average. Its the way debt works. It would be "nice" to imagine ever increasing quality of life is possible, but if your country hasnt got the cash to pay for it, nor the economy to support it, its nothing but a pipe dream.

ILW

chucky wrote: »

lots and lots of ways - there is more wealth than there was 20 years ago.

the wealth is generated from debt but there is still more wealth.
this can't be denied.

Can you give a few examples please, I do not see people having a higher standard of living. In general new houses are smaller and the gap between the top and bottom earners is higher than ever, also for many employment is less secure and most decent pension schems are on their way out.

chucky

DervProf wrote: »

I`m not really saying that savers are "hard done by". It`s just that I`ve never known average savings rates being so far behind inflation. And for the past few years (pre credit crunch), the BoE have supposedly used IRs to keep inflation under control. They now seem to be using IRs to keep bankpruptcy under control.

I`ve always been a saver. When I say that, my aim is to always spend a penny less than I earn, and try and build up savings to fall back on during leaner times, or for my retirement. I don`t want to make £££ in interest, I simply would like to see what I`ve saved maintain it`s value, without having to resort to gambling, or buying up property that other people would like to buy, but can only afford to rent from me.

Old fashioned approach ? Probably. My definition of "prudent" is certainly a lot different to Gordon Brown`s definition.

you're not wrong at all and it isn't a bad approach.

where i was going was that times have changed and this economic crisis is showing us that if we want to make the most of our savings - bank savings accounts may not be the future.

we will have to look at alternatives.

lisyloo

Can you give a few examples please, I do not see people having a higher standard of living.

Twenty years ago most teenagers did not have a car (I was near that age 20 years ago).
We didn't have mobile phones, sat nav, satelitte TV, expensive TVs, gym membership.
2nd cars weren't that common.
Foreign holidays weren't that common either.

Now I would agree with you that most of those things aren't necessary enriching, but the point is that people did not have the disposable income to spend.
We have probably been encouraged by our capitalist society to work harder to spend on junk like a plasma TV rather than doing more enriching things (like voluntary work) I would agree, but people definitely have different standards now than 20 years ago.

Whether our lives are better - probably not.
They were probably "best" in austere times when people helped each other out, had a sense of camaraderie, dug their gardens and were fittter and healthier.
So it depends on how you value things doesn't it.

But I would definitely say more disposable income.
My niece, nephew had cars at 17 depsite being in lowly paid jobs.
That was very uncommon 20 years ago.

chucky

mbga9pgf wrote: »

Yes, but the debt has to be paid back, meaning at some stage, our quality of life has to decrease below the average. Its the way debt works. It would be "nice" to imagine ever increasing quality of life is possible, but if your country hasnt got the cash to pay for it, nor the economy to support it, its nothing but a pipe dream.

that's my point. the debt has created wealth.

as you say if the debt isn't managed and delayed and delayed it's a whole big issue that needs to be addressed in the future for the next generation.