Shocking advice for the MPC (Ms Flanders)

Wookster

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/11/shocking_advice_for_the_mpc.html

Read the article in the Telegraph and this is a really excellent analysis of the housing market and its impact on the broader economy.

blueboy43

Wookster wrote: »

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/11/shocking_advice_for_the_mpc.html

Read the article in the Telegraph and this is a really excellent analysis of the housing market and its impact on the broader economy.

An excellent piece and it does seem that we have a fair way to go.

The problem with the analysis is that the solution (buying poor quality housing debt) doesn't seem to solve anything other than free more capacity for yet more property lending (hopefully better quality this time!).

The real problem is getting business to start borrowing and investing again.

I think the BoE solution is 6 years of housing stagnation while inflation ticks along at 3%.

michaels

Hmm - matches a piece re negative equity in the US in the economist this week suggesting that debt write-offs without repossession should be the way to go and the Govt might need to pony up for it as the lenders were not in any postion to do so.

dopester

michaels wrote: »

Hmm - matches a piece re negative equity in the US in the economist this week suggesting that debt write-offs without repossession should be the way to go and the Govt might need to pony up for it as the lenders were not in any postion to do so.

I'm ready to take my own house if that happens in this country; by force if necessary - from people who don't deserve to have the asset.

Wookster

michaels wrote: »

Hmm - matches a piece re negative equity in the US in the economist this week suggesting that debt write-offs without repossession should be the way to go and the Govt might need to pony up for it as the lenders were not in any postion to do so.

Debt write off without repossession... Think of the moral hazard in doing that!

ruggedtoast

dopester wrote: »

I'm ready to take my own house if that happens in this country; by force if necessary - from people who don't deserve to have the asset.

Yes, let us know how that works out for you.

amcluesent

Remortgage then don't pay pack. Expect debt write-off!

dopester

ruggedtoast wrote: »

Yes, let us know how that works out for you.

Hey.. it's not me gifting away free houses in a sicko system, whilst others have baulked at the amount they'd have to borrow in order to acquire the same house during the boom years... and have spent years incuring the costs of renting whilst trying to save more towards their target.

Running a sicko system you're gonna get a reaction. I'm on the verge of snapping as it is.

Graham_Devon

dopester wrote: »

Hey.. it's not me gifting away free houses in a sicko system, whilst others have baulked at the amount they'd have to borrow in order to acquire the same house during the boom years... and have spent years incuring the costs of renting whilst trying to save more towards their target.

Running a sicko system you're gonna get a reaction. I'm on the verge of snapping as it is.

Although I completely and utterly agree with you, just imagine how outnumbered you would be.

We, as a nation have been looking for anything to get out of debt repayments, looking for anything to reclaim money that morally isn't ours to reclaim, and any way to release ourselves of responsibilities, but gen up on every single right we hold and take those rights as far as possible.

If there was a way out of mortgage debt, there would be huge numbers of people rejoicing.

Bit like fathers for justice, everyone knows that a lot of what they say makes perfect sense, but, not enough people give two hoots as they are alright thanks.

Loughton_Monkey

This concept of QE and "Bad Bank" is completely woolly thinking if you ask me. Unless I've read it wrong, what they suggest is that in true QE fashion, the government buys worthless 'paper', in effect paying full value for bad debts. So what's good about it? Er... can't think of anything. What's bad about it?

1. So all the banks 'sell' their toxic loans to the Government Bad Bank. So an extra form of bailing out the banks, but in particular, by definition, they are giving most money to the 'crazy' lenders and virtually nothing to the sober ones.

2. Once offloaded, what does "Bad Bank" do with the loans? Write to the debtors and say "There, there, don't worry. Just carry on living there and we'll just forget about it shall we...?" Well this is madness if ever I heard of it.

3. Alternatively, do Bad Bank persue the debts in the same way as the bank would have done? Thus kicking out the 'owners' and selling the house by auction in a 'fire sale' to get it off their hands, followed by doggedly tracking the debtors down and hounding them for life. Same as the existing banks would.

So if (2) applies, it doesn't help "The Economy". It's just a letoff for a few (possibly irresponsible, or maybe unfortunate) houseowners. If (3) applies, nothing really changes, other than a central "Bad Bank" might be able to persue the repossessions and loans in a more efficient and centralised operation.

None of this makes sense to me.

dopester

Graham_Devon wrote: »

Although I completely and utterly agree with you, just imagine how outnumbered you would be.

We, as a nation have been looking for anything to get out of debt repayments, looking for anything to reclaim money that morally isn't ours to reclaim, and any way to release ourselves of responsibilities, but gen up on every single right we hold and take those rights as far as possible.

If there was a way out of mortgage debt, there would be huge numbers of people rejoicing.

Bit like fathers for justice, everyone knows that a lot of what they say makes perfect sense, but, not enough people give two hoots as they are alright thanks.

How outnumbered? Whilst I see what you're getting at, I still believe it's not as clear a picture as you suggest. That the majority would be all for mortgage debt forgiveness to support values, or taxpayer absorbing toxic debt. The majority, I suspect, wouldn't suffer if the values of their homes fell.*

*Other than wishing STR'd ect for significant extra monies.. not true suffering. Just their egos dented, especially people Merv's age who have had a love-affair with HPI boosting their perceived worth.

And, haven't some studies reported the majority would like to see house prices stable or actually fall? 2009 example below (first link I looked at in a google search.. there may be other similar examples).

Most people in Great Britain would not welcome a pick up in house prices, suggests a poll commissioned for BBC Two's Propertywatch.

The ICM poll found that 64% of people polled would prefer house prices to stay the same or decrease. Of those asked, 30% want them to decrease and 34% want them to stay the same. Only 32% of those interviewed say they want prices to go up.

It also suggests that older people in Great Britain are far more likely to want to see higher property prices than younger people.

According to the poll, 40% of 55 to 64-year olds want to see prices rise and 21% want prices to fall; while just 18% of 18-24 year olds want higher prices compared with 52% who want lower prices.