£140Bn fund for small business and mortgage lending

Graham_Devon

BBC comments are not positive at all. Putting it to the highest rated first, it appears people fear inflation and a further decline in living standards due to this money causing inflation.

My personal view is that I'd have to side with Hamish & Co now. This money won't go to the FTB. It will go to the BTL investor.

I honestly think this has pretty much done it for me, and it's time to realise that (as stated on another BBC article today) this recession is is bringing poverty to the young and prosperity to the old. When this money feeds through to BTL's and even more backup for the construction companies through new schemes, the young won't get anywhere.

I feel somewhat sad about saying that, and forcing myself to realise it. But like I say, the only people who will benefit from this is those with assets already.

Savers, the young, and young families will be royally screwed over.

Thrugelmir

Graham_Devon wrote: »

If £275bn didn't work, won't an extra £140bn simply make the debts bigger, but give the can another kick?

Debts aren't getting bigger. Currently fractional reserve banking is in reverse. As banks contract their asset bases to increase capital ratios. The money supply is contracting.

Over time the UK mortgage debt mountain is going to contract. possibly by as much as 50%. That's around £600 billion. So is going to take some clever financial engineering to reduce this in a controlled manner. Over many years.

Mrs_Bones

Graham_Devon wrote: »

BBC comments are not positive at all. Putting it to the highest rated first, it appears people fear inflation and a further decline in living standards due to this money causing inflation.

Maybe inflation is the plan? It is a conservative government after all.

Thrugelmir

Mrs_Bones wrote: »

Maybe inflation is the plan? It is a conservative government after all.

Doesn't matter what Government is in power. Inflation means there's no need to budget properly.

The issue is. Disposable income is in decline. So austerity is heading many peoples way.

Thrugelmir

Turnbull2000 wrote: »

and diminishing real incomes. Rents on the other hand should rise rapidly.

Those are contradictory statements.

As rents will be determined by the open market and levels of income.

tomterm8

I suppose it is good of them to get the quantative easing in before the credit crunch.

I'm also wondering if the reason they are making this move is because the money markets have been freezing up again, just like they did in 2008.

Thrugelmir

tomterm8 wrote: »

I'm also wondering if the reason they are making this move is because the money markets have been freezing up again, just like they did in 2008.

Does seem to be an issue that UK banks will be unable to access sufficient wholesale money to refinance fixed term debt. Believe that in 2012 and 2013 banks need to refinance around £800 billion of debt in total.

Graham_Devon

Thrugelmir wrote: »

Doesn't matter what Government is in power. Inflation means there's no need to budget properly.

The issue is. Disposable income is in decline. So austerity is heading many peoples way.

Exactly. Austerity for familes.

The very same families who are supposed to take on loans from this £140bn!

Have read a few pages of the BBC comments now, and some really stuck out. Families really fearing more inflation, wondering how they are going to cope on the back of this. People stating "I just want to know I have a job next week....not take a 25 year loan" and one which states if food, fuel and rent go up on the back of this then it will be the straw that broke the camels back as working 6 days already he can't put a roof over his families heads.

Some of the comments show people really are outraged about this. If this money has to be pumped into the economy, they suggest cutting VAT to allow us to get by, cutting fuel duty to stimulate spending elsewhere, allowing us to transfer some debts so that we, the population can free up some earned income. Not trying to get us to take on loans we can't afford. One stated "didn't Greece give loads of money to the banks and send everyone into poverty....did that work?"

Feel a lot of them have good points about how £140bn could be used by the general populace to free up money to spend in the local economy.

Thrugelmir

Graham_Devon wrote: »

The very same families who are supposed to take on loans from this £140bn!

Without this funding. Your lender may have to call in your mortgage. how would that make you feel?

Remember NRAM still holds £85 billion of mortgage debt. So I'm sure the Treasury would like to see this remortgaged elsewhere. Thereby reducing the exposure to taxpayers.

Graham_Devon

Thrugelmir wrote: »

Without this funding. Your lender may have to call in your mortgage. how would that make you feel?

Remember NRAM still holds £85 billion of mortgage debt. So I'm sure the Treasury would like to see this remortgaged elsewhere. Thereby reducing the exposure to taxpayers.

Well if they called in my mortgage, at least I'd be on the same level as everyone else.

Instead, those with the least are going to suffer more than those with the most. Investors will love it. Indeed, a share board I frequent is in overdrive with the celebrations and hope for resource prices to rise.