Help to Buy equity loan London - The right approach ?

Crashy_Time

buggy_boy wrote: »

To be fair I could pick out some spelling mistakes you have made in other posts but I always think once you start doing that its because your losing the argument. I did not say money would be worthless because of house prices crashing 30-40%, in fact my post never relates to 30-40% decreases. What I am saying is for house prices to crash (I would call a crash bigger than a correction) as you want it would mean something drastic has gone wrong just like in other crashes you need high unemployment and high interest rates. We currently have neither and nor is there any sign at least at the moment that we are particularly heading in that direction. Hence a crash is not likely in the near future. A slight correction or stagnation yes but a sustained crash no.

My post before stated if the government had not stepped in during the financial crisis then it could have made money worthless yes, we saw with northern rock there was a run on the banks, if the government had not stepped in that would have likely led to loss of confidence and more of a run, this would have crashed the banks which would have had a knock on effect and crashed the economy, at that point house prices are a bit of a mute point if you have no job, no money and are hungry.

The old rules, those that caused the 80`s crash and repo frenzy, no longer apply, all it takes is for central banks to stop artificially suppressing interest rates. Interest rates were high single digits during the 80`s, and peaked even higher than that, the level of personal borrowing now dwarfs borrowing during that period, and a lot of it has been done at near zero rates.


There would have been a loss of confidence in keeping money in BANKS, not in money itself, that is too hardwired into people at this point, and it is after all just a means of exchange, the bailouts were to keep the debt based money system alive, not to stop people going hungry. People have functioned, eaten, and engaged in economic activity during two world wars last century, it is going to take more than RBS going pear shaped to stop life as we know it, but of course the bankers want you to believe that unless they got bailed we were heading back to the stone age.

buggy_boy

Crashy_Time wrote: »

The old rules, those that caused the 80`s crash and repo frenzy, no longer apply, all it takes is for central banks to stop artificially suppressing interest rates. Interest rates were high single digits during the 80`s, and peaked even higher than that, the level of personal borrowing now dwarfs borrowing during that period, and a lot of it has been done at near zero rates.


There would have been a loss of confidence in keeping money in BANKS, not in money itself, that is too hardwired into people at this point, and it is after all just a means of exchange, the bailouts were to keep the debt based money system alive, not to stop people going hungry. People have functioned, eaten, and engaged in economic activity during two world wars last century, it is going to take more than RBS going pear shaped to stop life as we know it, but of course the bankers want you to believe that unless they got bailed we were heading back to the stone age.

Agh yes the old housepricecrash conspiracy theories... The worlds governments have avoided a big depression. Yes this has probably avoided a big house price crash but at the expense of saving jobs, people can't get mortgages and buy houses if they dont have a job.

Crashy_Time

buggy_boy wrote: »

Agh yes the old housepricecrash conspiracy theories... The worlds governments have avoided a big depression. Yes this has probably avoided a big house price crash but at the expense of saving jobs, people can't get mortgages and buy houses if they dont have a job.

The problem with your argument is that it doesn`t stack up if interest rates start rising, the CB`s have been artificially suppressing bond yields and interest rates and they have avoided nothing, only postponed it. If houses get cheaper people can afford to buy houses, but banks balance sheets may not look so rosy. You don`t actually believe that the bailouts were to save the little people`s jobs do you?

buggy_boy

Crashy_Time wrote: »

The problem with your argument is that it doesn`t stack up if interest rates start rising, the CB`s have been artificially suppressing bond yields and interest rates and they have avoided nothing, only postponed it. If houses get cheaper people can afford to buy houses, but banks balance sheets may not look so rosy. You don`t actually believe that the bailouts were to save the little people`s jobs do you?

Lowering interest rates encourages people to spend and companies to invest. The BoE which controls arguably the most important interest rates does just that dictates their interest rates, there is no artificially suppressing interest rates, it was done intentionally. House prices in real terms have not gone up in the last 10yrs, instead of a crash and then a bounce we have had stagnation... The bailouts were to save the economy, not necessarily the "little people", Banks were let loose and played fast and loose with money, it was that construct of money that was in danger. If people stopped believing in banks everyone would hide their money under their mattress, banks could not lend money to businesses and the whole system would have imploded being a disaster for the economy. Does anyone like that we had to bail out the banks no, its an experiment, the down side is unlike when you normally get a big crash it bounces back after a few years we have not seen that... I understand your frustration as you think had their been a crash then you would have been able to afford a house, but that is not true, jobs would have been more scarce and you would have been paying more interest so affordability would still be the same.

Crashy_Time

buggy_boy wrote: »

Lowering interest rates encourages people to spend and companies to invest. The BoE which controls arguably the most important interest rates does just that dictates their interest rates, there is no artificially suppressing interest rates, it was done intentionally. House prices in real terms have not gone up in the last 10yrs, instead of a crash and then a bounce we have had stagnation... The bailouts were to save the economy, not necessarily the "little people", Banks were let loose and played fast and loose with money, it was that construct of money that was in danger. If people stopped believing in banks everyone would hide their money under their mattress, banks could not lend money to businesses and the whole system would have imploded being a disaster for the economy. Does anyone like that we had to bail out the banks no, its an experiment, the down side is unlike when you normally get a big crash it bounces back after a few years we have not seen that... I understand your frustration as you think had their been a crash then you would have been able to afford a house, but that is not true, jobs would have been more scarce and you would have been paying more interest so affordability would still be the same.

Yes, but the rates are artificially low because of the intentional intervention! You are responding as if I said "Accidentally" , I didn`t. I also didn`t say they shouldn`t have back-stopped the banks AT ALL, I said the amount of intervention and length of time it has gone on was a mistake, the bust that follows will be bigger because of this mispricing of debt for so long.

buggy_boy

Crashy_Time wrote: »

Yes, but the rates are artificially low because of the intentional intervention! You are responding as if I said "Accidentally" , I didn`t. I also didn`t say they shouldn`t have back-stopped the banks AT ALL, I said the amount of intervention and length of time it has gone on was a mistake, the bust that follows will be bigger because of this mispricing of debt for so long.

You have clearly been brainwashed by the housepricecrash lot... They are not artificially low, they are set by the BoE, there is no set rate they should be like inflation, they are at historic lows yes but they or not artificial lows. There would be no point of bailing out the banks to then a short time later pull the plug, what the banks did has taken a long time to recover from, that selling of bad debt as good debt which started it all off has been stopped, banks have to now have a lot more reserves to make sure if something similar happens again it is the banks that take the hit not tax payers, this does not happen over night... Look if you want to debate house prices go to the forum "Debate house prices & the economy". Just stop posting copy and pasted unrelated to the topic links hijacking posts to try and spread house price crash propaganda, there is a separate thread for that to avoid it when people ask genuine questions.