Panic at the Bank of England

michaels

Politics of envy is alive and well on the forums today.

If the Central banks pull of the confidence trick of convincing the banks that triple A rated counter parties are good for the money (and why shouldn't they be if they can get cheap money from the central bank if needed) then they will lend to each other rather than needing money from the Central banks and thus the liquidity crisis will disappear...the problem will be to avoid propping up banks with solvency problems at the same time - how that will be avoided I'm not sure.

I can't see why the Central Banks are getting criticized for this. If you were trying to complete a 25% mortgage (hopefully no risk of capital loss for the lender whatever doom laden predictions are made for house prices) and the lending bank was unable to give you the money because of a lack of liquidity rather than any suggestion that your secured asset was not sufficient to cover the loan wouldn't you think it was a rather stupid state of affairs and that the central bank should try to fix things?

WTF?_2

michaels wrote: »

Politics of envy is alvie and well on the forums today.

I'm going to be generous and say that the posting of uninformed financial ignorance is alive and well too.

michaels wrote: »

If the Central banks pull of the confidence trick of convincing the banks that triple A rated counterparties are good for the money (and why shouldn't they be if they can get cheap money from the central bank if needed) then they will lend to each other rather than needing money from the Central banks and thus the liquidity crisis will disappear...the problem will be to avoid proping up banks with solvency problems at the same time - how that will be avoided I'm not sure.

I can't see why the Central Banks are getting criticised for this. If you were trying to complete a 25% mortgage (hopefully no risk of capital loss for the lender whatever doomladen predictions are made for house prices) and the lending bank was unable to give you the money because of a lack of liquidity rather than any suggestion that your secured asset was not sufficient to cover the loan wouldn't you think it was a rather stupid state of affairs and that the central bank should try to fix things?

Has it occurred to you why we are in this mess in the first place?

It's because lending/borrowing has raged increasingly out of control in recent years, driven largely by greed on the part of the lenders and greed on the part of the borrowers.

The lenders (and buyers of collateralised debt) have made fortunes for themselves with their irresponsible policies of handing out money hand over fist and snapping up bonds based on dodgy debt.

Now that this has turned sour for them, it's time for the general population to take the inflation (destroys buying power and shreds savings) and tax hits (erodes earning power) to bail the big boys out and stop them facing the consequences of their foolish and irresponsible actions.


This isn't about saving the asses even of the financially stupid who have got themselves into un-serviceable debt. That may or may not be a side effect.

It's about making sure that gorging on profit from making crazy loaning decisions is a one way bet for the people in positions of power.

Jonbvn

acook wrote: »

I will answer that one.

Inflation for everything except housing. Massive deflation for housing.

So we could be buying property in the same manner as "Monopoly?"

Methinks you may have an agenda?

Jonbvn

Jonbvn wrote: »

Methinks you may have an agenda?

Oh you do!

I am a bitter renter who is appalled by the housing bubble in the UK. I refuse to believe that it can continue.

Personally, I refuse to believe my boss when he says he won't double my salary.
:rotfl:

gps_2

acook wrote: »

The credit crunch is worse than anyone ever imaged. Today, the central banks have announced a coordinated plan to pump in liquidity into the world's major banks.

Here in the UK, the bank of england will accept inferior quality debt as collateral for short term loans to the banks.

Last week's interest rate cut has failed to stop the credit crunch. Interbank rates haven't fallen and accessability to cheap mortgages is over.

What does this mean for the UK housing market. I doubt we will see 10 percent annualized house price growth again in our lifetime.

Now is the time for panic. Sell those houses now, accept whatever is offered. The first one to the fire exit survives, everyone else gets burnt.

Alice

http://ukhousebubble.blogspot.com

being a bit sensationalist?

HugoSP

Squat Now, you have a friend.

Gorgeous_George

Que sera sera.

Armageddon tonight? I'll still go to work and pay my bills tomorrow.


God,
Grant me the serenity to accept the things I cannot change,
the courage to change the things I can, and the wisdom to know the difference.



GG

setmefree2

Doomed doomed - we're all doomed;)

acook

gps wrote: »

being a bit sensationalist?

Well, maybe my language is a little sensationalist.

However, I do think something very unpleasant is happening within the banking system; both here; in the US and in Europe. At the center of this unfolding crisis is the housing market. In many countries - the UK, the US, Spain, Ireland, and Australia - house prices have accelerated beyond what could be described as reasonable.

This surge has been driven up by easy credit. Now, the underlying asset - house prices - is beginning to fall, and it threatens to make a fair proportion of that credit worthless. Not all of it, to be sure, but enough to threaten the banking system.

There might not yet be panic on the streets of London, but I am sure that there is panic in the city of London, and in Wall street.

Alice

http://ukhousebubble.blogspot.com

acook

Gorgeous_George wrote: »

Que sera sera.

Armageddon tonight? I'll still go to work and pay my bills tomorrow.

Don't worry, I'll be at work tomorrow too. We are no talking Armageddon, we are talking banking crisis.