Panorama tonight - Bursting the house price bubble.(merged)

wolseley_2

It summed up all that was wrong when the woman who bought the 1.2M worth of houses without looking at them said that she would have to declare bankrupt in such a dismissive tone (when it was revealed that after reposession she was going to be left owing the bank 700K). It was kind of 'sod the fact that I've lost 700K of someone elses money through my own stupidity, because I can just get out of paying it back by declaring myself bankrupt'.

MissMoneypenny wrote: »

You never see a farmer on a bike.

John Crisp?

Pobby

In the program they briefly mentioned that one reason why people b-t-l is because of failed pension schemes.Hmmmm,think I am expecting about half the annuity that I expected.Would be interesting to know how many exactly have done it for this reason.

Another point,where I livethere is a lot,and I mean a lot of work in progress on new build.With programs like this one,I sure wouldn`t want to be a developer trying to flog them off at over inflated prices.

SquatNow

Pobby wrote: »

In the program they briefly mentioned that one reason why people b-t-l is because of failed pension schemes.Hmmmm,think I am expecting about half the annuity that I expected.Would be interesting to know how many exactly have done it for this reason.

Of course all the money the borrowed to buy the BTL mini-empire was from where... that's right...pension funds.

The infamous CDOs and CDSs were created explicitly and exclusively to be sold to pension funds.

Chances are "half the annuity" is a bit on the optimistic side.

Instead of investing in a pension, the BTLers have borrowed your pension and blown it on what was essentially a gamble. And they lost.

As I keep saying... the wailing of the bankrupt BTLers will be drowned out by the wailing of the pension holders when they realise where the BTLers borrowed their money.

Pobby

Understand what you are saying squatnow.Are you saying that pension fund managers actually knew they were buying into this amazing ponzi schemes.

I certainly am not an economist but even I had serious misgivings about property prices as far back as 2000.As soon as they got out of traditional earnings/price ratios I couldn`t see how the market would be substainable.I can`t believe that every fund manager would go headlong into this market unless,as we hear from the US that these loans were so cleverly packaged that nobody really knew what they were buying.

That program certainly pointed out some of the dodgy practices that solitors,estate agents and developers have been committing.Add that to 50 year mortgages,lie to buy,5 times earnings and so on.

I can`t fathom out just how this will unravel.Any idea guys?

SquatNow

SDooley - Many thanks, it's nice to converse with someone who can do more than throw random insults and snigger in a beavis/butthead fashion.

sdooley wrote: »

Squatnow I suspect your signature has been squished because it wasn't nice. See Martin... ...will be stopped appropriately solely at the discretion of MoneySavingExpert.com with or without reasons given.

I understand that, but the way in which my footer was changed implied spite rather than logical filtering. While they don't HAVE to give reasons, if they don't it implies impropriety. If they had a valid reason then I'm fine with that, but if they can't state a valid reason then they shouldn't have done it.

sdooley wrote: »

This from the person who protests that he only posts rational arguments. A Stalinist might agree that the petit-bourgeois (i.e. BTLers) in a Western social market system were morally equivalent to the Nazis (or even say they are worse); Stalin's philosophy was discredited in Kruschev's 'secret speech' when he revealed the hundreds of thousands killed in 'administrative interrogation' and the gulags, later worsened by the revelation of the terror famines. Stalin was wrong and so are you.

I do not disagree with capitalism, I disagree with what we have now... feudalism. Capitalism without land taxation is merely a well concealed version of feudalism.

sdooley wrote: »

I suspect I went to a far more ordinary comprehensive school than some dilettant quasi-socialist squatter.

Social Squatting has nothing to do with socialism. The word social is simply used to defferentiate it from anti-social squatting.

Social Squatting promotes capitalism... people working to better themselves and enrich themselves... (the essence of capitalism) instead of people just working to try to pay the rent.

sdooley wrote: »

For example the lady on the Panorama programme declaring bankrupt with c. £500,000 negative equity, is unlikely to be granted a 'quick release' from bankruptcy - which can last five years or more in cases of apparent fraud.

The fact that she can apply for bankrupcy at all is a digrace... she lost £700,000 of other peoples money through nothing more that a bad bet. She bet prices would skyrocket and they didn't. I doubt she'd be on TV complaining about how much money she had made if the values had doubled.

sdooley wrote: »

If your signature had said you were looking forward to BTL fraudsters going to jail, most would agree. But (a) there are buyers who are innocent victims and (b) there is a massive moral distinction between hoping that criminals are punished according to the law and wishing for their mass suicides (as your signature used to).

NO BTLer is a victim. They will try to make that out and they will demand compensation, but they are simply gamblers. They gambled with other peoples money. Regardless of the game being rigged, they were still gamblers, who saw £££ signs and chased after them.

BTLers didn't CARE about the damage they were causing, they only cared about making themselves rich. They didn't care about the misery they were putting FTBer in, about the crippling debts they were forcing other people to take on, nor the risks they were taking with other poeples money.

There is no moral defense for BTL, same as there is no moral defence for land speculation... it's simply personal enrichment at the expense of society.

TTMCMschine

Pobby wrote: »

I can`t fathom out just how this will unravel.Any idea guys?

Really badly for everyone.

Pobby

Ahh it is like a distant memory now.All those loverly people in garlands of flowers who gayly,arm in arm,smiling sweetly as they skipped along out streets singing the well known songs.``Property prices always go up``Or that rousing anthem``They(the government) won`t let it happen``I expect you remeber that one,it told the tale how the government would step in to stop any difficulties in the housing market.

And finally,that truly amazing call to the people``You can`t buy enough bricks and motar``Oh,glorious by gone days!

SquatNow

Pobby wrote: »

Understand what you are saying squatnow.Are you saying that pension fund managers actually knew they were buying into this amazing ponzi schemes.

Pretty much yes.

The pension fund managers had explicit rules to follow... they could only buy stuff which had been given an "investment grade" by the rating agencies.

CDOs and CDSs were a way to get the mortgages an investment grade.

The fund managers were paid bonuses based upon profits. As CDOs were high risk they gave great returns, and the fund managers got their multi-million pound bonuses. The fund managers bought as much/many CDOs/CDSs as possible, as the more they bought, the more profit they made and more bonus they received.

In reality they would have known they were high risk, but it didn't matter... make hay while the sun shines. If things start to look iffy you can sell them on before things get bad, and someone else will take the losses. Besides, what's the worst that can happen.... you get sacked. And the best...? multi-million pound bonuses!!!

Put simply, the benefits were so big that the fund managers had no choice. If they hadn't bought the CDOs and their collegues did, their performance would look awful by comparison, and they would be sacked and replaced by someone who WOULD then buy the CDOs! So they might as well buy them and get their bonus. Right?

Result: If you think you have a good pension, but you are not a civil servant, then think again, you probably have jack.

Pobby

Oh well,just another thing to worry about!Can`t say I am enjoying living in the UK right now!!!!

Generali

SquatNow is right to say that CDOs etc have been bought by pension funds but in such small amounts as to make little or no difference to the individual fund - I've yet to see a pension fund that is more than 5% in CDOs and most tranches are unlikely to be worth nothing at all.

It's funny but these things seem to be all over the place. Last week Bristol Myers Squibb (BMY) wrote down a holding of CDOs by $411,000,000. A couple of months back, a couple of towns in Norway had their reserves wiped out by putting too much of their holdings into this stuff.

I suspect that what is going to come out is that company treasury departments all over the place have been holding CDOs as near-cash equivalents because they pay a better return than cash and after all they were AAA rated in many cases. There'll be a few million here and a few 10s of millions there that get lost to these things. Outside worlds of investment banking and hedge funds, it's very unlikely that there will be big losses to invidiuals or companies I reckon, except to the very reckless.

Don't think that your pension fund will have been p1ssed away on US sub-prime mortgages. Pension schemes aren't allowed to concentrate their assets like that.