The bust begins

chrisandanne

This is just a question...not an opinion....do the government have a say in the lending policy of banks and building societys ? Ax

Martinslovechild

I think that Gordon Brown's words were pure rhetoric.

I don't believe for a moment that he sat back and "allowed" a bubble in the housing market to be created. What was he going to do to counteract increases in the housing market? - Quadruple the cost of Stamp Duty so that people "invested" their money elsewhere? Bubbles exist because people chase pounds and pence - it's been happening for hundreds of years - look at the dutch tulip mania crash during the 1600's - have people truly learned any lessons since then?

I also firmly believe that had Gordon Brown sat down and done absolutely nothing during the past 10 years, the economy today would have looked been almost identical to the one we're faced with today after 10 years of his tinkering. Up until mid-2007, Gordon Brown was simply a benefactor of a (then) successful economy which was pretty much running itself (although as we know, Gordon liked to pat himself on the back quite often for it!).

Well Gordon, the chickens are finally coming home to roost and you won't even be able to mention your old friend the economy as an excuse for labour's ills.

Generali

chrisandanne wrote: »

This is just a question...not an opinion....do the government have a say in the lending policy of banks and building societys ? Ax

Not directly is the short answer.

The long answer is that banking is a highly regulated industry and so the government does have a pretty big impact:

1. The Bank of England sets the base interest rate which is the price of money.
2. The Government regulates the reserves that banks need to hold - raising the reserves is the same as cutting the amounts that banks can lend.
3. There are various things at the margin such as rules on marketing, what constitutes a reasonable interest rate, contract law, OFT action on bank charges etc.
4. There is also a threat to legislate. Traditionally, although less so today I believe, much of the financial sector was regulated with a quiet word in the ear as much as by using rules and laws.

borntobefree

HSBC RateMatcher extended to ALL customers!
http://news.bbc.co.uk/1/hi/business/7337861.stm

mystic_trev

borntobefree wrote: »

HSBC RateMatcher extended to ALL customers!
http://news.bbc.co.uk/1/hi/business/7337861.stm

For a fee and max 80% LTV. Also the'offers' only available for five weeks!

I think the word gimmick springs to mind :rolleyes:

WTF?_2

Martinslovechild wrote: »

I think that Gordon Brown's words were pure rhetoric.

I don't believe for a moment that he sat back and "allowed" a bubble in the housing market to be created. What was he going to do to counteract increases in the housing market? - Quadruple the cost of Stamp Duty so that people "invested" their money elsewhere? Bubbles exist because people chase pounds and pence - it's been happening for hundreds of years - look at the dutch tulip mania crash during the 1600's - have people truly learned any lessons since then?

I also firmly believe that had Gordon Brown sat down and done absolutely nothing during the past 10 years, the economy today would have looked been almost identical to the one we're faced with today after 10 years of his tinkering. Up until mid-2007, Gordon Brown was simply a benefactor of a (then) successful economy which was pretty much running itself (although as we know, Gordon liked to pat himself on the back quite often for it!).

Well Gordon, the chickens are finally coming home to roost and you won't even be able to mention your old friend the economy as an excuse for labour's ills.

To be fair, although most of the 'boom' of the last 5-6 years was out of his hands he could have introduced policies to moderate it. ie. Higher interest rates (BoE is independent my a**e!), tweaks to stamp duty etc. They might have helped keep things in check on the HPI front and left us with less of a drop now.

But most of all instead of borrowing, borrowing, borrowing at a time when the economy was practically overheating and giving record tax receipts he could have used the opportunity to create a govt. surplus for the bad times coming. Instead he was running record deficits which is frankly unbelievably fiscally incompetent.

Now, the housing market is about to collapse like the pack of cards that it is, severe economic recession is knocking on the door and the govt. is up to its neck in debt. A total disaster beckons. :mad:

Martinslovechild

!!!!!!? wrote: »

To be fair, although most of the 'boom' of the last 5-6 years was out of his hands he could have introduced policies to moderate it. ie. Higher interest rates (BoE is independent my a**e!), tweaks to stamp duty etc. They might have helped keep things in check on the HPI front and left us with less of a drop now.

But most of all instead of borrowing, borrowing, borrowing at a time when the economy was practically overheating and giving record tax receipts he could have used the opportunity to create a govt. surplus for the bad times coming. Instead he was running record deficits which is frankly unbelievably fiscally incompetent.

Now, the housing market is about to collapse like the pack of cards that it is, severe economic recession is knocking on the door and the govt. is up to its neck in debt. A total disaster beckons. :mad:

I totally agree with your second point, but not your first. In a market economy, the market is effectively balanced by the forces which drive it; no market economy runs in a straight line which is why applying pressure to it (e.g. stamp duty increases, interest rate hikes) may temporarily tip the balance, all that happens in reality is that a similar bubble begins elsewhere (e.g. stock market), but because you're too focused on the market you're attempting to contain, the bubbles elsewhere flare up and you're left wondering where they came from.

I believe that the one of the major reasons that people aren't worrying yet about the road ahead is because large-scale redundancies are yet to occur in most places of employment. Once people start losing their jobs as well as their homes, then a total disaster will indeed beckon. Bear in mind though that disasters like this tend to last for a short time frame, e.g. 3-5 years, whereas growth periods historically last much longer. The shock for some people though is that they firmly believe that it won't happen to them - maybe if these people took a stress test for their finances, they could determine if their current exposure to debt would be enough to render them homeless should a shock to their income occur. Having been through five bouts of redundancy programmes myself in various companies (although never yet having actually been made redundant), I can say that these things happen very quickly and with hardly any warning that they're about to start - a phone call to see a Senior Manager is usually the first thing that people hear about it...

dean_ham

Isnt this nice to see, about time it started correcting itself!!!




AVERAGE UK HOUSE PRICES
October 2007: £197,000
November 2007: £194,500
December 2007: £197,163
January 2008: £197,243
February 2008: £196,465
March 2008: £191,556

Source: Halifax
(seasonally adjusted figures)

BobProperty

mystic_trev wrote: »

For a fee and max 80% LTV. Also the'offers' only available for five weeks!

I think the word gimmick springs to mind :rolleyes:

Someone on the radio this morning said it's cheaper for them to cherry pick a load of good borrowers than take over some bank or building society.

mystic_trev

dolcevita wrote: »

And you also have to open a current account and have you wages paid into it.

and give them your Firstborn!