Is the credit crunch really ending?

dopester

Conrad wrote: »

BOE must significantly reduc e rates if the mortgage / housing sector is to return to a semblance of normality, but the fear is ole Merv is way out of touch. I bet he doesnt even have a mortgage and has no real grasp on what life is like for those on the sharp end.

No... he's just not wanting to let inflation rip and devastate the economy entirely.

Even if he cut rates to 0% the banks LIBOR would still be high, because house prices are stupidly over-valued.

Maybe you should have considered all the future pain when helping sort out lie-to-buy mortgages.

WTF?_2

Annpan wrote: »

Protected upto £35,000 actually. Hope you haven't been party to starting a run on A & L and B & B. Hopefully people won't be taking that much notice of your negative opinions without looking into it themselves. Hey ho

Full details are at:

http://www.fscs.org.uk/

I certainly wouldn't want to find myself depending on this scheme to pay back my savings.... Firstly, it's pretty clear that it could take some time to get the money back and almost certainly a lot of paperwork.

Secondly, it's not a cast iron guarantee: http://www.fscs.org.uk/consumer/key_facts/limitations_of_the_scheme/

The FSA's proposals for reviewing the funding of the FSCS will increase the financial capacity of FSCS. But it is still possible to conceive of a default (or a combination of defaults) so big as to be beyond FSCS's ability to pay compensation up to our limits. The FSA's proposals significantly reduce the probability of this happening, but they cannot completely eliminate it.

Basically, if there isn't enough money in the kitty to cover payouts, too bad. It's entirely possible that a single bust could clear it out.

There are all sorts of other not so obvious restrictions too - like multiple accounts at different banks owned by the same parent group only being covered for a total of 35k and, I believe, some complications if you hold a mortgage with the bank which holds your cash.


All in all, better than nothing but also nothing like the sort of cast iron guarantee that many savers seem to believe that they have.

Mandark

Yes good points !!!!!!. You see people here advising others to spread their cash around because they're guaranteed to get their money back up to a £35k limit...but clearly they're not! If Lloyds TSB goes down then I'm not going to be expecting much with thousands of businesses and millions of customers all clamouring to get their money back.

brit1234

If anyone things the credit crunch is over then watch this video from today on American Bloomberg. Its getting far worse. As for all those interest rate cuts, it looks like that is extending the problem from one quarter to the next.:exclamati

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vixaSLF8gmq8.asf

WTF?_2

brit1234 wrote: »

If anyone things the credit crunch is over then watch this video from today on American Bloomberg. Its getting far worse. As for all those interest rate cuts, it looks like that is extending the problem from one quarter to the next.:exclamati

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vixaSLF8gmq8.asf

The only way this crisis is going to be 'solved' is by the central banks completely monetising the bad debt. ie. Printing up new cash to cover the money lost by the chancers on Wall Street and in the City -> Massive inflation, total loss of confidence in the whole system of fiat currency.

Either that or let the people who made the mistakes pay from them and go bust so that the process of recovery can start -> Nasty recession and lots of economic pain.

WTF?_2

If you missed the programme on ITV 'How Safe Are Your Savings' tonight, you might want to take a look at it here;

http://www.itv.com/CatchUp/Video/default.html?ViewType=5&Filter=19198


It features MSEs own Martin. It does a pretty decent job of filling you in on the facts of the FSCS. Pitfalls and gotchas well covered.

As Martin notes, the FSCS absolutely isn't sufficient to cover the liabilities of any bank in the top 25 UK banks......

... But don't worry, apparently the government will get the Bank of England to bail out any bank. Allegedly - it's not in writing anywhere.

So, as long as you trust our government to be able to pay tens of billions of pounds of cash on demand, nothing to worry about.

Mandark

I suppose the government could issue bonds to raise the cash meaning that foreign banks will own even more of GB Ltd!

MrsCJH99

I have a contact who is a fairly well known economist. He says when he heard that the government would only protect savings up to £35k he moved his money to Northern Rock. Do you remember Darling promised to guarantee savings in NR up to £100k...

Only wish I had these kinds of savings to worry about.

tradetime

Conrad wrote: »

As a mortgage broker I do not see credit losening for at least 12 months.

As a full time speculator in the financial markets I'd agree with that, particularly, the "at least" part.

Conrad wrote: »

People underestimate the size of the UK subprime / self cert market. I estimate 40% of all business was self cert or sub prime prior to the crunch and now only a small percentage of people in that market can access finance.

That's a worrying statistic given the current climate.

Conrad wrote: »

BOE must significantly reduc e rates if the mortgage / housing sector is to return to a semblance of normality, but the fear is ole Merv is way out of touch. I bet he doesnt even have a mortgage and has no real grasp on what life is like for those on the sharp end.

Possibly, but neither protecting the housing market, nor the economy are part of the BOE's mandate. The BOE is not the FED, but rather more like the ECB. The FED's mandate is to protect the economy, with inflation (price stability) as a secondary. The BOE and ECB's mandate is to fight inflation and maintain price stability. Mervyn is actually falling victim to pressure to assist the economy and as such he runs the risk of failing to control either.

jammie*dodger

Pobby wrote: »

Out of interest,I have a friend who is a mortgage brokes on the west coast of the USA.Overnight she has NO business,zero,zilch,didly squat!She was earning over£150k a year.

She is desperate to sell her home.Sadly during that period she saved nothing.Someone else who thought the part just ran and ran!

How does someone earning £150k p.a. not have any savings? :eek: