The credit crunch, banking crisis, thread

"...a general tax rebate would be a better use of that money" Not from the point of view of the government who are at least getting something for their money with the current plan, something that is -at the moment- poisonous debt, but may, assuming things one day recover, turn out to be quite valuable.

true... j

Yes, the consensus on the forums of some of the morbid economic doom websites I frequent is that Iceland will be the worst country hit, closely followed by Spain, USA, UK and Ireland. They will probably switch to the Euro or peg the krona against it. The bail out plan in the US is just throwing good money after bad. I think the only effect in the UK is that it may delay complete capitulation in the housing market by 6-12 months. Given the recent developments in the world feeling is average property price in UK will decline by 50% peak to trough (revised from 25-35%) and that looks more and more likely as the weeks go by. William Buiter's 12 steps to the depression will still probably manifest though in a milder form. jude "Cacoethes scribendi" http://www.judesworld.net

So Jude you think that people who've been repossessed and now homeless have been "reckless" and need to learn a "painful lesson". I think that's a very callous view for a christian to take - most people have ended up there because the rented section is very poor in the UK and ordinary people have continually been urged to get on the private housing ladder, they've only been trying to better their circumstances by home ownership as every good Conservative would urge. I'd put the bastards responsible for all this up against the wall and shoot them, as soon as we know just which of the multifarous bastards in the financial world should be first.

If you look back at the 'NASA Blindness' thread, you will read that whilst I have some sympathy and I agree that the lenders should be held to account for irresposible lending, people must bear some of the responsibility themselves. What ghastly paternalistic society have we become when we say people have no part in the blame for their 5x salary 100% mortgage and multiple credit cards? People need a roof over their heads, the rental sector needs to be improved, yes we need more Tenant Managed Organizations and housing co-ops. But the debt bubble wasn't just about putting a roof over people's heads. How many people who are repossesed/ go bankrupt took equity withdrawal from existing property? How many bought luxury items and holidays on credit cards? How many are amateur by to let landlords who will end up losing their own property as well, how many were speculators buying into the frenzy that thought prices would only ever go up so they could make a killing for nothing instead of working for it? There is also a large section of society who like me did stay in rented accomodation and took personal responsibility by not taking out an unaffordable mortgage despite being continually urged to get on the private housing ladder. jude "Cacoethes scribendi" http://www.judesworld.net

I think we're going to see a comeback of cash power. There's been too much funny paper around. There are trillions of dollars waiting to be reinvested if the US government and Wall Street start showing some fiscal responsibility.

I'm somewhere between Neil's position and Jude's position. Some people have been very reckless, not to mention (in the case of the worst of the buy-to-let amateur landlords) greedy and cynical. Others have, as Neil suggests, just been honestly trying to do what the government said they should do. If you have an economic model so heavily reliant on home ownership and also - as the Conservatives consistently have - actively stigmatise people who don't own homes, it's not really surprising when people take risks in order to own homes. The problem is that in order to promote a dream that works extremely well for some sections of society, Thatcher, Major and Blair had to pretend that it was possible for everyone to reap the benefits. It wasn't and it isn't.

A position supported by the Indy. http://www.independent.co.uk/news/business/analysis-and-features/20-reas... They give twelve suggestions as to who is to blame. Maggie Thatcher is included for 'the deregulation of the mortgage market; encouraging the demutualisation of the building societies; selling off council housing; and encouraging the national obsession with home ownership.' However, the homeowner and consumer is included because 'It's easy to blame traders, bank bosses and watchdogs, but no one was forcing us to take 125 per cent mortgages or to rack up debts to pay for Caribbean holidays and Jimmy Choo shoes..' jude "Cacoethes scribendi" http://www.judesworld.net

"football is in trouble as well, running a football club has never really made financial sense, most clubs are in debt, and up until now, they were able to manage the debt (with a few casualties)" Well, that specific case aside, the interesting question will be what happens to TV money (which is the real difference between 1980s football and 2000s football). Currently the Premiership deals have continued to massive due to the presence of competitors to Sky such as Setanta whose involvement pushes up the costs of rights. I'd hazard a guess that the Murdoch empire is fairly secure but I imagine the pretenders to the throne of football coverage could be going belly up quite soon it the current conditions. So Murdoch will have to pay less, and so on.

Excellent (and terrifying) description of what has gone wrong here (an hour long show, but worth it).

They need to fix this fast before the newspapers run out of adjective/weekday combinations. Today's alliterative effort is Monumental Monday, I hear.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/momentous_m... What I find shocking is that the RBS and Lloyds-HBOS have agreed to return to mortgage and small business lending levels of 2007. Nothing wrong with the latter but this attempt of the guv'mint to reinflate the housing bubble is terrible. Is the guv'mint trying to encourage a return to insane 2007 levels of irresponsible lending cos I thought that's what got us into this mess in the first place? I am consoled by the fact that it won't work and will at best (from their pov) cause a temporary bull trap http://img127.imageshack.us/img127/5522/bubblepsychologydm7.jpg jude "Cacoethes scribendi" http://www.judesworld.net

Morbid Monday 2008 (Guv'mint decide to try and reinflate housing bubble) Terrible Tuesday 2009(with 600bn funding gap the only way of keeping mortgage lending high is to keep banks nationalised permanently) Walloping Wednesday 2012- An entire generation can only afford a home by borrowing 10 x salary fom the goverment banks effectively selling themselves into a lifetime of slavery Thirsty Thursday 2015 - Mass mortgage defaults from UK borrowers bankrupts the whole country. Sales of cheap vodka and meths triples as people drown their despair. F***-off Friday 2020- anyone with any sense emigrates Can't quite see it myself and I think the government will back down on their demand when they realise it is unsustainable. jude "Cacoethes scribendi" http://www.judesworld.net

"incredible really - the govt has bought 60% of RBS, and 40% of lloyds/hbos nationalisation - michael foot is vindicated!" Well, obviously that's not completely true. These are not nationalisations motivated by a ideological opposition to profit-making capitalism - which is the route 1983 Labour was edging towards. But Brown and Darling's 'this not a normal nationalisation' rhetoric is complete bullshit. The government is taking a stake - in at least one case, a majority stake - in companies. It is putting a number of 'independent' representatives on the boards to safeguard its interests, and it is putting down a series of conditions about lending operations and directors' bonuses. After that, they're apparently being run at 'arm's-length' without political interference but if you own the majority of company's shares, hire and fire the board, and determine its commercial practices, it's slightly difficult to see what there is left to be at arm's length from. Perhaps the non-interference is a commitment that Alastair Darling won't be appearing in RBS TV ads? I support the government's decision on this but I think the portrayal of what they're doing is slightly disingenuous.

"After that, they're apparently being run at 'arm's-length' without political interference but if you own the majority of company's shares, hire and fire the board, and determine its commercial practices, it's slightly difficult to see what there is left to be at arm's length from." Spot on buk. The devil, as usual, is in the details.

They're probably busy checking if they have anything left in their offshore accounts.

The Government has been warned that unemployment could spiral to 3 million after the biggest jobless rise since 1991 left 1.79 million people looking for work. Today, Gordon Browne said one way to tackle unemployment and at the same time climate change was to train people to install loft insulation. I guess we can expect the department of loft insulation to roll out the loft insulation retraining scheme very soon. The Minister for LI heading a large department in Whitehall produced a strategic masterplan. By 2010 each local borough and council should have a team of loft insulation managers, ten administrators, four research officers and a diversity officer to ensure equality of opportunity for all those involved in loft work. jude

Don’t forget the government research project canvassing thousands as to the question, ‘What will loft insulation mean to you?’ Their findings, published in 2011, will necessitate a re-branding of the DLI to ‘The Department of It Will Make Homes Cosier Whilst Cutting Fuel Bills and Helping the Environment.’ After much fanfare and a £250,000 bill for the new logo, someone will point out that the type is too small on the letterhead to be read by the visually impaired and the entire policy will be quietly dropped without a single roof being insulated. In 2012 a junior civil servant will be caught flogging suspiciously large amounts of loft insulation on Ebay. ~ www.fabulousmother.co.uk