Jump to content

Recommended Posts

"Until the market value of the mortgaged properties falls below the amount of the mortgage loans?"


- and the mortgagees are unable to meet the repayments. Being in negative equity doesn't mean you will default; on the contrary, most people will try and stick it out. I'm not aware of any evidence that Northern Rock, or any of the others, have a riskier mortgage book than any other UK lender.

Yes and no DS. The collapse of the US sub prime mortgage market is the start of the Domino run. It's exposed what we've seen for the last few years as trouble brewing. Low interest rates and increased money supply have encouraged many to over borrow, has fuelled unrealistic proprty value growth and has artificially staved off the natural economic cycle of highs and lows for political purposes. The problem now is that this is unsustainable. Company stocks are overvalued, property prices are too high in relation to earnings and personal debt is at an all time high. Increased borrowing costs and a slowdown in consumer spending (witness latest retail spending results) will tip the balance. Why Northern Rock and others? These banks led in offering self certified mortgages, high multiples of earnings and loans up to 125% of the property value. Therefore these banks are particularly exposed to the UK Sub Prime Mortgage Market and it's unclear as to the size of the economic impact when these mortgages default coupled with a property price correction. If it happens it could be a disaster and that is what investors (big and small) are gambling on. The governments reaction will probably be to pump cash into the banking system and reduce or stabilise interest rates. How often does the government get it right and how much will the slowdown in the US economy affect us?

People (and I include the chancellor in all of this) keep saying that the gov't won't let banks go under.

But if it was to underwrite financial institutions' debts it would obviously have to go to the money markets, whether issuing bonds or taking loans, to raise the funds to so do.


If confidence continues to be undermined and this panic gets out of hand, where exactly is the government going to go to get the money to prop up the entire financial system. I suppose we could sell some of our trident submarines to, oooh I dunno, Iran, that'll raise a pretty penny?


I guess it'll have fall to the ECB, who have alreadly released billions of their cash reserves to prop up the markets, to save the day.

Nasty old europe eh! ;-)

lozzyloz - my point being that mortgages are premised on them being solvent in respect of their asset value, however cyclically the market value of the mortgaged properties will fall below the amount of the mortgage loans - especially when bought at the peak of a cycle. It's nothing new. The newness is the sub-prime issue and some of what you have said. But were the offers by these institutions helpful in getting some onto the property ladder who would not have been able to before? - remember all the cries about average joes being left behind. It was alright for those on the ladder but not the ones coming after. I am grateful to NR for getting me on in the first place. I watched for 3 years, prior to me buying, the value of housing go through the roof. If I was on the same money (with discount for inflation) then I'd be living in a good sized house on a nice road. As it is my wages afford me a flat. And without trying to sound smug or anything of the sort I am not on a pittance.


In reality house prices galloped away because of the buy to let phenomenon and because others had access to capital through equity release and perhaps the most destructive of forces - the private developer making 8 flats from one house or converting it to 3 flats. Therefore families can't afford houses as they are competing with developers and buy to letters who stand to make large profits so can put up more money.


This has led us to where we are. Interest rates and inflation have definitely played a huge part but demographics and sharp business practice is really why property inflation has far outstripped that of wages.


In terms of where willthe government raise the money - it's from us.

Not sure I agree with lollyloz. There's no evidence of a sub-prime problem in the UK leading to any problems with Northern Rock - it's just Le Crunch has stopped them lending in line with their business model. A bit like if ED Deli couldn't get enough cheese to sell.


Also, inflation is on the way down at the moment (2.8% announced today I think).

@ Sean - I thought you might like that :)


AB - I agree, the credit crunch is what has affected NR but that was their business model and the model of others sanctioned by the FSA which to be fair is quite stringent as regards solvency and liquidity ratios.


A good cartoon from the Telegraph today (before you say it I read allfour of the traditional broadsheets!)


http://www.telegraph.co.uk/opinion/graphics/2007/09/18/ixd18big.jpg

Nice cartoon DS!


Not sure I believe the inflation rate in the way its calculated and how handy that it comes in just under target so that the BoE has an excuse not to raise interest rates. The US will probably drop rates today in an effort to delay a recession as I mentioned before. Once jobs are hit in this country it is precisely those that have tried desperately to get into home ownership that will suffer as they default on loans that were too easily given. Agreed that house prices are far too high and even the most conservative forecasts say flat growth in next few years.

Something I find dodgy about the whole of this is fractional reserve banking, which allows banks to electronically put money into peoples accounts based on 1/10 of the assets they actually hold. The whole system is a house of cards and I feels a twister is a coming. Better run for them thar hills!

I think that's pretty much been the case for the last 500 odd years chav, so pretty tried ant tested.

Sub-Prime mortgages, an amoeba could work out that charging more to people less able to pay is stupid, no matter how well you think you cover yourself.


Northern Rock were just sailing too close to the wind with their operating model, mind you I see large chunks of the populace doing exactly the same, so they weren't alone in thinking the good times will roll on.


And do the gov't honestly have the tax pounds spare for this? Oh well, there go the flood defences again!!

I'm sure the Brits sold their gold reserves that were the basis for their banking ages ago, but the Americans kept the dollar as hard currency until relatively recently. I'm not an economist, but I'm sure the reason countries with mad currency like the old Lira and Escuda had hundreds to the pound was because they had no reserves left and just printed more money. Same thing with Argentina when their economy collapsed. I don't trust banks and their bits of paper, I want my money in Gold and Silver coins mate. Anyone have change of a dubloon?

If the value of coinage is intrinsic to the value of the metal of which it's comprised, then all you do is get people nipping stuff of the edges and/or debasing the currency, so you end up with the same problems, inflation and lack of confidence/trust in the currency, so there's no great improvement.


The moment you've moved to paper money it's all about abstraction; this ain't the problem; papaer money is essentially smoke and mirrirs and based on confidence, but as i said its a tried and tested trick, whether it's backed up by gold reserves, currency reserves or just sound financials (ie, don't keep printing the stuff to get out of trouble).


The problem is when financiers believe in alchemy as has happened over and over again. Nutmeg, tulips, dot coms, sub prime mortgages, yadda yadda yadda. Reality will always catch up in the end.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Latest Discussions

    • Nothing to do with the tories overspending whatsoever eh! Blame the last 10/11 years of blatant mismanagement, incompetence and willful deceit on the poor bastards that were left with the fall out of a complete car crash tory government.   One PM after another falling on their sword. Open corruption and piss taking throughout covid and a legacy of huge debt and destruction yet in your view it will be labour's 4 years in power that bankrupts us in 2029.  Another one that must think people are blind and stupid.  Rejoice rejoice. It's a pity he and his fellow clowns were completely annihilated at the ballot box. I mean they were doing so well after all 🙃🙃
    • Where did I say he did a good job? Yup and Corbyn was very close to Len McCluskey and funded by Unite wasn't he...they're all as bad as each other... Labour have to purge their party of the far-left - they're a disaster. Allan Johnson summed it up so well on election night in 2019....  
    • Thank you for the detailed advise @trinidad It is definitely damage we are concerned about. I don’t think Evri would agree to pay the bill to fix our gate or letter box if they were to be damaged as a result of their delivery drivers helper. Our doorbell can be heard from outside when rung so we don’t quite believe the aggressive simultaneous door/letter box banging is necessary. It can be quite a shock it is done very aggressively.  I’ll definitely action the steps you’ve kindly provided along with a phone call tomorrow. I do sympathise with the role drivers have and how busy they are, which is why we tried communicating directly with her but sadly we haven’t succeeded 
    • What outcome would you like? Disciplinary action? Not to have the driver back? Retraining? I know there is alot of pressure on drivers to deliver within a set day. if he slams the gate, is it evidence he is causing damage, or is the noise a irritant to yourself? You could put a sign up or buy a signing asking to close the gate gentle???? can you hear the door bell from the door? he might be ringing, not hearing and therefore knocking. In trhe notes section of the be livery page, there is a note section, although there is not 100 per cent these notes would be read as these drivers are constantly rushing.  I did a google search for you, i found this and you can try the envri website Contact Us | Evri   To complain to Evri, you can follow these steps: Contact Customer Service: Call Evri's customer service at 0330 808 5456 for assistance with your complaint.    1 Write a Letter: Address your complaint to Capitol House, 1 Capitol Close, Morley, Leeds, West Yorkshire, LS27 0WH.    1 Use the Official Website: Visit the Evri complaints page on their official website for detailed instructions on how to submit a complaint.    2 Email or Call for Specific Issues: For issues like missing or damaged parcels, you can email or call 0800 988 8888, which is free to call.    1 These methods will help you effectively communicate your concerns to Evri.   My driver is called anthony, he is brilliant to be honest. I cant fault him.
Home
Events
Sign In

Sign In



Or sign in with one of these services

Search
×
    Search In
×
×
  • Create New...