Comments on: The US authorities try to pilot through the Credit Crunch storm http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/ Conservative Party Candidate for Wokingham Sat, 20 Mar 2010 04:08:09 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Bazman http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24978 Bazman Wed, 17 Sep 2008 18:27:55 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24978 There will always political and financial capital to be made from cheap money (mortgages?) Everyone wants to own their own home and control their own destiny. Escape the Landlord or boss at any price. (Risk?) It's not just about money. It's much more than that. There will always political and financial capital to be made from cheap money (mortgages?) Everyone wants to own their own home and control their own destiny. Escape the Landlord or boss at any price. (Risk?) It’s not just about money. It’s much more than that.

]]> By: Bazman http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24930 Bazman Tue, 16 Sep 2008 18:57:18 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24930 City boys. Welcome to the real world. Have you noticed how bad the cutlery is getting in first class. City boys. Welcome to the real world. Have you noticed how bad the cutlery is getting in first class.

]]> By: lucysharp http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24917 lucysharp Tue, 16 Sep 2008 13:59:54 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24917 "On both sides of the Atlantic many more people got mortgages only because there were clever intermediaries and professional traders prepared to package loans and take them off the books of a Northern Rock or a Freddie and Fannie". Is getting a mortgage that wouldn't be offered by any prudent lender really such a good thing? I'm not unsympathetic to people who succumbed to the temptation of borrowing five or more times their optimistically self-certified incomes at attractive introductory rates, not least because I nearly did the same thing myself, but honestly, where did they think the money was coming from in the long run? I don't think it is unreasonable to be expected to provide a substantial (at least 10%) deposit and have a reliable savings history. If people can't do that then perhaps renting for a few years would be the wiser option. It is still just possible to lead a worthwhile life without being a homeowner. “On both sides of the Atlantic many more people got mortgages only because there were clever intermediaries and professional traders prepared to package loans and take them off the books of a Northern Rock or a Freddie and Fannie”.

Is getting a mortgage that wouldn’t be offered by any prudent lender really such a good thing? I’m not unsympathetic to people who succumbed to the temptation of borrowing five or more times their optimistically self-certified incomes at attractive introductory rates, not least because I nearly did the same thing myself, but honestly, where did they think the money was coming from in the long run? I don’t think it is unreasonable to be expected to provide a substantial (at least 10%) deposit and have a reliable savings history. If people can’t do that then perhaps renting for a few years would be the wiser option. It is still just possible to lead a worthwhile life without being a homeowner.

]]> By: Eddie Allen http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24915 Eddie Allen Tue, 16 Sep 2008 12:12:08 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24915 The Free Market and Globalisation doesn't work and it's all complete nonsense. The world is being conned with it. When you have supermarkets selling insurance and mortgages, and insurers selling and buying each other and mortgage companies struggling to compete to loan money instead of taking prudent risks with an observed experience, it's time to call a halt to it. Meanwhile, the most dangerous man in the world peddles a policy I doubt he understands himself. This is the most dangerous policy in the world and he's not accountable to a single authority for his actions. "Globalisation is across party divide and throwing cultures and countries together and this is one of the issues I'll explore in the faith and globalisation course which I'm starting with Yale University later this year" Tony Blair 2008 http://uk.youtube.com/watch?v=Vxm5eKSZNRs http://rugfish.blogspot.com/2008/09/most-dangerous-man-in-world.html The UK needs to get a grip of this before it's too late. The Free Market and Globalisation doesn’t work and it’s all complete nonsense. The world is being conned with it.
When you have supermarkets selling insurance and mortgages, and insurers selling and buying each other and mortgage companies struggling to compete to loan money instead of taking prudent risks with an observed experience, it’s time to call a halt to it.

Meanwhile, the most dangerous man in the world peddles a policy I doubt he understands himself.

This is the most dangerous policy in the world and he’s not accountable to a single authority for his actions.

“Globalisation is across party divide and throwing cultures and countries together and this is one of the issues I’ll explore in the faith and globalisation course which I’m starting with Yale University later this year” Tony Blair 2008

http://uk.youtube.com/watch?v=Vxm5eKSZNRs

http://rugfish.blogspot.com/2008/09/most-dangerous-man-in-world.html

The UK needs to get a grip of this before it’s too late.

]]> By: figurewizard http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24914 figurewizard Tue, 16 Sep 2008 11:24:29 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24914 The reason that Fannie Mae and Freddie Mac were rescued by the US government was because they are Government Sponsored Enterprises (GSEs), whose charters (granted by Congress) specifically required them to fund mortgages to people on low incomes at rates that would have been below those on offer from commercial lenders had they been foolish enough to get involved. They would then provide the cash to mortgage providers who would retain part of repayments as a management fee, while the rest of the cash was remitted to them. They in turn would then pass on the cash to those banks who had purchased blocks of their mortgages thus provided by way of MBSs (Mortgage Backed Securities). It was the devaluation of these securities, resulting from defaults by borrowers that kicked off the collapse in confidence that has led to the credit crunch and the collapse of the likes of Lehman Bros and doubtless others to come. The blame for this therefore lies four square at the door of the US government by implicitly underwriting vast amounts of money invested in assets that defied commercial commonsense thereby distorting the market for securities. This should be a salutary lesson for those calling for more government support here for the housing market, whether through interest rates or anything else. Any device that smacks of socialism, as in Fannie Mae and Freddie Mac can only lead to yet further disaster. The reason that Fannie Mae and Freddie Mac were rescued by the US government was because they are Government Sponsored Enterprises (GSEs), whose charters (granted by Congress) specifically required them to fund mortgages to people on low incomes at rates that would have been below those on offer from commercial lenders had they been foolish enough to get involved. They would then provide the cash to mortgage providers who would retain part of repayments as a management fee, while the rest of the cash was remitted to them. They in turn would then pass on the cash to those banks who had purchased blocks of their mortgages thus provided by way of MBSs (Mortgage Backed Securities). It was the devaluation of these securities, resulting from defaults by borrowers that kicked off the collapse in confidence that has led to the credit crunch and the collapse of the likes of Lehman Bros and doubtless others to come. The blame for this therefore lies four square at the door of the US government by implicitly underwriting vast amounts of money invested in assets that defied commercial commonsense thereby distorting the market for securities. This should be a salutary lesson for those calling for more government support here for the housing market, whether through interest rates or anything else. Any device that smacks of socialism, as in Fannie Mae and Freddie Mac can only lead to yet further disaster.

]]> By: David Eyles http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24912 David Eyles Tue, 16 Sep 2008 10:47:23 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24912 I've just seen a short tape on the Telegraph business where a banker is blaming ...... greedy bankers for the currrent crisis. Hmmmm. But, as you say, the world is much more complex than the regulators know. One of the side effects of too much cash in the City has been that agricultural land prices have been much too high for far too long because wealthy city types have been buying into "lifestyle" farms. The situation has been exacerbated by IHT rules that allow agricultural land to be exempt from IHT. The consequence of this is that many of us who really want to farm to produce food and work on the land have to compete by paying prices for land which is far higher than its intrinsic value in producing food would allow. However, simple removal of this IHT provision to stop wealthy people using agricultural land as a tax break will also disinherit many existing farmers and penalise those of us who plough much of our other income into the the farm to invest in its future. Perhaps some of the problem would be removed by removing IHT altogether. Another side effect of the overly wealthy bankers has been the reluctance of our brightest young people to engage in subjects like science and engineering, because a degree in economics makes a very large income so much easier to obtain. Our long term mixed economy of trading and manufacture has been compromised as a result. I’ve just seen a short tape on the Telegraph business where a banker is blaming …… greedy bankers for the currrent crisis. Hmmmm.

But, as you say, the world is much more complex than the regulators know. One of the side effects of too much cash in the City has been that agricultural land prices have been much too high for far too long because wealthy city types have been buying into “lifestyle” farms. The situation has been exacerbated by IHT rules that allow agricultural land to be exempt from IHT. The consequence of this is that many of us who really want to farm to produce food and work on the land have to compete by paying prices for land which is far higher than its intrinsic value in producing food would allow.

However, simple removal of this IHT provision to stop wealthy people using agricultural land as a tax break will also disinherit many existing farmers and penalise those of us who plough much of our other income into the the farm to invest in its future. Perhaps some of the problem would be removed by removing IHT altogether.

Another side effect of the overly wealthy bankers has been the reluctance of our brightest young people to engage in subjects like science and engineering, because a degree in economics makes a very large income so much easier to obtain. Our long term mixed economy of trading and manufacture has been compromised as a result.

]]> By: Acorn http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24905 Acorn Tue, 16 Sep 2008 08:17:15 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24905 I understand from US contacts that the FED is concerned about a crash in US Treasury Bond prices which lead to not bailing out an "investment" bank, as apposed to a "retail" bank. Also, Bear Stearns had a large "back office" which handled clearing for many other finance houses. Shutting down BS would have caused chaos across the whole system. You may wish to see the following:- http://www.financialsense.com/fsu/editorials/walayat/2008/0915.html Then click on the "Fridays commentary" [first para] and have a read of the "Recent Analysis of the Credit Crisis" articles at the end of the article. I understand from US contacts that the FED is concerned about a crash in US Treasury Bond prices which lead to not bailing out an “investment” bank, as apposed to a “retail” bank. Also, Bear Stearns had a large “back office” which handled clearing for many other finance houses. Shutting down BS would have caused chaos across the whole system.

You may wish to see the following:- http://www.financialsense.com/fsu/editorials/walayat/2008/0915.html

Then click on the “Fridays commentary” [first para] and have a read of the “Recent Analysis of the Credit Crisis” articles at the end of the article.

]]> By: Johnny Norfolk http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24898 Johnny Norfolk Tue, 16 Sep 2008 07:02:42 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24898 Perhaps the Labour government should set an example of showing what is what on the nations balance sheet Perhaps the Labour government should set an example of showing what is what on the nations balance sheet

]]> By: mikestallard http://www.johnredwoodsdiary.com/2008/09/16/the-us-authorities-try-to-pilot-through-the-credit-crunch-storm/#comment-24897 mikestallard Tue, 16 Sep 2008 06:57:14 +0000 http://www.johnredwoodsdiary.com/?p=1561#comment-24897 On Newsnight last night, the experts were of the opinion that we are, in fact, facing the 1930s all over again. Then there was a simple cause: protectionism and over production coupled to the destruction of the environment in the West (John Steinbeck). I am not at all sure, myself, why the USA and UK are so rich in the world. We don't seem to make much stuff any more (rust belt?). We don't seem, to be the kings of the carrying trade either. Perhaps it is our education systems? Reply: The UK has been relatively successful in recent years thanks to its success at financial and busienss services. On Newsnight last night, the experts were of the opinion that we are, in fact, facing the 1930s all over again.
Then there was a simple cause: protectionism and over production coupled to the destruction of the environment in the West (John Steinbeck).
I am not at all sure, myself, why the USA and UK are so rich in the world. We don’t seem to make much stuff any more (rust belt?). We don’t seem, to be the kings of the carrying trade either.
Perhaps it is our education systems?

Reply: The UK has been relatively successful in recent years thanks to its success at financial and busienss services.

]]>