[Closed] Another Tory Loon?

He's hardly the first to say that.

You think borrowers have no responsibility for their actions?

Cant really tell from that quote what people should be accepting responsibility for. If its for being in debt yes, if its for the global debt crisis then no. Hardly my fault i have a big motgage, it was still pretty much the cheapest house i could buy.

lots of people borrowed more than they could really afford*, on the assumption that they [u]could[/u] afford to service the debt next year when they got their pay rise.

(and when lots of people do this it creates a problem)

mostly so they could buy a new car, and a bigger telly, and a flat in turkey, and a ... etc.

hey presto, an economy driven by debt. which has to stop somewhere.

Yes but does the fault lie with them or those who are making more money from more expensive houses and bigger debt. For their own situation yes, for the nations no.

but does the fault lie with them or those who are making more money from more expensive houses and bigger debt. For their own situation yes, for the nations no.

with all of us, we're all grown-ups, we all knew what we were doing.

and especially Mervyn King, who should have raised interest rates back in 2002.

I think there is an argument could be made that something should have been done about house price inflation a long time ago, too many people are trapped into large debts because their is a real lack of alternatives in housing.

Their is also an argument to be made that the law is too sided with the lender when things go wrong, ie securing unsecured loans after the fact. And their is still a lack of decent consumer protection or action to curb the practices of the debt collection industry.

However I really can't see how

We borrowed against our house. Rationalised it as an "investment" for mrs rkk01 to go back to uni and retrain. Must be our fault, then

is anything but the act of consenting adults.

with all of us, we're all grown-ups, we all knew what we were doing.

yes but i have an almost zero impact on house prices, lenders have a massive influence on house prices and have a vested intrest in them being higher. So if i'm in debt thats my fault but the debt crisis wasnt caused by individuals buying a house to live in. It shows that the politicians have learnt the square root of **** all about the cause of the problems if they are trying to blame me.

I agree neither the banks or government had a vested to see lower house prices. The economy ran on borrowed money through the so called good times. Fuelled by the banks and promoted by politicians. When the borrowed money dries up people no longer spend putting many people in service and retail sectors out of work. I agree that we should have been more canny for when the day came it was all going to come crashing down. However I am left with the feeling that a lot of the people who have caused this mess have somehow risen above the s**t.

yes but i have an almost zero impact on house prices,

Hardly my fault i have a big motgage,

O NOES, TEH EVIL TORIEEZZZZ!

Borrowing against your house was a calculated risk, though at least you did it for a worthy reason.

Plenty of other people did so because they simply had to have that new X5, marble kitchen, twice-yearly exotic holidays etc etc.
Do we really have to outsource personal responsibility for everything in this country?

I remember being at a meeting a couple of years back in which Bob Crow said he had been told the problem was that people hadn't "saved enough". He said that was going to use that useful information by adding an extra amount into RMT's pay negotiations to allow for "savings" by his members, thereby helping the economy.

I agree with Philip Hammond's claim that consumers should borrow less. That's why I support wages rises to at least the level of a living wage.

Well i didnt buy a house for years and prices didnt go down. How do you explain that if i have an impact on house prices?

You've been sold a lie if you think its down to individuals. What are the levers controlling house prices.

"But it's not fair mummy - a bad man made me do it" - not the words that you expect to hear from someone old enough to sign a loan form.

And it seems that the lessons still haven't been learnt - witness the number of folk on here looking for 0% deals to buy the latest two-wheeled bling.

Who was it exactly that forced you to buy a house?

the people who bought all the houses and made rents so high. I could have carried on paying more in tent for a small 1 bed flat than i pay in repayments on a small 2 bed house and resigned myself to never having a family. Wonder what caused these stupidly high rents? Was that my fault too? Seems an amazingly myopic viewif you think its all down to individuals.

I can't believe the bare-faced racism in this thread..

[img] [/img]

Personal responsibility should come into it, the people setting the policies of the banks to offer easy credit to customers who could barely make repayments in the 'good' times, who were only thinking about there bonuses springs to mind. Perhaps also the politicians on both sides who didn't have the bottle to say this is going to end in tears.

The problem is that if you offer easy credit people will take it up, this puts prices up for everyone who then need credit (Its a bit like dealing opiates except its harder to opt out).

The new X5, marble kitchen, twice-yearly exotic holidays etc argument describes the exceptions rather than the norm. Most people are up the creek because of far more mundane reasons like having to move house/ replacing the clapped out car.

Seems like a statement of the obvious. How many of us levered themselves up to buy the big house (me), or bought cars they couldnt really afford and stuck them on the mortgage. Foreign holidays on the credit card anyone?

Just for once can we not blame the politicians and the big bad banks?

Seems an amazingly myopic viewif you think its all down to individuals.

who says it is?

quoting Phil Hammond (the tory loon)

...there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls...

we've all got a lesson to learn.

we're knackered if Politicians don't stop spending next years tax revenue, we're knackered if banks don't stop lending to ninja's*, and if the rest of us don't stop buying shiny things with next year's pay we're knackered.

(ninja = No INcome Job or Assetts)

Mcboo, you not separating individuals problems, their own fault, from the global credit crisis. People will make decisions that are sensible, like getting a mortgage rather than pay higher rents. Others will get indebted up to their eyeballs on fake tan and gucci. But who controls the availabity of that credit. We are all responsible to some extent but some need to learn different lessons such as controlling rampant house price rises. I tried for many years by not buying a house, but it had little effect, others couldhave had a much bigger effect.

there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls

true but one side made one the other made hundresd of thousands.

I remember in 2003 we sold our house on the basis that people were over borrowing and a crash was inevitable. It happened but not for five more years.

Anyone accepting the multiples that were being offered at the time (it got worse) needed their heads examined!

Edit: it wasn't the Tories presiding over that time bomb!

true but one side made one the other made hundresd of thousands.

Six of one, half a dozen of the other innit?

A few years ago I was working in a very affluent Cheshire suburb. Big houses with the compulsory Merc/X5 in the drive. I had a meeting at the bank one morning. There was a staff training session on as I waited, and they clearly hadn't clocked that they could be heard. The bank manager was telling the staff..

"We refer to this area as Debtors Paradise. The big cars, the new conservatories, and foreign holidays, etc are all on credit. They're all up to their eyeballs in it. All its going to take is a couple of percentage points rise in the interest rate, and they're all ****ed!!"

Seems he was right. Though I'm sure that didn't stop him extending yet further lines of credit to them all

Tell us then, the banker who put all the costs in the contract or the speculating home owner who assumed they were going to make a profit?

can you try writting this so it makes sense?

Who made the hundred's of thousands you claim? The bankers or the home owners? Both are in it to make money. As has been said many times over, both parties entered into the contract in order to make money.
Won't someone please think of the chidren?

can you try writting this so it makes sense?

Six of one, half a dozen of the other innit?

no some people have much bigger levers.

no some people have much bigger levers.

Who made the hundred's of thousands you claim? The bankers or the home owners? Both are in it to make money. As has been said many times over, both parties entered into the contract in order to make money.

Banks, politicians and bank of england bosses all made decisions that had a much bigger impact than any individual borrower. For a policy maker to then blame the individuals makes me think they havent learnt their mistakes (to be fair not Tories fault, but they could/should learn from the mistakes of others).

Both are in it to make money

Many of us just wanted somewhere to live, not an investment, The home market was turned into an investment market by the banks and the greedy, many of us would have preferred it wasn't.

Right so the bank of england and government and banks dont have any more control over house prices than me? I guess i will have to bow out as there is no point discussing things with five year olds.

Anyone talking out a 100% mogrtgage is an idiot. The banks should not have lent money to idiots. That doesn't excuse the fact that they are still idiots.

Add in to the equation that we are a democracy & any government which took realistic action to address the situation wouldn't get elected. There is a lack of willingness to vote for anyone who takes the long term view against short term benefit.

Just for once can we not blame the politicians and the big bad banks?

Well, we could, but where would the fun be in that. Like it or not live in a society now where people are caught in an endless cycle of desire - without realising that ultimately, their lives are never really improved that much by the purchase of the next tv, car, phone, gadget...etc. Yes, there is a brief buzz from the purchase, but after a while we're just as miserable as we were before.

The "bankers" take advantage of dangling "cheap" credit in front of peoples' eyes - and sometimes the eyes of those who are not the sharpest tools in the box - and convince them that yes, this will be manageable, no problem Mr & Mrs, you'll manage that repayment for the next ten years, yadda yadda yadda. This is especially true of the sub-prime crisis in the USA, the contagion of which spread over here and caught us with our pants down. Mr & Mrs get themselves that wood burning stove that will change their lives and hey, guess what, it doesn't. And the cycle begins again.

Those who are sensible enough to leverage themselves intelligently usually get away with it. It's those who don't understand debt, interest, PPI scams, etc that have had the piss taken out of them. So, each side should take a portion of the blame, but I know which side would be getting my sympathy when the shit hits the fan.

Or of course, we could all just free ourselves from desire.

Right, I'm off to the Estate Agents to check for any vacant repossessions...

Personally I blame decisions by those in power which allowed people to increase their borrowing limits from 3 times to 6-7 times their combined annual income for fuelling the housing market prices. With a larger pot available to them, it was inevitable that people would just keep bidding up the price they were willing to pay, pushing house prices sky high.

But.. idiots who could plainly see there was a chance they may not be able to sustain the repayments should interest rates rise, yet still went ahead, have absolutely no sympathy from me.

The UK has had one of the biggest housing booms. Which is, among a couple of other things, what caused banks to overextend themselves.

In order of responsibility:

1. The political leadership and banks for creating the FSA, which was entirely toothless. They should have MADE the banks rein in their spending or influence SOMEONE to get it done.
2. Bank of England for being useless
3. Banks on their own for being idiots
4. The population who have gotten high on debt.
5. the Media for being complicit.

So he has a point, but it's only one piece of the puzzle.

Anyone talking out a 100% mogrtgage is an idiot. The banks should not have lent money to idiots. That doesn't excuse the fact that they are still idiots.

Anyone who lends to an idiot hardly deserves to be rescued when it all goes wrong.

Anyone talking out a 100% mogrtgage is an idiot. The banks should not have lent money to idiots.

Any bank offering a 100% mortgage is an idiot, anyone investing/saving their money in a bank that offers people 100% mortgage is an idiot who deserves to have lost their savings, the taxpayer should not have bailed out either the bank, or the investors in the banks, who took these risks.

Oh holy Jesus...I think Zulu and I just met briefly on the same wavelength. 😆

A house, a home, a roof over your head is a basic necessity in modern life, you can't compare that to lusting after big screen TV's and x5's. Its not unreasonable to expect elected governments to pursue policies that make decent accommodation available and reasonable to the people they are meant to represent.

I have no sympathy for those that took on too much credit so they can have a shiny new bmw on the drive. But that isn't the real problem, the real problem is the millions of people struggling with debt just to provide a home for their families because of an overinflated housing market and a lack of realistic alternatives.

Banks, politicians and bank of england bosses all made decisions that had a much bigger impact than any individual borrower.

Of course these organisations had a much bigger impact than individual consumers. However, individual consumers made hundreds of thousands of poor decisions which collectively contributed to the problem, just like hundreds of banks made poor decisions which collectively contributed to the problem.

A single bank acting like a dick would have made a relatively small impact on the economy. But individually, they're all still culpable.

An individual voter cannot be entirely blamed for voting in the Tories/Labour, but is part of a much larger group which can be blamed for what follows.

Anyone who lends to an idiot hardly deserves to be rescued when it all goes wrong.

Bravisimo nails it!

anyone investing/saving their money in a bank that offers people 100% mortgage is an idiot who deserves to have lost their savings

Can you inform us all which one of the banks, in our highly competitive banking sector (which most definitely isn't a cartel!) , was offering an alternative to this. Maybe we should have looked abroad for alternatives. Iceland maybe?

However, individual consumers made hundreds of thousands of poor decisions which collectively contributed to the problem,

But they were all just thinking of their own situations.

How many individuals in Northern Rock do we think made the decision to lend wunundredandwhatever percent of house values? A few handfuls? So who was more culpable when the house of cards came down? The borrowers or the lenders?

How about the mutual building societies Binners? They were a fairly good alternative!

Do they even exist any more. I can think of the Nationwide, and ....erm.... erm... no thats it.

And having my savings and pension with them, I know that during the boom years, there was some bunch of banking sector carpet-baggers trying to de-mutualise them every year!

Anyone who lends to an idiot hardly deserves to be rescued when it all goes wrong.

Yeah but ostensibly they weren't rescued for their own sakes. They were rescued becuase otherwise the whole system would have gone tits up. The unfortunate by product was that the bankers were saved.

There also has to be distinction between lending to allow the economy to grow and reckless lending to the aforementioned idiots.

its an interesting issue , certainly a small number of individuals made some foolish decisions over borrowing

however they were not employed to be financial experts and I am happy to give some leeway to non experts who made silly decisions when someone offered them more than they could afford. I was offered a mortgage x 5 of my earnings @100% at the time but had the sense to decline this.

however the financial institutes were experts [ its why we pay such high bonuses to keep this expertise here iirc ] and they hold more responsibility than the person on the street

If it is my job to lend money and i lend it to someone who cannot pay it back then this error is my fault and the system that allows me to make bad loans - i assume banks dont want to do this

Zulu is correct and he stays true to his right wing views that we should not have intervened and let the markets decide

To have bailed them out means , in the future, they can be as reckless as the govt/people will bale them out. In essence we have put them in the position of being irresponsible children who have mummy and daddy to bale them out when they **** up whilst they pick up bonuses for their expertise.it is a no loose situation and that will have consequences in future reckless behaviour

Still 47 of them running Binners, and the banker's couldnt de-mutualise them on their own, the members had to vote for it!

http://www.bsa.org.uk/aboutus/buildsocmember.htm

*
* don simon
 - Member

no some people have much bigger levers.
No they don't. Or do you have problems thinking for yourself? Be a man and take responsibility for your actions.

can someone try explaining the role of policy makers, Banks and bank of england in house prices to Don Simon please.

Listened to a BBC4 podcast last night: [url= http://www.bbc.co.uk/programmes/b01dtlzn#synopsis ]"ANALYSIS WHAT IS MONEY? "[/url]
Had some interesting interviewees on it. This bit struck me. At what point (and for what reason) did we culturally shift in our moral classification of debtors and creditors?

LANCHESTER: It’s a trick of language, when I was a kid it used to be called debt and now it’s called credit. I don’t think you have to be all that old to remember when debt was just regarded as an uncomplicated bad thing. And now we call that credit. And that I think is a very profound cultural shift to do with this essentially rebranding.

COGGAN: History is a battle between creditors and debtors, and the nature of money is the battleground.

STONER SAUNDERS: Philip Coggan author of Paper Promises: Money, Debt and the New World Order

COGGAN:. Go back into novels of Dickens and you’ll see that debtors were imprisoned, debtors were viewed as immoral, people who took on responsibilities which they then ducked. But I think in modern culture it tends to be the creditors who are seen as immoral, so we have campaigns against predatory lenders. We tend to blame the lender for forcing the borrower into debt rather than the borrower for taking on too much debt.

[b]John Lanchester, author of Whoops! Why Everybody Owes Everybody and NoOne Can Pay
Philip Coggan - Author of Paper Promises: Money, Debt and the New World Order (BUT also my favourite book on the financial markets: [url= http://www.amazon.co.uk/The-Money-Machine-Penguin-Business/dp/0141009306 ]The Money Machine: How the City Works[/url]
Stoner Saunders- Presenter, No relation 🙂 [/b]

Banks and bank of england in house prices to Don Simon please.

Stoner, is the shift as much to do with what has become necessary in order to live a "normal" life? If i could have rented a house at a reasonable price i may have done. But that wasnt an option.

A certain amount of blame has to lie in the lack of oversight that allowed the banks to grow, effectively unregulated, into these huge, uncountable corporate monsters that became 'too big to fail'

Once they achieved that tag, we were (and still are) effectively underwriting their activities by acting as guarantors. And they knew it (and still know it) hence the crazy risk-taking

If you went into a casino and saw someone spunking thousands away on a roulette table, would you offer to cover their losses. Of course you bloody wouldn't.

But hey ho. That's where we are right now. Only they're still racking up a big bar bill on top, swilling vintage Champagne. Just to add insult to injury!

It's a two way thing isn't it; the banks were greedy and foolish in offering excessive multiples and the borrowers were greedy and foolish in accepting them.

You don't have to know anything about economics to understand that 5 x income and/or 100% mortgages leave you very overexposed. If you can't work that out then, I'm sorry, you get what you deserve!

lack of oversight that allowed the banks to grow

Id disagree with "lack of oversight" and qualify it with lack of [i]effective[/i] oversight. I think the biggest failing has been the appalling flippancy institutional investors have applied to their roles as shareholders. Proprietary traders within banks were permitted to trade on the banks behalf without the shareholders understanding the risks they were exposing the bank's share capital to.

Proprietary traders within banks were permitted to trade on the banks behalf without the shareholders understanding the risks they were exposing the bank's share capital to.

Not just shareholders. Those who were supposed to be supervising said traders didn't either.

Ultimately what it all amounts to is that too many people were guzzling at a free lunch without remembering the old saying.

aa hit the nail on the head third post:

Cant really tell from that quote what people should be accepting responsibility for. If its for being in debt yes, if its for the global debt crisis then no. Hardly my fault i have a big motgage, it was still pretty much the cheapest house i could buy.

I'd add that I reckon its intentonally obtuse, he's a politician.
It stirs up enough sh1t by playing on personal jealousies to have people pointing fingers at each other (it can't be me), whilst deflecting attention from the real causes. Also its deliberately unspecific enough to give an easy back door way out if he's challenged on the facts.

You don't have to know anything about economics to understand that 5 x income and/or 100% mortgages leave you very overexposed. If you can't work that out then, I'm sorry, you get what you deserve!

A huge amount of people are very stupid and policy makers need to account for this.

Stoner - do you think that the situation has changed in any significant way? I don't see any increase in meaningful and effective regulation or oversight. And it sure the hell won't happen under this lot. Has there been a structural change in the way these companies operate?

Seems to me, that the next banking crash is 'when' not 'if'. Only we're not going to be in a position to bail them out this time, as they've effectively bankrupted us already.

It genuinely shocks me how quickly 'the establishment' has returned to business as usual, having apparently learnt nothing!

Anyway must go.. Homes under the hammer is on!!

You don't have to know anything about economics to understand that 5 x income and/or 100% mortgages leave you very overexposed. If you can't work that out then, I'm sorry, you get what you deserve!

and what AA said i was in the odd position of not being able to afford rent but able to get a mortgage which is circa 20-30% cheaper than rent

I dont think shareholders have changed particularly.

There have been big changes though, the most considerable being the capital adequacy rules that banks must adhere to. (i.e. liquid assets as a ratio of liabilities) They've increased enormously.

I was having lunch yesterday* with a retired [i]very[/i] senior banker - used to have a team trading volumes in the £tn's under him. He remarked that if you look at Morgans Stanley's results, they show much the same profit this year as 6 years ago but the size of the balance needed to do that is over three times what it was in 2006 because of the adequacy requirements. He also recounted the woeful level of FSA oversight. Once a quarter, an under-qualified, under-paid, under-experienced FSA monkey would come by and be presented with trading data with no effort to asses s any systemic risk. Much of the risk in the system could only be assessed by looking at the industry as a whole. No one bank could go to an other and ask to see their risk profiles and positions to see if there was a systemic problem - each bank throught that they were working within the safe area that their internal models defined. It really should have been the role of the FSA to pick up on the circular-cluster-bumming that was developing.

* nothing more decadent than a Fish Finger sandwich and a pint of Doom Bar Im afraid.

EDIT:

Seems to me, that the next banking crash is 'when' not 'if'.

Nothing new under the sun. What should have happened (IMO) last time though is that more banks should have been let go to the wall. But that would have brought even more pain to the "little guy". Bailout was probably the least worst of a hobsons choice if you're a politician.

EDIT: just remembered another tale of a bank using the dutch FSA as an easy recruitment pool for their risk departments. Smart grads on €40k, get poached for salaries 10x.

can someone try explaining the role of policy makers, Banks and bank of england in house prices to Don Simon please.

It's not until you talk about the banks as a collective that they can influence house prices, a singular bank or banker has no more influence over house prices than an individual buying a house.

But if your talking collectively then you must compare to the buyers/sellers as a collective and they, as a collective, have a far greater influence on house prices.

i was in the odd position of not being able to afford rent but able to get a mortgage which is circa 20-30% cheaper than rent

It's not until you talk about the banks as a collective that they can influence house prices, a singular bank or banker has no more influence over house prices than an individual buying a house.

i accept your point but in real terms a banker who makes 10 loans a week has more influence than a customer who takes out five loans a year.

I was referring to Banks as the Banking sector however.

cheaper on 100% mortgage? if not then you're not comparing like for like.

you'll have to explain this to me

Some of you must be too young to realise that Thatcher started this ball rolling.

Its taken 30 years to come to roost. Set up an economy all driven by the power to borrow money and buy things rather than make things and keep the money circulating round this country and not China.

Also giving people the right to buy their homes, which is fair enough but for every home that was bought the councils should have built one to replace it, they didnt and now we have millions of private landlords getting rich from government benefit payments, and soaring house prices in the late 90's and 0's

Well it took 30 years to get here and its going to take not far off that to get out, at least 15 years.

A-A, am I correct in thinking that you are a teacher? If so, I hope that you remind your children that ultimately we all take responsibility for our actions. If we all look to shift the blame to others then we have learned nothing from the crisis or from life. Very sad.

To the catalogue of people to blame, don't forget the politicians who thought that it was a great idea to force feed low income households with financing they couldn't afford. That was a far bigger toxic bomb (sub prime) than UK household debt although the latter was/is also far too high. Hence the prolonged slow/zero growth period ahead.

It would still have been cheaper on a 100 % mortgage perhaps 10 % ish?

I was trying to keep party politics out of it.

Steve, can you remind me, is that the same woman who thought individuals and countries should balance their budgets like a grocer's shop? Agree with your final point, but hope 7-10 years not 15!

I teach science to kids. I leaves morals to others. Why is it the right wingers so often feel the need to bring up my job?

I don't think Thatcher had the first clue what she was unleashing on us all with the Big Bang! And just look where its got us

But the knee-jerk Tory instinct to deregulate everything over-rides all other considerations.

cheaper on 100% mortgage? if not then you're not comparing like for like.

you'll have to explain this to me

As I'm sure you know for a set mortgage amount re-payments vary based on the LTV, the larger your deposit the lower the interest rate. Put in a large enough deposit then sure your payments will be less than rent.

So the only fair rent/mortgage cost comparison is using a 100% mortgage as otherwise your not including the deposit value in the equation.

I'd be very surprised if 100% mortgage on the property has lower repayments than renting the property (but happy to be shown otherwise hence my original question).

Yeah but i cannot offset my rent against any savings can I so its more about what ican afford each month. In my cas 550 or 750. Actually now i can afford both but then it was more marginal.

I agree Binners i dont think she had a clue, but never the less thats where it all started. Free market my 'airce' A place for the wealthy to con and steal from the poorer in society.

Yeah but i cannot offset my rent against any savings can I

Which highlights my point that you need to use a 100% mortgage comparison.

Unless you are willing to use your savings to reduce the monthly rent, in which case you can factor the deposit in and evenly spread the same amount against the rent payments for the same period of time as the mortgage term.

I'd be very surprised if 100% mortgage on the property has lower repayments than renting the property (but happy to be shown otherwise hence my original question).

probably a common situation oop North.

probably a common situation oop North.

That's another thing to add to the North/South divide then, as it's not the case down here.

1 bed flat, value £220,000
Rent £750 month
Mortgage at 90% LTV, 30 years, interest only at 4.5%, £825 month

so even with 10% deposit renting is cheaper.

are there any mortgages around with a 10% deposit at the moment?

everyone i know looking for a house needs 20% at least

so to buy that 1 bed flat you need 44k just to get a look in!

and our mortgage (we bought 2 yrs ago) is less than the rental price for other houses on our street (i just checked)!

In reading rents are stupid as are house prices, its cheaper each month to buy and its based on monthly payments that most make decisions certainly as first time buyers or people a long way from retirement.