Hands up who's cynical about Gordy's new aid package for the banks?

[MrsThierryHenry]

here

Not so much that it won't do the trick, but that he's so far been woefully incompetent when it comes to helping Joe & Josephina Bloggs, but now that the banks are in trouble it's a different story?

Ohhhh, I think I'm probably rehashing an old thread from a couple of weeks ago. Age is clearly wearing my brain down to nowt.

MrsThierry, I think if you look way down the bottom of the food chain, the fault lies from there right up to the top. So, you have the mortgage companies coming up with these no or low-interest ARMs with little or no downpayment required. Then you have the participants in the mortgages, that is, the homeowners, who took part in these risky mortgages without an appreciation for the possiblity that their investment might tank, that is, their home equity would dip and their interest rates soar.

Then, of course, you have the fat cats creating all of these bizarre and novel financial instruments to syndicate and sell, gaining them huge bonuses for their creativity.

Then the interest rates rise, the average Joe defaults, the mortgage-backed financial instruments are worth nothing, the banks who have participated in the syndications have to mark-to-market down their participations on the books, their net income plummets, then they become fearful of lending to one another, shareholder confidence wavers, they sell their holdings in the banks, share prices topple, and here we are.

Responsibility, like carnage, is everywhere.

God, RoRo, do us a favour and leave your brain at home, alright? Yes, you're probably right that everyone has their part to play. Though I can polish my halo and say that we were very prudent when it came to choosing our mortgage !

Sorry! I am the point-person at my firm in dealing with global developments related to the financial crisis, so unfortunately it's swimming around in my head all of the time!

We were also prudent in choosing a fixed rate mortgage. Thank goodness or else we surely would have lost our home.

Well done, so you and I have clear consciences but woe betide the rest of 'em!

I am not cross on DHs behalf at all and I don't see this as an attack on him - I have asked him to come on here as a Fund Manager he could tell you what is happening minute by minute at the coal face so to speak but he says he has far more important things to be doing with his time at the moment - worrying where to invest the billions he has to to make sure lots of people don't lose their pensions for a start!

To me I look to the low life lenders who started this by giving mortgages to people who had no way of keeping up repayments and the prats who took out the mortgages thinking that everyone else was doing well so they would - they didn't and this is where we are.

You can invest in Northern Rock - although I think they stopped taking on accounts with decent interest rates as they had to so as not to have an unfair advantage against the other banks - and drag the bankers throught the streets but most of this country is funded off of the back of what those very people spend and in turn what they spend - remember it is not just the guy at the top it is the thousands below him, the suppport staff, the guy who stands by the security desk checking you in, it is the IT people, the people who clean the offices, the girl who works in pret across the road, the molly maid you have in to clean your house, the bar down the road, the shoe cleaning guy on the corner, the canteen staff, the rail companies, the department stores, the boutiques where you buy your clothes, the high street stores, the decorator, the plummer, the nanny, the nursery............. well I could go on and on because if these bankers lose their jobs it would effect all the above, they won't be able to pay mortgages, buy christmas presents, etc etc etc - this is the top of a huge iceberg and the government had to do something and lets hope to god they have done the right thing because we will all see the carnage if they haven't!

MC, I'm not sure that we're on the same page. Then again I think in some aspects, we might be!

Your long paragraph about the people who are affected - that's basically what most of us on this thread are complaining about! (nice phrase, by the way, "molly maid" - I don't have one as it happens, nor do I shop in boutiques ). So we agree - everyone's affected!

Blaming people for giving and taking bad mortgages - yup, again we agree. Although when you say the reason for taking a bad mortgage is that "the prats...were thinking that everyone else was doing well so they would" you sound terrifyingly disconnected from the world outside your door. We live in one of the most expensive countries in the entire world. Fact. You, as the wife of a Fund Manager, are one of the richest people in the world - easily in the top 5%. Fact. Most people in this country are not anywhere near as wealthy as you are. Most people (especially in the SE) struggle to afford a basic property, and with prices rocketing up as they were, their reasons for mortgaging themselves up to the eyeballs were more likely to do with fear of never being able to own a property. Not that this absolves them of responsibility for their actions; far from it. But you cannot presume that they're all bumbling, greedy fools trying to keep up with the Joneses.

As for investing in Northern Rock, are you referring to my quip about "investing £12.92"?!

I don't understand how it all works, what's happening...

So I've put together my emergency kit of a box of matches, a candle, a change of underwear, a (70s-style checked) thermos flask of tea, and a kitkat. I'm going to draw the curtains and sit on the floor in the corner wrapped up in my duvet, watching News24, until something decisive happens.

God I wish I were as rich as you think - DH is a cash fund manager he earns crap money compared to most of the others - and most of the bad debt originated in the US where people were taking on debts left right and centre that they would never be able to afford - those were the bumbling fools.

I am the housefairy by the way - I don;t have a Molly Maid and no my quip about northern rock was because someone had said to take all your money out and invest in Northern Rock as you would be safe what with it being nationalised! Glad we all haven;t got that idea eh!

.5% cut in interest rates anyone?
Hopefully all lenders will pass it on
Am now dreaming on turning the heating on for 1 more hour a day...
Progress?
Still at least my knitting skills can get a workout

Pass it on? Are you joking? How many cuts in interest rates have the banks passed on to their customers? Did their customers see the interest on their savings increase when the rates went up? NO!
Progress for the banks, not for anyone else.

Didn't (?) many of the mortgage lenders put their rates up last week in anticipation of a rate cut so that, even if they do incorporate the cut, their customers will be no better off.

I have a mortgage which tracks the base rate.

But it is small. So it's a fiver up or down per half percent.

It is so unfair to blame people for mortgaging themselves up to the hilt. In this country, if you want a secure, stable home and you are not entitled to a housing assciation or council place, then the only way of ensuring that is to buy. And if the only way to buy is to mortgage yourself up to the hilt, then that is what people will do. On the whole, people who are not mortgaged up to the hilt are either those who had huge cash gifts from their extremely rich relatives, or those who were already property owners and didn't need to take out a loan for 95% of the value of their home. They're not necessarily prudent, just lucky.

'It is so unfair to blame people for mortgaging themselves up to the hilt. In this country, if you want a secure, stable home and you are not entitled to a housing assciation or council place, then the only way of ensuring that is to buy.'

Why not?

We're private renters and not entitled to council or HA place. It sucks, but at the end of the day we knew mortgaging ourselves to the hilt was irresponsible and foolish and could well leave us repossessed.

So we didn't do it.

Because at the end of the day, we bear some responsibility for our financial actions.

Sure, the system sucks, but that's life and life's rough. It's not fair at all.

I'd love a secure, stable home for our family as much as anyone else, but risking the roof over our heads because things got overinflated because of people borrowing foolishly isn't the way forward.

And I don't see why I should bail such people out, to be quite honest.

Similarly, there are plenty of folks who stayed put in accommodation that was way too overcrowded or unsuitable for htem because they could not afford larger or more suitable accommodation for themselves and their families without borrowing foolishly.

And now they get to bail out others who acted irresponsibly.

So the message we take away is: next time, fuck it! Join the crowd. Borrow like mad and sod personal responsibility because the good ol' taxpayer will be forced to pick up the tab for it.

expat there won't be a next time as the banks won't lend like that again and prices will fall according to salaries.

you're right, noddy.

c'est la vie.

Oh there will be a next time. Every 15 years or so there is a big housing crash, this has been happening since the seventies. Young men in shiny suits and young couples looking for a home, don't have long memories.

I wish we could just let the banks fall. They really do deserve it. But unfortun\tely, too many people and organisations are interconnected.

it's crazy - Gov is pouring our money into a big black whole. and who is going to pay the interest on the money the Gov has had to borrow to lend to the banks? us taxpayers

also, the Gov guaranteeing IcSave customers' money - er, they took a risk with their investments, why should the taxpayer pay the, out? I want to be compensated for not having my money in an account paying 7% interest, so they can give me some dosh too!

grrrr, feel like emigrating

doh - HOLE

No point emigrating. Global capitalism is triumphant. There's no escape. THERE IS NO ALTERNATIVE.

lol,. exactly, nowhere to go! NZ?

No seriously. Where are you going to go? The US, UK and Spain are bailing out the banks with taxpayer money. At least the UK isn't giving to them outright, but rather is requiring them to raise their own capital as a condition to getting the money. The US and Spain are handing the banks a blank check.

Also, Australia's economy is in the rubbish bin, with the dollar tanking. Iceland is on the brink of bankruptcy as a country. Hong Kong cut interest rates today, a tacit admission that they're also feeling the impact of the crisis.

No, I'd say stay put. Unless you want to move to Africa! Their emerging economies will unlikely feel the downturn as sharply as the developed world.

What I want to know is if the govt. thinks this is the short term solution what the heck is the LONG TERM solution they still have to work out/have up their sleeve?

Like others have said, more regulations needed to prevent catastrophes like this again.

Also the govt. is going to look darned silly/incompetent if this doesn't help the situation!!! Yikes.

MC, I wish I were as rich as I thought you were, too! Then again, money isn't everything. There's always the joy of dealing with a tantrumming two-year-old.

Hey - let's set up in business together: Molly Maids R Us!

I'm with dinny and expat.
mc I think you're living in lala land I'm just weeping at the thought of your dh pension hero though he is not being able to buy Christmas pressies. Beyond your imagination to get them from e-bay spread throughout the year like so many others?