House Prices

[AtW]

I agree that the BofE has put some money into the markets, but so far not enough

How much is enough in your view? BoE can't provide morgages for everyone to buy houses at ridiculous prices and pay 3-4% morgage, it's not going to happen and BoE has not got that much money anyway - it would be insane to throw more good money after bad ones.

Sure FSA, Gov and BoE was caught sleeping - but there is not a lot they can do now, they could have avoided this pitfall by ensuring no excessive lending
is going on, but Nu Liebour actively encouraged it, I guess from now on they won't be mentioning record low morgage rates though

[Cyberman]

How much is enough in your view? BoE can't provide morgages for everyone to buy houses at ridiculous prices and pay 3-4% morgage, it's not going to happen and BoE has not got that much money anyway - it would be insane to throw more good money after bad ones.

Sure FSA, Gov and BoE was caught sleeping - but there is not a lot they can do now, they could have avoided this pitfall by ensuring no excessive lending
is going on, but Nu Liebour actively encouraged it, I guess from now on they won't be mentioning record low morgage rates though

The BofE can create any amount of money as all it has to do is print more, but the downside is that increasing the money supply will create more inflation. The fact is that they have been far too frugal so far and are putting inflation ahead of other factors.
It is not just a case of mortgages, but also many other types of borrowing. The real problems will come once banks start reducing or even calling in business overdrafts and then unemployment will start to rise. As to the amount required, it could be as much as 100 Billion, but this could be later paid back as conditions improve, so it is not quite as bad as it sounds.

[AtW]

The BofE can create any amount of money as all it has to do is print more

Yes, and this will lead to hyperinflation like Zimbabwe, you are therefore Mugabe
: "But economists say that the prime cause of inflation is the government's huge budget deficit, which it deals with by printing more money."

BoE can't and won't print enough money to give anyone a morgage with small interest rate when assets are priced so highly, something like this has already been happening in the lext 3-5 years, which has lead to the bubble reaching current levels - there is no longer anymoney left to keep the bubble going, if you print more money then the bubble will go a bit longer but it will also affect other things like food, fuel etc - it will be like in Zimbabwe. You are truly Mugabe, so I claim my 5000000000000 Zimbabwean dollars.

[Cyberman]

Yes, and this will lead to hyperinflation like Zimbabwe, you are therefore Mugabe
: "But economists say that the prime cause of inflation is the government's huge budget deficit, which it deals with by printing more money."

BoE can't and won't print enough money to give anyone a morgage with small interest rate when assets are priced so highly, something like this has already been happening in the lext 3-5 years, which has lead to the bubble reaching current levels - there is no longer anymoney left to keep the bubble going, if you print more money then the bubble will go a bit longer but it will also affect other things like food, fuel etc - it will be like in Zimbabwe. You are truly Mugabe, so I claim my 5000000000000 Zimbabwean dollars.

Your view is totally extreme Atw.
The BofE would grant the funds in interest-bearing loans just as it did with Northern Rock.
Once confidence has returned and banks are lending to eachother again and LIBOR is back to normal, those loans can be recalled thus reversing the inflationary pressure.

[AtW]

The BofE would grant the funds in interest-bearing loans just as it did with Northern Rock.

Just in case you did not notice Northern Rock will have to be scaled down to return that money - central bank can't just give anyone lots of money, when you do you get hyperinflation like in Zimbabwe or in Russia in the 90s - they were also printing money there. I think you need to learn a bit about macroeconomics and monetary policies.

[Cyberman]

Just in case you did not notice Northern Rock will have to be scaled down to return that money - central bank can't just give anyone lots of money, when you do you get hyperinflation like in Zimbabwe or in Russia in the 90s - they were also printing money there. I think you need to learn a bit about macroeconomics and monetary policies.

But that is part of the problem as I have already stated on another thread. Calling in loans is not the way to handle a liquidity crisis. The government should be adding liquidity to the system but instead they take it out. Nothing surprises me any more with New Lie.

[AtW]

But that is part of the problem as I have already stated on another thread. Calling in loans is not the way to handle a liquidity crisis. The government should be adding liquidity to the system but instead they take it out. Nothing surprises me any more with New Lie.

Loans won't be called. Suckers who overextended themselves in the last 2-3 years will have to pay a lot higher interest - when they took out their 2 years fixed 4.5-5.0% deal thinking: "oh I'd just switch to another morgage provider so I won't be hit by higher variable rate" will now be stuffed because they won't get morgage elsewhere, they will have to pay up more and will either do that by cutting expenses (going out for a meal, new plasma TV etc) or lose their house - there is no other alternative that would not lead to hyperinflation.

Sorry Cyberman but I really think you got no clue in macroeconomics, but don't you worry - you are not the only one on this board, and especially on this God forsaken planet

[Cyberman]

Loans won't be called. Suckers who overextended themselves in the last 2-3 years will have to pay a lot higher interest - when they took out their 2 years fixed 4.5-5.0% deal thinking: "oh I'd just switch to another morgage provider so I won't be hit by higher variable rate" will now be stuffed because they won't get morgage elsewhere, they will have to pay up more and will either do that by cutting expenses (going out for a meal, new plasma TV etc) or lose their house - there is no other alternative that would not lead to hyperinflation.

Sorry Cyberman but I really think you got no clue in macroeconomics, but don't you worry - you are not the only one on this board, and especially on this God forsaken planet

When I refer to 'loans being called' I mainly mean the loans to Northern Rock from the Bank of England. The government are trying to reduce the mortgage book from 100 Billion pounds to 50 Billion approx. The net affect of this is to take 50 Billion of liquidity out of the system.
Atw, you do yourself no favours in the credibility stakes by resorting to abuse which I notice you also did to the poster Mailman. Just because other people's opinions may be different to yours, does not always make them wrong. Please try to keep on the subject rather than behaving like a child throwing its toys out of the pram.

[PAH]

If houseprices are going to nose-dive, the less of our money tied up in over-inflated mortgages, that they'll make a loss on if people start defaulting, the better.

[HRH]

We have been screwed over by the greed of the banks they have gambled with our futures.