“1-across is SWAT TEAM”
“I’ve got ‘T’ as the first letter”
“That doesn’t surprise me.”
The latest desperate initiatives of an increasingly desperate Prime Minister and a Chancellor who is already packing his parachute have just traversed the laughable and blundered into the surreal.
The plot so far: The banks rip each other off by granting a mortgage to anyone with a pulse – irrespective of whether or not they can repay the loan. The banks then tart-up these dodgy mortgages by packaging lots of them up them up into a fund (securitisation) and then they flog shares in these funds to each other.
The money rolls in and is lent to more dodgy individuals until someone realises that selling shares in “funds” that are not producing any income because no-one seems to be paying their mortgage is not a good thing.
(The American banks started it but we aped them and then blamed them.)
The banks then decide that there is a crisis and the only way to deal with it is to stop lending – to each other and to the public.
This strange new situation is given a name – Credit Crunch.
Then these privately-owned banks go cap in hand to the Bank of England which has been “advised” to bail them out. Others, such as the Northern Rock are given money directly by the Government.
That does not seem to do the trick because the banks decide to sit on their (our) money because they don’t want to take any more risks. Why not? Because these ersatz corporate entrepreneurs can only function when things are going well.
They have no real idea what to do next – except perhaps to rip off existing customers by increasing interest rates on anything that they can get away with.
When they did play at being entrepreneurial with these so-called “securitised ” mortgages, they messed up – big time. They should all be standing shoulder-to-shoulder in the dock.
However, the banks know that if they do nothing for a few months, the desperate government will be forced into action. They know that the New Labour government has only two ways of doing business:
1. No Crisis = No Action.
2. Crisis = Panic = Action = Handouts = Big Bucks.
Today we have the announcement that the government will lend money to first-time buyers and there will also be a package for those who cannot repay their mortgage and for good measure, Stamp Duty for properties with a purchase price of £175000 or less will be suspended for a year.
So the government lends to the banks then it lends to the borrowers so that the banks can lend some more to the borrowers.
Why doesn’t the government cut out the middle-man and give the money to the builders to build houses which can then be rented out with a post-dated option to purchase.
When will we all wake up to the fact that the “owner-occupier” skirmish with hard capitalism has not worked and that we have to be re-educated into thinking of a house as a home and not as a commodity.
This is what Gordon Brown had to say:
“No-one in this country who works hard and plays by the rules should be left alone to bear the impact of the current global economic downturn, and I am determined to see the government do everything we can to help British families weather these difficult times.
I understand what it means to see people struggling to get mortgages or homeowners who, through no fault of their own, suddenly find themselves unable to keep up with their repayments. And it’s not just families who are finding it tough but businesses as well, with house-builders now experiencing difficult conditions after years of extremely favourable circumstances.
So to address these issues, the government’s new £1 billion housing package will give first-time buyers a leg-up onto the housing ladder, help homeowners in difficulty and support the UK’s housebuilding industry.
First-time buyers are one of the groups hit hardest by the credit crunch and are crucial to driving the wider housing market. They would usually benefit from falling prices, but a combination of the higher cost of borrowing, bigger deposit requirements and weakening consumer confidence means this has not happened.
To do everything we can to support them, there will be a one-year stamp duty holiday for all properties sold for up to £175,000 – helping to restore market confidence and giving first-time buyers the extra help they need. And, alongside this, 10,000 more first-time buyers will benefit from a new £300 million shared equity scheme called “Homebuy Direct”.
The current housing market difficulties are also leading to increased repossessions, so we are introducing a new £200 million mortgage rescue scheme that will help thousands of vulnerable families to stay in their homes.
And to do more to encourage social rented housing, we are bringing forward £400 million of government spending to deliver up to 5500 new social rented homes over the next 18 months.
Taken together, I am confident these measures and the other new steps we have announced will help create the best possible environment for the housing market to come through these challenging times – and I invite you to read more about our proposals on the Number10 website. “