From The Metro:
The Government is doubling the funding available to give people who face losing their home free legal advice in court. Housing Minister John Healey said the Government was increasing the extra money for the service from £750,000 to £1.5 million. The service offers free on-the-spot legal help to people in England who are in court facing having their home repossessed or being evicted from rented accommodation...
However, the CML has recently indicated that it is considering revising down its forecast for repossessions for this year from its near-record level of 75,000.
Assuming that £1.5 million is an annual budget, that works out as £20 of 'free legal advice' per case, which is enough to pay for about ten minutes of solicitor's time. And if the scheme actually 'worked', does this not set the 'moral hazard' alarm bell ringing?
We have clearly sleepwalked into a post-modern tax/economic system, whereby savers are not only subsidising (reckless) borrowers (via artificially depressed interest rates), but then Timmy Taxpayer is being asked to foot the bill to help the self-same borrowers wriggle out of the responsibility of even paying the subsidised interest.
I accept that rising house prices are a symptom of a growing economy, but over the years, this logic has been turned on its head, and the generally accepted view is now that rising house prices are what drives the economy. Which is, presumably, why money is now being sucked out of the real economy in order to try and reflate the bubble...
Also chucklesome is this:
The Government has introduced a range of initiatives to help people avoid losing their homes, including the Homeowner Mortgage Support scheme, under which people can defer up to 70% of interest on their mortgage for up to two years.
It has also increased support for mortgage interest and introduced the Pre-Action Protocol under which courts can only grant repossession orders as a last resort. But recent figures showed that only two families have so far benefited from its mortgage rescue scheme.
NB, the original article appears to have disappeared.
Monday, 22 June 2009
Another day, another reckless throw of the dice (27)
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4 comments:
In short...
Governments are trying to make banks pay for "social housing" rather than the state.
I accept that rising house prices are a symptom of a growing economy.
WRONG! Rising house prices are a symptom of:
1. A housing shortage, due to rising birthrate, break down of families,increased immigration and a shit national house-building program.
2. Too much cash in the system (inflation), leading to churning and a collapse in savings ratios.
3. A banking system where the regulators are encouraging banks to lend money on projected asset values, thereby letting people borrow far too much. (politically skewed risk assessment criteria).
4, Government interference in the lending markets,( Clinton and Brown), forcing the banks to lend
to poor risks for political benefit.
One then contends with a bubble, followed by a crunch. Fulminate about greedy bankers all you like, buy never forget that politicians are ultimately responsible.
GOM, that's an excellent list (which I didn't include as I wanted to keep the post short) - but even if you sorted out all that stuff, on the whole house prices are more likely to rise than fall in a growing economy.
A growing economy would tend to have a faster Money velocity which also tends to raise prices.
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