From Reuters:
Policymakers need to boost the UK economy by buying bad mortgages says Fathom Consulting's Danny Gabay. Former BoE mpc member Charles Goodheart adds UK may benefit from plan similar to U.S. TARP.
Eighty or ninety percent of UK banks' real assets (ignoring all the inter-bank stuff and derivative contracts shown gross) are loans secured on land and buildings, so indirectly, they are huge landowners (almost a third of UK land and buildings by value), so what do we give them..?
Via Alan at HPC.
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4 hours ago
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Check out more quality advice from Fathom consulting
"This speaks volumes about what lies at the heart of the problem – namely an overvalued housing market, and excessive private sector debt."
Sounds right, so what can we do about it? Build more houses?
...a building boom could trigger "a correction back to fair value" in house prices, which it estimated at 30pc below current levels.
What's the solution then?
A better way of stimulating housebuilding, Fathom said, would be to force prices to fall back to their equilibrium level by forcing banks to repossess struggling borrowers and disclose their hidden bad debts. Bank of England money printing could "be used to recapitalise the banks". That would leave them "free to lend" and make houses more affordable again.
True friends of banks this lot aren't they?
Kj, I think I covered that one at the time, it's an all time classic from the Home-Owner-Ist genre
"A state-backed housebuilding boom would not deliver the sought-after economic recovery, a leading consultancy has warned, but cause prices to crash and tip Britain's banks back into crisis."
Insane
Altogether now, there are a million empty homes in the UK. Building more would mean even more empty homes.
Good bank numbers I used to say 80%. All that is real value. The derivatives you could just incinerate with no winners or losers. Even if you jubileed all the mortgages too that would be better than the alternatives so long as you started collecting the rents for gov.
House would be so cheap the lucky winners would gain litle and unlicky losers lose.little.
But we are all rent seekers so I realise heaven on earth must come first.
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