House Prices and Recessions

This blog has long maintained that the house price crisis, which governments and politicians in the UK and USA have both tried to ignore, remains basic to the dire and contnuing economic crisis, which is now quite clearly once again rearing its head.

The sell off on Wall Street, already well down today on the turmoil underway across the EU, got new legs when US home sales last month were announced as down another 3.5 per cent to the lowest levels for fourteen years!

Amongst all the numbers from the press release, this paragraph in particular caught my eye:

Foreclosures and short sales — when a lender agrees to sell for less than what is owed on a mortgage — made up about 29 percent of all home sales last month. That's up from about 10 percent in past years. And a wave of foreclosures are being held up, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.

In the UK the ongoing manipulation of house price statistics, that amazingly contiues in the mainstream media, month after month will quite soon inevitably be sussed out by the intending buyers who are its victims.

A Buyer's Strike is coming, sped on its way by the rapid realisation that owning a property to which you are heavily mortgaged and thus indebted for life, and will likely never more appreciate, is even less likely to prove sensible, when looting, arson and riot could occur anywhere, at any time once our democracy is totally abandoned, as is now becoming the case!

I have suggested possible solutions again and again on these pages, if any interested readers remain, you can find some on the following search links:

Walkaways

Fannie Mae

House Price Crash

Mortgages

Money for First Home Buyers in Oz

At least there is somewhere in the world where governments throw money in the right direction. Unhappily only in Oz! Linked here!

"HOUSE PRICE" not "Banking" Crisis

Across the world this weekend national leaders and heads of international organisations are meeting to come up with new sticking plaster cures for a banking crisis they state has caused a stock market collapse. Unless they address the real crisis their cures are doomed to failure - for this is a financial crisis caused by the house price bubble. It started in the US with its roots in the Democratic Party inspired reckless lend by Fannie Mae, itself a creation of the supposed cure for the Great Depression. The publicly underwritten mortgage debts together with those of its sister organisation Freddie Mac were never carried as public debt. These organisations lent to low income people incapable of responsible mortgage and lifestyle management. Similar crazed lending policies were adopted in the UK under the New Labour Government and Chancellorship of Gordon Brown. Unless the artificially high house prices in these two countries are addressed the banks cannot be the source of salvation. Other countries may well have similar but not necessarily identical problems. If taxpayers money is to be liberally thrown away, aiming it to reduce house prices in the US and UK would certainly make more sense.

Poisoned politics

The stench from the completely underhand attempts to ram through the Lisbon Treaty will spread across Europe from Dublin like stinking clouds of mustard gas over the World War One battlefields of the Somme and Verdun. The Red C poll in Ireland clearly showing more voters would vote against the Treaty than at the actual referendum is a clear signal of the contempt the electorate in that country holds for the spectacle put on by the EU's leaders since the result became known. The latest fracture in Ireland's political scene is reported in this morning's Irish Times, linked here. The London Times meanwhile has its most significant articles in the business section, the UK Government's borrowing plight here, but even more worryingly this harrowing tale of the problems at Merril Lynch, linked here. It is difficult to pick one paragraph to highlight the disaster at that institution long considered a pillar of the West's capitalist system, so try these: ....The group has made an overall loss of $18.7 billion in the past four quarters, after taking about $40 billion worth of writedowns on CDOs and other mortgage-related investments. Mr Thain called last night’s CDO sale a “significant milestone in our risk-reduction efforts”.... ........Merrill Lynch acquired the CDOs that it sold yesterday for $30.6 billion. By the end of the second quarter this year they had declined in value to an estimated $11.1 billion and Merrill agreed yesterday to sell them to Lone Star, the private equity fund, for $6.7 billion. Meanwhile the BBC Today programme , this morning, is regularly pushing an extension of the mortgage rescue scheme which would put taxpayers at further risk for potential losses in the trillions where individual UK citizens have already been placed in debt by their government of almost 200,000 pounds per head. What a time for the EU leadership to destroy any remaining credibility the democratically elected governments of the 27 nation state membership might retain by fraudulently trying to salvage the Lisbon Treaty which will deprive those individual states of some of the tools many will need to protect their national citizens from this economic hurricane as best they may.

Government plans for House Price meltdown? ZERO

Thanks to the Crown Blog for this image of a Cabinet Briefing paper for today. And the Telegraph who got the snap and analyse the crass statements, read here.

Note the amazing final paragraph for an official document both on asinine comment and content, I quote:

"But it is vital that we show at this time of uncertainty we show that we are on people's side"

"Show" that's all they are!

Britain's financial disaster could finish Brown and win EU Reform referendum

The ten year disaster that has been Gordon Brown's management of Britain's economy as chronicled on this blog since 2003 is finally gaining worldwide recognition. Read the Telegraph article on the IMF report here, the Guardian headlines its report 'Worst crisis since Great Depression' here and even Anatole Kaletsky in the Times here forecasts a 30 per cent crash in house prices which will certainly finish off the wierd creature presently occupying 10 Downing Street and any successor could not possibly start to cope with the crisis repeating the disgusting lie that the EU Reform Treaty and the Constitutional Treaty are not almost totally identical. Every cloud therefore has a silver lining. The econmy collapses but our democracy gets a second chance! A maintenance of present levels of interest rates by The Bank of England or a rise today would be the first sign some sanity is returning. A drop in rates will have no effect on mortgages and lead to further falls for sterling.