Banking Panic - The Plan (1)

Banking Panic - The Plan (Prelude)
Banking Panic - The Plan (2)
Banking Panic - The Plan (3)
Banking Panic - The Plan (4)
Banking Panic - The Plan (5)
Banking Panic - The Plan (6)
Banking Panic - The Plan (7)
Banking Panic - The Plan (8)
Banking Panic - The Plan (9)
Banking Panic - The Plan (10)
Banking Panic - The Plan (Nearly There)
Banking Panic - The Plan (Arrival)
Banking Panic - The Plan (The Next Phase)
Banking Panic - The Plan (11)
Banking Panic - The Plan (12)
Banking Panic - The Plan (13)
Banking Panic - The Plan (Exit)
Banking Panic - The Plan (1st Encore)
Banking Panic - The Plan (2nd Encore)
Banking Panic - The Plan (3rd Encore)
Banking Panic - The Circus

The Housing Markets

The UQ (aka UK) Ltd housing market is considered to be potentially in crisis. It's certainly in a state of delusion. Shares plummet as much as 10% in the housebuilder trade. Money lenders (building societies, banks, debt 'consolidating' agencies etc). Tracker mortgages and raising the cost of borrowing for the new (next generation) homebuyer. Debt rising exponentially: no problems. And everybody is happy according to a media effectively controlled by:

Rupert Murdoch

So the story goes. Reality or delusion?

UK house prices have apparently suffered their sharpest drop since January 2002 (2.6% as of August 2007) according to Rightmove. Incidentally, the argument that there is a housing shortage in the UK gets rather strained (unless this is qualified with 'affordable' = sensibly and realistically priced without greed attached) with appropriate advertising.

Most problems have been confined to the "sub-prime" end of the mortgage market and lenders are beginning to be a little more prudent when lending money to those with a poor credit rating or low incomes. Low income presumably meaning an income that is regarded as insufficient to realistically repay a loan without reducing the interest payable. This is a kind of "rock-and-hard place" scenario, but this time for the lender.

The Halifax and Abbey banks have raised the interest on their tracker loans and indicates the issue has reached the mainstream end (aka: lucrative middle range) of the mortgage market. So with the rejection of all but the best 'quality' mortgage customers, the future scenario is looking like a vast and very stagnant housing market of unsold homes: nobody (next generation) can afford to buy these very 'affordable' houses. There are plently of houses, but no affordable ones.

Modern-day homes (prefabs) are now being made to sound popular. But:

• Who is popularising them?

The construction industry

• Who is suffering or will suffer?

The next generation

and surprise, surprise it is here:

NOW

What could happen as the pit deepens and the trough deepens at a similar rate? This is not Keynesian Theory and the principle is even more straightforward. Wave goodbye to a wrecked system and wave a welcome to the next, and very new, generation. The corollary ("a proposition inferred immediately from a proved proposition with little or no additional proof") is that there will be a lot of negative equity around, but hide one crash behind a bigger one and nobody will notice? That is highly unlikely, but so what? Who cares?

Northern Rock allegedly supplies 23% of all UQ (aka UK) Ltd mortgages. One implication of this is that potentially 50% of new mortgage lending won't happen. To make up this loss someone will have to pay. Everybody else. Watch for the interest rate hikes.

Negative growth. What a quaint financial term. It means CRASH: prompted by the credit crunch and house prices are expected to cool and if all this affects (un)employment then...

...allegedly, the financial services industry is the biggest contributor to the UK economy. Examine that statement. This 'industry' contributes nothing, but only acts as an agent to increase debt and so monetary interest and so greater debt. The industry helps to create a self-sustaining situation that potentially ends with a lot of redistribution. It actually creates nothing and contributes nothing except misery disguised as assistance to create misery. If the credit crisis worsens (!) this could end up with companies making lay offs and increasing levels of unemployment. When the 'quality' end of the housing market struggles, the result could well be a housing crash.

This presupposes that those good quality customers will not meet with problems. Unemployment caused through this predictable scenario could be a reality and the knock-on effect would be dreadful though predictable. The irony here is that the very people who arranged loans for 'new business' end up as needing a loan themselves as a result of the situation they have helped to service. The major banks still freely lend to good quality mortgage customers, as much as five or six times a clients' annual salary, but denial states there is no problem and everyone is very positive about the future.

While tracker mortgage rates have been rising (for new customers: the target) fixed rate mortgages have fallen. Banks finance fixed deals usually in the swap markets: the Bank of England's base rate more heavily influences borrowing rates. As at 15th September 2007, this rate was 5.75%. Swap rates have fallen suggesting the movement of interest rates is expected to be downwards.

I can see a change of government (labels) very close as the mess continues to descend into absolute chaos. A new government will say: "it's not our fault" and "we told you so" and the old government will just be forgotten. The last +10 years of societal destruction will be just forgotten with the introduction of change.

Money markets recover, but evolve. The question is does the monster get more powerful? It is still a monster: "where the money is".

The irony? Greed lives on yet is hungry for more, but starving.

When the human race is gone (another mass extinction), the Earth will be a happier place and life can then get on with living.

The future is about not being human: Devil's Advocate.

Banking Panic - The Plan (Prelude)
Banking Panic - The Plan (2)
Banking Panic - The Plan (3)
Banking Panic - The Plan (4)
Banking Panic - The Plan (5)
Banking Panic - The Plan (6)
Banking Panic - The Plan (7)
Banking Panic - The Plan (8)
Banking Panic - The Plan (9)
Banking Panic - The Plan (10)
Banking Panic - The Plan (Nearly There)
Banking Panic - The Plan (Arrival)
Banking Panic - The Plan (The Next Phase)
Banking Panic - The Plan (11)
Banking Panic - The Plan (12)
Banking Panic - The Plan (13)
Banking Panic - The Plan (Exit)
Banking Panic - The Plan (1st Encore)
Banking Panic - The Plan (2nd Encore)
Banking Panic - The Plan (3rd Encore)
Banking Panic - The Circus