Nanny bans mortgages of more than 3 x income

Of course they did, along with every other party. And here, whenever I called over the last few years for better regulation of our financial systems, the right-wingers ranted "red tape". Time and time again..."there is already too much government interference" they prattled on and on. There is nothing to be learned from Lamont's mates, Cameron and Osborne in all this, BTW....the 'temporary blip' party of double-figure inflation 3m + unemployed should never be returned to.

Something needs to be done about irresponsible lending and that is a start. Once no one can afford what's for sale then the prices will have to come down or no one can move. They could stay put I suppose - cutting of their noses to spite someone else - that right could never be removed (one hopes).

'Mark, Devon' wrote this:

But it was Brown in office and therefore responsible for proper governance. He failed. With NewLab's large majority, there was no effective action that the Opposition could take. That's the way our system of govt works.

There is a big difference between "effective and efficient regulatory oversight" -vs- "more regulation". The former aims to ensure the markets operate smoothly with a minimum of dishonesty (a traditional Conservative approach), the latter seeks to control, manipulate and distort the markets for socialist political motives.

More than half of the societal regulations introduced in Britain since 1997 have no effect on improving anything, just give the Almighty State ever more control, often at a high cost.

Well it looks like your chums are taking us down that road all by themselves. The huge debts being dumped on us by Brown will take a generation to pay off and cause inflation along the way.

Looks like you're backing the wrong horse buddy...

i'm glad to see you back.... you are at least creatively nutz...

when's the clown going to be 'relieved of his duties'?

you're confusing the amount of regulation with whether it is 'good' or 'bad'....whether it is effective or otherwise and whether it is enforced or not... you're even confusing government interference(meddling) with banking system regulation.... the government almost always part own the banking system... and now the clown seems hell-bent on owning the lot... next the commanding heights of the economy....he's a socialist for st paddy's sake....when will dopes like you recognise the natural consequences of that fact?

you must learn to think before you babble

now extend your observations to pricing

It's a nice thought that if only we'd got the regulation right, we'd all have been entirely sensible and saved up for what we wanted instead of borrowing to have it now.

The history of credit bubbles is very clear on this: once the people have dollar signs in their eyes and have set about buying their Golden Tickets to riches without work, any politician or regulator who tries to get in the way will be quickly replaced by someone more amenable. To paraphrase old Will: the problem lies not in our regulators but in us.

It's no coincidence that Glass-Steagal was abandoned after more than a decade of the credit bubble in the US and neither was it one that Brown messed with the regulators here.

Better might be to try to educate everyone to eschew debt as much as humanly possible and teach them as children the history of the societal outbreaks of mass-madness that are credit bubbles.

FoFP

Hopefully this is pretty obvious: banks only make profits from loans - not from savings. As you increase the pressure on an institution to make more profits, they are driven down the road of making more loans.

Now, there are only so many sensible, prudent, responsible people out there. Once they have had their fill of loans (and have, themselves, come to the realisation that they shouldn't take on any more debt), how can a bank increase its profits - as its shareholders demand? The only way is to expand their reach, and start lending to people who wouldn't normally be eligible (or who hadn't considered the possibility) for a loan.

What's the solution? Well, one way would be for the people who deposit money to be lent out, to have some say in the lending policy: i.e. who gets to borrow _their_ cash. This is effectively what building societies are. The problem is that during the 90's a lot of BS's converted into banks - and made large "windfall" profits for their previous owners - the depositors. In some cases, it was the savers themselves who pressurised the BSs to convert.

That's another flaw in modern society. Everyone and everything has to improve on the previous years profits. What for? If they are paying off what they need to pay off and they have enough to pay employees and to keep the business going why make more profit year on year? Because everyone else is and they'd go under as they were outpaced as a business? There's no need for it if most of them stopped that madness.

Then we should change it.

Why does the word "socialist" keep cropping up in these threads? Nulabour are not socialists. They pluck policies from both extremes of the political spectrum and have continued some of Major's madder policies, such as PFI.

I would say the same about the years preceeding 1997. Who started selling off councils houses, for example?

You're right there.

In doesn't matter how much regulation you have if the incompetants in government appoint regulators like Crosby - who while in charge of HBOS, sacked his head of risk regulation because, erm, he kept warning the board about their excessive risk taking!

Nope - instead lets have deflation plus government debt from bailouts which will take a generation to pay off. That's much better.

Exactly. This government have successfully combined the worst of the left with the worst of the right.

Which, as an attempt to increase home ownership among those on lower incomes was pretty successful. Compare that with the loony US policies to do the same like the CRA, which effectively forced US banks to make subprime loans... and we all know what that led to...

Mike,

When do you think this debt bubble started to inflate? and when do you expect this debt bubble to fully deflate?

Early 80's. Possibly the Big Bang in London was what really got things moving in the UK.

If the government left it alone, I think we'd likely be through it in

4-5 years. As it is, we could be talking 10-20. I'd hate to think we'd totally follow the Japanese and still not be able to see the end of it 20 years from now, but obviously I can't rule that out either.

Sorry I can't be more specific, but understanding teh structure of these things is a far cry from being able to date the turning points. If it were otherwise, I'd be posting from my yacht.

FoFP

The problem with that idea is that they tried leaving it alone during the depression, and got... The Depression...

Rothbard's analysis is that the US was through the Depression by 1934 and the government managed to take them back into it three times by interefering with wages, prices and gold.

They can't avoid the debt-deflation which follows large credit bubbles and nor could they in the 1930's. All they can do is delay the recovery.

FoFP

Rothbard was a stone bonkers Anarcho Capitalist who wanted all governments to be abolished.

He fell out with the bonkers Ayn Rand on the grounds that she wasn't bonkers enough and left the US Libertarian party because they weren't Libertarian enough and founded the John Randolph Club who are so bonkers they can't explain what they're about except that it's both Christian and 'from the American heartland'.

His opinion is one we can all do well without.

Yeah. There are a few of us around.

FoFP

The denial of the nation state, the mainstay of civilisation for five centuries is... blah blah blah.

Yu' know, sometime I just can't be bothered...

'William Black' wrote this:

I don't think you understand how free markets operate William. They are not perfect, but there's nothing else available which comes close for producing global wealth.

On their own they will solve all the relevant problems that arise in the most effective and efficient way known.

The question becomes "how much regulation and control should be applied to moderate their actions and to reduce the pain caused by their occasional process of correction."

We know that socialist govts always try to control and manipulate markets to get their own desired effect, but always fail. Given what markets are, we also know that without regulatory oversight, they can get out of control. The solution of course is to exercise sufficient oversight to ensure that bubbles are not allowed to arise and that the markets operate as effectively and efficiently as possible. Socialists don't have a clue about this.