who would have thought it!

Or you could decide that the fire has reached the stage at which it can no longer be put out. Well, it'll go out by itself eventually, what I meant was that it has reached the stage where neither the house nor anything in it can be saved. - Give up and concentrate on retribution.

That is unlikely. What is far more likely is that the Government will stand there pissing on the fire hoping that it will put it out.

In this particular case they are doing that big time and there will probably be no retribution for now. If they don't succeed in their pissing they will have far too much to worry about to chase those responsible until it comes to the blame game at election time and GB is never going to put his hands up willingly.

Proper independent assessment of this ridiculous situation should be carried out in due course and ALL those responsible (that includes the mickey mouse authorities who are supposed to oversee the system) held properly to account. Fat chance of that ever happening. It smacks of white collar crime to me, utter incompetence at best.

Or perhaps now's the time to find those responsible and throw them on the fire? The banks liked to boast they had the best rocket scientists and it is traditional for the mob to burn the mad scientist in his castle.

BTW, have others noticed that there have already been bids to pay FSA staff more so, it is argued, it can recruit people better able to spot toxic debts and excessively risky assets? I suspect a pre-emptive defence of the FSA's bonuses for this year.

Or one of the arsonists is trying to gain plaudits for tackling the blaze?

I saw all the debt people

This is just getting started.

Nope. It's time to tell your estate agent you're up for a quick sale.

FoFP

Or just hold your cash ready to buy some cheap land once the burnt wreckage has been cleared.

FoFP

Hmmmmm. So can I rely on you guys for references?

FoFP

A year ago, we already had the run on Northern Rock, so I guess you want to go a little further back than that?

I have just noticed your "pen name", and recollect that it was Ronald Reagan, along with Thatcher, who thought the free market was the answer to everything. ;-)

The cruel irony is that she is probably too far gone now to understand how her Utopia is collapsing. :-(

The free markets were doing a fine job of fixing the problem. Most still imagine the problem is the current crisis. It isn't.

The problem was the credit bubble. Too much boprrowing, most of it reckless borrowing by the time we reached the blowoff phase. The solution is to eliminate the reckless borrowers from the markets and the reckless lenders who enabled them, then cut down borrowing. I defy anyone to deny that the markets were achieving this with uncommon efficiency.

There have been credit bubbles and the debt-deflations to follow them before. Those experiencing the bust fancify that it's the end of capitalism. It isn't, it's just the end of the bubble. In twenty years we'll be over this. Less if the authorities just let the medicine do its work.

FoFP

I pretty much think this as well. It can be quick and dirty, without intervention, or slow and painful with.

Whatever happens house prices are coming down.

Neb

But pouring petrol on it won't help.

But the "free market" allowed this huge bubble to form in the first place.

The normal retrace would be two-thirds of the way to the price at the start of the bubble (1984). This being a larger bubble than most though, I'd be surprised if it didn't go further than that.

FoFP

Really? Fannie and Freddie were Ground Zero. They were state-sponsored enterprises. The politicians forced them to loan to people who couldn't afford it (it was Bushite policy). That inaugurated the subprime mortgage bubble.

Then there's the fact that governments the world over permit fractional reserve banking - a central driver of the leverage responsible for the bubblee and the main reason people are ready for a run on the banks now.

Then there's fiat currencies. Governments remove the ling to hard assets and then inflate. Inflation is a great friend to bubbles.

It wasn't entirely the fault of governments. But once they've done their work, there's not a lot of room for free markets to add to the damage.

FoFP

I didn't know that these institutions were forced to lend money to high risk borrowers. That does make a difference.

Isn't this lack of regulation? Were the other banks forced to lend so much?

I thought they only guaranteed prime mortgages. BICBW

Tim.

Not really. Fractional reserve banking is essentially a fraud where the banks lend out a multiple of what they have as assets. It's essentially a political licence created by government that allows them to practice fraud without being prosecuted. If you or I had 100 quid in our accounts and tried to write twelve cheques for the same 100 quid, we'd soon be in the pokey.

I think in the US, Federal Home Loan Association supported banks were also encouraged to make subprime loans. Not on the scale of Fannie and Freddie though.

FoFP