Brown still doing "everything it takes"
Peter Hoskin 1:33pm
Brace yourselves. It looks as though the next couple of weeks are going to be among Brown's busiest and - so far as the taxpayer's concerned - costliest yet. As the Sunday Times sets out, the flurry of initiatives and announcements may include: a call to ban 100 percent mortgages; a cash injection of £10 billion for Northern Rock; the start of a £100 billion programme of "quantitative easing"; and the establishment of a "bad bank". The final tab could hit an eye-watering £500 billion.
It's the proposal to ban 100 percent mortgages which catches the eye and, to be fair to Brown, it makes a great deal of sense. Similar measures in Spain and Canda have limited those countries' exposure to the banking crisis, as well as protecting individual borrowers from excessive debt. But - and it's a big but - Spain and Canada had their measures in place before the credit crunch hit. Brown didn't. It's yet another example of how inadequate his regulatory system has been. And the thousands of Brits currently having their homes repossessed will hardly be grateful that he's making changes late rather than never.
Aside from that, it's striking how Brown's adhering to the same overall approach. Depsite the eventually-unspoken warnings from Peter Mandelson, and the calls from within Labour for a change in strategy, it's clear that the PM still wants the major dividing line to be between the "do everything" government and the "do nothing" Tories. With the "headless chicken" charge achieving greater traction, the PM may find the political tides are swelling against him.
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The Watcher
February 22nd, 2009 2:03pm Report this commentBrown trying to lecture people about prudence is a bit like Monty Burns criticizing unethical business practices!
david b
February 22nd, 2009 2:16pm Report this comment100% morgage ban. The words horse cart and bolted come to mind. Latest quote from GB "All our problems relate to the previous chancellor"-(thinks o dear that was me)
Austin Barry
February 22nd, 2009 2:25pm Report this commentBrown is clearly suffering from hyperkinesis and should be sedated. That he believes there is electoral salvation in producing endless initiatives from his hat like a demented conjuror merely confirms his desperation. Gordon, relax and enjoy the perks of power while they last, for you and NuLabour are already dead.
fulcanelli
February 22nd, 2009 2:34pm Report this comment100% and above mortgages should never have been allowed or encouraged in the first place.
No wonder so many people are struggling to manage their repayments. We should also be asking whether it is right for our society that we allow mortgages that include both wages. This can have a really destructive impact on the family, often encouraging both parents to work long hours to meet a mortgage that should never have been approved in the first place.
I fear a vicious circle has been created over the last decade, whereupon soaring house prices necessarily precipitated the need for such ridiculous mortgage practices. In effect, Brown is yet again fixing the barn door after the horse has bolted.
Wilhelm
February 22nd, 2009 2:46pm Report this commentWhat is it with Broons awkward hand gestures ?
Mark Heenan
February 22nd, 2009 2:46pm Report this commentBanning 100% mortgages sounds good but how do you implement it? Why is Brown doing this rather than letting the FSA he created do the job it was set up to do? Will he now have to find even more money to help the first-time buyers such a limit would hurt?
And most importantly, if 100% is stopped, what is acceptable? 99%? 98%? The papers lead me to believe 95% will be the limit, but if you give a 95% loan on a property that then loses 5% of its value, doesn't that then automatically become a 100% mortgage?!
The real answer is not some eye-catching figure like 100%, or 95%, or anything. It's for banks to go back to giving mortgages only to those who have a pretty good chance of being able to pay it back. I.e., bring back Prudence.
Wilhelm
February 22nd, 2009 2:50pm Report this comment''The final tab could hit an eye-watering £500 billion.''
The one good thing is its blown to smithereens that Gordon prudent Broon is good with money. Everytime liebour is in they wreck the country.
Kevyn Bodman
February 22nd, 2009 2:59pm Report this commentThere would be no need to ban any type of mortgage at all if the crash was just allowed to take its course and mortgagors and mortgagees were left to find their own levels, with necesary painful memories, I'm afraid.
Rescuing businesses and individuals who have fouled up because of their own poor decisions and/or greed will have at least 2 effects:
this kind of imprudent decision making will resurface in the future.We just don't know when.
Future generations of taxpayers will have to pay for the money spent in bailouts now.
There is no easy way out of the crisis and what I suggest is harsh,but whatever is done it's all going to be harsh, and readjustment and recovery would come quicker my way.
Look at that £500 billion figure again.
That's a tax load on you, your children and maybe your grandchildren.
country mouse
February 22nd, 2009 3:08pm Report this commentIt should not be for the government to ban 100% mortgages. We badly need a totally independent and effective regulatory system for the financial world.
DavefromLuton
February 22nd, 2009 3:34pm Report this commentCan someone explain what the effects of 'quantitative easing' will be on individuals please.
Presumably if we print more money its real value goes down but does it mean 'that the pound in my pocket is not devalued' to coin a phrase
strapworld
February 22nd, 2009 3:47pm Report this commentwhat truly amazes me, is the way Brown can just go and commit so much money on schemes he has not given Parliament a chance to debate.
Then, equally amazing, is the slavish acquiesence given to Brown by all those Labour Cabinet Ministers etc and back benchers. Those that say nothing deserve to be kicked out, at a general election, for denying their constituents the opportunity of having all the issues raised and debated within Parliament.
One must ask the obvious. Just what use is Parliament? we appear to have a dictatorship!
Max Kaye
February 22nd, 2009 4:21pm Report this commentThis is flim-flam. 100% mortgages have not been available for months. (Buyers are having difficulty securing 60-70% mortgages.)
Typical Brown: make a big announcement about something that isn't actually what it's dressed up to be, and then - a few months down the line - we find out that nothing has been done to progress this 'amazing initiative' anyway.
Vir sapit qui pauca loquitur
February 22nd, 2009 4:29pm Report this commentCan't someone tie Brown's hands to his chair and put a gag in his mouth?
Mitch
February 22nd, 2009 4:34pm Report this comment"Just what use is Parliament? we appear to have a dictatorship!"
exactly! how much cash can brown pee up the wall before he is stopped? what do the other 645 muppets actually do?(fill out expense forms and keep quiet perhaps)
Andy
February 22nd, 2009 4:40pm Report this commentSurely it's not the percentage of the house value that's borrowed that's important, but the ability of the borrower to pay it back. Wouldn't it make more sense to ban lending more than 2.5 times salary?
Mitch
February 22nd, 2009 5:01pm Report this commentThe damn fool is 10years too late. must have been the other guys fault..you know......oh yeah it was him.
he really does think we are stupid.
Craig R
February 22nd, 2009 5:31pm Report this commentA mortgage is a private contract between you and a mortgage provider. I fail to see why the state should interfere. What matters is that the bank takes a good, long hard look at your income and comes to a rational conclusion about whether you will be able to pay it off.
Jules
February 22nd, 2009 5:38pm Report this commentI think you'll find that 100% mortgages are simply not available anywhere now. Why would they be when house prices are still falling. I think you'll find that lenders are demanding at least 25% deposit these days!
Oor Willie
February 22nd, 2009 5:59pm Report this commentWhy would Brown write to the FSA--surely that should be the Chancellor's job?
Oh I forgot, he, Gordon Brown, is saving the world single-handedly.
Darling must get miffed that he has to give out all the bad news while Brown picks the allegedly "good" things to take the credit for.
Ivy Eileen
February 22nd, 2009 6:31pm Report this commentStrapworld has it - we are effectively in a dictatorship.
All considerations of democracy, parliamentary debate, due diligence, weighing the pro's against the con's have been chucked out of the window. He's behaving like a child whose been given the keys to the tuckshop and he's spraying jelly babies ("initiatives" and our money) in all directions.
At least this "initiative" about banning 100% mortgages is harmless - can anyone imagine a bank or building society offering anything like that percentage in today's market, including in view of its own financial position.
yarnesfromhorsham
February 22nd, 2009 6:34pm Report this commentDont forget the creation of another 100000 jobs. Yeah Right. Surely its time for the Army to take over.
TrevorsDen
February 22nd, 2009 7:15pm Report this commentWhat's pathetic is the way we do not have a Chancellor anymore - Brown is managing two jobs so why not save a bit of money and get rid of Darling.
500 billion 700 billion a trillion?? Who cares - money has lost all meaning to Brown now - it is a bizarre parallel world he is inhabiting.
Banks are going to lend responsibly? When did Brown realise they were not? He has spent the last 10 years praising the City? When did he realise this was all a load of bollocks?
But Brown is actually complaining that banks aren't lending enough- wish he'd make his mind up.
100% mortgages bad - does that mean that 99.99% mortgages are OK? And as others have said - we are not getting these mortgages now anyway.
Clearly this was just the announcement of the day. Todays manufactured event for the news grid.
TomTom
February 22nd, 2009 8:16pm Report this commentWhich company will get the contract to provide soup-kitchens ? Another year of Brown and we'll all be on benefit
Fearless Frank
February 22nd, 2009 8:20pm Report this commentI don't think Gordon or anyone else with their hands on the levers of power have quite grasped the simple fact that it was 100 per cent mortgages which pushed up house prices - continuously.
Athesius the Facilitator
February 22nd, 2009 8:31pm Report this commentIt just goes to show how thick the editor of the S Telegraph is he's splashed all that mortgage tripe all over this mornings front page. What a Wallie! Has he still not learned anything about this neo-Labour lot or his he in Mandelsons pocket. HMMMMM?
Silent Hunter
February 22nd, 2009 10:33pm Report this commentOh Christ!
£100 Billion to be 'blown' on printing money as a way to get us out of this Labour Recession.
Well they tried that historically in Weimar Germany and ended up having to carry their currency around in wheelbarrows because it became worthless (rather like Labour)
And in recent times the other country currently trying this wheeze is ........Zimbabwe!
Where inflation is running at a rate where the cost of basic staples such as bread, milk etc double in price every day.
No wonder Der Kluncken Fuhrers party is often called ZaNuLabour.
Printing money to get us out of this financial hole of Labours making, is pure insanity.
Either we get a General Election soon or we will need to remove these incompetents from Government forcibly..........no wonder JacbootStraw is currently sucking up to the police............he realizes that he may need them soon to crush dissent on the streets.
Silent Hunter - http://politicalnewsblogs.com/
Where Comment really IS Free.
JohnAnt
February 23rd, 2009 12:46am Report this commentThe next Big Idea will be to go after offshore funds, tax havens etc. following Ms Stalinchen's 'lead'.
Never mind the fact that they can't do much about it, ultimately.
Oh, and it's irrelevant that offshore non-taxables have played no part in the bank crisis or the recession.
Chris lancashire
February 23rd, 2009 9:26am Report this commentApart from DavefromLuton everyone has been distracted by the 100% mortgages issue. The real problems will start with "quantitative easing" i.e printing money. The first effect will be a plunging £ (expect $1.20 at best). This will be followed shortly after by rocketing inflation fuelled by import costs. Which, according to monetarists will be followed by increased interest rates. Great scenario.
cuffleyburgers
February 23rd, 2009 10:02am Report this commentI think Britain is facing its most dangerous crisis since 1939.
Pretty well everything that can be wrecked has been.
Education. The health service. The armed forces. The BBC. The economy.
I am not exaggerating if I say that this 11 years of labour government have been the most destructive in History. The Great Britain of my youth (I was born in 1963) has been smashed. And can never be fixed.
Leave the country and enjoy the old re-runs of Minder because that's all that is left.
Memories.
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