Re: German inflexibility of thinking : Tue Feb 14, 2012 12:31 am  

Dally wrote:

Look at the UK - policy is aimed at supporting mortgage holders / debtors and therefore banks at the expense of those with savings or capital. So, the prudent and those who did well in good times are paying and the others benefitting, largely because the debtors and poor can't pay directly (although will by virtue of a reduction in State support).

The problem with this analysis that you keep bringing up is that you're assuming the poor are those that are most indebted. The people that have gained most direct benefit out of the low interest rates are the middle classes that were climbing up the property ladder and mortgaged themselves to the limit just before 2009 and so have enjoyed lower repayments than would have otherwise been expected.

I know people talk about the 'poor' having debts from buying on catalogues etc but those sort of debts are usually very high interest rates that have not been brought down by the Bank of England rate being low, the beneficiaries are mainly mortgage holders. Most of the 'poor' are not home owners and do not have the debts that the middle class homeowning types do.

The main benefit of the lower interest rates is that it has prevented the economy from going back into recession and hence more people losing their jobs (recessions tend to hit the poor proportionally harder in terms of unemployment outcomes)

Re: German inflexibility of thinking : Tue Feb 14, 2012 9:41 am  

sally cinnamon wrote:

The problem with this analysis that you keep bringing up is that you're assuming the poor are those that are most indebted. The people that have gained most direct benefit out of the low interest rates are the middle classes that were climbing up the property ladder and mortgaged themselves to the limit just before 2009 and so have enjoyed lower repayments than would have otherwise been expected.

I know people talk about the 'poor' having debts from buying on catalogues etc but those sort of debts are usually very high interest rates that have not been brought down by the Bank of England rate being low, the beneficiaries are mainly mortgage holders. Most of the 'poor' are not home owners and do not have the debts that the middle class homeowning types do.

The main benefit of the lower interest rates is that it has prevented the economy from going back into recession and hence more people losing their jobs (recessions tend to hit the poor proportionally harder in terms of unemployment outcomes)

That's why I said the debtors and poor. In fact, one could argue that big mortgage holders are poor. They do not own their own house like they think and are encouraged to believe. What the "own" is a large debt with the right to occupy whilst they service that debt. In many cases the value of that debt exceeds or is close to the value of the property (and the latter will probably decrease in value as the UK prospectively loses its AAA rating and unemployment increases, whilst the former will only decrease if repaid).

Re: German inflexibility of thinking : Tue Feb 14, 2012 12:38 pm  

Dally wrote:

That's why I said the debtors and poor. In fact, one could argue that big mortgage holders are poor. They do not own their own house like they think and are encouraged to believe. What the "own" is a large debt with the right to occupy whilst they service that debt. In many cases the value of that debt exceeds or is close to the value of the property (and the latter will probably decrease in value as the UK prospectively loses its AAA rating and unemployment increases, whilst the former will only decrease if repaid).

On the other hand its a huge apple cart to upset if and when mortgage providers decide that they want their money back now rather than ride the depression for two or more years.

It never ceases to amaze me how organisations who are very quick to emphasis the long term nature of investments, especially mortgages, suddenly become very nervous when house prices start to fall and start reviewing their books for those who are about to fall into negative equity - its only negative for as long as it takes for demand to pick up again, and that demand is triggered by the very same people who are doing the review, in other words lend more and you'll create the demand that will cause your negative equity figures to fall back again.

From a personal point of view I am very happy with the mortgage service that the Nationwide offer as a "traditional" building society as they do seem to take a long term view on their loans and are more than happy to discuss extending terms or reducing for short periods your repayments rather than go through the hard man routine and get you out on the streets, it is after all in their interests to keep you in the property and have you pay something every month rather than own an empty property that they can't give away at auction let alone raise their equity in.

Re: German inflexibility of thinking : Wed Feb 15, 2012 4:51 am  

I think you'll find most banks in the UK revised their foreclosure strategies as a result of housing price collapses in the 1980s. As you say, its far better to partially write down the value of mortgages in aggregate on your books than crystallise actual losses by foreclosure. Especially since the very act of mass foreclosure adds to the vicious cycle of negative equity and further foreclosures. Banks obviously do sell from under defaulters, but generally not as quickly as in the 1980s.

On a case-by-case basis the main thing borrowers in difficulty should do is pre-emptively talk to their bank, rather than wait for the wheels to fall off completely. I know of some very good deals made with high street banks in difficult times, including long interest holidays. The customers they do tend to hammer are those that bury their heads in the sand, don't talk to them up front, and refuse to answer letters and phone calls. In those cases the banks tend to act tough because the customer themselves leaves them no option.

Re: German inflexibility of thinking : Wed Feb 15, 2012 6:38 am  

Mintball wrote:

Off the top of my head?

Luther, Grünewald, Bach, Schubert, Haydn, Handel, Bach (there was more than one), Beethoven, Schumann, Wagner, Strauss (Richard), Brahms, Mahler, Neitzche, Schopenhauer, Kant, Marx, Brecht, Weill, Eisler, Grass, Mann (Thomas and Hienrich), Dietrich, Lang, Pabst, Goethe, Schiller, The Brothers Grimm, Dürer, Kraftwerk, Gutenberg ...

That's off the top of my head. And it ignores science and medicine, of which I have limited knowledge. But every one of those have influenced culture way beyond the boundaries of the German lands.

sorry,you can't have dear old Gustav - he was Austrian

Re: German inflexibility of thinking : Wed Feb 15, 2012 7:29 am  

BrisbaneRhino wrote:

I think you'll find most banks in the UK revised their foreclosure strategies as a result of housing price collapses in the 1980s.

So why were they happy to offer 125% motgages then?

Re: German inflexibility of thinking : Wed Feb 15, 2012 9:21 am  

sanjunien wrote:

sorry,you can't have dear old Gustav - he was Austrian

Damn!

I'd excluded Mozart and assorted Strausses already on the same grounds.

Re: German inflexibility of thinking : Wed Feb 15, 2012 10:01 am  

BrisbaneRhino wrote:

On a case-by-case basis the main thing borrowers in difficulty should do is pre-emptively talk to their bank, rather than wait for the wheels to fall off completely. I know of some very good deals made with high street banks in difficult times, including long interest holidays. The customers they do tend to hammer are those that bury their heads in the sand, don't talk to them up front, and refuse to answer letters and phone calls. In those cases the banks tend to act tough because the customer themselves leaves them no option.

I'd agree with that, a couple of years ago with only one of us working we needed a bit of slack cutting, I rang the Nationwide and they offered to extend the mortgage which brought the payments down to half what we were paying - ok so its going to take five years longer and more interest but the short term relief was the primary concern - the extended years are irrelevant as we will sell this house and down-shift long before it comes to an end, the next move will wipe out the mortgage, everyone happy.

Re: German inflexibility of thinking : Wed Feb 15, 2012 10:09 am  

Mintball wrote:

Damn!

I'd excluded Mozart and assorted Strausses already on the same grounds.

well,no one's perfect !

except for James Roby............

NB :
useless infomation - you could have had Richard Strauss a well known German composer, roughly at the same time of Mahler who was also a 'romantic' composer following the later Wagner trend and totally unrelated to the austrian Strauss clan

see,I told you it was useless infomation !

Re: German inflexibility of thinking : Wed Feb 15, 2012 10:20 am  

sanjunien wrote:

well,no one's perfect !

except for James Roby............

NB :
useless infomation - you could have had Richard Strauss a well known German composer, roughly at the same time of Mahler who was also a 'romantic' composer following the later Wagner trend and totally unrelated to the austrian Strauss clan

see,I told you it was useless infomation !

Damn again! Did I not include Richard Strauss in that initial list? I'd meant to. <i>Also sprach Zarathustra</i> is quite glorious – possibly the apotheosis of 19th-century romanticism.

The first movement is famous as a result <i>2001</i>, of course, but the second is like floating in honey.