Hilarious: Prime Minister Brown Should Buy Homes

What else?

http://www.bloomberg.com/apps/news?pid=20601102&sid=asbUPM85hwB0&refer=uk

Jan. 9 (Bloomberg) -- Prime Minister Gordon Brown should buy homes on the verge of repossession to add money to the British economy and save families from being thrown out onto the street, two former Bank of England economists said.

The plan would cost about 50 billion pounds ($76 billion) over five years, Fathom Financial Consulting economists Shamik Dhar and Danny Gabay said in a report today. The program would also provide a new economic policy tool as the central bank’s interest rate approaches zero.

The Bank of England yesterday cut its benchmark rate to 1.5 percent, the lowest since the bank was founded in 1694, bringing it closer to the limits of conventional monetary policy. U.K. officials are considering other measures such as buying assets to pump money into the economy as the recession deepens and threatens to exacerbate the housing-market slump.

“The smart asset to buy would be housing directly,” Gabay said in an interview. “The ideal thing is to go at the core of the problem. This would bring forward the necessary correction. It would to a great extent put a bottom to it.”

The government would finance the program by selling bonds, which the Bank of England could buy up to expand the supply of money, Fathom said. The proposals are a more direct intervention in the housing market than measures planned by the U.S. Federal Reserve, which this week started buying up securities backed by mortgages after bringing the interest rate close to zero.

‘Social Landlord’

Brown’s government would become a “social landlord,” charging rent to families and saving them from eviction, Fathom said. The plan would also allow banks to benefit through the removal of outstanding bad debts as financial institutions worldwide nurse more than $1 trillion in losses and writedowns from the credit crisis.

The ruling Labour Party’s surge of support from Brown’s handling of the economic crisis has started to wane. It narrowed the opposition Conservatives’ lead to as little as 1 percentage point in November from a gap of 28 points in September. Labour trailed by 5 points in the most recent poll of voters by ComRes Ltd. published on Dec. 22.

“We can’t solve every problem,” Chancellor of the Exchequer Alistair Darling said yesterday as he urged mortgage lenders to pass on the central bank’s interest-rate reductions. “There are areas, if we can help, then we’ll do it.”

Property Crash

House prices had the biggest drop since at least 1991 last year, declining 15.9 percent, Nationwide Building Society said Jan. 6. Banks are forcing potential buyers to raise down payments and are charging more for mortgages, pushing property prices down further.

The government should step in and “set a floor” under house prices, protecting taxpayers by paying below-market prices for houses and distressed homeowners by paying more than “vulture purchasers,” Fathom said.

“The average discount will probably be in the region of 10 percent to 20 percent below what asking prices are in the locality for similar properties,” the report said.

Fathom also suggested that any shortfall owed to a bank, if the value of the homes were less than the original loan, should be repaid from a share of the rent collected by the government.

“The way people are talking about it now is to say: We have a big problem, let’s print money,” Gabay said. “But many bailouts haven’t had the desired effect. Investors are still fearful of potential losses. We’re trying to say: If we’re going to do it, how would it work?”

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net; Brian Swint in London at bswint@bloomberg.net.

 

Housing associations bought 497 homes from Bovis for £47,500 each last week. Bad news if you live next door and paid three times as much and you now get some chavs or illegal immigrant neighbours.

 

Not that hilarious. The US and UK are throwing obscene amounts of money at everything.

If we're going to just change the rules for everything in the middle of the game, let's get serious and just pay off everyone's mortgage and start over.

 

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Don't know what the new game with GM will be;
but despite most NOT wanting to reward GM mis-management/punish TM,HMC,NSANY,DAI, they did just that @ the end of the 2008 game.

And your idea ,ralph500, debt pay/ forgiveness,is much better than UK;
people take much better care of thier own homes,
than they take care of gov homes.

 

I'm half joking and half serious here, but if politicians really want to help INDIVIDUALS, why doesn't BO and Congress pass this law:

As of FEB 1, 2009, all residential mortgages will have a zero lopped off the end. If you mortgage was $500K, it is now $50K, $100K is now $10K, $1M is now $100K.

Additionally, the Fed Funds rate will be taken back to 5% immediately.

Additionally, the gov't will set a 3 year schedule to sell all stakes in private institutions. The TARP program will be eliminated.

Now everybody quit whining and go the F home!

 

EU and England are Sociaist Countries.

They want that type of "System" Britts gave up their freedom long ago and now the are willing to lay down and die.

The EU and English Gov. have an agenda to push Socialism to the max.

Obama has the same plans. So we will see where the US is by the end of his 4 years. I doubt we will be a full fledge Socialist System but we will be close.

The majority of Americans are pushing for Socalism.

 

funny thing about americans is they like to call socialism to mild capitalism, while in reality socialism is a theory of social organization advocating state or collective ownership and administration of the means of production.

EU, UK and Obama are no socialists. at best they are social conscious capitalists.

 

It is interesting to see what happens to this "housing stock" when the gubmint owns it. Will the renters mow the lawn?

As a graduate of the housing projects just outside of Boston I can tell you it aint a pretty picture. When people don't own something they do not take care of it.

 

Do you know what that would do to disposable income in this country? I think we'd see a gigantic move in all assets as an incredible amount of money is unleashed into society.


On the other hand, can you imagine how the property-less and underdebted class would react?

I might rather have today's situation (and more debt) than the violence that might ensue from class dissention as a result of your plan.

The middle ground is the govt just sends a check of $20K to every citizen.

 

in the UK, as off March, all ISPs will be required to keep all emails sent/received out of the UK...

big brother brown will go after rebel bloggers, mind your words, it's 1984