Is Darling guilty of criminal negligence?
November 21, 2007 at 11:02 am | In alistair darling, credit crunch, fraud, gordon brown, politics | Leave a Comment
Certainly somebody in his department is guilty of something. As the head honcho, Darling ultimately has to take full responsibility. His gross mismanagement of the Northern Rock situation and now his department puts at risk 25 million members of the general public?
Brown needs to act quickly and decisively. If not he will prove himself to be an even worse prime-minister than Tony Blair. At a time like this, when the global economy is so unstable, we need competent political leaders at the helm to guide us through the storm.
The Bush initiative may actually save US housing
September 4, 2007 at 7:00 pm | In credit crunch, fha, george bush, housing bubble, housing market, mortgage, odysseus medal, subprime | 3 CommentsSeattle based Jillayne Schlicke, winner of this weeks ‘Odysseus Medal’; highlights in her post what she believes to be the hypocrisy in President Bush’s Homeownership Financing initiative, which is supposedly a ‘common-sense, risk-based pricing structure’ scheduled to begin January 1st 2008.
The main aim of the initiative appears to be a modernization program aimed at the Washington based Federal Housing Administration (FHA), a government agency that provides mortgage insurance to borrowers through a network of private sector lenders.
“In the coming days, the FHA will launch a new program called FHA-Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes. In other words, we’re going to start reaching out and making sure people know that this option is available to them so they can stay in their homes” according to the president.
The problem with the above statement is that homeowners with good credit history aren’t usually the ones with sub-prime loans and are therefore less likely to be the ones feeling the effects of the current crises. Furthermore current indications in the prime mortgage market appear stable; but that may change as the credit crunch continues to bite.
Schlicke’s argument also suggests that it takes an enormous amount of effort for a mortgage broker to become FHA-approved, and that it’s really not worth it because of the ’small details’; including net worth requirements, audited financial statements, quality control and compliance issues, plus a rigorous employee payment requirement.
According to Ms Schlicke, for some small to medium sized broker firms, it was:
“a business decision: make more money selling subprime and leave the hassle of originating FHA loans to the banks. “See ya, wouldn’t want to be ya” was the motto when bank [loan officers] left to work for a brokerage firm where all the women and men were hotties, yield spread rapes were encouraged and celebrated and the underwriters gave unconditional loan approvals because the underwriters reported to the sales manager or were threatened with baseball bats.”
Bush also claimed in his statement that if a mortgage broker was ‘cheating somebody’, his administration would ‘find you and hold you to account’, reminiscent of the ‘with us or against us’ war on terror rhetoric, which – if history is our best teacher, well, need I say more?
Needless to say, any Bush initiative at this stage of his presidency will most likely be dismissed as hogwash by most people as its become way too easy to dismiss the man as a buffoon.
Truthfully, at the moment his words appear to be shallow political rhetoric, but if the credit crunch hits the prime mortgage industry, they may prove to be a little deeper than first imagined. And if the US economy recedes because of housing, his words may actually resonate further than we would all like to hear. If it gets to that stage, the program may not appear to be so useless after all.
Bloomberg makes the right move
June 20, 2007 at 5:36 pm | In bloomberg, manhattan, new york, politics, usa | 2 Comments
By no way do I consider myself an authority on American politics, but I do believe it was a very smart move by NYC Mayor Michael Bloomberg to quit the embattled Republican party and reposition himself as an independant.
By politically disassociating himself with Bush and pals and furthermore, by not returning to his old party, the Democrats, Bloomberg positions himself strongly for the White House as a true independent. Bearing in mind that in 2001, right after 9-11, Bloomberg joined the Republicans when New York and the rest of the country was standing with Bush and Rudy. Now however, for the most part, the Republicans are a bunch of losers, and there really is nobody in the Democratic party that’s looking much better either. So Bloomberg proves himself to be politically astute. Besides that, he’s done a pretty good job in managing New York City these past 6 years. Just look at the Manhattan property market, when compared with the rest of the country.
OFHEO director comments on Federal Housing Finance Reform Act 2007
May 23, 2007 at 12:21 pm | In housing bubble, housing market, legal, politics | Leave a Comment
“We commend Chairman Frank and Members of the U.S. House of Representatives for passing a balanced bill that will strengthen the nation’s housing finance system by enhancing oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
H.R. 1427 gives the new regulator the tools necessary to ensure the safety and soundness of the GSEs so they fulfill their congressionally-established mission, especially affordable housing. It is noteworthy that there was virtually universal agreement by all Members of the need to create a new and stronger regulator for the housing GSEs.
We recognize that a few issues remain and we pledge to continue
working with the House and the Administration on those issues. We are hopeful that the Senate will act quickly on this important legislation.”
JAMES B. LOCKHART, DIRECTOR, Office of Federal Housing Enterprise Oversight (OFHEO)
Industry reaction to HIPs announcement
May 22, 2007 at 9:57 pm | In hips, politics, ruth kelly | 1 CommentAssociation of Home Information Pack Providers (AHIPP):
“It is difficult to understand how RICS can claim that it is acting in the public’s interest by denying them this much needed reform, and the benefits of reduced carbon emissions as a result of the EPC.”
RICS
“We support the introduction of EPCs – we always have.
The additional time should be used constructively to iron-out the problems. The practical implementation of HIPs must serve the best interests of the consumer.”
National Association of Estate Agents:
‘total chaos’
Rat and Mouse
“Clarity to everyone”
Council of Mortgage Lenders
“This cannot be an appropriate way to make policy.”
RUTH KELLY’S STATEMENT
HIPs delay?
May 22, 2007 at 1:34 pm | In hips, politics, ruth kelly | 1 CommentUPDATE:
delay till August, but HIPs will now be phased in, starting with large home sales. The delay comes after a legal challenge from the RICS 
Ruth Kelly to make statement
Software threat to HIPs Launch
May 18, 2007 at 1:12 pm | In UK, energy, environment, hips, politics | Leave a CommentAccording to The Times:
… faulty software has thrown many of the training programmes for energy inspectors into disarray. It emerged yesterday that IT programmes to measure home energy ratings have failed to analyse the correct data.
One estate agent told The Times that a huge number of energy inspectors will have been trained on faulty software. Although two suppliers have had their software approved, two others — Property Tectonics and Northgate — are said to be still waiting, two weeks before the deadline on June 1.
Critics, including the Consumers Association, said yesterday that pilot schemes to test the packs had not been evaluated and that the proposal should be delayed for at least a year.
The Government is facing a legal challenge over the plan after the announcement by Royal Institution of Chartered Surveyors (RICS) that it was seeking a judicial review regarding a lack of consultation.
The latest problems came amid reports of a row between Ruth Kelly, the Communities Secretary, and Yvette Cooper, her deputy, over the Home Information Packs. Mrs Kelly wanted to scale the proposals down, but this was strongly resisted by Ms Cooper, the Housing Minister, who reportedly threatened to resign.
Mayor Ken "to help" on HIPs
May 2, 2007 at 10:09 am | In hips, ken livingstone, london | Leave a Comment
The Greater London Authority issued this press release on behalf of London Mayor Ken Livingstone this afternoon
Mayor helps Londoners gear up for home information packs
With a month to go until the Government introduces Home Information Packs, the Mayor and British Gas have extended their offer of cut-price insulation for homes in the capital until 1st July 2007.
From 1st June, if you are selling your home you will need to have a Home Information Pack before you put your home on the market. A Home Information Pack includes an Energy Performance Certificate, which gives a rating for the building, showing its energy efficiency and its environmental impact on a scale from A-G (A is the most efficient and G the least efficient). It includes information on the construction and location of the house and the fittings such as the heating system, insulation and double glazing for example. By insulating your home you can help to improve your energy efficiency rating.
The home insulation campaign is a first part of the Mayor’s Climate Change Action Plan, which sets out how London can contribute to tackling climate change.
London’s homes are responsible for 38 per cent of London’s emissions and so tackling climate change needs to start at home. Under the Mayor’s offer, Londoners can take advantage of cut-price cavity wall insulation (from £250) and loft insulation from (£274), installed by British Gas. The Mayor and British Gas will give each household that signs up for the offer £100 cash back when the work has been completed (1). Interest free credit will be available and for most households the energy savings will mean that the measures pay for themselves within a year (2).
The offer is available to every household across London that is suitable for the scheme and it is free to those that are on benefits (2). To take up the Mayor’s insulation offer, Londoners need simply to contact the helpline on 0845 070 5059 or for further information go to www.london.gov.uk.
Mayor of London Ken Livingstone said: ‘The new requirement for Home Buyer Packs will enable home buyers to choose ‘green’ when they are looking for a house. Our surveys show that over 82 per cent of Londoners are now concerned about climate change and many want to cut their own carbon emissions. To enable Londoners who are thinking of selling their homes to better prepare for this, I have agreed with British Gas to extend our offer of cut-price home insulation to 1 July. If you are thinking of selling your home, this is the perfect chance to both make a contribution to tackling climate change and to improve the ease of selling your property.’
Housing Minister Yvette Cooper said: ‘Energy Performance Certificates will give consumers energy ratings for homes similar to those found on fridges, helping them to reduce carbon emissions as well as cut their fuel bills. We want homebuyers with poorly rated homes to be able to get extra support so they can make the changes recommended. That’s why I welcome the extension of this deal available to Londoners. The Government is also developing measures to make it easier for homebuyers to access grants for energy efficiency measures, linking them to new EPCs.’
Andrew Reaney, Head of British Gas Residential Energy for London said: ‘ With thousands of Londoners already signed up for our cut-price home insulation, we are keen to keep this offer open for as long as possible to give even more homeowners across the capital maximum opportunity to benefit from this great deal ‘.
The Inflation Question
April 23, 2007 at 3:59 pm | In bank of england, economy, gordon brown, interest rate | 2 CommentsLast week, the Bank of England announced record inflation rates prompting Mervin King, the central bank’s governor to write a letter to UK chancellor Gordon Brown, explaining why consumer inflation had reached a level that was more that 1 percent higher than the recommended 2% inflation rate.
The letter did not explain why the 2% rate was chosen as safe inflation, since inflation at any rate is , well, still inflation. The question: why at 2% inflation is “good”, but at 3% inflation is “bad” intrigued my mind. I couldn’t get any answers in the FT, Wall Street Journal, or any other financial broadsheet, so I decided to do further investigation into the inflation question to see if I could come across some explanation, forcing me to re-read “The Force of Finance”
Krugman’s occasional recommendation of 2 percent inflation means that money would loose half its value within 35 years – one generation. Why is that good?
asks Brenner
Indeed, in some of his writings for Slate magazine and others, Krugman appears to admit that inflation targeting as a solution/strategy for economic advancement may be fundamentaly flawed, since, by the professors own admission:
The Consumer Price Index overstates inflation. Nobody really knows by how much, but Boskin and company made a guesstimate of 1.1 percent annually. Compounded over decades, this is a huge error.
In Mervin King’s letter to the Chancellor last week, he blamed the record CPI on “a sharp increase in energy prices during the second half of last year” which he feels ” more than offset the fall in petrol prices”. King also blames the record inflation rate on a rise in food prices caused by “bad weather”. This – King states – accounts for one half of the CPI pick up over the past year, which has risen to 3.1% from 1.8% this time last year. King points to this “upside” in inflation, which forced the bank to raise interest rates by 75 basis points over the past couple of months. Most economists are predicting imminent rate rises in light of the inflation figures and to a lesser degree, the strong pound against the dollar.
Although Gordon Brown appears satisfied with this strategy, Kings argument for rate rises is not flawless, because if rising interest rates were the cure against rising inflation, then the interest rate rises in August last year and the “surprise” rate rise this past January should have curbed the inflation rate, but this has not happened.
Furthermore, King is blaming the rise in inflation on energy prices and the weather, all aspects of human life that he has absolutely no control over. So if King and the bank of England have no control over the causes of inflation, how can we realistically expect him to have the cure?
Yes, there is such a thing as a zero-carbon house
March 26, 2007 at 5:23 pm | In UK, design, environment, gordon brown, politics | Leave a Comment
last week, in his annual budget speech, UK Chancellor and soon to be Prime Minister Gordon Brown, announced to the nation that from October 1st 2007 all new zero-carbon homes costing up to £500,000 will pay no stamp duty and zero-carbon homes costing in excess of £500,000 would receive a £15,000 stamp duty tax reduction.
Unsurprisingly, Browns announcement was greeted with heavy skepticism and nobody I spoke with seemed to had ever seen or even heard of a zero-carbon house; but alas, we can reveal that – yes – there is indeed such a thing as a zero carbon house!
Spotted this weekend at the Birmingham Property Show, the “Eco Pod” boasts that it can “reduce energy requirements and costs by up to 90%, producing virtually no CO2 emissions”
But wait … there’s more …
According to the website, the Eco Pod does not need planning permission “in the majority of cases” , yup, you heard right; all you need is “a flat firm (hard standing or concrete) level surface … and we will do the rest.”
And at prices starting at a meager £45,000 (waay under stamp duty), the EcoPod may be the answer to a lot of problems, or may indeed be the creation of a whole new set of problems, depending on who you speak to … who knows, maybe the guy who invented it will build a £500,000 model, so we can at least get some satisfaction we’re beating the government, whoopee, cant wait for that to happen !
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