Thursday, January 31, 2008

Plugging the Gaps

Oil giant Shell, may have recorded the biggest profits in British company history but other news this week's suggests that a financial storm is on the way that none of us will escape.

Firstly, yesterday's warning from the Financial Services Authority (FSA) warning that one million mortgages may be at risk of serious financial difficulty and possible re-possession in the present economic cliamte.

The FSA cites three warning signs on mortgages:

· The loan was taken out for longer than 25 years;

· It is worth more than 90% of the home;

· The amount borrowed is 3.5 times or greater than income .

Over a third of all mortgages sold between April 2005 and September 2007 fall into one or more of these categories. This suggests that more than 2m of the 5.7m mortgages written during this period are of potential concern.

If that isn't worrying enough, then the Institute for Fiscal Studies (IFS), predicts that the national tax burden will be at a 24-year high in five years' time, despite public spending falling to an eight-year low. Families face having to pay £2,900 a year more in taxes by 2012 in order to fund the Government's spiralling spending and borrowing commitments.

The institute, which uses the Treasury's own figures in its calculations, says that while the £8 billion tax rise - equivalent to around 2p on income tax - would be "prudent", the Government is likely to shy away from it, forcing it to borrow even more or spend less.

The taxpayers' support for the Northern Rock bail-out could add £100 billion to net debt - seven per cent of national income - if the Office for National Statistics rules it must be included on the Government books

One more sign of market difficulty, above and beyond that of Northern Rock is that last week, one of the larger commercial property funds (CLOSE) suspended trading indefinitely. Like Northern Rock, there was a run on the fund as investors sought to recover their money and it's had to shut the doors until sentiment calms and it can recover its liquidity. All rather worrying for investors as confidence in the economy declines.

Back in the clouds however, we still keep hearing from No10 and No11 that everything is under control, so that's alright then. However, it wil be interesting to look back on this entry in twelve months time, when my 2007-2008 tax return has gone-in as to what new surprises this year will generate the tax revenues that government now so desperately needs to plug the cracks in the economic dam.

And the chap in the photo? I wonder what he would think of it all?


Anonymous said...

Buy gold!

Michael Child said...

I think I can help with Wilson by quoting him directly, not sure I have the time frame right on all the quotes.

As economics lecturer at Oxford university. “All the little gnomes in Zurich and the other financial centres about whom we keep on hearing.”
As a politician. “A week is a long time in politics.”
As a Foreign Secretary. “Whichever party is in office, the Treasury is in power.”
As a Prime Minister. “Courage is the art of being the only one who knows you're scared to death.”
On leading the Labour Party “This party is a bit like an old stagecoach. If you drive along at a rapid rate everyone aboard is either so exhilarated or so seasick that you don't have a lot of difficulty.”
As a peer of the realm. “He immatures with age.”

Anonymous said...

On devaluation didn't he say something about the pound in our pockets still being worth the same? Mortgage failures are in no one's interests so why can't banks and building societies sit down with lenders in difficulty and help them plan their way out of debt; accept reduced payments; restructure the mortgage etc. Re-possessions on a huge scale are not good news for any-one. If a family are made homeless doesn't the tax payer pick up the bill to house them? Will their be calm heads around?

anon again! said...

anon again!
Exactly, most problems can be avoided if they are dealt with before they get seriously dangerous. Big Lender's like Nationwide, Abbey and the like are usually very coherant and willing to help. On the other side of the coin, I wouldn't care to trust Banks like Barclay's or HSBC with my property.(too much bad publicity recently in the media)

Anonymous said...

Back in 1987 there was a firm of local solicitors who were taking out possession orders at the rate of 5 per day.

This in effect gave local families about 15 months to sell under market value under pressure or face eviction.

With official figures for male unemployment in Margate being 27.1% I think, it was notieable that the families being taken to Court for Possession Orders were EMPLOYED and in typical low p[ay Thanet employ.

Typically just three months in arrears.

It seems that Maggie gained the co-operation of the Building Societies.

In Wales for example people 18 months in arrears had still not been county courted.

But people in an eighty mile radius of London would get no such leniency.

We ended up camping at Nethercourt, along with a few other families, told by TDC that they could not help because we were classed as voluntary homeless.

We started again in another part of the country.

As a skilled contractor I waas earning between 700 and a 1000 a week.

And we became Thatcherites.

hence if we turned up at a site as contractors to find out that the agents had lied about the pay on offer (to get us to site) then we would just b-gger off telling the site engineers "We are all Thatcherites now"

So when you whinge about half the contractors not turining up to do rail track work over Christmas. THINK ON.

These men may have been like me.

I was one of 29 adults from my mine paying my own way through college. That is how I got my qualifications.

No pay. No play.

And to think when we were county courted I was working for 123 quid a week for a typical Thanet employer.

At the time in 1987 there was research done by a university into the effect in Thanet. It pointed out that the people being ripped out, to promote Maggie's centralised Commissariat ideas of producing mobility of skilled labour, were the youth club leaders, the St Johns Ambulance volunteers, the cadetr Force leaders, the judo club instructors etc. The unsung people who weld society together.

This research gelled with us. My wife was a St John nurse back then. I did cadet leadership, judo and helper with disabled swimming.

But we are glad that if it had to happen it happened to us young with young kids.

My grown up kids now have a much better attitude to survive.

For example at the Chester Zoo toddle for Barnardos walk a couple of years ago there was a black child running out of control.

This lad sent our little grand daughters newly bought Chester Zoo helium balloon sailing away. Ha ha ha.

My daughter went straight after the black adults (who turned out to speak no English). They sucked their lower lips at her.

She told them to stick that behaviour up their ars-s and get their money out.

With that the father whipped out a wad of tenners and peeled off one and flung it at my daughter.

She thanked him but told him he is in England now and all she wants is the price of the ballooon. Searched through her purse to get the right change and then threw it in his face.

He looked round and saw my 18 stones getting to its feet and sat down taking his lesson in English standards quietly.

All around there was applause.

If you are in a queue in Thanet and an asylum seeker walks to the front. It will be my daughters or sons in law who are the ones who drag them to the back of the queue.

There is no such thing as society.

we are all Thatcherites now.

And a good dose of mortgage foreclosure will liberate this country further.

Hard on the victims in the short term. But then the victims become hard. No pay no play.

Too hard, for example, for police who think they are now a force of social control.