asterisk2a + loan-guarantee   4

▶ Help to Buy sparks supply and demand fears - YouTube
UK's property market is the most unappetizing one around Europe. Too prizy for shitty weather. Then the prize of mortages are cheap because of ZIRP ... once rate rise in 3-5 years ... people on median income who wouldn't have been able to afford one otherwise can't afford one now - when rate rise. peoples houses get repossessed and gov with the scheme (gov guarantees 15% of the loan) is having to pay part of the bill. George Bush did the same in his first year as President - subprime was the result.
state  guarantee  Repossession  Career  Politicians  2013  incentive  economic  history  demand  and  supply  fiscal  policy  property  bubble  UK  loan-guarantee  political  error  fiscal  stimulus  and  Help  to  Buy  Scheme  davidcameron  political  folly  financial  incentive  guarantees  subsidies  GeorgeOsborne  policy  error  subsidizing  policy  folly 
october 2013 by asterisk2a
Cash in as our desperate government inflates a new housing bubble - MoneyWeekMoneyWeek
So if prices are going up, people think that their situation is improving. Happy families make happy voters – and happy voters vote for the party in power. That’s why a massive mortgage subsidy scheme – Help to Buy – has been thrust upon us. And it seems to be working. Prices and sales are rising. [...] Trouble is, interest rates right now are at or near record lows. So mortgage servicing costs are only likely to rise. Ironically enough, it could be an economic recovery that does the damage: a recovery would result in higher rates, pushing mortgage payments up, and making many loans unaffordable. [...] As long as things look good come May 2015, it will happily ignore any potential collateral damage. And the scheme has had an almost-immediate impact. Formally launched in this year’s budget in April, it has already seen sales of new homes surge. The government now plans to expand it from next year.
state  guarantee  microeconomic  policy  2013  Politics  microeconomics  fiscal  policy  property  bubble  UK  unintended  consequences  loan-guarantee  Help  to  Buy  Scheme  collateral  damage  davidcameron  subsidies  guarantees  Funding  for  Lending  Scheme  GeorgeOsborne  subsidizing 
august 2013 by asterisk2a
"The Inequality Trap" by Kemal Derviş | Project Syndicate
The University of Chicago’s Raghuram Rajan, a former chief economist at the International Monetary Fund, tells a plausible story in his recent award-winning book Fault Lines about the connection between income inequality and the financial crisis of 2008.
Rajan argues that huge income concentration at the top in the US led to policies aimed at encouraging unsustainable borrowing by lower- and middle-income groups, through subsidies and loan guarantees in the housing sector and loose monetary policy. There was also an explosion of credit-card debt.

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The recent work by Rajan, Stiglitz, Kumhof and Ranciere, and others explains the apparent paradox: those at the very top financed the demand of everyone else, which enabled both high employment levels and large current-account deficits.

PLUS - leverage and low interest rate environment

Stagnant incomes of US households (the 99%) is in the making since 70s. Is this Globalization effect? Playingfield gets leveled?
globalization  income-gap  income  inequality  income  USA  QE  ZIRP  Leverage  macroeconomic  policy  microeconomic  policy  mortgage  subprime  freddiemac  FannieMea  loan-guarantee  subsidies  monetary  policy  fiscal  policy  inequality  book  debt  bubble  bubble  GFC 
march 2012 by asterisk2a
Obama lied, Solyndra died | Power Line
Jim McTague of Barron’s noted over the weekend that, two months before Obama’s glowing speech, PricewaterhouseCoopers released a fear-filled note in its audit of the company, which has accumulated losses of $558 million in its five-year lifetime. The firm noted that Solyndra “has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern.”

Solyndra proved to be a model alright — a model of the wreck Obama has made of fiscal and economic policy, a model of crony capitalism, a model of waste and/or corruption. Solyndra has filed for bankruptcy and laid off 1,100 workers. Before filing for bankruptcy Solyndra blew through the $535 million loan guaranteed by taxpayers’.
barackobama  presidency  recovery.gov  stimulus  loan-guarantee  GSE  economics  scandal  2011 
september 2011 by asterisk2a

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