Wolverhampton 01902 577775Bilston 01902 577767Lettings 01902 577799

Wolverhampton
01902 577775

Bilston
01902 577767

Lettings
01902 577799

30 | 04 | 08

None are so deaf as those who will not listen

Posted by: katalysis

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When questioned by MPs the other week Mervyn King was asked about what the Bank of England could do to influence the activities of Bankers and curb their tendencies to excess and folly. His reply was to the effect that he and his colleagues made speeches. Problem was they couldn’t make the Bankers take notice of what they said. Snippets from the past include…that bottle of champagne with triple A rating on the label may prove flat when you open it (Collateralised Debt Obligations)…. the risk premia are too low (you’re not properly assessing the risk of loan default) and more importantly for us a whole host of head scratching about how the price of houses could get so out of kilter with earnings and why hadn’t people woken up to the fact that in a low inflation economy the cost of debt repayment over the life-time of a loan is not eroded by healthy pay rises as had happened in the past. For us the risk now is that those who got sucked into the hype about soaring house prices will lurch to the other extreme and expect a crash. We’ve said before that a modest correction is to be expected and is healthy as it helps first time buyers and those who are trading up.
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