Labour to reveal state-backed mortgages plan



LeDroit

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So let me get this straight;
1. Labour create a new quango.
2. Labour guarantee the borrowings of householders who would otherwise not be able to guarantee to pay back their mortgages.
3. Labour then bundle together these guarantees and sell it as a bond on the open market.

Is this sounding familiar to anyone? It's basically the FannyMae/FreddieMac debacle all over again. Once these people start defaulting the State will be left to pick up the tab and the junk bond will infect the whole system!

It's no wonder Labour don't do policymaking. They should stick to populist soundbites.
 
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So let me get this straight;
1. Labour create a new quango.
2. Labour guarantee the borrowings of householders who would otherwise not be able to guarantee to pay back their mortgages.
3. Labour then bundle together these guarantees and sell it as a bond on the open market.

Is this sounding familiar to anyone? It's basically the FannyMae/FreddieMac debacle all over again. Once these people start defaulting the State will be left to pick up the tab and the junk bond will infect the whole system!

It's no wonder Labour don't do policymaking. They should stick to populist soundbites.
Not only that but anybody thinking of availing of them would have to take out multiple Insurance products as well.

Labour SUB PRIME coming soon to a bank near you.
 

needle_too

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Brilliant plan!

Loan state money to prop up inflated house prices.

Cant see any problem with that.

Not a one.

No Sir.

Edit - Just for sh!ts and giggles I notice its even called 'Prop'. LOL. Genius.

Labour - blowing into a deflating balloon.
 

grafter1

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I am pleasantly surprised to see Labour coming forward with a policy/plan in the area.

However i was wondering where i could buy some CDS in relation to these securities?

Bad idea
 

johntrenchard

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"It also includes a proposal for banks to pool bundles of the state-guaranteed mortgages to create bonds that would be sold to investors on the international markets. "

oh dear god - here we go again - SUBPRIME MORTGAGES.

this is exactly what happened in the U.S. , with state owned Fannie Mae and Freddie Mac mortgages - and that caused the current crisis in the first place.

Sorry Labour - you need to try again. this aint going to work.
 

White Horse

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All this will do is to keep property prices artificially high and continue our wage uncompetitiveness.
 

johntrenchard

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and it gets better...

"To offset risks for the state, the property, while it could be old or new, must be within a price range set by the agency, thereby ruling out excessive lending that led to the property bubble burst."


so in effect, Labour are proposing to nationalise the property market, via price controls.

as well as introducing subprime mortgages:
"As part of the proposed Labour policy, pools of mortgages would be sold as bonds on the international markets thus promoting international investment in Ireland. "

dear god almighty.

Can anyone in Labour think outside the usual Soviet state controlled mental box?
Seems like they can't.
 

ivnryn

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and it gets better...

"To offset risks for the state, the property, while it could be old or new, must be within a price range set by the agency, thereby ruling out excessive lending that led to the property bubble burst."


so in effect, Labour are proposing to nationalise the property market, via price controls.
In fairness, that doesn't represent price controls. They are saying that the State back mortgage system would only lend if the price of the house was reasonable.

Ofc, if they ban people who obtain their own mortgages from buying/selling outside that price, then that represents price controls.

Also, it sounds like they won't lend mortgages if the price is to low, which is a terrible idea. It prevents the buyer from getting a reasonable price, which puts the lender at more risk.

However, I do agree that state back mortgages are not a good plan.
 
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In fairness, that doesn't represent price controls. They are saying that the State back mortgage system would only lend if the price of the house was reasonable.

Ofc, if they ban people who obtain their own mortgages from buying/selling outside that price, then that represents price controls.

Also, it sounds like they won't lend mortgages if the price is to low, which is a terrible idea. It prevents the buyer from getting a reasonable price, which puts the lender at more risk.

However, I do agree that state back mortgages are not a good plan.
SO who decides is the price of the house is reasonable ?

Couple of Union guys with couple of dolies ?
 

johntrenchard

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In fairness, that doesn't represent price controls. They are saying that the State back mortgage system would only lend if the price of the house was reasonable.
but since it is state backed , then it is obvious that private lenders would steer mortgage lending through this scheme - because ultimately the taxpayer will pick up the tab for bad loans.

So therefore mortgage lending will become risk free for private institutions, and as a result pretty much the entire mortgage market will become state backed.

so we're back to effectively nationalising the property market.

who determines what's "reasonable"? answer : the state.

and foots the bill for bad loans? : the state.

Thus Labour's proposal would in effect get us even MORE into a debt spiral.

I do note from that examiner story that the banks are all in favour of it - of course they would. it would allow them to have totally risk free lending.

"Banks and the Financial Regulator have already privately signalled support for the Labour plan. "

http://www.irishexaminer.ie/ireland/labour-to-reveal-state-backed-mortgages-plan-131891.html
 

Thac0man

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Is this sounding familiar to anyone? It's basically the FannyMae/FreddieMac debacle all over again. Once these people start defaulting the State will be left to pick up the tab and the junk bond will infect the whole system!
Exactly. After all the muck we have been through and are still wading through Labour have come up with state backed Sub-Prime lending as a solution. How can any serious political party with even a remote grasp of economics propose such a move? It not only puts another serious question mark over Labours policies but also the internal party thinking and mechanisms that allow it to get this far. Labour seem to have not moved beyond the policy of sustaining unsustainable expectations.
 

johntrenchard

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Exactly. After all the muck we have been through and are still wading through Labour have come up with state backed Sub-Prime lending as a solution. How can any serious political party with even a remote grasp of economics propose such a move? It not only puts another serious question mark over Labours policies but also the internal party thinking and mechanisms that allow it to get this far. Labour seem to have not moved beyond the policy of sustaining unsustainable expectations.
to be honest, i'm as shocked as you about this - any policy maker with a whiff of intelligence would have researched the Fanny Mae/Freddie Mac subprime disaster.

I really thought better of Labour. Thought they'd be a bit more intelligent about this.
 

captainwillard

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to be honest, i'm as shocked as you about this - any policy maker with a whiff of intelligence would have researched the Fanny Mae/Freddie Mac subprime disaster.

I really thought better of Labour. Thought they'd be a bit more intelligent about this.
That is the problem with Labour. They are very statist and expect the taxpayer to pick up the tab for their daft ideas.
 

redhead101

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to be honest, i'm as shocked as you about this - any policy maker with a whiff of intelligence would have researched the Fanny Mae/Freddie Mac subprime disaster.

I really thought better of Labour. Thought they'd be a bit more intelligent about this.
Call me old fashioned, but I think I'll wait to see the actual policy before I make a judgment on it.
 

johntrenchard

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That is the problem with Labour. They are very statist and expect the taxpayer to pick up the tab for their daft ideas.
this is also very worrying in the macro sense.

Bear in mind that Wall Street is SHORTING Irish bonds right now. And if one of the major opposition parties is coming out with daft ideas, that will only prove to investors that to take short positions is the correct one.

Watch our bond rate shoot ever higher.
 

Sync

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"Tired of watching your banks sell their debt then having the taxpayer bail them out after people begin to default? Well worry no more! We'll replace these highly paid professionals who made mistakes with our well meaning amateurs. Think of the money we'll save by just having the taxpayer pay off the defaults immediately!

Labour. Cutting out the middle man for YOUR benefit."
 

H.R. Haldeman

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Finally, a real policy from Labour...and it's a total pig. In fact, it's disgraceful, populist nonsense that shows a frightening tin ear to what got us into our catastrophe.

For those of us looking to vote the government out is the alternative really a confused and uninspiring FG and a ridiculous Labour? Seems so. Not good enough.
 


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