Never fear, equity is here. Data from the Council of Mortgage Lenders (CML) reveals that there are 3.9 million outstanding interest only mortgages, and between now and 2020 no less than between 131,000 and 158,000 of these mortgages will mature every year. A big cheese at the FSA has called this a ticking bomb. It’s okay, relax, says the CML, most of these mortgages were taken out when house prices were much lower. There is plenty of spare equity. In other words, thanks to the property bubble, there is no need to worry mortgage debt. That got me thinking, and I have just uncovered a theory from a highly respected economics professor, who has some pretty radical ideas for stemming not only property, but equity bubbles. One idea is designed to put an end to just about all speculation in shares. I repeat, it is pretty radical, but he may have a point.
The vitriol aimed at British banks won’t go away. Over the weekend, the ‘Mail’ led with a story headlined “Banks’ day of shame – three fatcats in line for £42mn, Barclays makes millionaires of 238 staff, but still they won’t lend to small firms.” This morning’s ‘Guardian’ headlined: “Banks’ macho culture ‘holds women back’.” And also this morning the ‘Times’ published an interview with Mervyn King in which the Bank of England governor was quoted as saying that banks are in denial over their failure to deal with the banking crisis. But I reckon the problem lies deeper than the press commentary would have you believe it. The real problem is endemic within the UK, and it lies with our obsession of debt over equity. More…
Bull and Bear, an optimistic and pessimistic view of investment news. Today’s stories include: China hints yuan is to be set free. Food prices flat in August. But retail sales fall.UK still growing. Carlyle plans float.
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