ZOMFG! Freaking idiots!

Just when you're ready to stop fighting it and begin to allow the waffle about bank rescues to pass without comment.  "Yeah, they must know what they're doing, they're learning from past mistakes, just get on with it and fix it."  Just when you're getting to that stage, something happens, something to shake you back to reality, something to prove that the world is run by idiots and we're all doomed.  And not only doomed, but double fucking doomed with knobs on.

I've just been watching Newsnight.  (Not exactly rock'n'roll, but it's a Tuesday and the Plan A Development Budget doesn't extend to Tuesday night entertainment.)  And I can't believe what I've just seen.  I think it may have been the single biggest concentration of fat-headed idiocy I have ever seen.  And Jesus H. Christ have I seen some fat-headed idiocy.

They were talking about how the U.K. Government has been taking stakes in the biggest mortgage lenders, and "what this means for the property market".

(The property market, as I've said before, is the least of everyone's worries!  Actual economic growth, employment, inflation, etc. is the damned problem!  Fix those things and property will take care of itself.)

I wish I'd recorded it, in years to come it will be used in medical treatment.  Whenever someone would be admitted to hospital with poisoning they'd be shown the video, the subsequent uncontrollable vomiting would cure the patient instantly.

The piece started O.K. with a recorded report which recapped most of the recent news, so far so standard, it was all things that we knew already.  "Credit crunch" this, mortgage lending woe the other, etc.  Then it went back to the studio, and that's where things went wrong.  The presenter did a good job of asking good questions and playing Devil's Advocate.

The government representative was Yvette Cooper, Chief Secretary to the Treasury, who quickly proved herself to be an idiot.  (Once more for Google: Yvette Cooper is an idiot.)  The government has been calling for the newly part-nationalised banks to maintain lending at 2007 levels.  The presenter asked a very pertinant question: "Given that the banks came within a whisker of bankruptcy, due, in no small part, to over-agressive lending, isn't it unwise to force the banks to continue lending?"

The answer.  Well, the answer was a single prolonged attack on my brain cells, and would make any right thinking person destroy their television set (or start angry-blogging!).  She said, from memory, "the problem was that those banks were dependent on wholesale funding; with our money, that's not a problem."

...

Wait...

...

What?

She's saying that high-risk unprofitable lending was only a problem because the people upstream from the bank wanted their return-on-investment; and when the ROI went away, so did the money.  Well, duh!, that's kind of the point.  But it was the second part of the answer that was the most worrying, she was essentially saying that since it was government money (i.e. taxpayers money; or, even worse, new money fresh from the printing press) that didn't matter any more; banks can lend whatever the fuck they want because the government won't care as long as they're placating the masses.

We are fucked.  FUCKED.  If solving financial problems was as easy as printing money, why has no-one thought of this before?  Oh, they have?  Shit...

If this was a treasury spokesperson (and, unfortunately, despite Yvette Cooper being an idiot, she is) saying these things then you can be sure this is official policy.

The other two guests were: head of the biggest chain of estate agents, and an individual who makes money from wannabe buy-to-let investors.  Well done BBC, good to see you're as impartial as ever when it comes to property!

The presenter asked some very good questions, but he was outnumbered three to one!  The estate agent rubbished the report, in a not very good way, he didn't really counter any of the points but launched an ad hominem attack on one of the people interviewed in the report.  The person in question had been warning for a long time that the property market was fueled on wholesale speculation (mortgage bonds, etc.) and would come to an end in a fairly painful manner; i.e. he warned of exactly the eventuality that is currently happening.  The estate agent described this person as being "always wrong".

What?

Those tactics of using ad-hominem against people blowing the whilstle on the property market worked before this crisis hit, people wanted to believe it.  This forecaster had been marginalised for years.  If he had been listened to by more people three years ago we wouldn't be in this mess now.  You can't call someone wrong when his prediction has just happened!  The very thing he isn't is wrong.  He's 100% right!

All the guests on that programme were complete half-wits.  Either that or charlatans, or both.  They even tried the "house prices grow at 10% a year" lie.  No, no they don't.  The Nationwide House Price Index clearly shows a long-term trend growth of 2.7%.

Presenter: "...but inflation is currently 5.2%, the highest it's been for years!"

Buy-to-Let Bloke: "That isn't the problem, the economy is the problem.  I don't care about inflation.  And stamp duty, let's get rid of that!"

(These same types of people - the names and faces change, but they're all from the same pod - were trying to lower interest rates and get rid of stamp duty "to help first-time buyers" during the boom years, now they want to get rid of them "to stimulate interest".  Yeah, I want free money too, but it ain't gonna 'appen, get over it!)

One question that wasn't asked, but should have been: "If the report was 'always wrong', and house prices are such a great investment, why are you in such a panic demanding for interest rates to be halved and stamp duty abolished?"

The estate agent even had the cheek/stupidity to say "mortgage lending was fine when there was money being lent".  Good observation there!  If an exponentially growing amount of money is pumped into an asset class then the prices of that asset will rise indefinitely, that observation has to be worth a Nobel Prize or two.  But, since no-one (who isn't a government) is dense enough to buy mortgage assets at this present time, now that there's no denying that most old mortgage assets were overpriced, house prices are shrinking.

But instead of coming to the conclusion that this is because the sustainable maximum of house prices has been breached, instead he demands the government to provide an unlimited amount of money.  And the government agrees!

Who the hell appointed these clowns?  Bollocks to whatever I may have said last week about voting Labour, or helping them in any way.  Fuck that shit.

I almost want this recession to get worse, just to finally flush these shameless cheerleaders out of the system, once and for all.  Being impoverished myself would be a small price to pay, the world as a whole would be better when we come out the other side.

All I know is:

• September mortgage approvals are at a record low.  The conventional rule-of-thumb is that mortgage approvals are an indicator for prices six-months hence.  So it's probably conservative to expect prices to fall for the next six months at the very least.
• Even with HBOS, etc. being forced to maintain 2007 lending, even though they don't want to, that still doesn't add up to much.  HBOS were generally a more conservative lender than some.  The more agressive ones: Northern Rock, Bradford and Bingley have been forced to be significantly more conservative!
• If the various predictions for a recession next year are true, then employment will be lower, and therefore fewer first time buyers and fewer traders-up.  (And, unless they pass a law banning reposessions, more repossessions.)
  
• In London, with the huge fallout in investment banking, the annual bonus season will be much reduced.  Places like Knightsbridge suffered massively in the 1990's crash, no City bonuses and not much foreign interest; the dormitory boroughs suffer the most.
  

Even with government funding I can't see house prices turning positive until the end of next year at the earliest.  And even then I wouldn't say it was likely.

So, in order to try and keep this pig flying we're all going to have to suffer inflation.  Don't forget that 5.2% was in September (i.e. before the government started printing infinite amounts of money to bail everyone out).  Inflation is going to be huge.  Commentators say that the coming recession will cancel it out; it'll have to be a disasterous depression to cancel out that much money-printing.

And all the newspaper front pages tomorrow are full of doublespeak "Cost of Living to Fall to New Low" on a day that inflation reached a 16-year high.  Has the government taken over the media yet?  Or is that happening next week?

Something is going on.  No good will come of this.  No good at all.  Mark my words.