Quote:
Originally Posted by Phoenix
Quite simply, banks and mortgage brokers have lent money out that they didn't have for too long, borrowing from one-another and loaning to people who never had the ability to pay it back, and now a few of them have gone bust because of this method, the ones who loaned them that now are short themselves, and thus the dominos begin to fall. It's a crippling time financially for every developed nation, and any "third world" nation that relies on products being exported to the West.
However, long-term, the housing market is lower, so first-time buyers will have a better time getting on the property ladder, globally, provided that there are mortgage companies (probably government-funded) who can lend them the money to give them that helping hand. Long-term, this benefits us all. Short term, we all struggle with the cost of day-to-day living, unemployment and increased crime rates. Right on election time, too!
There is no quick fix. Throwing money at it won't solve it. It only slows the process down. Money needs to only be given to those who have means to repay and money needs to not be borrowed from global markets and other companies, because if one fails, the rest have to compensate and we get this fiasco. Joy.
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Not to mention that the more money these governments throw into the mix, the more the value of the £ and $ will drop, which is a bit counterproductive.
I disagree on the part of helping global economy in the long run. While it will rise back up eventually, this time for the economy will never be viewed as "beneficial". With housing markets the way they are there, yes new buyers will be able to buy cheaper houses. However, this does them little good if the economy continues to deflate, especially with some major mortgage companies and banks refusing loans lately in the event that people will not be able to pay.