Can't disagree with any of that. I suppose the point I was trying to make is that the public were dealing with highly trained Sales People which is a very different thing to what they might have perceved a Financial Advisor to be. As I said I know a lot about sales tactics and to put it mildly, the ethics were seriously missing and their advice was seriously misleading. Had I listened to them I would probably have 4 or more NE properties dotted around the globe.
Not surprised to hear this, and I agree that sales tactics were very "agressive". But the problem lies within the mistaken belief by people that a sales person is trying to get them a good deal that is of benefit to them. People in general do not have this attitude towards car sales people. Correct me if I'm wrong, considering that you have some experience in this field, but the tactics used to sell a mortgage or a car or anything else, is pretty much the same. And technically a good sales person doesn't really care too much about what it is they are selling, as the punch lines and jargon used doesn't really differ.
I don't disagree with anything that Chris said in his last post either but as I said before neither debt restructuring nor the other options I suggested are debt forgiveness and no external party has to foot any bill. I work in a business that gives trade credit to customers and we have been flexible in providing solutions to those that over-stretched themselves. These are solutions that we wouldn't have countenanced before but we're in extraordinary times so things have to be done differently. It's just common sense and banks should do the same.
Yes I think banks could be more flexible in a lot of circumstances. However, I see two major issues:
1) Those in negative equity often already have 30 or 35 year mortgages; even if they could justify increasing the term to 40 or 45 years (considering that a lot of people would be pensioners and still be paying their mortgages), this would not make a big enough difference for someone out of work.
2) Due to the bank bailout there is no incentive to be innovative or flexible. Essentially the bailout was to the benefit of creditors, and they are the only ones that can really put pressure on banks to reduce risk and increase chances of recovering funds. But as they have been bailed out, they really don't care what the banks do or don't do; either way they'll get their money back.
I read an excellent article on the reason for the behaviour of bank creditors by economist Russ Roberts. He makes some very logical points, well worth the read:
http://mercatus.org/publication/gambling-other-peoples-money
Remember when we all had "homes" and not "houses".
Very good point. I was talking to my father in law the other day, who is in his 60s, so still relatively young. And he said that in his and his father's generation you made the money first and then you purchased a house with as small a mortgage as possible; according to him borrowing more than your annual income was a no-go.
What planet are you on?
An entire generation of young couples are in serious negative equity, which will drastically effect the quality of their lives due to being sold hugely overinflated properties that will take 20 years or more to right recover.
This will be a drain on society for a long time, comments like just pay more off the mortgage are insulting to people who are already stretched to due to massive wage cuts and in many cases the loss of one or both incomes.
Saying that people were "being sold hugely overinflated properties" takes any responsibility away from the buyer. The way I see it is that many people decided to
buy overpriced properties.
What effect this will have on society as a whole is arguable, and I'm not trying to say that it won't be negative. However, the effect on society, of making society as a whole pay for the mistakes of a few is an even bigger problem. This is a moral hazard that sets a precedence for future generations, and encourages higher risk taking. It might sound cruel but society as a whole will be better off if individuals are forced to suffer consequences of making mistakes.
If the outcome of negative equity and property bubble is that the the ideas of a "proprty ladder" and owning a house at any cost are eradicated from society, then I think there will be a huge benefit to be gained.