A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.
Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.
Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.
