Thursday, 5 December 2013

The problem is simply that savings to buy houses come out income and have little to do with interest rates.

Obviously banks that operate their balance sheet at the short end will have serious issues when it comes to maturity mismatch for home loans.

What if banks were require to hold a portion of long term bonds equivalent to their long home loans? Even if governments forced the practice, it would create a market over time in long term securities for home financing. Adjusting the proportion would allow the central bank to reduce the pressure of demand when necessary.

With time people might actually start saving out of real income again? 






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Sketches from scratches is a provocative blogspot that has grown out of the Wuh Lax experience. It is eclectic, which means that it might consider just about anything from the simple to the extremely difficult. A scratch can be something that is troubling me or a short line on paper. From a scratch comes a verbal sketch or image sketch of the issue or subject. Other sites have other stuff that should really be of interest to the broad reader. I try to develop themes, but variety often comes before depth. ... more!