Freethinkeruk’s Weblog

UK Political weblog

Opportunity to be Lost?

The Government is doing all that it can to re-finance the banks in order to get them lending more and to help this along the Bank of England is steadily lowering interest rates which are heading towards zero. Other governments around the world are taking similar actions and Obama expected to announce a massive cash injection into the US economy.

In order for the banks to lend, someone must borrow which is pretty self evident. People and business borrow in order buy something, again pretty self evident. The more people buy and the more that they borrow in order to buy more then the faster industry works and the economy, national and global, expands . Again, it is self evident that this cannot go on indefinitely. Economic growth must hit the buffers sometime. OK I know this is Marxist theory but it is also commonsense. The global economy has hit the buffers and the political engineers are now doing all that they can to move the buffers further down the track, build up a credit based head of steam once more in order to hurtle down the same track heading for the same result at an indeterminate date in the future.

The housing market is used by many as a yardstick for the health of the economy but it’s the same story here. House prices cannot increase above inflation ad infinitum but while they do rise to dizzying heights their buyers are saddling themselves with huge debt, meaning that they have to work longer and harder and often put off having children just so they can pay the mortgage. Is this the life that we want for ourselves and for our children, if we manage to have some? Some mortgages are already crossing over to the next generation.

We have an opportunity with the current crisis to pause and take stock of what is best for our health, mental, physical and spiritual. Houses are losing their value and easing to a more sane level but have a way to go yet. Good! If government could but grasp the nettle and decree a return to mortgages being granted on the basis of 2.5 times the annual earnings of the highest earner in a partnership, life would be far more pleasant for those making the purchase. State investment in social housing would keep the building industry active and aid recovery too.

The fat cats would squeal in anguish of course but I don’t think I would lose any sleep.

Advertisements

Single Post Navigation

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: