Freethinkeruk’s Weblog

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Archive for the tag “Credit Crunch”

Here We Go Again!

The housing market is on the move again of that there is little doubt and of course along with it the cost of buying a home is rising albeit slowly at the present time. The highest level of unemployment in my region stands at 6% which of course is not much fun for those without work but it does mean that 94% have jobs. Car production is rising once more and bankers bonus payouts are still obscene.

All this does not mean that the recession is over but points to it at least bottoming out. The massive bill to stave off the worst of the global economy crash will still have to be paid over the next couple of decades and will have some negative impact on most of us. Most of us being the ones who played no part in the disgraceful financial gambling of the past ten to twenty years although most of us were a part of the rampant consumerism that gripped the developed world.

A few minor inconveniences have been put in place to curb some of the excesses of the financial traders but by and large as the recovery gets under way it will be business as usual and so setting us up for a repeat performance in another decade or so down the line. Bankers will be making fortunes out of the future labour of ordinary people not even born yet, houses will be purchased as investments and not as homes to live in, industry will again expand and add to the climatic pollution that is already out of control.

This global catastrophe presented the World and I suggest, the UK in particular, with a golden opportunity for change. That chance has already been squandered and we are doomed to repeat the mistakes of the past and the next time may not contain within it opportunity for change.

Economic Boost

Well, it’s coming up to Christmas so let’s have a little bit of cheer amidst all the gloom and economic despondency.

The Pound has fallen in value to almost equal the Euro and in the current recession this is a definite advantage. Our exports will be cheaper for the buyers thereby creating more work for us or at the very least, preventing the closure of some companies. Holidays abroad will be considerably more expensive and so encourage many of us to holiday in the UK and so keep the money within our own economy. Additionally, a holiday in the UK will be very attractive to foreigners and provide yet another boost.

Of course, as the global downturn turns up in a year or so, we will be at a slight disadvantage to start with but let’s not worry about that for now, it’ll spoil this little bit of cheer.

Socialism To The Rescue

Now that the alarm and panic of the last couple of weeks is abating somewhat perhaps we can stand back and see just a little more clearly.

Many will agree with me that capitalism has within it the seeds of it’s own destruction and this has been demonstrated to a degree recently. Admittedly it was not the time for global leaders to look for a better and more sustainable system, urgent action had to be and was, taken to affix a sticking plaster to the wound in the economic system that was hemorrhaging peoples savings and financial security. This sticking plaster was and is, nothing less than Socialism and it is stemming the flow. A few years ago when the rail network, then in private hands, was falling apart it was nationalised and has been improving ever since.

If Socialism can be so effective in times of emergency why not move towards that ideal generally? The answer of course is obvious; it would stand in the way of amassing personal fortunes for the few at the expense of the many.

Who’s To Blame

The system under which we live, Capitalism, may not be at all desirable for many of us but it is the system at present and so there is no alternative but to deal with the problems as they arise. The Government has, I believe, acted responsibly and decisively over the past few weeks in dealing with this financial crisis and was faced with little room for manouver.

The bankers and dealers and short term profit makers have rightly come in for huge critisism and public condemnation. However, we should not apportion all the blame to them. People taking out mortgages bigger than they could realistically pay are to blame, people who self certified over inflated salary’s to get a mortgage are to blame, people who took out multiple credit cards and ran up debts they couldn’t in the end pay, are to blame, people using the expected future equity in their homes to buy another home to rent out, are to blame. Spending bonus’s on luxury items and exotic holidays instead of putting it by for the rainy day that just had to come sometime, are to blame.

In short, you, me and most of us, are to blame and we should remember that, not just now but in the future when this crisis is finally over.

Housing, it’s not all bad news.

House prices continue to fall in the UK with London showing it’s first fall in over eight years. Bad news if you’ve bought a house expecting it to increase in value, above the rate of inflation, indefinitely. If though, you bought a house to be your home to live in, which is what they are really for, what difference does it make? If you need to move then the cost of the house you wish to buy will also have gone down by approximately the same percentage rate as yours. If the current financial crisis continues and it looks set to do so for a year or two at least, then house prices may stabilise at a sensible and sustainable level. It’s not likely, unfortunately, that the current government will accept my suggestion and nationalise all land (see).

Perhaps and I won’t hold my breath, regulations will be brought in requiring a hefty deposit to be put down when buying a home and a limit on lending of say, three times annual income. In the case of a couple buying, based on the highest single earner only, thus removing the financial block on having babies. These regulations would have the added benefit of keeping prices on a more even keel.

The talks currently still under way in the USA, as to how to prop up the banks with how many $billions are going to do little for mortgaged to the hilt buyers in the US and in the wider world. ‘Trickle down’ has never worked as we all know too well after the Thatcher years. How about at least some of these now almost countless billions going to the mortgage payers who are in trouble, by way of installment interest relief. It would help them and help the wider economy and if the greedy bankers could possibly learn the lesson it would help to stabilise the banks as well.

Oh well, dream on.

Housing Mania Continues

There is a saying that “if you do what you have always done, you will get what you have always got”.

It seems that the Government hasn’t noticed that we are in a financial mess brought about in the main by our borrowing money mostly to buy houses that we can’t afford. So what do they do? They make it easier to buy homes and build up more debt. The mind boggles, well mine does anyway.

House prices on average have fallen by around 10% over the last year. If you bought a house in the expectation that it’s value would increase above inflation indefinitely you’re in trouble or could be. If you bought your house as a home to live in then apart from a likely rise in the mortgage rate, you’re OK. Housing values falling back to a more realistic level is a good thing bringing some sanity back into the market. Today’s announcements of stopping Stamp Duty for twelve months, interest free loans for five years on new houses will indeed stimulate in some degree the building industry and the housing market. It will also reinvigorate the rise in house prices and back on the treadmill we go. In addition ‘rescuing’ defaulting home buyers by local authorities part buying their homes and renting that part back to them only serves to trap the occupants in debt.

Yes people need homes and yes, the building industry needs stimulation particularly as so many other industries depend on it’s activity. The huge sums of money that Government is about spend is a short term, short sighted, fix and will, in the long term be largley wasted. This money should be spent by building homes for rent (see) and thus adding the same stimulation to the builders, providing homes and thereby avoiding yet another debt spiral resulting in yet another ‘credit crunch.’

Royal Albert Hall Box

I heard this snippet on the news today that a box in the Royal Albert Hall is up for sale, at around £1.4million.

No Credit Crunch for some then?

Inside the R.A.H.

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