The Flying Frisby - money, markets and more Dimwitted Housing Policy and the Destruction of Britain
You might have seen in the news a couple of days back that, to make Britain’s unaffordable housing affordable, Chancellor Jeremy Hunt and the Treasury are considering a scheme whereby people can buy homes with a deposit of just 1% and get a 99% mortgage.
Thus, in theory, you could buy a one million pound home with just a ten-grand deposit.(I expect they will cap it below that level, but you get the point).
It has become a cliché of the internet, but we say it anyway: “what could possibly go wrong?” It’s good to see the lessons from 2008 have been learned.
Who would guarantee these loans should the buyer default? You would. You probably didn’t know this, but you’re already guaranteeing £4 billion under the existing mortgage guarantee scheme. You could soon be guaranteeing a whole lot more.
Remember how they used taxpayer money to bail out the banks in 2008 and it was called “socialism for the rich”? This is the same thing, except this time they are bailing out the housing market.
The Tories have this annoying (and mendacious) habit of leaking a policy to the press before it is actually policy to see how it goes down. I say mendacious because it is misleading. If they had any actual first principles by which they operated, then they would not do this. Instead, what sets policy is what Tories think might make them popular.
In any case, I would hope this is another one of those test-the-water leaks, rather than something we will see come the next Budget in March, because it will send prices higher, just like its predecessor Help To Buy did, and that is the last thing we want. The solution to unaffordable housing is lower prices, not more debt.
But regardless of whether the scheme gets the go-ahead or not, it still tells us all we need to know about how the Blob is going to fix Britain’s housing crisis: it isn’t.
Instead, it’s going to come up with increasingly innovative ways to bring more debt into the market and thereby send prices even higher.
It was the same after the Global Financial Crisis in 2008. There was a chance to let the whole thing reset. Instead, we got suppressed interest rates, Quantitative Easing and then Help To Buy, all of which protected the already-haves at the expense of the have-nots.
Labour won’t make a jot of difference, by the way. It is just as bereft of first principles. That is how Keir Starmer is going to win the next General Election: by not standing for anything. Not that it matters who wins. The Blob still runs the place.
The destructive effects of high house prices
It makes me weep what high house prices have done to this country. I see an entire generation, if not two, psychologically damaged, almost beyond repair, because they cannot afford somewhere decent to live.
They feel inadequate. They delay starting families, or have smaller families, or have no children at all because they cannot afford anywhere to house them. They then hate themselves because they have no children.
The result of smaller families later in life is population decline. The Blob then says there aren’t enough young people and opens the doors to mass immigration. Guess what happens then? Cheap imported labour pushes wages down, but increases demand for housing and essential services. State systems are too slow to adapt. Housing gets even more unaffordable. It is the most vicious of vicious circles.
Locals are then told that priority in the workplace must be given to the newcomer because diversity. Complain and you are racist. Your history is bad, by the way. And you wonder why everything is such a clusterfook.
Why do you think so many young people are so nihilistic? Because deep down they know they are never going to be able to afford anywhere decent to live, never mind pay off their student loans or have a family. They are, effectively, excluded from society. But stop drinking lattes and work harder.
Who do you know who can afford to buy somewhere where they grew up? I know I can’t, and I’m part of the One Percent. It’s the opposite of progress. When people can’t afford to live where they gre w up, they lose touch with their roots, their traditions, their culture, the very land. And you wonder why we have lost touch with who we are.
All because of stupid house prices.
Houses themselves are not that expensive. Look here’s a 1,400 sq ft, 4-bed house with a 145 sq ft porch for £45,000. Delivery in six weeks.
Looks nice, no? (You’ll need someone to put it together).
The issue is land, and it’s a needless issue that goes all the way back to one of the most insidious and stupid bits of legislation ever enacted, The Town and Country Planning Act of 1947.
When you create debt, you create money. The more money you bring into a market, the higher prices go. See student loans for more details. When that market is limited in how much it can expand, which is the case with UK housing because of restrictive planning laws, you get our situation where houses have gone up by three and half times more than wages.
All the Treasury is doing with this policy is finding new ways to get more money into this market. There is only one way that will send house prices. It will only make things worse.
The solution to unaffordable housing is lower prices. The Blob will not let that happen.
By all means prop up the housing market. The cost will be your country.
Further reading on the housing market:
* What Really Causes Inflation
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