Housing used as a tax-free profit-maker has ended in tears. If taxation policy had been in the hands of a sane chancellor none of this disaster would have occurred. Now we have people deeply indebted for assets which, to all intents and purposes, are worth nothing. People owe tens of thousands of pounds on mortgages that stretch as much as 30 years into their future and yet are not secure even in their tenancy of their horrible house.
No-one wants much of the housing in undesirable areas, in poor condition, in deserts of collapsed economies. The only purpose of these houses now is to provide shelter for those left holding them when the music stopped. Putting people out of worthless houses is an outrageous response to managing debt.
There are various responses to dealing with all this debt - banks being given government bonds for the part the mortgagee can't manage to be recovered when the good times roll again. But there are settlements where the good times will never roll again, that should be abandoned, as was reported by think tanks and hurriedly repudiated. The central issue is that at the moment some people are tied to 25 years of repayments for a worthless asset. And those are certainly the poorest, the least well-informed, the vulnerable to whom a duty of care is owed by the rest of us, even if we don't care for their life styles or values.
New Labour, and particularly its iron chancellor has presided over a regime that has preyed upon the most vulnerable in the interests of others getting filthy rich. For banks to hold an unfettered interest in financially next to worthless assets and pour encourager les autres, families are made to suffer for no benefit to any other part of society. Here the state could act, as the state, and properly as the state.
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That's what I thought, HG: pay off the mortgages and kick the banks out. People seem to think it's too fantastic.
That's what you have said, I'm sure S. And I will have been mulling away over it on a back burner, not quite grasping the proposal because of an unfamiliar word, or technical bit that I skipped over.
What upset me is the 'usurer' aspects of all this. I realise it isn't usury but it feels the same. Very poor people are having their money siphoned upwards to benefit rich people, and being reproached at the same time.
We took a 100% mortgage and borrowed another bit to pay the transaction costs when we were very young. But we, or at least Mr HG, knew what was going on. And we did have resources - illiquid but there - if everything had gone wrong. Subsistence income isn't resources. I read somewhere that many people are less than five meals away from hunger, in an advanced capitalist economy, yet have taken on life-destroying debts.
There has to be a debt amnesty.
Yes, a debt amnesty - coupled with serious prosecutions of the financial fraudsters and conmen who got the country/world into this mess and the politicians who facilitated it/them.
There was some discussion of what went with the debt amnesty too, Nomad. Conclusions were:
No involvement of the government in the post bail-out. No rent demanded, no later repayments in better times etc. No even greater hold over people's lives by the government.
The bail-out must be universal insofar as it covered all mortgages on these kinds of houses, whether the mortgagee had defaulted or not. This to prevent infighting over fecklessness or deservingness. It wouldn't cost much more anyway, and could readily be implemented postcode by postcode.
We weren't willing to bail-out defaulters with worth in their houses. So defaulting in Welwyn and Hatfield will not attract bail-out.
Any mortgage-holder accepting a bail-out offer forfeits for ever any claim upon socially provided housing. This is it.
No claims for repairs or improvements of any kind can be levied on the tax-payer, either local or central.
It then dawned that much of Mrs Thatcher's sell-off must have been driven by the shutting down of refurbishment bills that tax-payers would have had to meet. The social housing stock was aging and full of rot, asbestos and similar ills. Yes, the desirable stuff went first, but it was followed by a lot of expenditure-attracting, deteriorating stock that even managed to get itself paid for.
"Houses can never fall in value."
So oft repeated it became a mantra. On this our whole economic strategy for growth came, so no wonder Brown is desperate to bring it back.
Stupid stupid stupid.
And another mantra, equally falsified, E-K:
"States can't go bankrupt".
Some of their assets may be hard to impound, because of sovereignty within their borders, but default they certainly can, with all the consequences that entails for their reputation, cost of borrowing, etc.
I am not quite completely sure it's such a great idea just to write off debts that people find (or decide) they can't (or don't wish to) pay off.
Incentives do matter, you know, and we really don't want this all to happen over again, do we?
I agree - if we can do third world debt relief why not at home? I did suggest this ages ago - but people thought I was joking...
People thought you were joking, M? Never!
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