Iain Dale has an article from Dennis Sewell on his blog claiming that it is all Bill Clinton's fault, and if you subscribe to the view that all the problems we face are all the fault of the US and their problems, then yes, Iain Dale may be correct. However, if, like the Tory Party, you want to blame Gordon Brown and Labour for the problems we face, then Iain Dale's argument somewhat collapses.
Perhaps most interesting is the quote Iain uses to show us how Clinton was to blame. In this quote it says :
"The main thrust of the Clinton housing strategy was to increase home ownership among the poor, and particularly among blacks and Hispanics. White House aides, in familiar West Wing style, could parrot the many social advantages that would accrue: high levels of home ownership correlated with less violent crime, better school performance, a heightened sense of community."
The problem for me is this seems so similar to the strategy of Margaret Thatcher which has led to our own housing bubble. Council houses were sold off, councils were not allowed to use the cash to build new ones leading to shortages of housing, people getting on the housing ladder without the necessary finance, banks becoming increasingly willing to lend to anyone, and thus the housing boom was born, and from each boom there comes a bust, which we are suffering again now.
I know the argument are more complex than that, but for me the problems in this country were born from Margaret Thatcher's housing policy.
14 comments:
It seems you are clutching at straws Nich. People being given the right to buy in the 1980s that early 1990s are not the cause of this problem. Home ownership gave people a stake in something and added responsibility, freeing them a little more from the state.
The problem today centres on the easy availability of credit and companies encouraging people to have now what they cannot afford until much later - often using their property as a guarantee.
Buy to let, re-mortgaging, equity release and other actions that people have chosen irresponsibly because they risk losing what they have if they are unable to pay their debt back, are the cause of this, not the excellent opportunity Thatcher's government gave to everyone.
Tell me, if one of your former pupils who came from a good home but started making bad decisions as an adult and ended up in court for smashing a bottle over someone's head, would you blame his parents for giving him the opportunity to go to the pub?
At some point people have to take responsibility for their actions. You seem to be suggesting the state should restrict what we can do to save some of us from ourselves. That to me is terrible.
Tony Sharp wrote "At some point people have to take responsibility for their actions. You seem to be suggesting the state should restrict what we can do to save some of us from ourselves. That to me is terrible."
I agree up to a point, Lord Copper: but don't you think (like me) that criminalising certain drugs (to save some of us from ourselves) is a good idea for the individual and society?
But Tony, we have 75,000 people in Norfolk on housing lists because all our council houses have been sold.
This caused the housing boom by making people who wanted to rent have to but houses.
Council house sales were pretty rampant before Thatcher. 46,000 dwellings were apparently sold in England and Wales in 1972, compared to 7,000 in 1970! Sales were then at the discretion of local authorities. Thatcher simply made it a right for all - you can read all about it in the "Right To Buy" research paper -
http://216.239.59.104/search?q=cache:Y-Sa3eEYY-QJ:www.parliament.uk/commons/lib/research/rp99/rp99-036.pdf+%2246,000%22+1972+%22council+house+sales%22&hl=en&ct=clnk&cd=2&gl=uk
I persueded my father-in-law to purchase the council house he and previous generations of his family had lived in since it was built.After the discount, his home was at a price that was affordable.
Ex council houses had that stigma about them that made them comparably cheaper than private housing stock. As I remember it,if the house was sold within a certain timeframe (3 years after sale?) the council had a right to a percentage of the sale price.
I do not exaggerate by saying that we have spent an absolute fortune on bringing it upto date since its purchase all those years ago.It was a clever move to get rid of such housing stock in poor state.
However, we could never understand why the sale monies were never used to build upto date social housing.
My father-in-law died recently and when the revamp is complete we will be offering the property for rent. Maybe under a council run scheme.
James, you are right that it is incomprehensible that the monies could not be re-invested in to new housing, but that was what the Tories wanted so that it would create the housing booms with no regard to the busts.
Dale's article and similar have been around on different blogs and media for about a year.
The fact that the USA pushed banks to take more risks is true.
Whether this for political reasons to help mainly democrat voters gain property or social for the benefits of home ownership is unclear. Certainly the far right see it as a great way to blame Blacks and Hispanics for America's financial troubles.
But the point is missed. If the banks had just made bad loans from their depositor base then the banks would just run into trouble over non repayment and be looking at big profit losses for a few years and maybe needing to merge or sell up in extreme cases.
Its the SELLING ON, falsely rating toxic assets at AAA, disguising and complicating the value of assets and debts and of that unknown value of bad debt that has caused the collapse of confidence and the end of inter bank lending.
Clinton and Co forcing this policy onto banks and lenders may have been unwise, but it should haver had little effect here. No British government ever insisted banks lend to minorities, yet we are in the same but smaller boat.
The banks and the regulators, and by implication the governments of the bubble who depended on corporation and stamp duty taxes, are squarely to blame, followed by borrowers themselves.
In the USA if you can't afford your mortgage you can abandon the property without liability..so what's the risk if it all goes wrong..very little..
Here you are still technically liable for the debt and can face a long battle and rather unpleasant debt companies chasing you.
But in the 80's housing bust mortgage companies pretty much let people just return property and settle debt for a few hundred quid.
It has nothing to with Thatcherism/Clintonism/ and much to do with accounting rules that give the ability to self certificate assets value which can then be pushed into a housing debt pyramid selling scheme.
And what the hell has the Labour Party been doing for the last eleven years. For goodness sake, have a bit of common sense.
Nasty Maggie Thatcher - fancy letting people buy their council houses; my mother did and it was the only thing that gave her a sense of security.
Dreadful word - responsibility isn't it - especially for those who still want to play victim. Get over it you dafty - the problem is, as was pointed out above, the availability of easy credit, and that lies firmly in the hands of the banks assisted by the Chancellor - a Mr Gordon Brown.
It is amazing how many people miss the point.
Iain Dale's article pointed out that some claim it is all bill Clinton's fault. and i am sure that there are many in the US, particularly creationist republicans who are scared to death that Obama will win, who want to blame the Democrats for the problems and therefore blame Bill Clinton.
The point is tha Bish has been in for 8 years, in the same way as some people point out Labour have been in for 11 years here.
And that is my point, if it is Clinton's fault, it is Thatcher's fault. You can't blam Clinton but absolve Thatcher.
However, I would make one point about Council house sales and security. I am pleased your gran (Mr Anonymous) felt secure in her house built using rate payers money. Sadly, the next generation were much less secure because of the sales. Why didn't the tories allow this money to be re-invested so other could do as your gran did ?
There has been ample time for authorities to be given the right to use their capital to build new housing required locally. It is inexplicable that the restrictions have remained in place when they should have been lifted 15 years ago.
But getting back to the point, blaming Thatcher's policy is wrong. Thatcher's policy had little to do with the property speculation and easy credit that is the real cause of this problem.
Weren't council house purchasers rate payers too?
For the decades my father-in-law's family rented the property, the amount of rent paid must have exceeded the discount he received.
The price before discount had to be a fair market price anyway so 'ratepayers' didn't lose out in his case.
What really fuels boom and bust is greed and fear.
I am sure when they started renting they knew it was rent, not a deposit that they were paying ?
If I rented a car for several weeks I don't expect the rental company to be forced to sell me the car for less than its full worth and then find out that the money I pay them has been locked away by the government so they cannot re-invest it.
The problem was not that people were allowed to buy their houses but was that the councils could not build new ones with the receipts.
I agree wholeheartedly with Bill Quango MP, if we are to lay blame anywhere (other than human greed), it would be with those who have committed large scale fraud by selling on bad mortgages as good. If these people lived in one of these council houses, they would be in prison for the slightest misdemeanour. However, these bank officials are, as ever, immune from prosecution - white collar crime is not percieved as a serious deviance, merely clever business practise. They have systematically destroyed the banking system, and will walk away, scot free, with fat wallets. (I assume they will use cash, as you can't trust the banks these days.)
its full worth and then find out that the money I pay them has been locked away by the government so they cannot re-invest it.
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