Gordon Brown saves the day but I have an uneasy feeling. My instincts tell me that all he's done is messed around with nationalisation and done nothing to address the underlying problem: all that debt and inflated asset value is still there.
Is another financial timebomb not far away, worse than this one? And if so, what will trigger it?
That's a good question, and wider than my answer here, but here's a start:
It has done nothing about the underlying problems of the UK housing market. The very fact that the word that springs to mind when talking about "housing" is "market" is itself a sign of a problem. The problem that housing is seen as a market, and not as somewhere to live.
So those of us who own houses are a bit like taxi-drivers who own a registered cab in a place where they are under-supplied: we have paid so much for ours, that the last thing we want is to see more and more of them created, though that is the solution.
1. There are not enough houses, and we as a nation are not building enough.
2. People expect a house to be a great investment. It shouldn't be: it should sell for about the same real price as it was bought for.
3. People expect more than they can afford. ISTM that many young (and old) people can't stand the idea of saving for a few years, then buying somewhere smaller than they would really like, in a non-ideal location, that needs a bit of work.
4. Nos 2 & 3 mean that people are prepared to spend staggeringly high proportions of their income on housing, which is merely competitive bidding that beggars everybody, twists the market, and increases the risk of a crash.
I think Brown's actions have been bold and probably successful, but only in alleviating the consequences of some of the current results of what remains an extremely unhealthy housing market, which rests on bad practice and bad attitudes, firmly ingrained in our way of doing things.
