I offer this simply because I think it true and for no other reason. The report is from the Guardian:
George Osborne's scheme to boost the housing market through state mortgage subsidies has been dubbed one of the most stupid economic ideas of the past 30 years by a leading City commentator.
Albert Edwards, who heads the global strategy team at Société Générale said the chancellor's flagship Help to Buy programme was artificially inflating property prices and driving young people deeper into "indentured servitude".
The report continued:
"I believe it truly is a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business. It ranks above some of Alan Greenspan's very worst blunders."
Please don't hold back Albert.
The trouble is, he's right. But it's happening anyway. That's the really scary bit.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
It seems to have been attacked by everyone, including the IMF. It’s bizarre that it’s going ahead.
What alternative would you propose?
Social housing
You can check this out if you like, you will find it is true…
Over a twenty five year period 1982 to 2007 there were three, I will repeat that, three council houses built in Scotland. They knew what was going to happen, they knew this day would come, they didn’t care, they still don’t. Someone remind me, when did New Labour come to power, how many years did they have in power to put things right!!!.
Although Tim Worstall was particularly scathing of this measure I seem to remember, on the day it was announced.
Sounds like Osborne is simply doing a scaled down version of what happened ten years ago – Government grants in this case to second home/buy to let speculators. What we need is more Housing Associations building homes – of course the neo-liberal agenda hates this idea because banks and speculators cannot gain which is why the bedroom tax and touting the idea of forcing housing associations to sell off valuable properties in ‘desired’ locations is the start of this erosion in social housing. As someone who lives in a Housing Assoc. home I am very worried – I’ve experienced homelessness before and don’t want to again.
“America’s Misplaced Deficit Complacency”
http://lecercle.lesechos.fr/economistes-project-syndicate/autres-auteurs/221173470/america-misplaced-deficit-complacency
The previous one that impressed me was reducing the duty on alcohol, in the teeth of the evidence in favour of the 45p per unit duty. Alcohol duty brings in less than £10bn, and I think Sarah Woolaston’s figure was that alcohol costs the taxpayer £20bn in illness and crime. Great thinking to reduce duty, decreasing the tax take and increasing the alcohol-related costs. Osborne will be a hard act to follow, though Ed Balls is shaping up well.
“- Public announcement GEAB N°60 (December 16, 2011) -”
“With £1.8 trillion of public money invested in banks to prevent their collapse in 2008, the British taxpayers are in fact those who have paid the most for the rescue of financial institutions. And the British government may well continue to exclude this amount from its public debt calculations by claiming it’s an “investment”, de facto, fewer and fewer people consider that the banks in the City will recover from the crisis, especially since its worsening in the second half of 2011: the shares purchased by the Government in fact are already worthless. The “UK hedge fund” is on the brink of collapse (25) … and thanks to David Cameron and the City, it’s isolated with no one to come to its aid, neither in Europe nor the United States.
With the Chinese bubble (26) about to join the European recession and the US depression, the 2012 storm will determine whether David Cameron and his finance minister George Osborne are worthy descendants of the great British sailors.”
http://www.leap2020.eu/Global-systemic-crisis-USA-2012-2016-An-insolvent-and-ungovernable-country_a8481.html
”
Why are houses too expensive in the UK?
Too much debt. So what is George Osborne’s solution for first time buyers unable to afford housing? Why, arrange for a government guaranteed scheme to burden our young people with even more debt!
Why don’t we call this policy by the name it really is, namely the indentured servitude of our young people”
http://www.zerohedge.com/news/2013-06-04/most-overunder-valued-housing-markets-world
It’s an insane policy – mindbendingly moronic. Having totally failed to “rebalance” the economy (except for the ongoing task of asset-stripping the public sector to inflate the profits of multinational outsourcing companies, Osborne is desperately trying to engineer a mini-boom to win the election. It seems to me that people are pretty wise to “boom and bust” now though and I doubt they’ll let him get away with it. Whether Labour has any convincing alternative is another matter, of course… not really convinced by Ed Balls this week I have to say.
Is this a more stupid policy than allowing banks to lend 125% of the value of a house, or to not have to check whether the borrower has the income they say they have or decoupling interest rates from the measure of inflation that includes property prices or taking banking regulation away from the BOE and giving it to a useless and toothless FSA.
It is just continuing the incredible stupidity shown by the previous government who created a situation where most of the private sector GDP growth came from housing and construction. At least the banks are being more responsible in mortgage lending.
Did Labour sanction 125% mortgages?
Can you show me where?
Brown admitted several times that they got banking regulation wrong (and of course I am not arguing that the tories would have not been the same). He also said that the high LTV mortgage were appropriate in certain circumstances.
http://www.ft.com/cms/s/0/53e54c1e-f0af-11dd-972c-0000779fd2ac.html#axzz2VM0t40ND
Although the crisis came from the US, the way our retail banking sector was being managed and regulated was terrible, which is why it hit us so badly here. The stupid bank management teams, the regulators, BOE and government all bear blame for that. Most emerging markets had regulations in place to stop irresponsible behaviour (by both borrowers and lenders), why did we not?
“Can you show me where?”
By allowing it to happen!.
Umm, Mr. M., the very fact that a CotE – of any colour – allowed it to happen, indicates that such things were sanctioned.
“A truly moronic policy”
http://m.dailykos.com/story/2013/05/20/1210395/-Meet-the-Republican-who-is-demanding-that-the-government-let-poor-people-starve