According to the Guardian Mark Carney, the Governor of the Bank of England thinks that the 'UK housing market has 'deep, deep structural problems', and there is little the Bank can do'.
Having overcome the obvious desire to ask why we pay £800,000 a year for such insights matched with declarations of impotence, let me draw the next obvious conclusion, which is that he's right, but only in a way that indicates either a considerable lack of courage or competence on his part.
The UK housing market needs a Green New Deal, as I have long argued. Green quantitative easing could help deliver that but right now the Bank does not have the power to deliver that Green New Deal alongside the Treasury and others because this would require the creation of new bond funding to be spent into the economy by way of house building for social renting rather than be used to prop up bank balance sheets.
So Carney's right: he does not have power to build houses, but he 's also wrong because he could suggest how the Bank of England could facilitate the process, especially at a time when many could not buy houses even if they were built. He's chosen not to make that point.
And Carney's right; there are major structural problems in UK housing, including the fact that housebuilding is run for the benefit of house builders and not society at large, which is what Help to Buy has been all about. But again Carney's wrong. He could spell out what could be done to correct the structural defects rather than simply say they exist. But he has not had the courage to criticise Osborne, which is required.
So he's not saying what's needed right now. And that's not a good return on the investment in Mark Carney.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
You could argue he’s there precisely because he won’t argue against Osborne, in which case he’s doing the job he’s being paid for (by Osborne, using our money).
Agreed Richard -what amazes me is that people like Mervyn King have already stated explicitly that the present incestuous relationship between the BoE and the banking oligarchy is just about the worst arrangement one could have yet still doesn’t advocate alternatives such as debt-free money creation. Likewise, Adair Turner (poacher turned gamekeeper) is good at appearing at conferences, criticizing the system and suggesting nothing coherent. Carney’s shoulder shrug around housing is unacceptable and an abject denial of human agency! We know there are plenty of solutions (sovereign money,LVT, mortgage lending controls, buy-to-let bans, QE for housing etc) but these people have greasy fingers in these pies as do their political masters-so we can expect nothing from them – it is beyond contempt. Until the populace wake up to the fact that those who are poor and young are in the ‘grip of death’ with their wealth being syphoned off the the financial sector, those already with property and speculators. It is a bit like having a boa-constrictor wrapped around your chest and not noticing!
They live in a solution free world
I live in a solution focussed one
Agree entirely with your comment, I had the same reaction to the rather crass statement reported,but then thought whenever has a banker been good value to society he’d have to put in a little more effort to be creative and courageous.
Over a number of decades we have awarded ourselves much greater amounts of living space per head, essentially based on future economic growth. We have changed our social arrangements for partnerships in favour of forms of individualism that add to housing demand. We have gone for population growth unevenly distributed. We have created financial means to allow multiple personal property ownership beyond actual living requirements. We have channelled vast credit facilities into the housing market to boost prices. We have assumed that building is necessarily investment when much of it amounts to consumption. We have made promises to all and sundry that cannot possibly be fulfilled. Then we wonder why things seem to go wrong.
You can’t build houses without land. Less than 10% of UK land is built upon. There’s loads of idle land and most of it is privately owned. The govt could designate sites for new towns and garden cities and then charge all landowners the full land value. LVT is a fee for exclusive use of the commons – use it or lose it.
Anne Pettifor warned us that the Ex Goldman Sachs man would carry on working for the City.
http://www.theguardian.com/commentisfree/2012/nov/26/mark-carney-appointment-bank-england
A government working for the people would have appointed Lord Adair Turner. He recognised that private debt has become too enormous for any of the usual levers to work, either Keynesian or Monetarist.
His approach to create “Overt Monetary Finance” would have been the answer, and this money could have been used in part to build council housing. Government spending without further debt. It could also have been used to create jobs in the North, where thousands of houses lie empty.