Waking the Dead
Hildy Johnson | 23.02.2009 09:55 | Sheffield | South Coast
According to the FT, the Government has decided to extend more credit to Northern Wreck as a way of propping up the falling housing market. The bank is also to be broken up into a good bank and a bad bank with taxpayers left to cover the losses on the toxic waste, whilst the private sector will no doubt be allowed to pick up the healthy part on the cheap.
House prices are too high- the supply of old and new properties is too great for effective demand. Anyone with a GCSE in economics and a shred of honesty could see that as inequality in the UK grew those house price rises could never be sustainable. The housing bubble, deliberately blown up by diverse financial speculators, was always going to burst- after all it was inflated by imaginary money. Yet the nouvelles riches empowered by Thatcher and then Blair couldn´t contain their delight as they seemed to get richer and richer. As everyone else gave up on the electoral system these forces continued to vote for whichever party which offered policies which would protect the rising prices of their homes most effectively. But now the party´s over and everyone knows it apart from a few estate agents who are desperately attempting to talk up the market. US house prices continue to plummet and their housing market collapse started over 2 years ago. With so many frozen out of the housing market due to the absurd level to which prices have reached there is only one way for prices to go. The trouble is this doesn´t play very well to the Shires as anyone can see from scanning the Daily Mail comments sections.
Given these pressures New Labour have decided to piss against the wind and throw more good money after bad by attempting to use the Wreck as a means to reflate the bubble.
"Northern Rock is to embark on a £14bn mortgage sales drive to resuscitate Britain's sluggish housing market, fuelled by a hefty injection of fresh government funding for the state-owned lender to be announced today.
Alistair Darling, the chancellor, will present the move as an effort by the government to help responsible, hard-working families get mortgages, arguing that even those with a 20 per cent deposit are struggling to get finance."
http://www.ft.com/cms/s/0/22e5636a-0149-11de-8f6e-000077b07658.html
No doubt the announcement is of little substance in real terms given the astronomical figures already thrown at banks by taxpayers. But it demonstrates a refusal to fess up to the monumental fuck up that has been New Labour economic policy. The writing is on the wall and the quicker that we quit funding our own downfall the better.
Moreover, presumably under pressure from the US administration which continues to be dominated by bankers interests despite Obama´s rhetoric, there is an attempt to adhere to "free market capitalism". This is to be achieved by splitting the Wreck up into a good part and a bad part. The intention is that taxpayers will absorb the losses generated by the toxic waste produced by the Wrecks lending activities whilst the new healthy part will at some point in the future be sold to the private sector. This sounds remarkably similar to New Labours adventure with the Commonealth Development Corporation (CDC).
In a nutshell, CDC had been around since the 50s and was one of the governments tools to promote development in countries and sectors where Western capitalists feared to tread. Over the years it had accumulated a large number of healthy assets although there were some bad loans and loss making projects. Of course, when Man of the (Posh?) People Blair came to power he took one look at it and said "Privatize It". But of course with the bad loans the private sector didn´t want to know and so it had to be divided into good and bad. All those losses could of course be covered by the Treasury and the private sector would bite the juicy bait offered to it. As Private Eye and the BBC have documented the healthy part of CDC became an incredibly profitable asset for the private buyers who picked it up on the cheap whilst taxpayers continue to absorb the losses on the bad loans.
Yet this deal was pushed through at the height of optimism around the New Economy. So why, when the concept of the New Economy that only boomed and never bust has been shown to be demonstrably false have New Labour fallen back on an idea that only benefits the few. Is it because they think that we are either too dumb to pick up on it or that they think we are just too apathetic to care? It should be pointed out to them that we own Northern Rock and we aren´t just going to sit back and allow them to continue with business as usual. It´s ours and we want to keep it that way. If when the crisis is over we decide to continue with some form of mortgage system we may need it. Alternatively, we may decide to keep properties repossessed by the bank for redistribution in some cases or just forgive the debts in others. People haven´t quite clicked on The Wreck, Bankrupt and Bingley and RBS belong to us. We should be deciding policy for them- not some more of New Labours crony capitalist friends. This is what The Great Robert Peston says on his blog
"What´s striking is that although he (Brown) has extraordinary and perhaps unprecedented power over the banks, the prime ministers programme of change for the banking system is strikingly conservative"
for example
"we will continue to provide a guarantee to banks, even those engaged in high risk international speculation, that we won´t let them collapse"
Brown still claims that
"Global financial flows and liquid capital markets have brought massive benefits to our economy"
http://www.bbc.co.uk/blogs/thereporters/robertpeston/
in other words we will now be paying for the privilege of having banks fuck us and our communities
Given these pressures New Labour have decided to piss against the wind and throw more good money after bad by attempting to use the Wreck as a means to reflate the bubble.
"Northern Rock is to embark on a £14bn mortgage sales drive to resuscitate Britain's sluggish housing market, fuelled by a hefty injection of fresh government funding for the state-owned lender to be announced today.
Alistair Darling, the chancellor, will present the move as an effort by the government to help responsible, hard-working families get mortgages, arguing that even those with a 20 per cent deposit are struggling to get finance."
http://www.ft.com/cms/s/0/22e5636a-0149-11de-8f6e-000077b07658.html No doubt the announcement is of little substance in real terms given the astronomical figures already thrown at banks by taxpayers. But it demonstrates a refusal to fess up to the monumental fuck up that has been New Labour economic policy. The writing is on the wall and the quicker that we quit funding our own downfall the better.
Moreover, presumably under pressure from the US administration which continues to be dominated by bankers interests despite Obama´s rhetoric, there is an attempt to adhere to "free market capitalism". This is to be achieved by splitting the Wreck up into a good part and a bad part. The intention is that taxpayers will absorb the losses generated by the toxic waste produced by the Wrecks lending activities whilst the new healthy part will at some point in the future be sold to the private sector. This sounds remarkably similar to New Labours adventure with the Commonealth Development Corporation (CDC).
In a nutshell, CDC had been around since the 50s and was one of the governments tools to promote development in countries and sectors where Western capitalists feared to tread. Over the years it had accumulated a large number of healthy assets although there were some bad loans and loss making projects. Of course, when Man of the (Posh?) People Blair came to power he took one look at it and said "Privatize It". But of course with the bad loans the private sector didn´t want to know and so it had to be divided into good and bad. All those losses could of course be covered by the Treasury and the private sector would bite the juicy bait offered to it. As Private Eye and the BBC have documented the healthy part of CDC became an incredibly profitable asset for the private buyers who picked it up on the cheap whilst taxpayers continue to absorb the losses on the bad loans.
Yet this deal was pushed through at the height of optimism around the New Economy. So why, when the concept of the New Economy that only boomed and never bust has been shown to be demonstrably false have New Labour fallen back on an idea that only benefits the few. Is it because they think that we are either too dumb to pick up on it or that they think we are just too apathetic to care? It should be pointed out to them that we own Northern Rock and we aren´t just going to sit back and allow them to continue with business as usual. It´s ours and we want to keep it that way. If when the crisis is over we decide to continue with some form of mortgage system we may need it. Alternatively, we may decide to keep properties repossessed by the bank for redistribution in some cases or just forgive the debts in others. People haven´t quite clicked on The Wreck, Bankrupt and Bingley and RBS belong to us. We should be deciding policy for them- not some more of New Labours crony capitalist friends. This is what The Great Robert Peston says on his blog
"What´s striking is that although he (Brown) has extraordinary and perhaps unprecedented power over the banks, the prime ministers programme of change for the banking system is strikingly conservative"
for example
"we will continue to provide a guarantee to banks, even those engaged in high risk international speculation, that we won´t let them collapse"
Brown still claims that
"Global financial flows and liquid capital markets have brought massive benefits to our economy"
http://www.bbc.co.uk/blogs/thereporters/robertpeston/ in other words we will now be paying for the privilege of having banks fuck us and our communities
Hildy Johnson
