26 Responses to “Why Gordon Brown is to blame for the housing crash”

Comments

1. Brown is out of his depth he seeks to control only he is so deviorced from reality evidenced by him telling his customers those who elected NULAB that a 2.5% drop in property prices is okay.
   His true Presbyterian near communist view of the world means he assumes that he can control everyone’s views, thought’s and income and that he and only he knows what is ‘value ‘ for the British Public.
   Brown needs to understand that the ‘value’ for a product or service is determined by the person receiving such not the person giving and just telling someone that losing 2.5 % from your house value is okay along with Council Tax increases, Commodity energy prices increases and food increases is effectively telling the UK public they are stupid as they cannot see how good their life is.
   Brown’s failure to deliver on the public service reforms. His first attempt at selling a product was the gold reserve and like an amateur at a car boot sale he sold the gold short by announcing what he was going to do demonstrating a complete lack of ability he would have done better starting with a page on e-bay he showed he really is a non value add employee.
   I have to say his greatest crime is that he really is perhaps the most arrogant individual I have ever seen speak, to stand and preach to people a speech he wrote as a young boy outside No10 showed that like any true great communist leader the most important view and opinion is his and his alone, to hell with what the masses are experiencing .
   Brown is a poor leader and manger because he could not be managed or led as demonstrated by his behavior as chancellor. He will not be leader of the UK or NULAB after the next election.
   You could right his political obituary now Gordon Brown added no value spent lots of cold cash for no reward he had lots of ideas all going nowhere at some one else’s expense, sooner or later someone will have to tell him and I feel it will be the British public.

   Posted by: Nulab Supporter | April 11th, 2008 at 1:37 pm | Report this comment
   

2. I was very perturbed to realise that the two most powerful men in the UK are a Stalinist (Brown) and a Trotskyite (Livingstone). Just when the whole world seems to be rejecting Communism, we put in charge. It is quite incredible that this could have happened. On Tuesday a friend, who is a Labour Party member (as I once was), told me that Labour have been excellent for the economy because property prices have gone up 200% in 10 years. QED - it seems to have been the aim of Labour economic policy

   Posted by: David Petersons | April 11th, 2008 at 2:33 pm | Report this comment
   

3. Brown talks all the time about economic stability. But what has been the most destabilising influence on UK economy for the past 25 years? I’d suggest house prices. So you would expect Mr Stability to have passed a range of policies to prevent imbalances in the both the residential property and the mortgage markets from getting out of control. Yet I can’t think of a single policy that has been introduced to help. Can you?

   Stability? I really don’t think so.

   Posted by: Mark Burton | April 11th, 2008 at 4:11 pm | Report this comment
   

4. Our economy relies on cheap money and cheap import prices - now they are both gone ! Brown and his cohorts have taken credit for their brilliant management of our economy, when in fact they have simply presided over poorly regulated credit markets which have fuelled consumer demand for inexpensive goods from china, india etc, and in turn given us all the feel-good factor. The future looks rather different, £ is down 15% against the Euro, and struggling even against the $ (where the above is true in spades!). The mortgage market is in freefall. Let’s see how his mastery of economics plays through in tougher times - if he had maintained labour market flexibility, the pain would be limited, but he hasn’t, so look forward to rising unemployment, rising inflation, and house price falls. Sad that the British public keep supporting him !

   Posted by: David Wilkinson | April 11th, 2008 at 4:13 pm | Report this comment
   

5. Brown has taxed us in every possible way and others previously unknown. He has raided our pensions and now tells us to save more when earning less. No other Labour government in history has ever treated the British working man so shabbily or with such contempt. The sooner we get the chance to kick him out the better.

   Posted by: Robert Reynolds | April 11th, 2008 at 4:51 pm | Report this comment
   

6. Another major contributing factor that squarely points at Gordon, is the fact that he was so busy poncing and jawing after Tony Blair for Leadership, he lost sight of gathering thunderclouds. The heat given off by the workings of such a powerful economy needs to be managed and controlled at micro-levels and events anticipated and surely modelled. He took his eye off the ball. He would clearly argue then, as he does now, that the intellectual power and sentiment exists to confront these changes, but clearly, his administration are exposed for what they are - completely irresponsible and perhaps not as bright as we all thought.

   Posted by: David B | April 11th, 2008 at 4:59 pm | Report this comment
   

7. Excuse me but you cannot blame Gordon for everything, although many of his policies led to imaginary wealth and stupid behaviour. Who forced you all to spend spend spend? Who forces you all to drink drink drink and take drugs? It is time for everybody in this country to learn about self-discipline, and restraint. Gordon has not forced most people to live above their means, he made it easy. I bet you also whinge when you are being told that we are damaging the planet and it is imperative you change your behaviour. Yet you will say “I hate Nannying”. Where is your sense of logic?

   Posted by: Esther Phillips | April 11th, 2008 at 5:21 pm | Report this comment
   

8. There have been similarly immense housing booms in Ireland, Spain, Netherlands, US, Australia and New Zealand. Given that Gordon Brown doesn’t run these countries is it simply coincidence or is it that the housing boom was down to developments in international finance? Politically there is little that a government can do to halt a boom in house prices anyway. Most people are loving it while it’s happenning, dollar signs flashing in their eyes, and wouldn’t accept interference.

   What the government should have done, however, is relaxed planning laws so that the increased house prices led to more and better quality new homes from house builders. Instead they’ve built the least homes since the 1920s, many of which are apparently of an undesirable quality. Surely a 200% price increase would mean builders could afford to construct more and better dwellings? This effect is dragging down the quality of life of many young Britons and in my opinion is the greatest failing of this government.

   Posted by: Ted | April 11th, 2008 at 6:37 pm | Report this comment
   

9. If my most famous promise was ‘an end to boom and bust’ I’d have been a little concerned when house prices were going up at 15% a year and not waited until the US is crashing and the UK is hitting the skids to start doing something about it.

   All Gordon’s solutions are aimed at subsidizing people to pay the current ridiculous prices rather than addresses the ridiculous prices themselves.

   Posted by: Paul | April 11th, 2008 at 7:16 pm | Report this comment
   

10. Your leading article yesterday quoted leading bankers blaming themselves for the credit crisis. They are the ones to blame - politicians in all western countries have be shown to be powerless in the face of the merciless chase for excess profits that these unworthy institutions have pursued to the detriment of all of us

    Posted by: John Rennie | April 11th, 2008 at 8:06 pm | Report this comment
    

11. I am a dairy farmer. The last 10 years have been dire for us, and we certainly havent shared the “economic miracle”. Our worker left for an easier job in the health service and we could not afford to replace him. I have not had a holiday for 7 years and work every day of the year. So, I think like many true country people, we here despise Blair/Brown and new labour. (New labour have despised country people also it has to be said!). They have introduced loads of extra paperwork and inspections upon us, but unlike MPs, I can’t claim expenses to hire a secretary; and end up doing a lot of this paperwork at the end of my 12 hour day, or at mealtimes.

    The government has started loads of projects this small country cant afford - like starting dubious wars, the Olympic games, ID cards etc. We have more spy cameras watching us, more snooping on every aspect of our lives than we had 10 years ago, and yet yobbish and violent crimes seem more common; so these things arent benefitting the individual, but only give the state more power over us. Most people seem less happy than they were 10 years ago, and I think the mental burden of all these extra rules and regulations is a large part of the cause.

    The housing situation seemed inevitable to me, as you’ve only to look at the adverts of fairly ordinary looking houses with huge price tags, to see how over-valuaded they have become. If they are priced so much higher than what it actually costs to build a house then surely the difference is just specualtive “investment” value - which easily evaporates.

    Gordon Brown was telling us that his management of the economy had ended the boom/bust cycle. But it now looks like this is not the case. After the swinging 60’s, the 3-day week 70’s; after the go-for-it 80’s, the 90’s housing crash. After the party comes the hangover! Bigtime maybe.

    Posted by: Abe | April 11th, 2008 at 8:57 pm | Report this comment
    

12. But he has such a charitable heart! how nice of him to donate 20 million mossy nets to a good cause using OUR money.
    Perhaps he is sourcing these from all of the net curtains from repossessed houses.

    Posted by: Jon | April 11th, 2008 at 9:01 pm | Report this comment
    

13. New Labours main downfall has been a complete lack of efficiency in the money spent during a time of relatively strong global economic growth. Sure enough available credit allows the average person to invest and push forward business ideas and new technology developments etc… but when the vast majority of this money available to people is directed instead into a needless housing boom, many end up just chasing their tails, working harder than ever to meet the ridiculous prices. There is no long term gain at all for anyone. Similarly, the governments idea of lowering unemployment has been to create thousands of pointless beaurocratic jobs by overstringent regulation in the public sector - shown most notably by money pumped into the NHS that still fares worse than the majority of other health systems in poorer countries.
    Speculative property investment and immigration should have been capped and the easy credit made available for manafacturing, education, scientific research and development and social welfare.. to ensure people of the UK are well placed to deal with any change in the global economic climate (and potentially the climate itself).
    As it stands now, the future doesn’t look so good.

    Posted by: Paul Turnpenny | April 11th, 2008 at 9:52 pm | Report this comment
    

14. At my advice centre in the westcountry we have a massive number of people presenting with personal debts they will never be able to repay, and now we are seeing mortgage arrears as well, all caused by artificially low interest rates set by Greenspan and his cohorts years ago and greedy for market share lenders who lent ‘unlimited’ money to anyone who required a loan or mortgage…….Boaster Brown and the BofE obviously haven’t got a clue .We saw the start of this debt problem at least 8-9 years ago as the numbers of debt cases increased greatly from that time…..if the ‘government’ lived in the real world they would have realised as the banks could not lend sensibly that some form of credit control was urgently needed to prevent what we now have thousands of distressed people visiting me with huge debts!
    john

    Posted by: john franklin | April 11th, 2008 at 10:11 pm | Report this comment
    

15. Yes, Gordon B. is partially to blame for the fall in value of house prices, and other assets too. To be fair, there are also other contributing factors, but he should have, and could have, taken action much earlier to help mitigate the impact that we are now feeling - but he was so sure that he had eliminated ‘Boom and Bust’ - well he was wrong - how could anyone imagine, if they just look at a little history, that this was the case?

    However, there is also a very, very, long list of other problems that the 10+ year old Labour government has created. It will take the UK many years to unravel some of these.

    I have started a list below, but it is in no way complete - please add to it as you see fit.

    I cannot understand why someone with enough cash, or indeed the opposition, has not taken a full page advert in the FT and listed, in a neccesarily very small font, the mistakes, U turns, failed policies and projects that the government has presided over. It makes me weep to even think of reading it.

    Never in the recent history of the UK has so much damage been inflicted by so few misguided individuals.

    The list: Take any one of these topics and you will soon recall a litany of past disasters, near misses or expensive outcomes - and the people of the UK suffer the consequences and pay for the privilege.
    - Transport: Rail (crowing, high costs), roads (under provision), air ( cheap fuel, at odds with any green policy) remember the Prescott ‘Integrated Transport Policy’?
    - Health (huge sums of money for dubious results, deaths from superbugs, reduced services while taxes stay the same or rise - think dentists)
    - Education (standards slipping, assault on private schools, university fees, lots of new school buildings though, as if they make a difference - my best lessons were received in a prefabricate wooden hut)
    - Law and Order (increasing anti social behaviour, disaffected police forces, offenders rights, lack of respect)
    - Local government (Council tax rises, reduced services, bigger staff numbers)
    - Public sector employment (significant increase in numbers employed by government)
    - Immigration (no attempt to understand or manage it)
    - Energy Policy (there isn’t one)
    - Tax take (it’s growing)
    - Red tape for businesses (it’s also growing)
    - The European Consitution (have we been conned?)
    - And for fun, a ‘light’ hearted item - the proposed banning on incandescent light bulbs without the slightest understanding or review of the issues involved.

    I could go on but I think this illustates my point, please add the many missing items….

    I knew we were in for trouble when I listened to Gordon Brown on the radio about 7 or 8 years ago - he would not answer a single question put to him with any semblance of a direct response - the impression he created was that he thought we are all stupid.

    So in response to the original subject - it is not just falling house prices that the government and Gordon B. have inflicted on us, if it were only that, then we could rejoice, but we have suffered a huge raft of failures that we will all pay for.

    However, the British spirit will win through in the end, it’s just a pity that we will have to work so hard, and pay so much, to resolve the problems.

    Good luck Great Britain. Goodbye Gordon Brown.

    Posted by: Robert K | April 11th, 2008 at 10:19 pm | Report this comment
    

16. I am absolutely clear on the main reason we are facing a crisis of major proportions: House prices have been massively skewed and manipulated by full-scale fraud. This fraud has been in the form the endemic supply of what’s called “Liar Loans”.

    Liar loans involve encouraging and allowing prospective property buyers to LIE about their true income: This process has led to rapid rises in comparative house “prices” right across the entire UK - [and other countries too] - and has led to a feeding frenzy akin to a Pyramid Scheme. Liar Loans have been systematically encouraged by mortgage brokers and intermediaries on commission.

    Posted by: Peter | April 11th, 2008 at 10:26 pm | Report this comment
    

17. Ditto to all the comments

    Anybody thought of starting a webpage of

    www.getgordonbrownout.com, it has a nice ring and might catch on!

    Posted by: Rod | April 11th, 2008 at 10:49 pm | Report this comment
    

18. Powerful economy my foot! The un-economical “economy” run for the benefit of big banks and speculators. The devaluation of money in real estate terms (Nulab Bloggist 2) and creation of a two-tier economy has yet to be adequately analysed and described, but needs emergency action. It has impoverished many more people than the many made rich even if a better understanding of markets and values resulted. Now we need to take the time to understand bank money creation. Most of it is created at no charge to big banks, yet the government outlawed free banknote currency 60 years ago. Government currency has declined to a few percent as a proportion of total money.

    To rely on the credit money and allow big banks to create most of it with Government turning a blind eye to extreme profits even after extreme expenses and salaries is flawed and has globally impoverishing effects by putting our technology out of reach of the poor in other countries. In wealthy countries it has put waste at extreme levels and bona-fide wealth creators such as manufacturers out of business. Lets all scratch each others’ backs in London and New York/Washington and ignore the truth eh!

    The growth of commercial “bank money” via (relatively risk-free, as yet) credit on mortgages/secured loans is the root of the problem if that displaces govt created currency as it has done - from 50% in 1946 to less than 10% today. This increases tax take and prices.

    Succinctly put by your fourth bloggist: “Our economy relies on cheap money and cheap import prices - now they are both gone ! [except that UK money is not cheap - its just that the UK is prepared to pay it.] Brown and his cohorts have taken credit for their brilliant management of our economy, when in fact they have simply presided over poorly regulated [**designed or grew into this state** i.e. with an underlying flaw that raises prices - see below about bank credit money] credit markets which have fuelled consumer demand for inexpensive goods from china, india etc, and in turn given us all the feel-good factor”. [The goods from China and India were not sold cheaply here at the start of your off-shoring exercise in the 1980s and 90s which also helped to fuel those years of inflation as the goods were re-sold at the highest possible prices. That’s a habit peculiar to the UK. So those greedy manufacturers who shut down here for greater profit are partly to blame for the current situation as are those of us who were apathetic in the face of all the undesirable changes. Such as virtually complete obliteration of the unions and exclusion of any of their sensible ideas. We also wonder at the cause of terrorism while we suck the most from the poorest countries due to the design of the system and a refusal to take the plunge and adjust trade for a climate change benefit as suggested several years ago.]

    The biggest challenge facing us is climate change and we need to unite to gather the revenue to solve the problem - for example the inundation of productive land, further reducing our food supply see New Civil Engineer - current issue 10 April 08.

    It is not the regulation of the credit markets only that needs to change, as suggested by the Fed, it is a structural adjustment of both banking and trade that is needed. By diverting some of the interest (say at the level of the base rate) gained on the new mortgage money towards the publicly owned central bank re-stabilising could begin with emergency legislation this year.

    If this diversion was at the level of the base rate, this would be transparent and logical (set by the MPC) still giving the mark-up to the big banks - ample reward as proven by the operation of building societies. The implementation of such a system would imply that the Central Bank was now the wholesaler of all new money. Further adjustments could then be made as necessary, but the effects of a few billion in the first year could be monitored, as the next year’s new money provided an additional boost.

    This money can be hypothecated two ways: to a stabilisation fund which invests against future threats to stability (not bailing out banks) and against climate change - first by addressing the massive leakage of energy from existing buildings. That way fuel poverty and our carbon footprint could be seriously reduced and some of the new food price rises offset.

    In this way we do not turn off the credit tap, there can be a credible deflation of the banking sector and regulation is minimised. The plan gives the whole global community confidence for the future and if the ETI proposal described on www.STEERglobal.org put in place, a just return from trade, reducing terrorism incidents and climate change (see also “previous website there for clearer text”).

    I do not blame Mr Brown (yet) but he could have put this in place sooner? Maybe we needed the current crisis to concentrate the minds. Browse the website and send a message back! Because sea level rise has been underestimated and that and water shortages are explained on a new document available by return: how an Energy Sustainability Revenue Offset could help to solve these problems rapidly .

    Posted by: Ian Greenwood | April 11th, 2008 at 11:16 pm | Report this comment
    

19. oh here we go…all the labour luvviesnow saying brown out. well let me tell you its your problem not his.no one told you to buy a house,no one told you to spend your money the way you did.the basic tenet of life is accept responsibility for YOUR actions,dont blame a half wit. you screwed up,no one else so grow up and take it on the chin

    Posted by: eric savage | April 11th, 2008 at 11:33 pm | Report this comment
    

20. Incompetence is always used to point the finger at the current Political incumbents. This tactic is designed to distract from the fact that the whole system is flawed.

    The FT - alongside the rest of the Corporate media - should take it’s share of the blame for ramping house prices.

    Is not the 18 year cycle (that you’ve all been trying so hard to hide or repudiate) coming to it’s natural end?

    You all knew that the crash would come at the end of the credit supply, why pretend you didn’t?

    Posted by: iain morrison | April 12th, 2008 at 12:23 am | Report this comment
    

21. The UK has the largest consumer and total debt per capita in Europe and a total inability to earn its way out of this position. Moreover the Trade Balance with the Budget is in hopeless deficit with the only hope of correction being a massive reduction in consumption. That has ramifications for Brown’s taxation of economic activity.

    I trust that the financial sector is provisioned sufficiently for a c. 50% drop in house prices because if you do your sums on initial buyers it looks that bad or worse. If they have to find a deposit, which few will have, for a 75% mortgage rather than a 95% or higher that suggests for the same deposit house prices will have to fall some way, and without new buyers the whole market will become fraught.

    Hopeless.

    Posted by: Damian | April 12th, 2008 at 2:07 am | Report this comment
    

22. Gordon the great should not have allowed financial restrictions for mortgage lending to be relaxed.

    However, perhaps his plan worked! It seems the treasury has already spent the tax these inflated house prices provide in the way of Inheritance Tax, now applicable on most properties.

    Posted by: Marilyn Charlton | April 12th, 2008 at 6:51 am | Report this comment
    

23. Brown simply did what the City and its moles in the Treasury told him to do. Hence the collapse in manufacturing, the increase in private equity deals, house price inflation, the great UK Plc garage sale and the general unbalancing of the economy. Nobody capable of independent thinking would have let these things happen would they?

    Posted by: Dick | April 12th, 2008 at 10:35 am | Report this comment
    

24. The biggest lie that has been fed to the public, is that it’s wonderful that house prices have rocketed. As a couple who have paid off our mortgage and seen a huge rise in value, we could smugly sit here and say `great’. But of course it’s not great. We can only realise the money if we die. Meanwhile our two daughters are finding it impossible to find the large deposit now required to buy a house. Ironically, they are competing to buy with buy to let investors who are getting tax relief on their mortgages, something Gordon Brown ought to have been giving to first time buyers instead.

    I’m a LP member and have been for 30 years, but at the next council elections I’m NOT voting Labour in protest. The removal of the 10p tax band was the final straw. TYpical Gordon Brown move - take it out of the direct wage packet and then push people into a benefit system instead. Of course, people under 25 won’t qualify so low paid young workers will suffer, whilst non working benefit claimants come out better again. I think Brown believes they’ll vote for him in gratitude but of course, they can’t be bothered to vote. My daughters in contrast will vote, so will my husband and I, and I hope GB gets the message from everyone.

    Posted by: S Kirby | April 13th, 2008 at 4:54 pm | Report this comment
    

25. The house price crash was inevitable -the only surprising thing is why it has taken so long to materialise. Gordon Brown could have imposed credit controls if access to the housing market for first-time buyers had been a real priority. Instead political imperatives dictated that nothing should be done to upset the burgeoning feel-good factor as property was marketed as a one-way bet- cheered on by vested interests (banks, building societies, estate agents, house builders etc). Restrictive planning policies constrained supply leading to a classic bubble. Gordon Brown was the Chancellor for 10 years- he is responsible. In the words of Sir Alan: “You’re fired!”.

    Posted by: C Foster | April 17th, 2008 at 5:13 pm | Report this comment
    

26. Many contributors are talking about the need to get Brown out. Hear, hear to that but is there another priority we are not looking at?

    The massive debts have been created by banks et al. It is normal practice for a criminal or unscrupulous idiots to pay for their actions by going to jail and paying fines. Why then are we giving the banks ever more ways to claim more money from the tax payers to cover over their crime?

    Surely it is high time that we had some new rules to make sure that banks covered the debts they have created using their own resources? The only ways banks should be allowed to do this is by emptying their own pockets and those of their investors. Doing this will hurt us all but once only. If we let them try to recover at our expense it is going to hurt us twice over.

    I know that we need a financial industry to keep normal commerce working (and the sane side of banking can do this very well) but that is all we need them for. A higher priority is the need for genuine wealth creators and wealth can only be created from genuine products not endlessly re-cycled,re-packaged debts. We need to dismantle much of our world beating financial industry and get back to productive work. As a by the way, we need to dismantle a lot of our legal industry so that people really can start productive work in the first place.

    Posted by: lgm | April 18th, 2008 at 8:20 am | Report this comment
    

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