Politics can be an unfair business. It can come back to bite you when you least expect it. Alistair Darling will know exactly how Norman Lamont felt in 1992 when a policy instigated by his predecessor proved to be his downfall.
The news that confidence in the housing market is at its lowest for thirty years will send shivers down the spine of many Cabinet Ministers and Labour MPs in marginal seats. The bookies reckon house prices will fall by twenty per cent by the end of the year. If so, the negative equity crisis of the early 1990s (of which I was a victim) will appear a minor blip compared to the political fallout from such a crisis today.
Despite their protestations to the contrary, Britain will be harder hit by the credit crunch than other European countries. The laws of economics dictate it. Our levels of personal debt are way ahead of other leading economies and as the Conservatives have been warning for some time, that particular chicken was always going to come home to roost sooner or later.
The big political question is this: who will the voters blame? It seemed Brown and Darling got away with Northern Rock, but they are now being seen by the electorate as repeat offenders. Voters are blaming them, rather than the global economic situation. When nearly seventy per cent of people say they have no confidence in the government to get us out of this crisis, the government knows it has a problem. A big one.
Several commentators are asking if Gordon Brown has now reached a so-called 'tipping point'. No. But that may come on May 1st. Then the political fun really starts.
51 comments:
So Gordon and Alastair are responsible for (deep breath):Globalisation, China, US sub-prime loans,Northern Rock, electric and gas rises and house price falls.
Ok.
Do you now know why this Country rejects Conservatism? (Telegraph yougov readers, excused).
Gary
Just what is wrong with house prices coming back down to realistic levels?
Iain,
With respect, you may have been very unfortunate but I don't think you should refer to your equity loss in 'victim' terms. After all, such a term might imply that there was some other malicious party involved. The reality was that market conditions prevailed and some - including your good self - got burned.
There's very little difference now except, as you say, voters' anger will be focussed on those who are seen to be responsible for the disaster. The penalty for Brown's hubris in 'economic competence' is now his nemesis. Why did this clown not understand how business and industry works? Largely because he's never been anywhere near them. The crass notion of control of market forces by diktat has been his undoing.
Frankly, Darling should have seen this one coming. Never mind Northern Crock etc, it was abundantly clear from Brown's previous that he would not be around to accept responsibility for his incompetence and profligacy.
It'll turn into a cat fight soon, with Brown seeking to shift blame anywhere else except at his door. Already he's blaming China and America. It won't be long before he starts blaming the Vatican and the Archbishop of Canterbury.
I see that even Digby Jones is preparing his exit strategy.
What happens if the elections aren't a disaster for Labour?
What happens if they are?
Same result-Gordon stays until 2010. It may be difficult but there is no way he's stepping down.
Are you really relying on bookies' "predictions"? Oh dearie me. As anon 10:17 says, this is neither unexpected nor disastrous. In fact it is a boon for first time buyers, renters, families. If it is one in the eye for those gambling greedily on the housing market, particularly rentiers, then so be it.
As Comrade Elsby points out this scape goating for everything in the world ever is very silly.
Iain, the Tories have to be a bit careful about "calling" a big recession so early. Mr Osborne was made to look foolish on C4 news last night for telling us that the economy is in tatters. It isn't *yet* so his criticism sounded overblown.
What people want to know is what the Tories *will do* when they regain power not what they wouldn't have done. People don't want to be told that they made a mistake by voting Labour in 2005, they want to know how they can fix the problems in 2010.
The message needs to be positive and show what the differences between a Cameron government and a Brown one will be in practical terms. Many people are absolutely fed up with finger-pointing and politicking.
"The bookies reckon house prices will fall by twenty per cent by the end of the year. If so, the negative equity crisis of the early 1990s (of which I was a victim) will appear a minor blip compared to the political fallout from such a crisis today. "
Average house prices fell by well over a third in the early 1990s. There is no indication that falls will be any greater this time.
Chris Paul:
Bookies don't make *predictions*. They set prices that reflect the balance of bets that are being wagered so that they will make a profit whoever wins. Bookies prices are a reasonable reflection of the strength of feeling (at least amongst those who are prepared to gamble).
But then a socialist would never understand markets.
Only 20% ?
I bought a house from a building society in 95 at half the price the previous owner had paid. Sold it a couple of years ago at six times the price I paid.
The problem now is not falling house prices, the problem is actually overpiced houses.
Not only did house prices fall by a third in the early 90s,Interest rates were double and Unemployment was Three million.
Very different.
Brown and Darling look like a crock of shit at the moment, but Osborne last night was cruelly embarrassed.
An economic upturn in the second half of next year should not be ruled out.
I think the political trick for the Conservatives will be to make sure that the electorate associate the economic woes with Gordon Brown.
It is absloutely the right thing for them to keep on about 'not fixing the roof', announcing the gold sales in advance, going on a spending splurge, tax levels, public sector waste, hobbling the FSA, Ed Balls's So What? comment, etc, etc. All have been disastrous and all are thanks to the PM and his old treasury clique.
Making people wake up to the fact that Brown was a calamitously incompetent chancellor and is proving to be a calamitously useless PM is surely an open goal.
Brown's past will dictate his future - and it's not going to be pretty.
For those who are about to suffer financially I feel very sorry. For those who aren't I suggest you buy a bag of popcorn and sit back to enjoy the spectacle of Labour destroying itself.
Anon 11.21. I agree. Anyway Gordon has been complaining about the lack of affordable housing, which must mean he thought the prices were too high.
A touch of hubris here, I feel. There has been so much hyping of how disastrously Labour will do on May 1 that anything less than a wipe-out will seem like good news for them (Brown on his way back etc). Ditto re the London Mayor: Ken could scrape back in so let's not count our chickens, please. Falling house prices are only a problem if you have to sell. A fall in the rate of increase is not a problem at all. It's when unemployment rises and there are lots of forced sellers or people being repossessed because of large debts that you start having real problems. I think the real criticism is that times are tougher than they were, may get much worse, the Govt appears to have no real understanding of the pressures on families (Alastair wittering about plastic bags during a Budget, for God's sake) and keeps on taxing us, to no visible benefit. Companies and people are starting to move abroad because they feel that Britain has lost its way and the path Brown is intent on leading us (the State knows best and can spend your money better than you) is the wrong one. It's the over-mighty State all over again, a bit like the 1970s, and it needs determination and a clear sense of a different direction to put us right. Lots of people who are sufficiently fed up with Labour may vote Tory (or Lib Dem) to get Labour out but I don't yet sense that DC has a real sense of direction about what's needed to curb the over-mighty State e.g. cut the State's functions which leads to a reduced tax burden, as well as curbing the surveillance state and the effective nationalisation of our private lives (e.g. Ken telling us when to flush the lavatory, the Govt bossing us about over every aspect of our lives. Even DC hasn't been immune: where supermarkets put their chocolate oranges is not the business of politicians.) The Tories still have lots of work to do on this front.
"this scape goating for everything in the world ever is very silly"
Oh dear!
Why the hell are we paying Brown and his henchpersons? To run the effing country in such a way as to ensure the untroubled peaceful prosperity of its citizens. Have they done that? Absolutely not.
Brown has managed to flog off the gold at cut price, increase the borrowing of our sodding cash to astronomical levels, steal our pensions, piss our money up against the wall, preside over phenomenal levels of personal debt, huge increases in the cost of living, etc etc etc and now he wishes to avoid any responsibility.
WTF is he doing then? WTF has he been doing? Is this all the result of some hidden maelevolent force, some unpredictable events? Have The Mysterons suddenly launched a pre-emptive strike on Earth?
Competence? I don't think so.
Ah, yes, well, it's like this. It is the old "when things were going well it was due to my efforts. When things are going pear shaped, it is due to the global ecomonic crisis" excuse.
oh look elsby's back.....
do you know why you was (sic)rejected the last time you tried to get elected as a councillor?
One benefit of the house price slump is that the bastards won't get so much from your estate in inhertitance tax!
george osborne was really usless on c4 news........what you have to realise is that all the figures are fictonal. ie.gdp/inflation etc....
gdp consists of water supplies,govt.spending(cant see that one falling)hotels? repairs?
and then subject to revisions such as seasonality.......
i am not a neu lab voter but suggest that george really must pull his socks up.
Alex
So Iain is not basing his analysis on bookies but on those gamblers who are prepared to place bets on the housing market. Not sure which is worse.
BTW if you understood markets you would know that prices in efficient markets should reflect expectations of price changes almost straightaway. But the UK Housing is not efficient - as there is no efficient forwards market in housing - so market for gambles in house prices tells us very little whatsoever other than where gamblers are placing their money.
What a load of tosh. Gordon and labour will lose the next election but it will have done immense harm to the tories to be seen to be celebrating the economic damage being done to britain and in particular the poor as a result of the global crisis.
Will britain be hit worse?
Not according to international experts.
Look for example at last week's little reported prediction by the IMF that even though economic growth will slow in Britain, it will be higher than in all the other industrialised economies.
Fear you won't hear any of this from iain though cause it doesnt fit with the party line.
Well, dear Gary, Gordo was warned twice by the Bank of England that Northern Rock was in serious trouble, but since it was Labour's preferred bank, nothing was done. Yes, I'd say he takes some of the blame for that fiasco.
US sub-prime loans? I knew about those problems more than 4 years ago just from watching TV - and I'm just a suburban housewife with no links to Big Finance - so how comes the ex-Chancellor didn't start making provision for storm clouds coming over the horizon?
House prices can go down as well as up, but Gordo said he had beaten 'boom and bust', so couldn't be seen to be taking action.
The ex-Chancellor did not encourage the building of nuclear power stations, so we are at the mercy of foreign fuel price rises, thanks a bunch, Gordo.
The ex-Chancellor wouldn't fund the building of extra prisons ....etc, etc.
The Big Clunking Fistula has been at the top of Government for 11 years now matey, you can't cleanse him of blame.
Chris Paul said: "this is neither unexpected nor disastrous. In fact it is a boon for first time buyers, renters, families."
You mean those first time buyers and renters who can't find a mortgage without a 25% deposit, and who can't raise such a deposit because the price of living is so high? And those families who are stuck, because whilst they want to trade up to a bigger place the value of their current home is plumetting?
You'll be telling us that tractor production has increased next....
may i suggest to all people of the 'right' persuasion and if in need of a small amount of cheer please visit Labour Home.
It is a Wake !! Their morale is zero. Just visit and read, Getting out of the brown stuff.
"Britain will be harder hit by the credit crunch than other European countries."
Naughty Iain. We are not a European country. Yet.
Gary Elsby, at the same time, why do you think "country" is a proper noun? I ask because it's interesting that so many socialist posters are borderline illiterate.
O/T but typical, Gordy has just blamed the tories for his selling gold at the bottom of the market apparently they hadn't diversified enough.
So there you go, it's Majors fault
Now where's my polling card as I go to vote the cretinous idiots out
Speaking of humongous mistakes made by Gordon Brown surely "I can't wait any longer..I'm bursting" must be his biggest.
Wasn't Blair due to step down right about.. well now really. If Brown, Balls etc hadn't kept tripping him up in the corridor and yelling'No one likes you, why don't you leave.'he'd be catching all this economic woe.
Another clunking miscalculation. He could have walked in and reversed, or even pretended to reverse all his own stupid decisions.
And doesn't Cherie have a book due soon..or maybe in 6 - 10 months time?
Never mind.I'm sure it will be very complimentary. And old Ali Campbell..hasn't he got 2500 pages of material to go into his directors cut version? If Browns going anyway maybe he should cash in.
Did you see this?
http://thecrownblogspot.blogspot.com/2008/04/brown-squrms-out-from-blame-again.html
Gordon blame Conseratives over his Gold selloff.
Unbelievable! Just seen via link on Guido that Brown has blamed Tories for his gold sell-off. On Sky News!!
There is no other word for this man but LIAR.
Verity: It is perfectly reasonable to run a Country and be borderline illiterate, as you suggest.
What the Country rejects,is the notion of innumerate Conservatives running it.
Black wednesday and all that.
I hope this criticism hurts you as much as I had fun in writing it.
Gary
Talking of lies, anyone see that inflation is @ 2.5% CPI and down to 3.9% RPI.
We all know it's really 28.5%
We all know unemployment is really 28 million, the pound's really only worth 50 cents and less than a Yuan.
We all know that house prices have crashed to below their 1920 value and repossessions are set to rise to 15million this month.
We all know the waiting time for NHS treatment is 25 years.
We all know that the real Conservative poll lead is 98% and that when we get into powere, we'll abolish tax, abolish borrowing and increase spending
We all know that the EU has legalised rape and bestiality.
We all know it's all Brown's fault.
That's better, now , who's got my crayons?
kafka: there is another word for him, in fact I can think of several...
Anon 3.18
Has Dave missed you off the 'A' list? I can't find you.
I can see the slogan now...
"Vote Labour - for lower house prices !"
A surefire winner, methinks..
Just watched Brown on the BBC. He looks shattered. His confidence has gone. Occasional, but obviously forced, attempts to smile. This is a man who has lost the plot. And the Sky clip about "diversifying into gold" and blaming the Tories is as bad.
Back in October Brown told us he had proved his competence but needed time to let the people understand his vision. Well, he has proved his incompetence and the people have made up their minds.
By the way, when are we going to get the results of the inquiries/reviews into the lost child benefit data, the Abrahams affair and so on? If you think that things might get better for Gordon, think again.
Electorally, Brown is a 'dead man walking' - if he doesn't realise that now he's even more of a fool. He can wriggle and squirm all he likes, but history will record that he shares responsibility for the destruction (possibly irrepairable) that the NuLabor's actions have wreaked upon the UK.
Generations will be blighted thanks to the actions of this self serving, misguided coward.
A plague on his house for all eternity
verity said...
"Naughty Iain. We are not a European country. Yet."
No. Mexico is considered to be too far away to be considered part of Europe.
Whereas, when I was at school we were taught that Britain is part of Europe.
Just watched Brown on the BBC. He looks shattered. His confidence has gone. Occasional, but obviously forced, attempts to smile. This is a man who has lost the plot. And the Sky clip about "diversifying into gold" and blaming the Tories is as bad.
Back in October Brown told us he had proved his competence but needed time to let the people understand his vision. Well, he has proved his incompetence and the people have made up their minds.
By the way, when are we going to get the results of the inquiries/reviews into the lost child benefit data, the Abrahams affair and so on? If you think that things might get better for Gordon, think again.
"And those families who are stuck, because whilst they want to trade up to a bigger place the value of their current home is plumetting?"
Don't you realise that the value of the bigger place is falling as well? If the price of the bigger house falls by the same percentage as the smaller one then the absolute difference is smaller and so the bigger one becomes more affordable.
@ken from glos 1:34
followed your advice to Labour Home. Streuth! Unbelievable!
For those that can't be bothered, try this:
"...aggressive and bullying nature, someone who runs away when the going gets tough, someone who cannot make difficult decisions and a man who has always held grudges. We had some indication about his inability to lead and mutterings from some about the future being a disaster with GB..."
"...we're doomed..."
Iain, if as you say, they're not collectively at tipping point, the beam is very finely balanced.
This may be a global phenomenon but the Labour government have placed the UK in the worst possible position by:
- ripping the heart out of private pensions, leaving property as the only real alternative to inadequate "stakeholder" pensions after the widespread closure of final salary schemes;
- hiding the real rate of inflation by using CPI not RPI;
- keeping interest rates low when they should have been higher, encouraging over-exposed borrowing;
- dithering over Northern Rock leading to the collapse of the business and a drought of mortgage packages
It is the government's fault that first-time buyers cannot get mortgages for overpriced properties, and that house-owners are getting clobbered coming off fixed rates. House prices are too high and could probably survive a small drop or a plateau, but not the massacre that is imminent. Buy-to-lets and recent first-time buyers will be the worst casualties.
Most of these clowns have only ever run subsidised student unions, not even able to lay a claim to running whelk stalls!
Sometime ago I suggested that the so called feelgood factor was being funded on credit. Not very profound I admit, but it lies at the core of what is happening now. "Put it on the card" people muttered as the month's spending went a tad over their income: the "value" of their home was increasing at an unbelievable rate and all was well.
People were sliding into a pit of debt and starting to buy their groceries on MasterCard in order to get onto the magic property ladder.It was a call they thought they could make. Not any more. With house prices tumbling and the cost of a week's groceries estimated to be a lot higher now than last year, there is nowhere to find extra liquidity.
The things that matter the most to the public are not the nuances of Westminster tittle tattle that we like to fart on about. The things that matter to the voters are sex, food and fuel. The first is presumably beyond GB's purview, but food and fuel are most certainly not. Factually, the unknowing proletariat are being hit where it hurts and are now noticing what we, the intellectual elite (!), have known for sometime: we are being fecked bigtime and the blame lies firmly at the door of number ten.
As Patrick says, "Brown's past will dictate his future - and it's not going to be pretty."
I remember Thatcher selling off the "family silver" and being appalled. That is going to look very piffling indeed as Gordon now desperately tries to wring money out of every single corner of this land in order to cling to power.
I shan't be eating popcorn Patrick, I shall be stockpiling flour and diesel.
Gary Elsby writes to me: "I hope this criticism hurts you as much as I had fun in writing it."
No. You are not literate enough to articulate criticism and I can honestly say I have no idea what you are trying to say.
But do let us know why you think country is a proper noun.
4:31 - As a British citizen, I refer to "we" when we discuss our fellow Britons, and Britain.
He continues: "Whereas when I was at school we were taught that Britain is part of Europe." Socialist comp with an agenda, was it?
To quote from the film Zulu where a private asks a Sergeant 'why us?' when they are surrounded by thousands of Zulus, he gets the stoical reply 'because we're here'.
Alistar Darling is just discovering the private's situation. (ie catching the fall-out of the cock-ups made by others)
When faced with an unsustainable boom in house prices several things come to mind.... Increase the supply of housing. Improve transport links so that areas out of the boom come into play. The bank regulators could put in place rules about max. multiples of salary for loans.
If carefully managed, you could pull back the rate of increase to below inflation, and gently put the breaks on.
Alternatively you could just go over the cliff.
For the socialist types - who do you think have the crap loans of %125? Yes, the poorest people. They are the ones who will find that they can't get a mortgage deal when their existing one runs out - they will be paying the full lending rate with no hope of getting out of it short of bankruptcy - they won't be able to sell, and they won't be able to change lender.
They said on R4 news today that inflation remained at 2.5% in march because although food has gone up the price of furniture has fallen...WTF.
I'm now going to try and eat my table and chairs.
how many people buy new furniture every week/month/year..
@ Anonymous 4:31 PM
"when I was at school we were taught that Britain is part of Europe"
Did you go to some sort of Comprehensive, then? You're a State Education Victim, right? Remedial therapy and classes are available, of course, but not on the NHS which is now closed.
"Part of Europe" indeed. Did they not teach you that Europe, in part and in whole, is The Enemy? Have we spent centuries killing various Europeans, shedding our blood on their territories, to end up with this claptrap? Since when did 'Europe' do anything for us, apart from providing a few pleasing holiday destinations?
@ Mitch
So, do you want Chippendale with your st(e)ake? I thought the Axminster pie was pretty wholesome.
Don't you realise that the value of the bigger place is falling as well? If the price of the bigger house falls by the same percentage as the smaller one then the absolute difference is smaller and so the bigger one becomes more affordable.
You utter moron..
If people have taken out 125% or even 100% mortgages then ANY FALL in the house price puts them into negative equity.
Even 90% won't help due to fees, moving costs, stamp duties and HIPS tax etc.
It's Gordon's fault if house prices are too high and now it's his fault because they are lowering.
Is it too much trouble too ask those of you who fail at General Elections(at all General Elections)(whenever one comes along),exactly what price a house should be?
I'm busy writing election leaflets where I promise the earth, could anyone advise me on how to remove China from our equation?
How do we control wage inflation, which will add to inflation?
Any advice will be treated with the utmost disrespect.
George(gideon) Osborne needn't reply.
Gary
Unsworth asks: What has Europe ever done for us?
I do feel a Monty coming all over me, but I'll forsake such joys by just suggesting that it helped Labour into power due to the Tories killing her off, over it.
I'm enjoying this!
JessTheDog said...
Your list is very true. What you leave out is that much of the fabled 'growth' in GDP is the illusion provided by mass immigration - a 'benefit' that creates far more problems than the benefits claimed for it. A down turn might remove a small amount of the immigration thus further reducing the pretended level of GDP growth whilst still leaving enough to further increase demands on public spending.
I'm looking forward to it.
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