The Bank of England can rightly take credit for one achievement; they stemmed the house price crash. Prices have now flatlined for around two years. This is in stark contrast to the immediate post-crisis period, when prices were in free fall.
Stabilizing house prices required enormous effort. The Bank of England had to push the bank rate to almost zero, and print vast amounts of money; in part to prop up a bankrupt financial sector.
There were a few side effects, which is normal when any doctor applies strong medicine to an ailing patient. Economic growth has, for all practical purposes ceased.Savers have been ripped off while debtors have been protected. Inflation has picked up, and unemployment remains unacceptably high.
Still, it has all been worthwhile. Outrageously overpriced properties remain outrageously priced.
So, well done, Bank of England....
6 comments:
If inflation is 5% last year, stable prices are quite a loss.
The slow lingering death of the housing dream.
This all 'works' by stealing from savers for the benefit of those who borrowed too much and those who lent too much, and paid themselves vast amounts in the process, which has turned out to be payment for losing money efficiently rather than making anything useful at all. And of course, with inflation at 5% (echo the above) those who borrowed excessively are not even seeing their assets hold their value. Mmm. So who wins at everybody else's expense? Bankers, mortgage brokers, politicians and so-called regulators like the FSA who did their jobs very badly but got paid handsomely - for negative achievements. What a puckaterry! B in C
Real house prices are seriously undershooting the trend:
http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php
@Anonymous 18:34
On the money...When I explain this to people using the comment "the biggest bank heist in history" and then point to the continued levels of borrowing required to underwrite the toxic housing loans still on the books, few believe it. Instead they are being led to believe the masses of money being borrowed is because of "scroungers".
A highly successful operation all round I would say.
The tonic that is required is a scheme to enable first time buyers to get on the outrageously priced property ladder.
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