The illustrated guide to the Brown bust

RobertD

With more that the total tax revenue for next year already thrown at the banking system with the government instruction to get lending back to boom time levels we have the seeds of the next inflation.

As house prices have still a long way to fall before they reach affordability at typical interest rates it will require a major cut in interest rates (or some more of the creative up front interest discount plans) to allow buyers to go back into the market. That is just setting off the whole process again.

However I can see the political advantage in it for Grodon. He is then the man who saves house prices and makes everyone feel wealthy again, at least until 2011 when there will have to be either massive tax rises to pay for it or the IMF will be called in to bail out the bankrupt UK government. Interest rates will rise, buyers won't be able to keep up payments, and the housing market will have to crash even further to restore affordability.

Now the plans are out on the table its time for the opposituion to take of the gloves and start to ask some tough questions before it's too late.

mark c

Agreed RobertD .. huge sums poured into the banks are a bit like more and more water poured into a bowl.. it'll flow somewhere sooner or later but just like water the more gordo pours the bigger will be the mess to mop up afterwards.

Tiberius

Labour busts always seem to occur faster, undoubtedly because they govern without brakes. Perhaps it was this observation that led Blair to say he had no reverse gear.

David C

I thought the idea was daft, but I've changed my mind.
Brown is priming the system for a move into the Euro.
Maybe he sees himself as the European President at the end of his term as British PM? (certainly annoy Blair)

Short the UK

I see the Irish have raised taxes and cut spending. Darling will need to do this pronto.

We need to get the long dated gilt yield down, so as to reliquify the economy.

'Buddy, can you spare a dime?'

Frank P

Fraser

Will you please piss off with your subscription promos when I press the 'Coffee House' button. I subscribe, right? As for my friends, they decide what they want to read - and most of them think I'm barmy for subscribing to a magazine that has lost its way - so don't push your feckin' luck!

Frank P

Fraser

"...this will have a serious effect on the real economy."

After 11 years of Treasury incompetence, political posturing, sleaze and chicanery there is no 'real economy'. All that's left is a surreal economy and a bizarre government.

We need an election, now!!

luke

The two different Y axis make this a very misleading graph. One might almost call it a SPECTATORIE

Talia

In 2003, house prices rose 15%, in 2004, they rose even more. I still the correction still has far to go.

Ian W

"The two different Y axis make this a very misleading graph. One might almost call it a SPECTATORIE"

No they aren't - is this a Lukie?

Fraser Nelson

Frank P, sorry about the spam - I don't get it, for some reason. And as for your friends, I'd like to persuade your friends why The Spectator repays its cover price several times over.

Luke, this graph is from Citi. One step down from Mount Sinai. And the Y axes are the same - just cropped a little too harshly at the sides.

paul van brut

Lest we forget, Brown a year ago...
From Brown's speech to the City in June 2007, his last as Chancellor:

Over the ten years that I have had the privilege of addressing you as Chancellor, I have been able year by year to record how the City of London has risen by your efforts, ingenuity and creativity to become a new world leader...

So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London... And I believe it will be said of this age, the first decades of the 21st century, that out of the greatest restructuring of the global economy, perhaps even greater than the industrial revolution, a new world order was created...

So let me say as I begin my new job, I want to continue to work with you in helping you do yours, listening to what you say, always recognising your international success is critical to that of Britain's overall and considering together the things that we must do - and, just as important, things we should not do - to maintain our competitiveness: enhancing a risk based regulatory approach, as we did in resisting pressure for a British Sarbannes-Oxley after Enron and Worldcom.

Hat tip Polly

TGF UKIP

Falling house prices, just like rising unemployment, have absolutely nothing to do with Gordon or this government and you lot are the only fools who appear to think they do.

The BBC told us all on the BBC1 6 o'clock news that this was all the result of "the global economic crisis."

Nor, this time, is it just the BBC, it seems to be the entire broadcast media together with a major slice of the Press including the previously Tory Press such as the Mail and the Browngraph.

Your boys claim they're being clever while waiting "until recession bites" to mount their attack, Fraser, but by that time Gordon will have got his alibi repeated so many times it will be in the equivalent of tablets of stone.

Dave & Co and their increasingly few acolytes remaining in the Press are simply being left trailing in slipstream of Gordon's jet as he gives daily visual proof by his globetrotting that it really is nowt to do with him and it most certainly isn't a "Made in Britain" recession.

It really is a toss up which is worse - the government we've got or its supposed "opposition."

Nicholas

When it comes to the truth, Labour are a bit like the boche and Corporal Jones' cold steel. They don't like it up 'em. They do not like it up 'em. Eh, Luke?

Labour, the Left and socialism, built on lies, manipulating the facts and spin, aka propaganda. Always someone else's fault. The nazis of the 21st Century.

JohnAnt

It's absolutely terrifying that Brown now wants to force the banks to lend at 2007 levels. What made property unaffordable was that so much was sold at such fancy prices to people who had no savings nor equity, nor any clear margin to repay the mortgage. That ramped up the prices until the debt mountain couldn't be concealed.
Brown wants that all over again, but this time with nationalised banks soaking up the debt with tax payers' money.
That's neither socialism, nor capitalism, but just wantonly destructive, psychopathic behaviour.