Wednesday, July 16, 2008

Gordon Brown's ineptitude.

Quite by chance I was speaking today to the Romanian equivalent of a QC.
Extremely erudite ( as you would expect), he had a keen interest in all things Anglo-Saxon, having spent a couple of years in the UK earning enough to see himself through university.
Amongst other topics, Grodon Brown's sale of the UK gold reserves some years ago came in for scathing criticism, which is hardly surprising. It was probably the most ill-conceived and certainly the most cack-handed trade that was ever carried out.
The policy ( if that's what it is) which came in for the most derision was Brown's pledge to spend GBP200 million ( or is it GBP400million - noone seems quite sure) buying up newly-built flats for people and calling for first-time buyers to step onto the housing ladder. As even this foreign national, not very attached to UK news said " Does he not know that house prices are falling sharply in UK?"
In fact it could well be he doesn't. I have noticed that politicians always "do something" just when it no longer becomes necessary. One of my most treasured memories is of, I think, Jim Callaghan introducing index-linked gilts. I knew immediately inflation was going to fall.
As anyone with even half a gnat's brain knows, UK house prices are falling at their fastest rate ever. Forget about the drop over the last year - the last 3 months has seen the equivalent of 20% per annum wiped out.
So is this a good time for the government to be spending our money buying houses? No, it is not. Apart from the few housebuilders who might shift a bit of stock ( and at say GBP150,000 per house even GBP400million is only just over 2,500 houses or only 1% of what was sold even in the last 12 months of new build, and only 0.1% of the total sales last year) this is like the gold sale in reverse. Buy it at GBP150,000, sell it later at GBP100,000 if you're lucky. As opposed to sell it at USD 200 and watch it climb to USD 1000.
So, as my Romanian friend said, should he be encouraging youing people to get on the housing ladder? He answered the question himself. No, he should not. I would draw parallels here with Equitable Life, where Brown explicitly mislead thousands of policy holders, and the Ombudsman has said so, and awarded compensation. Whether they will get it is another matter.
If Brown were either prudent, economically competent or capable at all he would know that the economy will sort all these problems in time. Yes there will be hardship, yes some people will lose - but equally some people will profit. You might not like it, but that's the way it happens. Brown's interference will only make things worse.
So just think - we are back to being the "poor man of Europe" we used to be, and an Eastern European, only 19 years out of Communist rule, says so.
When was this phrase last used?
Oh yes, we had a Labour Government then as well, along with the "winter of discontent"
Did I read somewhere about 2.5million government employees going on strike just now? Oh, yes.
Oh well, we've been here before.

1 comment:

Winchester whisperer said...

Spot on - here comes our (and his) winter of discontent