Wednesday, March 18, 2009

Unintended consequences.

The one thing that has become abundantly clear over the last couple of weeks is that not only does this government have no idea what it is doing, it has no idea what effects it is having by what it is doing.
For example, the implication of a three times salary cap on mortgages implies a further huge drop in house prices. This, in turn, will lead to further huge losses at the banks - which means they won't be able to lend to start the economy.
Perhaps this further collapse in house prices is A Good Thing - in some ways it is - but it's also condemning millions to abject poverty.
It really has all got completely out of hand.
I had lunch yesterday with, amongst others, a CA long retired and the Treasurer of the Gurkha Welfare Trust.
He had banked from the days he first had an account with Bank of Scotland - as had his father and his father before him. His practice had banked with BofS. His wife and children banked there too.
Then one morning late last year he woke up and suddenly felt " My money's not safe in that Bank".
He says it was the most shattering day of his life. He had never never contemplated that cash in a bank was at risk.
His view is that the bankers - and the present government - will never ever be forgiven.

1 comment:

Whispering Walls said...

The govt relied on the housing bubble so what do you expect? They put forward the mantra that everybody has the right to own their own home. They also went on and on about the necessity of affordable housing. They should be pleased therefore that prices are collapsing.