Las Vegas – known best for its gambling haunts – now has a new reputation. It’s America’s No.1 city for foreclosures, with more people losing their homes here than elsewhere in the country.
Artist Emily Kennerk has created a 22-hour video installation which shows an image of every home foreclosed in 2009. (Foreclosure is the legal process whereby a bank or lender obtains a court order that terminates the borrower’s right of redemption. It is harsher than repossession).
Describing her installation, Kennerk says as you walk around the town you can’t help but see “this ghost town is forming around you. It’s broader than Las Vegas. This is the first generation that’s going to have to deal with the death of the American dream”.
More than four million US homes have been repossessed in the past three years. A website currently lists 2,304,257 foreclosed properties in the US. In the state of Nevada where unemployment stands at 14%, more than six out of ten of all home sales are currently from foreclosures.
At the start of the sub-prime mortgage crisis, back in September 2008, the US Treasury took the mortgage giants Fannie Mae and Freddy Mac into government “conservatorship”. These two mortgage corporations were set up under Roosevelt’s New Deal during the Great Depression of the 1930s. Along with Ginnie Mae (the Government National Mortgage Association) they currently guarantee $5 trillion in US mortgages and 96.5% of all newly originated mortgages in the US.
So far the government has injected $145 billion into them to cover their losses. The mortgage market now is almost a wholly owned subsidiary of the United States government, according to former Federal Reserve chairman Paul Volker. "Almost all the mortgages made now are insured by the government, bought by the government, and the guys at Fannie Mae and Freddie Mac are the market . . . It’s clear Fannie Mae and Freddie Mac need to go. "
But the US is not only affected by a housing crisis. The malaise goes far, far deeper. Three trends have come together. Economists estimate that the annual incomes of the bottom 90% of Americans have risen only 10 per cent in real terms over the past 37 years while the incomes of the top 1 per cent have tripled.
Thus, a “slow economic strangulation”, which began well before the Great Stagnation, now means that income mobility is declining just as inequality rises sharply. Even families with a gross joint income of $70,000 per year, are only “a pay check or two from the streets” as one Minneapolis worker puts it. Medical expenses are a nightmare. Even families on twice the US median joint income have to borrow heavily to have essential, life-saving operations.
Arthur Miller’s 1949 play, Death of a Salesman, dramatised the anxieties arising from US Great Depression of the 1930s and the reliance on credit to provide necessities. During the Cold War years, such plays were seen as an attack on great American dream. But in today’s Great Stagnation, following the years of easy debt-fuelled consumer credit, which analysts call the “Great Moderation”, it’s certainly not playwrights who are pricking the dream-bubble.
The inability of the capitalist system, not only to ensure the fundamental necessities of life, but the very notion of a positive future is self-evident. Cities and states are staring at bankruptcy while trillions of government dollars have failed to revive the economy. As American comedian George Carlin quipped: “It’s called the American Dream because you have to be asleep to believe in it.”
Corinna Lotz
A World to Win secretary
For revolutionary solutions to create a sustainable, not-for-profit economy in place of global capital alongside a real democracy based on People’s Assemblies. Visit our web site at www.aworldtowin.net
Showing posts with label sub-prime. Show all posts
Showing posts with label sub-prime. Show all posts
Monday, August 02, 2010
Thursday, February 21, 2008
Debt tsunami builds
The emergency legislation to allow a temporary period of public ownership of what now seems are the most worthless parts of Northern Rock, is increasingly looking like a finger plugging a hole in the dyke (or levee for American readers) as the global financial system continues to haemorrhage on debt.
On Wednesday, credit markets were thrown into fresh turmoil as the cost of protecting the debt of US and European companies against default surged to all-time highs, and Alliance and Leicester, another former building society, revealed that it had joined the ranks of deeply troubled banks. Money flowed out of the credit markets and into oil, driving the closing price of a barrel of crude above $100 for the first time.
Earlier this week, shortly after Credit Suisse’s auditors gave it the thumbs up, and it issued its annual bonuses, the investment bank was suddenly forced to reveal a £2.85 billion hole in its accounts. The heads of some of its traders in “synthetic collateralised debt obligations” rolled. Credit Suisse is just one of the many fundamentally unsound financial institutions to be reporting its audited accounts at this time of year.
Market watchers were looking closely to discover the hiding places of the remaining estimated $280 billion of so far unreported losses spun off from oversold and toxic sub-prime mortgage debt. Each new revelation delivers another painful shock to global markets, building irresistibly into a debt tsunami.
But the sub-prime debt mountain is just the visible tip of an iceberg, rapidly melting in response to a changing global climate. The hugely profitable market in debt-based derivative products developed towards the end of the 20th century. Initially, it was a relatively small part of the ballooning of fictitious capital needed to finance the growth of immensely productive globalising corporations and the credit-based purchase of their commodities.
As the global rate of growth per capita continued to decline, the pressure for more sources of finance to offset declining profits increased. Prominent amongst the apparently secure bases for credit expansion was property – both housing and commercial. If economic growth could be funded it would guarantee a highly profitable income stream from speculative new building and office rental. If people, individuals and families, could be persuaded to take out mortgages, they would be tied into decades-long repayments – another lucrative income stream. New homes guaranteed a demand for new products to fill them and the financing infrastructure that would be needed to help people pay for them, many times over.
So it was that the need for housing and the accumulated savings of millions of ordinary people invested in mutually owned building societies since the 19th century were converted for use by City spivs, high-rolling global gamblers and market traders in red braces. Northern Rock demutualised in 1997 exactly five months after the election of the first New Labour government.
Now, the determining factor of its future is the rapidly declining value of its mortgage book - the 700,000 households who are increasingly unable to make their monthly payments. And decline it surely will. As Martin Wolf, the Financial Times’ leading analyst, is now acknowledging : “The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world.”
New Labour can never repeat the Northern Rock bail-out. Not only would it bankrupt the state, it would also make no difference as decades of debt-fuelled expansion unwind. There is an alternative to making the entire population having to pay for the mother of all capitalist financial and economic meltdowns. Not-for-profit solutions to housing and other needs are well-known and well understood. They involve co-ownership, mutuality, not-for-profit finance, and a building programme targeted at need rather than what the market will bear. There is no alternative.
Gerry Gold
Economics editor
On Wednesday, credit markets were thrown into fresh turmoil as the cost of protecting the debt of US and European companies against default surged to all-time highs, and Alliance and Leicester, another former building society, revealed that it had joined the ranks of deeply troubled banks. Money flowed out of the credit markets and into oil, driving the closing price of a barrel of crude above $100 for the first time.
Earlier this week, shortly after Credit Suisse’s auditors gave it the thumbs up, and it issued its annual bonuses, the investment bank was suddenly forced to reveal a £2.85 billion hole in its accounts. The heads of some of its traders in “synthetic collateralised debt obligations” rolled. Credit Suisse is just one of the many fundamentally unsound financial institutions to be reporting its audited accounts at this time of year.
Market watchers were looking closely to discover the hiding places of the remaining estimated $280 billion of so far unreported losses spun off from oversold and toxic sub-prime mortgage debt. Each new revelation delivers another painful shock to global markets, building irresistibly into a debt tsunami.
But the sub-prime debt mountain is just the visible tip of an iceberg, rapidly melting in response to a changing global climate. The hugely profitable market in debt-based derivative products developed towards the end of the 20th century. Initially, it was a relatively small part of the ballooning of fictitious capital needed to finance the growth of immensely productive globalising corporations and the credit-based purchase of their commodities.
As the global rate of growth per capita continued to decline, the pressure for more sources of finance to offset declining profits increased. Prominent amongst the apparently secure bases for credit expansion was property – both housing and commercial. If economic growth could be funded it would guarantee a highly profitable income stream from speculative new building and office rental. If people, individuals and families, could be persuaded to take out mortgages, they would be tied into decades-long repayments – another lucrative income stream. New homes guaranteed a demand for new products to fill them and the financing infrastructure that would be needed to help people pay for them, many times over.
So it was that the need for housing and the accumulated savings of millions of ordinary people invested in mutually owned building societies since the 19th century were converted for use by City spivs, high-rolling global gamblers and market traders in red braces. Northern Rock demutualised in 1997 exactly five months after the election of the first New Labour government.
Now, the determining factor of its future is the rapidly declining value of its mortgage book - the 700,000 households who are increasingly unable to make their monthly payments. And decline it surely will. As Martin Wolf, the Financial Times’ leading analyst, is now acknowledging : “The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world.”
New Labour can never repeat the Northern Rock bail-out. Not only would it bankrupt the state, it would also make no difference as decades of debt-fuelled expansion unwind. There is an alternative to making the entire population having to pay for the mother of all capitalist financial and economic meltdowns. Not-for-profit solutions to housing and other needs are well-known and well understood. They involve co-ownership, mutuality, not-for-profit finance, and a building programme targeted at need rather than what the market will bear. There is no alternative.
Gerry Gold
Economics editor
Monday, February 11, 2008
Staring at 'economic calamity'
The world’s financial ministers are all in a dither, and it is not surprising. At the weekend meeting of the G7 – the world’s richest economies – ministers took a few steps towards acknowledging the scale of the economic unravelling that is both cause and consequence of the global credit crunch. Then most did a sharp about turn, rejecting America’s call for a global reflationary package and claiming things could be contained.
New Labour’s chancellor, Alistair Darling admitted: “It is undoubtedly the case following the problems that arose in the US housing market last summer that the world is facing a turbulent time.” Hank Paulson, the US treasury secretary acknowledged that “the current financial turmoil is serious, and persisting”. They were responding to an understated report from the Financial Stability Forum (FSF), a study group drawn from the world’s central bankers and financial regulators which warned: "It is likely that we face a prolonged adjustment, which could be difficult".
Financial Times columnist Wolfgang Munchau is even more downbeat – at least for the US and the UK - in what tries to be an assessment of the risk of global deflation, a repeat of the Great Depression – “the ultimate economic calamity” as he puts it. Munchau says there is one scenario that could produce a 1930s-style deflationary depression in the US: a large-scale financial meltdown, adding; “By that I mean a situation in which the financial sector would cease to fulfil one of its basic functions: to provide liquidity to the real economy.”
But those who’ve been paying attention know that the problem with Northern Rock was exactly that. The wholesale credit markets seized up – liquidity disappeared – following revelations about the repackaging and reselling of unrepayable debts. So Munchau’s assessment becomes particularly chilling when you read what another G7 Minister had to say. According to Peer Steinbrück, German finance minister, the G7 now feared that write-offs of losses on securities linked to US sub prime mortgages could reach $400 billion. This is sharply higher than the $120 billion credit losses that Wall Street banks and other institutions have revealed in recent weeks – and also far bigger than the US Federal Reserve’s estimates.
Which all helps us to put Munchau’s assessment of the UK’s prospects in perspective. He says “The UK is perhaps more vulnerable, because of the relatively large size of the financial sector in the economy, an over-reliance on a property market that is about to deflate, and chronically low productivity growth in non-financial sectors. There is now clearly the possibility of a severe and prolonged recession, followed by a long period of low growth.”
The FSF puts forward a raft of regulatory measures aimed at strengthening the resilience of key elements of the financial system. These however, are targeted at some of the many consequences rather than the underlying cause: 30 years of credit-induced transformation of the world economy has failed to reverse the underlying trend of a continuous decline in the rate of global growth per head.
None of this is really in line with Darling’s insistence that the UK has “good reasons to be confident” about its ability to withstand a slowdown in the global economy, is it? Just before the G7 met, figures released in Britain showed that home repossessions soared by 21% in 2007 as the credit crisis began to bite into people’s ability to repay their mortgages, let alone second mortgages used to buy expensive consumer goods. Meanwhile, business confidence in Britain is at an all-time low, according to a survey by the Institute of Chartered Accountants in England Wales. The banking, finance and insurance sector showed the lowest confidence. But there will be no recession, the institute says. So that’s alright then.
Gerry Gold, economics editor
New Labour’s chancellor, Alistair Darling admitted: “It is undoubtedly the case following the problems that arose in the US housing market last summer that the world is facing a turbulent time.” Hank Paulson, the US treasury secretary acknowledged that “the current financial turmoil is serious, and persisting”. They were responding to an understated report from the Financial Stability Forum (FSF), a study group drawn from the world’s central bankers and financial regulators which warned: "It is likely that we face a prolonged adjustment, which could be difficult".
Financial Times columnist Wolfgang Munchau is even more downbeat – at least for the US and the UK - in what tries to be an assessment of the risk of global deflation, a repeat of the Great Depression – “the ultimate economic calamity” as he puts it. Munchau says there is one scenario that could produce a 1930s-style deflationary depression in the US: a large-scale financial meltdown, adding; “By that I mean a situation in which the financial sector would cease to fulfil one of its basic functions: to provide liquidity to the real economy.”
But those who’ve been paying attention know that the problem with Northern Rock was exactly that. The wholesale credit markets seized up – liquidity disappeared – following revelations about the repackaging and reselling of unrepayable debts. So Munchau’s assessment becomes particularly chilling when you read what another G7 Minister had to say. According to Peer Steinbrück, German finance minister, the G7 now feared that write-offs of losses on securities linked to US sub prime mortgages could reach $400 billion. This is sharply higher than the $120 billion credit losses that Wall Street banks and other institutions have revealed in recent weeks – and also far bigger than the US Federal Reserve’s estimates.
Which all helps us to put Munchau’s assessment of the UK’s prospects in perspective. He says “The UK is perhaps more vulnerable, because of the relatively large size of the financial sector in the economy, an over-reliance on a property market that is about to deflate, and chronically low productivity growth in non-financial sectors. There is now clearly the possibility of a severe and prolonged recession, followed by a long period of low growth.”
The FSF puts forward a raft of regulatory measures aimed at strengthening the resilience of key elements of the financial system. These however, are targeted at some of the many consequences rather than the underlying cause: 30 years of credit-induced transformation of the world economy has failed to reverse the underlying trend of a continuous decline in the rate of global growth per head.
None of this is really in line with Darling’s insistence that the UK has “good reasons to be confident” about its ability to withstand a slowdown in the global economy, is it? Just before the G7 met, figures released in Britain showed that home repossessions soared by 21% in 2007 as the credit crisis began to bite into people’s ability to repay their mortgages, let alone second mortgages used to buy expensive consumer goods. Meanwhile, business confidence in Britain is at an all-time low, according to a survey by the Institute of Chartered Accountants in England Wales. The banking, finance and insurance sector showed the lowest confidence. But there will be no recession, the institute says. So that’s alright then.
Gerry Gold, economics editor
Wednesday, January 16, 2008
Banks’ losses threaten action on climate change
Despite Government loans and guarantees in the region of £55billion and the sale of a choice part of its assets to J P Morgan, (perhaps coincidentally the first of Tony Blair’s private sector income streams), Northern Rock’s problems are not easing. It isn’t making enough to repay the penal interest rates charged by the Bank of England. Plans for a state takeover – nationalisation -are well-advanced.
For the Government, as reported on epolitix.com, a private deal is the preferred option, but potential bidders Virgin and Olivant are reported to have had troubles in securing financing for the deal as a result of the global credit crunch.
Asked if ministers had any concerns about offshore ownership of the bank, the Number 10 spokesman said: "The priority here is to protect the interests of taxpayers, depositors and savers." The chancellor told MPs that the government had put guarantees in place to protect savers, not shareholders.
Reassured? Not if you’re one of the huge number of people with mortgages from the former building society. No mention of their interests. And interest is what they will be paying in shedloads whoever ends up owning their debt. With many holding up to 125% of the value of the property when they bought it, house prices on the way down, food and fuel on the way up, defaults are sure to mount.
The £25billion or so already lent to the failing bank comes at a price. It isn’t money transferred from another budget somewhere. It’s another injection of invented billions to add to the crumbling mountain of credit and debt issued at an ever faster rate to sustain global growth over the last few decades. And the whole shaky pile is founded on the expectation of increasing wealth generation and the consequent ability of wage earners to repay their mortgages at interest rates high enough to generate a profit for shareholders.
But there’s a recession on the way, so it won’t work any longer. It won’t work for Northern Rock, and it won’t work for Citigroup, the world’s largest bank, which yesterday revealed a 40 per cent dividend cut, a $9.83bn fourth-quarter loss, $18bn in subprime-related credit writedowns and remaining exposure of $37bn to subprime mortgages. Neither will it work for Merrill Lynch which is due to report this week. A form of transfer into state hands – some call it state capitalism – is underway for both of them too. Only the funds are coming from elsewhere: governments - and private investors - in the Middle East and Asia, representing the biggest-ever single transfer of capital to US banks from abroad, in exchange for a stake in the business.
Next week, the World Economic Forum meets in Davos. Up for discussion is Global Risks 2008, a report written for the event by a team of collaborating organizations. It is hardly reassuring to know that Citigroup is top of the team. In the light of the ongoing and rapid economic deterioration that has come out into the open since the report was finalised, it makes pretty chilling reading. With uncertainty about the short- and medium-term future and about who is responsible for dealing with global risks ‘Action to mitigate climate change, for example, may be put in danger should the global economy weaken substantially – even though many of the political, economic and investment decisions which will shape the future path of global climate will need to be made in the next five years.’
In other words, attempts to ensure the survival of the capitalist world economy will take priority over action on climate change.
You won’t find a better or more urgent reason for joining us in building the means to put capitalism on the compost heap where it belongs.
Gerry Gold
Economics editor
For the Government, as reported on epolitix.com, a private deal is the preferred option, but potential bidders Virgin and Olivant are reported to have had troubles in securing financing for the deal as a result of the global credit crunch.
Asked if ministers had any concerns about offshore ownership of the bank, the Number 10 spokesman said: "The priority here is to protect the interests of taxpayers, depositors and savers." The chancellor told MPs that the government had put guarantees in place to protect savers, not shareholders.
Reassured? Not if you’re one of the huge number of people with mortgages from the former building society. No mention of their interests. And interest is what they will be paying in shedloads whoever ends up owning their debt. With many holding up to 125% of the value of the property when they bought it, house prices on the way down, food and fuel on the way up, defaults are sure to mount.
The £25billion or so already lent to the failing bank comes at a price. It isn’t money transferred from another budget somewhere. It’s another injection of invented billions to add to the crumbling mountain of credit and debt issued at an ever faster rate to sustain global growth over the last few decades. And the whole shaky pile is founded on the expectation of increasing wealth generation and the consequent ability of wage earners to repay their mortgages at interest rates high enough to generate a profit for shareholders.
But there’s a recession on the way, so it won’t work any longer. It won’t work for Northern Rock, and it won’t work for Citigroup, the world’s largest bank, which yesterday revealed a 40 per cent dividend cut, a $9.83bn fourth-quarter loss, $18bn in subprime-related credit writedowns and remaining exposure of $37bn to subprime mortgages. Neither will it work for Merrill Lynch which is due to report this week. A form of transfer into state hands – some call it state capitalism – is underway for both of them too. Only the funds are coming from elsewhere: governments - and private investors - in the Middle East and Asia, representing the biggest-ever single transfer of capital to US banks from abroad, in exchange for a stake in the business.
Next week, the World Economic Forum meets in Davos. Up for discussion is Global Risks 2008, a report written for the event by a team of collaborating organizations. It is hardly reassuring to know that Citigroup is top of the team. In the light of the ongoing and rapid economic deterioration that has come out into the open since the report was finalised, it makes pretty chilling reading. With uncertainty about the short- and medium-term future and about who is responsible for dealing with global risks ‘Action to mitigate climate change, for example, may be put in danger should the global economy weaken substantially – even though many of the political, economic and investment decisions which will shape the future path of global climate will need to be made in the next five years.’
In other words, attempts to ensure the survival of the capitalist world economy will take priority over action on climate change.
You won’t find a better or more urgent reason for joining us in building the means to put capitalism on the compost heap where it belongs.
Gerry Gold
Economics editor
Tuesday, October 02, 2007
Britain’s very own sub-prime housing crisis
The credit crunch in the global financial system is now beginning to interact with the British housing market. Lax credit conditions that allowed prices to spiral are drawing to an end and many home owners are staring at sharp increases in their mortgage repayments. Record outstanding debts of £1,400 billion and low savings rates all weigh heavily on the property market. Experts are warning of a dramatic fall in house prices ahead.
Britain has its very own sub-prime crisis, which has already wrecked the US houing market and sparked the credit crunch. Large but unknown numbers of people have fallen prey to commission-based “financial advisers” and mortgage brokers who lured them into loans on properties far beyond their means. Using self-certification of income, these middlemen encouraged people to grossly overstate their income so as to qualify for the massive loans secured on over-valued property.
Rapidly rising house prices gave the impression of higher values, enabling people to borrow against the market price of their homes, increasing their existing loan. Now tens of thousands have sunk into even greater debt, overwhelmed by repayment demands. As the small print says, your home is in danger if you do not keep up the payments and repossessions are rising.
That is not the end of this particular story. An estimated 2 million poorer borrowers are on lower, introductory fixed-rate mortgages which were an extra inducement. These are drawing to a close and people with this kind of a mortgage face a staggering 60% rise in housing costs in the coming months as interest rates are readjusted, according to the credit ratings agency Standard and Poor.
The buy-to-let business has also boomed in the past five years. The number of such mortgages more than quadrupled as increasing numbers of people came to regard it as the dependable alternative to uncertain savings and pensions. In this speculative market, reckless profiteering combined with loose credit for mortgages has led to such drastic overvaluation of property that, as interest rates have risen, repayments on loans in many cases far exceed rental income.
At the heart of this problem is "creative financing", enabling buy-to-let investors to borrow 100% of the cost of their new properties - not the 85% maximum most lenders permit. With 85% loans, investors have to come up with money of their own, and so are limited in how much they can buy. But with 100% mortgages, the brakes are off and there's effectively no limit.
The "creative financing" was made possible by discounts - typically 15% or more - which property developers offered to buy-to-let investors who bought flats in bulk. It helped power a construction boom as new blocks of flats and apartments mushroomed in city centres for the buy-to-let market. With interest rates up, and the market oversupplied, prices are starting to fall sharply outside London, leaving property owners and their loan companies in deep trouble.
The more than £8 billion that Northern Rock has borrowed of the unlimited support provided by the Bank of England since its crisis erupted two weeks ago, will soon look like the summit of a much larger mountain of unrepayable debt. Meanwhile, with New Labour’s financial support, the bank continues to offer 125% mortgage and personal loan packages, whilst refusing to support applications for personal bankruptcy from its overstretched customers.
Decades of persuasion to “get on the property ladder”, declining social housing, the sale of council housing and a decline in affordable private rented accommodation together with historically unprecedented, impossibly easy credit have lured millions into levels of debt that can’t be repaid within their lifetime.
Gerry Gold
AWTW economics editor
Britain has its very own sub-prime crisis, which has already wrecked the US houing market and sparked the credit crunch. Large but unknown numbers of people have fallen prey to commission-based “financial advisers” and mortgage brokers who lured them into loans on properties far beyond their means. Using self-certification of income, these middlemen encouraged people to grossly overstate their income so as to qualify for the massive loans secured on over-valued property.
Rapidly rising house prices gave the impression of higher values, enabling people to borrow against the market price of their homes, increasing their existing loan. Now tens of thousands have sunk into even greater debt, overwhelmed by repayment demands. As the small print says, your home is in danger if you do not keep up the payments and repossessions are rising.
That is not the end of this particular story. An estimated 2 million poorer borrowers are on lower, introductory fixed-rate mortgages which were an extra inducement. These are drawing to a close and people with this kind of a mortgage face a staggering 60% rise in housing costs in the coming months as interest rates are readjusted, according to the credit ratings agency Standard and Poor.
The buy-to-let business has also boomed in the past five years. The number of such mortgages more than quadrupled as increasing numbers of people came to regard it as the dependable alternative to uncertain savings and pensions. In this speculative market, reckless profiteering combined with loose credit for mortgages has led to such drastic overvaluation of property that, as interest rates have risen, repayments on loans in many cases far exceed rental income.
At the heart of this problem is "creative financing", enabling buy-to-let investors to borrow 100% of the cost of their new properties - not the 85% maximum most lenders permit. With 85% loans, investors have to come up with money of their own, and so are limited in how much they can buy. But with 100% mortgages, the brakes are off and there's effectively no limit.
The "creative financing" was made possible by discounts - typically 15% or more - which property developers offered to buy-to-let investors who bought flats in bulk. It helped power a construction boom as new blocks of flats and apartments mushroomed in city centres for the buy-to-let market. With interest rates up, and the market oversupplied, prices are starting to fall sharply outside London, leaving property owners and their loan companies in deep trouble.
The more than £8 billion that Northern Rock has borrowed of the unlimited support provided by the Bank of England since its crisis erupted two weeks ago, will soon look like the summit of a much larger mountain of unrepayable debt. Meanwhile, with New Labour’s financial support, the bank continues to offer 125% mortgage and personal loan packages, whilst refusing to support applications for personal bankruptcy from its overstretched customers.
Decades of persuasion to “get on the property ladder”, declining social housing, the sale of council housing and a decline in affordable private rented accommodation together with historically unprecedented, impossibly easy credit have lured millions into levels of debt that can’t be repaid within their lifetime.
Gerry Gold
AWTW economics editor
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