Respect - The housing crisis and the credit crunch

The housing crisis and the credit crunch

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The housing crisis and the credit crunch

It’s clear the world is facing a very serious problem arising out of the credit crunch in the United States. Years of debt-financed growth, a sort of private sector keynesian binge, are now unwinding, sending the US economy into recession and lowering growth world-wide.

At the same time, basic commodity prices are rising including crucially oil, after a long period of relative stability where inflation was displaced into property.

The combination of lower growth and even recession combined with rising inflation makes monetary policy particularly difficult to manage. The UK economy could also be particularly vulnerable to a downturn in the financial sector as this is the sector which has led economic growth in the UK over the past several years.

Alongside private sector housing starts slumping and the construction industry heading for a severe downturn, we have an accumulated problem of huge numbers on council waiting lists and a severe problem of overcrowding in inner cities which has not been and cannot be alleviated by private sector solutions.

For example, here in Tower Hamlets the council waiting list has 20,000 plus families on it. Shelter estimates some 12,000 families are living in overcrowded conditions. Coming into George Galloway’s surgery every week are families who have been on the waiting list for up to fifteen years living in intolerable Victorian conditions and with little prospect of any short-term solution other than getting on the proverbial bike and moving to Hartlepool.

The housing crisis is a direct result of successive government policies - above all the right to buy combined with failure to invest to replace the council housing that has gone into private hands.

The government’s current plans to see Housing Associations lead on investment in “social” and “affordable” housing is not working or likely to work and with a mayor determined to abolish any targets for social and affordable housing, the situation is going to get worse.

In the context of an economy facing at the very least a growth recession, monetary policy stalled, a construction industry facing downturn and a massive housing crisis, state-inspired pump-priming via a crash council housing programme is a policy whose time has come, even if the neo-liberal dinosaurs can’t see it.

For those who ask where will the money come from with the government already in debt and about to pay out £2.7 billion over the 10p tax debacle, the answer is from two sources.

Firstly, the better off can clearly bear a significant tax increase which should be clearly tied to a programme of public service works with housing a central component.

Secondly, the government can borrow more. The banks have become reluctant to lend because of the sub-prime crash. But the state is the most secure borrower and can borrow at lower rates than the private sector because of it.

News and articles of interest

Here are some articles and news reports we think are worth looking at

Poll of polls shows Labour at its most unpopular since 1935 by Nigel Morris
Gordon Brown is leading Labour to its worst electoral defeat since the 1930s, according to a new "poll of polls" for The Independent. On current levels of support, Labour would lose almost half its MPs at the next election and David Cameron would become Prime Minister with an overwhelming majority. The backlash against Labour has left the party with the support of just 27 per cent of voters, the weighted average of last month's polls for The Independent shows.

Unmanned spy planes to police Britain by Kim Sengupta
The Government is drawing up plans to use unmanned "drone" aircraft currently deployed in Iraq and Afghanistan to counter terrorism and aid police operations in Britain. The MoD is carrying out research and development to enable the spy planes, which are equipped with highly sophisticated monitoring equipment that allows them to secretly track and photograph suspects without their knowledge, to be deployed within three years.

The Camp for Climate Action, at Kingsnorth, Kent, 3rd to 11th August - full details
Wednesday 10 am update. Local MP Bob Marshall-Andrews condems police action at climate camp (see BBC article), saying "I find the use of police in riot gear incomprehensible and I think it was a mistake." He also described the actions of the police as "provocation."

Diego Garcia: the UK's shame by Andy Worthington
The ancient Greek dramatist Aeschylus wrote: "In war, truth is the first casualty." These words are particularly apt in relation to the British Overseas Territory of Diego Garcia, leased to the United States in 1971, where the truth – that a secret "War on Terror" prison existed from 2002 until as recently as 2006 – has been persistently denied by both the British and American governments.

The Horror Of Israeli Occupation - documentary developed by Chaim Yavin West Bank Checkpoints
A video clip that dramatically portrays the meeting of Israeli solders and Palestinians at controversial West Bank security checkpoints. This clip is the second of a series taken from "Land of the Settlers", the acclaimed documentary developed by Chaim Yavin, Israel's premier news anchor.

Anger at police raid on green camp ahead of coal protest by Matthew Taylor
Environmental campaigners and politicians criticised the police last night after around 200 officers raided a climate camp, seizing hundreds of items that they claimed could be used to break the law. Activists at the camp, which starts today with a series of workshops on sustainable energy and social justice, said the raid aimed to disrupt legitimate protest.

Morning Star Back on Track After Office Fire by Tomasz Pierscionek
In the early hours of Monday morning (last week), an electrical fire broke out at William Rust House, the East London office of the socialist newspaper the Morning Star. The fire, believed to have been caused by a malfunctioning air-conditioner, broke out at approximately 3am and caused considerable structural damage to both the interior of the Morning Star's newsroom and the equipment within, knocking out both electrical power and phone lines.

Venezuela Bridges Diplomatic Fissures and Polishes Alliances in European Tour by James Suggett
Rounding off a diplomatic tour of Europe that began with Tuesday's controversial visit in Russia, Venezuelan President Hugo Chávez mended relations with the Spanish government, set up a bi-national commerce commission with Portugal, and eliminated visa requirements to facilitate bilateral accords with Belarus this week.

Why David Cameron Blames the Poor by Peter Taylor-Gooby
David Cameron's 'blaming the poor' speech in Glasgow may be more than just an attempt to placate the unreconstructed right of the Conservative party. It is not often recognised how far British public opinion has shifted towards a liberal individualist stance on social issues in recent years. In some ways we are more Thatcherite under New Labour than we ever were under the Conservatives.

Star names set to top the bill at Carnegie Festival - Dunfermline Press
TWO of the best-known faces on television will be making personal appearances in Dunfermline next month as part of the inaugural Carnegie Festival, from 21st August to 7th September. Evan Davis will be in dialogue with fiesty MP George Galloway in a conversation on Saturday, 23rd August, at 7.30pm in the Carnegie Hall. Tickets, priced £5, are available from the Carnegie Hall box office.

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