A step up on to Pendle's housing ladder (From Lancashire Telegraph)

In my dafter moments I sometimes have a vision of the LT as a beacon of genuine, independent, fearless, incisive, investigative journalism of the kind that we need desperately and that in time the journalists of the LT could become the very best in the country. Then I read a story like this and I realise that sadly the mainstream media is locked in a downward spiral of churnalism – repeating corporate press releases – and taking at face-value the utterances of corporate and vested interests without any thought whatsoever.

It pains me to say this, but in doing so the LT is contributing directly to our national befuddlement.

Here we have all the clichés of ‘Riches Galore’ – a piece that I have written that deals with the last decade of house price euphoria that I may yet post on the LT website – with terms like ‘help first-time buyers to get on the house ladder’. To hear Councillor Joe Cooney asserting this mantra is depressing in the extreme.

Around 5 years ago, at the height of the house price boom, my eldest daughter bewailed the fact that she would never be able to afford a house. I showed her a copy of the graph of house prices over the last 40 years and asked her to tell me what it demonstrated. “I’ll never be able to afford a house!” she said. I replied: “No it doesn’t! It shows that house prices are cyclical.” My advice to her then was to ignore the mainstream media and not to buy, but to wait. At that time the mainstream media and the metropolitan elite was chanting the mantra of getting onto the ‘housing ladder’. Here we are once again with the mainstream pushing the line of a ‘housing ladder’. Quite a few that made it onto the ladder, at or close to the peak of the boom with the aid of shared-ownership schemes designed to help first-time buyers, now wish that they hadn’t; and have found that they are now trapped. They over-paid for the most expensive asset they will ever buy in their lives and if they bought a new-build they got very little space for their money. Certainly house prices, which have fallen significantly in real terms, are now at a more realistic level but they are still quite expensive.

The second issue that needs explaining or challenging is the assertion that the Council is acting as guarantor of mortgages granted to ‘first-time buyers’. Is the Council the guarantor or is it the Council Tax payer? Why would Council Tax payers be in the business of acting as guarantor for private lenders? It seems to me that what we have here is local councils forcing their Council Tax payers to actively support privatised profits while socialising losses. It’s insane, but I think it reveals a deeper and more insidious agenda: the political class are absolutely determined to destroy our children by doing all in their power to ensure that young adults become slaves to the money-lenders, hence the Conservatives and Liberal-Democrats supported the increase of university tuition fees to a maximum of £9,000.

I think we’re living in one of those strange periods when the political class will not rest until they’ve impoverished everyone. One might hope that journalists would rise to the occasion and expose this sinister development but here we find them complicit in this madness.

Riches galore!

There was time when buying a house was about security and making a home. That was a time when one had to save assiduously for a deposit, when a visit to the building society to enquire about a mortgage entailed a lecture on financial prudence and responsibility from a soberly dressed and elderly manager in an oak panelled office, and when the heavy burden and significance of signing the mortgage deed would be spelt out sternly by a solicitor with presence. Then something changed. Buying a house was no longer about security and a home; it was about getting onto the property ladder and making money – getting rich. The riches were so great that the British stopped talking about the weather and instead they started talking about house prices and then in no time at all they became obsessed with them.

This obsession permeated nearly every segment of society. The television news producer, the radio announcer and the newspaper columnist waited with eager anticipation for the latest monthly house prices index to be published, confident that they would show that prices were rising. The results were reported earnestly by the media in euphoric terms. Daily news reports led with stories that house prices were ‘soaring’ while newspaper stands were filled with titles whose front page proclaimed in large bold letters of national and unalloyed joy that prices were ‘booming’.

There was an unspoken wish that rising house prices would go on for ever and ever, without limit. This view was supported by a welter of reports from ‘think tanks’, economists and pundits all of whom spoke of gains to come that would satisfy the wildest dream of every optimistic homeowner in the land. A never ending stream of ‘experts’ was only too willing to appear on television and radio or to provide a quote to a newspaper lauding the perpetual boom. Each report was seized upon and devoured by a media hungry for prediction of rising prices and every forecast no matter how exaggerated or outrageous was treated as an outcome of fact that was certain beyond doubt.

Television shows about buying houses, renovating houses or simply trading houses filled the screens; the presenters becoming minor celebrities and experts in the process. Radio phone-ins devoted to discussing the dizzy heights to which house prices might go filled the airwaves, and newspapers told their readers of the amount they had ‘made’ from their house in the last day, month or year. Politicians from across the political spectrum came to believe the absurd: that people selling houses to each other at ever higher prices was the symbol of a successful economy.

Never before were so many becoming so rich doing so little. All one needed was to be a homeowner. Everyone from the lowly worker to the highest paid executive could feel a warm glow from the observable fact that they were getting richer by the hour without the necessity of human toil. The effect on young people was particularly marked. They set aside their concern about acne and turned away from worshipping the latest teenage heart-throbs. There was a new hero to worship; the new aim in life was getting on ‘the property ladder’. These people were the much lauded ‘first time buyers’ who were possessed of the kind of madness that overtakes the human mind when great riches are in prospect; and no price was considered too high to pay in order to get a foot on that ladder. Many first timers felt compelled to act before prices went even higher, and quite a few were encouraged into this madness by their parents. Builders and lenders moved every nerve and sinew to entice first timers with schemes that improved affordability: low deposit and no deposit mortgages became commonplace, mortgages without the need to provide independent documentary proof of income were granted freely to borrowers on the basis of them signing a piece of paper declaring their income (known as a self-certification mortgage), while low interest or interest only mortgages were embraced without a second thought. If affordability was still a problem then extended repayment terms were there for the asking. No one seemed to notice or care that all of these schemes were encouraging and assisting young people in bidding the price of housing higher and in doing so guaranteeing that they would be paying the highest price possible for the largest purchase they ever made in their lives. This was insanity on the grandest of scale.

The stampede into property was not confined to first timers. The old timers wanted more of the action too and stories about the additional wealth that could be generated by getting into ‘buying-to-let’ vied with the daily diet of news about world affairs and local horrors. Property clubs aimed at helping people play the housing market proliferated. Many of these clubs required a joining fee and then charged their members additional fees for finding newly-built flats and houses that could be either bought ‘below market value’ (bmv) or purchased with ‘cash back’. Some of the clubs even provided a period of guaranteed rental income. Thus a business proposition that required careful and thoughtful analysis was turned as if by magic into a ‘no brainer’. Chartered surveyors and valuers conveniently gave valuations that met the price requirements, solicitors raised no objection to the widespread use of ‘cash back’ schemes inflating house prices beyond their true level and lenders were only too happy to lend sometimes on the basis of self-certification. The buy-to-let bandwagon encompassed all classes from wealthy barristers and superstars to the moderately comfortable professional; and from the modestly paid council official to the local taxi driver. The key to success was leverage without limit: borrowing more and more against ever rising house values. Many of the governing classes and opinion formers were heavily into buy-to-let and were quietly engaged in a process of self-congratulation on their financial acumen. Although they hid their glee well they always knew they were smart; and now they had the proof.

This was a time like never before: this was the time of riches galore! Those who harboured doubts about the durability of this new route to riches were in a minority. If they voiced their concern openly the elites portrayed them as fools. Arguments about the dangers of unprecedented credit expansion, reckless lending and fraudulent mortgage applications were dismissed as absurd. The metropolitan and media elites treated the nay-sayers with smug distain, derision and contempt.

One might like to think that this grand delusion would be confined to the economic and financially illiterate or the naïve, foolish and reckless but delusion had no barriers and extended to the high priests and guardians of the system. Regulators who were charged with securing financial stability, and who should have known better, were found to be wanting. The task of ensuring financial stability was shared between H. M. Treasury, the Bank of England and the Financial Services Authority. Here were some of the finest and most highly qualified economists in the land whose understanding of the economy and finance was second to none, or so they believed. They failed miserably. If they possessed any knowledge of financial history they kept this well hidden; if they saw any need to intervene and insist that lenders adhere to prudent standards they looked away; if they read of fraudulent practice they turned the page; and if they harboured the slightest doubt that they were witnessing a credit boom they took solace from the latest precepts of neo-classical economic theory. This was delusion with a fine pedigree: safety in numbers. The truth of the matter was that the guardians were utterly clueless. This was not cluelessness of those that know they are clueless. This was cluelessness of the most dangerous kind: this was cluelessness of those that genuinely believed they had clue aplenty. Sadly they had no knowledge of their plight, nor could they; for they had hidden their ignorance by clothing it with the new intelligence of ever-lasting prosperity.

As happens often in the affairs of men reality then made an unwelcome entry. This guest was unexpected, uninvited and unwelcome. The history of the world shows that sometimes a day will dawn just like any other but when it closes the world has changed irrevocably. That day was 9 August 2007. Adam Applegarth the Chief Executive of Northern Rock one of the most aggressive lenders made the point well when he said: “The world stopped on 9 August”. It did indeed. Another chapter in the book of financial euphoria had come to an end.

Kevin, Colne wrote:
Riches galore!

There was time when buying a house was about security and making a home. That was a time when one had to save assiduously for a deposit, when a visit to the building society to enquire about a mortgage entailed a lecture on financial prudence and responsibility from a soberly dressed and elderly manager in an oak panelled office, and when the heavy burden and significance of signing the mortgage deed would be spelt out sternly by a solicitor with presence. Then something changed. Buying a house was no longer about security and a home; it was about getting onto the property ladder and making money – getting rich. The riches were so great that the British stopped talking about the weather and instead they started talking about house prices and then in no time at all they became obsessed with them.

This obsession permeated nearly every segment of society. The television news producer, the radio announcer and the newspaper columnist waited with eager anticipation for the latest monthly house prices index to be published, confident that they would show that prices were rising. The results were reported earnestly by the media in euphoric terms. Daily news reports led with stories that house prices were ‘soaring’ while newspaper stands were filled with titles whose front page proclaimed in large bold letters of national and unalloyed joy that prices were ‘booming’.

There was an unspoken wish that rising house prices would go on for ever and ever, without limit. This view was supported by a welter of reports from ‘think tanks’, economists and pundits all of whom spoke of gains to come that would satisfy the wildest dream of every optimistic homeowner in the land. A never ending stream of ‘experts’ was only too willing to appear on television and radio or to provide a quote to a newspaper lauding the perpetual boom. Each report was seized upon and devoured by a media hungry for prediction of rising prices and every forecast no matter how exaggerated or outrageous was treated as an outcome of fact that was certain beyond doubt.

Television shows about buying houses, renovating houses or simply trading houses filled the screens; the presenters becoming minor celebrities and experts in the process. Radio phone-ins devoted to discussing the dizzy heights to which house prices might go filled the airwaves, and newspapers told their readers of the amount they had ‘made’ from their house in the last day, month or year. Politicians from across the political spectrum came to believe the absurd: that people selling houses to each other at ever higher prices was the symbol of a successful economy.

Never before were so many becoming so rich doing so little. All one needed was to be a homeowner. Everyone from the lowly worker to the highest paid executive could feel a warm glow from the observable fact that they were getting richer by the hour without the necessity of human toil. The effect on young people was particularly marked. They set aside their concern about acne and turned away from worshipping the latest teenage heart-throbs. There was a new hero to worship; the new aim in life was getting on ‘the property ladder’. These people were the much lauded ‘first time buyers’ who were possessed of the kind of madness that overtakes the human mind when great riches are in prospect; and no price was considered too high to pay in order to get a foot on that ladder. Many first timers felt compelled to act before prices went even higher, and quite a few were encouraged into this madness by their parents. Builders and lenders moved every nerve and sinew to entice first timers with schemes that improved affordability: low deposit and no deposit mortgages became commonplace, mortgages without the need to provide independent documentary proof of income were granted freely to borrowers on the basis of them signing a piece of paper declaring their income (known as a self-certification mortgage), while low interest or interest only mortgages were embraced without a second thought. If affordability was still a problem then extended repayment terms were there for the asking. No one seemed to notice or care that all of these schemes were encouraging and assisting young people in bidding the price of housing higher and in doing so guaranteeing that they would be paying the highest price possible for the largest purchase they ever made in their lives. This was insanity on the grandest of scale.

The stampede into property was not confined to first timers. The old timers wanted more of the action too and stories about the additional wealth that could be generated by getting into ‘buying-to-let’ vied with the daily diet of news about world affairs and local horrors. Property clubs aimed at helping people play the housing market proliferated. Many of these clubs required a joining fee and then charged their members additional fees for finding newly-built flats and houses that could be either bought ‘below market value’ (bmv) or purchased with ‘cash back’. Some of the clubs even provided a period of guaranteed rental income. Thus a business proposition that required careful and thoughtful analysis was turned as if by magic into a ‘no brainer’. Chartered surveyors and valuers conveniently gave valuations that met the price requirements, solicitors raised no objection to the widespread use of ‘cash back’ schemes inflating house prices beyond their true level and lenders were only too happy to lend sometimes on the basis of self-certification. The buy-to-let bandwagon encompassed all classes from wealthy barristers and superstars to the moderately comfortable professional; and from the modestly paid council official to the local taxi driver. The key to success was leverage without limit: borrowing more and more against ever rising house values. Many of the governing classes and opinion formers were heavily into buy-to-let and were quietly engaged in a process of self-congratulation on their financial acumen. Although they hid their glee well they always knew they were smart; and now they had the proof.

This was a time like never before: this was the time of riches galore! Those who harboured doubts about the durability of this new route to riches were in a minority. If they voiced their concern openly the elites portrayed them as fools. Arguments about the dangers of unprecedented credit expansion, reckless lending and fraudulent mortgage applications were dismissed as absurd. The metropolitan and media elites treated the nay-sayers with smug distain, derision and contempt.

One might like to think that this grand delusion would be confined to the economic and financially illiterate or the naïve, foolish and reckless but delusion had no barriers and extended to the high priests and guardians of the system. Regulators who were charged with securing financial stability, and who should have known better, were found to be wanting. The task of ensuring financial stability was shared between H. M. Treasury, the Bank of England and the Financial Services Authority. Here were some of the finest and most highly qualified economists in the land whose understanding of the economy and finance was second to none, or so they believed. They failed miserably. If they possessed any knowledge of financial history they kept this well hidden; if they saw any need to intervene and insist that lenders adhere to prudent standards they looked away; if they read of fraudulent practice they turned the page; and if they harboured the slightest doubt that they were witnessing a credit boom they took solace from the latest precepts of neo-classical economic theory. This was delusion with a fine pedigree: safety in numbers. The truth of the matter was that the guardians were utterly clueless. This was not cluelessness of those that know they are clueless. This was cluelessness of the most dangerous kind: this was cluelessness of those that genuinely believed they had clue aplenty. Sadly they had no knowledge of their plight, nor could they; for they had hidden their ignorance by clothing it with the new intelligence of ever-lasting prosperity.

As happens often in the affairs of men reality then made an unwelcome entry. This guest was unexpected, uninvited and unwelcome. The history of the world shows that sometimes a day will dawn just like any other but when it closes the world has changed irrevocably. That day was 9 August 2007. Adam Applegarth the Chief Executive of Northern Rock one of the most aggressive lenders made the point well when he said: “The world stopped on 9 August”. It did indeed. Another chapter in the book of financial euphoria had come to an end.

Only read stage 1 so far Kev, but totally in agreement, especially about enslaving our young people. Sadly our average young person is probably so stoned or so drunk that they will never actually find the time to read this :(

Michael

The mainstream media is doing a fine job in supressing or ignoring stories that might enable young folk to have a better grasp of the causes and ramifications of their descent into financial slavery.

Earlier in the year Reuters ran a piece by Lorraine Turner titled ‘Analysis – Britons’ love affair with housing on rocks’. Among the stories is Jade Heppenstall, a 30-year old graduate and youth worker in Hartlepool who describes the situation of buying a first home with her partner. She is quoted as saying: “Not only are we going to be in debt to the bank, we’re also in debt to our parents … we’re probably never going to be able to get married, and god forbid we ever decide to have a child. I’ve worked my a**e off, (so) how the h*ll has this happened?” The last sentence of this quote is a gem as it sums up perfectly the truly dreadful situation that confronts young people and their sense of bewilderment at the way events have unfolded.

Debt levels have become unsustainable yet the ‘solution’ that the political class are offering is to find as many ways as possible to load young people with still more debt in what I believe to be an era where jobs are in short supply, many are casual and labour has lost bargaining power. This changes the old rules of the game completely.
Remember the adage: gold is the money of kings, silver the money of gentlemen and debt the money of slaves. Our debt based monetary system lies at the root of many of our current travails since the economy can function only by debt increasing not just continually but exponentially. We’ve now hit the buffers but the political class are so inter-twinned with the banking class that all the mainstream political parties can offer is more of the same.

Things are a bit grim, but we’ll come through providing we can challenge and expose the deceit and manipulation from the elites and vested interests. This is why we need independent and courageous journalism.

All the best

Kevin