Credit crunch and public policy in the UK
The privatization of British council housing (public housing in the USA), begun under the leadership of Margaret Thatcher, means that the mortgage crisis is hitting the UK as well as the US. Now, some politicians are urging local councils to buy houses from owners who are threatened with foreclosure. What are the politics of such a policy change?Labour MPs' fury over homes crisis
"Gordon Brown's government came under attack from one of his closest allies last night for failing to help families threatened with losing their homes in the credit crisis.
"George Mudie, a senior member of the Treasury select committee, called for ministers to strike an urgent deal with lenders to delay repossessions and help struggling householders through short-term difficulties.
"His words reflect backbench MPs' fears of a rise in people losing their homes as around two million Britons come off cheap fixed-rate deals this year and struggle to get another affordable mortgage...
"Around 40 Labour MPs have now signed a Commons motion tabled by backbencher Austin Mitchell warning that a 'large and growing number of houses' will be repossessed because of this year's credit squeeze. It urges councils to buy up the empty homes, allowing former owners to stay under their own roof as council tenants and helping councils expand housing stock...
"Alistair Darling, the Chancellor, has asked officials to monitor the situation. The Treasury has held provisional talks with lenders about extending mortgage 'holidays' - a few months' grace for families in changed circumstances..."
In a broader context which more politicians will have to respond to, the BBC reports about a prediction from the IMF. How will this policy challenge present itself to Russia? China? Iran? Nigeria? Mexico? And how will the public policy-makers in those countries respond?
Credit crunch costs '$1 trillion'
"The International Monetary Fund (IMF) has warned that potential losses from the credit crunch will reach $945bn (£472bn) and could be even higher.
"The IMF says that losses are spreading from sub-prime mortgage assets to other sectors, such as commercial property, consumer credit, and company debt.
"It says that there was a "collective failure" to appreciate the risky borrowing by financial institutions.
"And it warns that tough measures and government intervention may be needed..."
posted by Ken Wedding @ 9:09 AM
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