The cult of home ownership is dangerous and damaging – Adam Posen – FT.com

Dr Alf's Blog

This is an excellent, MUST READ article by Adam Posen, president of the Peterson Institute for International Economics and is published in the FT.

via The cult of home ownership is dangerous and damaging – FT.com

The article highlights the risks at both the individual and national level of the home ownership cult, especially in the US and the UK.

These days, home ownership favors the wealthy and inherited wealth. The article cites latest research in the US that home ownership impacts mobility and aggravates unemployment. The financial crisis started in the US in 2008, and was triggered by sub-prime mortgages supporting home loans to the less advantaged. Now, once again, the big US banks are booming, and both the US and the UK governments are propping up the housing market.

Surely, the UK Government should be subsidizing language training rather than mortgage finance, and encouraging more people to go…

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Opinion: Mortgage debt threatens overstretched UK households-FT.com-John Gelmini

Investment

Investment (Photo credit: LendingMemo)

 

The article Dr Alf refers to talks about “overstretched ” households.

 

Most mortgage debt is going to professional buy-to-let landlords who are not in this category and to ordinary people entering the game who are sick and tired of poor interest rates but lack the knowledge to make sensible returns on the stock-market, fine art, gold or other more exotic investments.

 

David Cameron’s and George Osborne’s policies are based on creating a consumer led recovery until 2015 and Alex Salmond losing his independence referendum.

 

If Salmond wins the referendum then, of course, our obligations to the Scots under the Barnett Formula would cease, leaving England and Wales very much better off.

 

What the policies SHOULD be are, as Dr Alf hints at,very different:

 

–Rebalancing the economy into high tech manufacturing
–More enterprise creation
–More exports
–More foreign inward investment
–Lower corporation taxes and an amnesty to get the trillions held offshore back onshore and invested in job creating activity
–Cutting the public sector down to size
Investing in those parts of the economy which show growth and promise and clearing out through outsourcing and automation all the rest
–Improving worker productivity,skills and language capability
–Ending rewards for failure
–Improving the health of the nation through better healthcare,education and variable taxes on foods

 

John Gelmini

 

 

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