Desperate Move In UK To Preserve The Bubble
As the housing bubble bursts, governments can be expected to attempt desperation moves like the one proposed today in England. "Struggling first-time home buyers could gain cheap mortgages funded by public money under plans revealed by Chancellor Gordon Brown."
Of course, this is a thinly veiled effort to stop a property collapse, and it is doomed to fail. "The plans reflect government concerns, not only over the frustrations of first-time buyers but over the effects on existing homeowners."
"If new buyers cannot enter the market, sales of properties will eventually grind to a halt, leading to a meltdown in property prices and the return of the negative equity nightmare last experienced during the early 1990s."
The wisdom of allowing this bubble to form is certainly under scrutiny now, as the governments are caught between millions of people struggling with home price inflation, and millions more trapped in an over-priced mortgage. This turn of events is especially laughable as any country could bring prices in line with incomes just by reinstating traditional lending standards.