Friday 24 August 2012

They are getting increasingly blatant about it.

The powers that be are gradually abandoning any pretence that what they are doing is for the benefit of the wider economy. Here are some examples from the current month:

Exhibit One

Chancellor George Osborne has announced that the government's £80 billion Funding for Lending scheme is open for business... The Bank 0of England] will offer the funding at below market rates and will monitor banks' progress in lending it out.

Yup, the banks get our money at 'below market rates' so that they can lend it back to us at market rates, so that's guaranteed profits of 2% x £80 billion = £1.6 billion which can go towards the bankers' bonuses.

Exhibit Two

Mr Pickles is concerned that too much development is being stalled because of economically unrealistic agreements negotiated between councils and developers at the height of the housing boom. This results in no development, no regeneration and no community benefits at all when agreements are no longer economically viable.

Yup, the government has just handed the land bankers (they refer to themselves as 'home builders' or 'developers') massive windfall gains. There are other reasons why construction has stalled, and this move, on its own won't make any difference. The land bankers will still wait until prices start rising again before they cash in, thus getting double the benefit.

Exhibit Three

THE GOVERNMENT has today launched a long-awaited review of the private-rented housing market that calls for councils to waive affordable housing requirements on private rented schemes and for financial incentives to encourage investment into the sector.

The review, conducted by 3i chairman Sir Adrian Montague, makes five recommendations to the government for encouraging large institutions to invest in privately rented homes to help meet demand.

As well as waiving affordable housing requirements, these include making more public sector land available for private rented schemes and setting up a “task-force” of developers to advise the government and set standards.

The report also recommends the government provide equity or debt funding to share the risk and help kickstart investment.

Aha, what do you call it when the government provides the land to build houses on, and provides the finance and bears the risk? Isn't that a bit like 'social housing'? Only with proper social housing, the profits are dished out as reduced rents to the tenants, but with the government's vision, all the profits go straight into the pockets of vulture capitalists like 3i.

Exhibit Four

The Bank of England has defended its policy of quantitative easing, despite admitting that the top 5% of households have benefited the most... "By pushing up a range of asset prices, asset purchases have boosted the value of households' financial wealth held outside pension funds, although holdings are heavily skewed, with the top 5% of households holding 40% of these assets," the Bank said.

Enough said?

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