Finally got around to watching this program, and to no surprise it was the same old tripe. But what baffled me the most is the conclusions they came to, i.e. that the crisis was a failure of the free market economy, when nothing could be further from the truth. Numerous interviewees stated this, including Bertie. But the one person, being an economist, that made the most contradictory comment was Joseph Stiglitz. His metaphor was down the line that central banks should be in charge of taking away the punch when the party got too heated, but that free markets kept topping up the punch. Either this guy is stupid, deceiving or a fraud. The one institution that can add punch to the bowl, is the central bank, as they are the ones that increased the money supply and kept interest rates low. The free market can only pyramid money on what is provided by central banks.
As for the rest of the program, I found that it focused on all the incentives given to builders and bankers, and that this fueled the property bubble. Now unless the other part of the program, which I missed, focused on the incentives to buyers, then I believe that the most fundamental reason for the inflation of the property bubble was missed. This being government intervention through reduction in stamp duty for first time buyers, followed by no stamp duty for buyers of new developments, followed by no stamp duty for first time buyers at all, followed by affordable housing schemes and joint ownership schemes, followed by ever increasing mortgage interest relief. It was these very actions by government that added ever more buyers and therefore demand to the property market.
The program did go on to to highlight and critisise the incentives given to the construction industry, investors/speculators and banks, through various tax schemes. It also briefly mentioned the facts that banks were bailed out in the 80s and 90s. But how then do they come to the conclusion that the free market failed. A free market, by definition, is a market that is not interfered with by government interventions. Yet the program accentuates some of the interventions of government over the years.
Governments and their central banks provided the money and incentive, through low interest rates, for banks to borrow ever more amounts of money and make ever more loans. As there are only so many prime borrowers available to lend money to, it is no surprise that less attractive borrowers found credit. Then government added incentives to buyers and builders, further increasing artificial supply and demand.
The conclusion should be that government intervention to constantly tweak and twiddle the economy has failed and not the free market..
As for the rest of the program, I found that it focused on all the incentives given to builders and bankers, and that this fueled the property bubble. Now unless the other part of the program, which I missed, focused on the incentives to buyers, then I believe that the most fundamental reason for the inflation of the property bubble was missed. This being government intervention through reduction in stamp duty for first time buyers, followed by no stamp duty for buyers of new developments, followed by no stamp duty for first time buyers at all, followed by affordable housing schemes and joint ownership schemes, followed by ever increasing mortgage interest relief. It was these very actions by government that added ever more buyers and therefore demand to the property market.
The program did go on to to highlight and critisise the incentives given to the construction industry, investors/speculators and banks, through various tax schemes. It also briefly mentioned the facts that banks were bailed out in the 80s and 90s. But how then do they come to the conclusion that the free market failed. A free market, by definition, is a market that is not interfered with by government interventions. Yet the program accentuates some of the interventions of government over the years.
Governments and their central banks provided the money and incentive, through low interest rates, for banks to borrow ever more amounts of money and make ever more loans. As there are only so many prime borrowers available to lend money to, it is no surprise that less attractive borrowers found credit. Then government added incentives to buyers and builders, further increasing artificial supply and demand.
The conclusion should be that government intervention to constantly tweak and twiddle the economy has failed and not the free market..