We are a nation that behaved like spoiled children over the last 10 years and many of us have learned nothing from it, still expecting someone else to clean up after us. Maybe someday we’ll grow up.
This would be fine if we weren't on the verge of a very serious problem. As Liaconn states not everyone of those pursued an unrealistic lifestyle. It may not be the most accurate survey, but the fact that 250,000 people have no money left after paying bills is worrying. Any interest rate change or any inflation is going cause serious issues for them and those nearly at that point.
This is not just people looking at a big house, two cars, holidays, credit cards and shopping in BTs. This is people who bought property as a home at the peak of a market, who have seen wages reduced to 2002 levels, but prices remain at 2011 levels.
But it's that critical mass of out of 4 million people in the state, 250K may not be able to put food on the table.
This is where empathy and what is best for us can meet. It is not in my interest as a tax payer that they are left to struggle. Whether it be welfare bills and other benefits, there's health issues and more importantly the prospect that they just up and leave the state so we are left with the complete loan on our books (as we own the banks) and we lose tax revenue.
What we aren't show is just how the cost of restructuring loans (it will never be full forgiveness) compares with the long term cost of leaving people in that situation. I'm not coming at this from an empathy level, I'm purely looking at what other burden I'm likely to carry if we leave it like it is in the short term and then the effect of that on long term recovery.
Yes people will have to change their attitudes to property, but then that should be part of a deal, downgrade, lower costs and debt will be reasonably restructured. For many of those involved it will be a temporary measure and once there's recovery, then we renegotiate the loans.
If we control the downgrading and then how we structure the negative equity, we also get to control the house prices to some extent and aren't left with fire sales of abandoned or repossed properties. While not artifically propping it up, at least preventing an even greater crash and the consequences then on pensions.
I've stated all along, when it comes to the bankers, developers and those citizens who tried to achieve a lifestyle on credit, I'm as annoyed and disgusted as the rest. But I just want the problem fixed rather than, as we have, spending 3 years fixing the blame. I'd rather my future was more optimistic than see it ruined for the short term satisfaction of schadenfreude.
Long ranting way of saying, yes we should grow up, people should accept responsibility, but there also needs to be maturing done by others that we may need to shoulder some of this to prevent an even bigger disaster and an even bigger bill for us.