Hope that this ‘debtonation’ – or even a simple pricking of the bubble – will not occur before the general election which is clearly his principal point of reference. Hope that bond yields will not keep rising, forcing mortgage rates higher, and ‘debtonating’ the Funding for Lending and Help to Buy bubbles he has floated on top of Britain’s sea of private debt – still (at over 430%) by far the highest level of private debt as a share of GDP amongst the large, advanced economies. Instead, while the Chancellor chooses to use taxpayer resources to protect bankers from the risk of default and from the discipline of the ‘free market’, he encourages middle-class homeowners to take up 95% LTV mortgages – and to single-handedly face the ruthlessness of the one-sided “market”, with its risk of default, foreclosure and homelessness for those left exposed. Because he argued “you don’t solve the pressure on cost of living with simply a shopping list of interventions and government regulation.” A risk made more probable by falling real incomes and rising rates – about which the Chancellor made clear he would do nothing. Hope that more and more families will take up Loan to Value mortgages of 95% – thus bravely shouldering the risk, shame and consequences of default and foreclosure. Hope that the huge gamble he is taking by “repeating the debt-fuelled mistakes of the past” – handing out more taxpayer-backed subsidies (in the form of ‘guarantees’) to a small group of business people and voters in the City of London – will not annoy the millions of voters explicitly denied government support or subsidy, and who were made to suffer “the bulk of the consolidation” – as he reminded us today.
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