That would all be very nice if it wasn't the cost of the big state social welfare model that had actually bankrupted the west.
Banks don't have any money - they just hold vast amounts of debt
And the vast majority of this debt is government debt.
When the state accounts for more than 50% of the economy and pays millions of people to do nothing while providing them with free housing, healthcare and education it seems a bit far fetched to blame the inevitable collapse on anything other than the obvious cause.
Anyway the truth will be revealed eventually because reality can only be ignored for so long.
The private sector has played a huge part in driving up the benefit bill via the mechanism of privatizing the housing supply. This led to run away housing costs, and that in turn, amongst many other things, led to a large increase in housing benefit.
The truth as you describe it is being revealed, an almost unregulated free market in housing finance has driven up the cost of one of the key needs in life, shelter. That has had a massive knock on effect on wages, and contributed to the need for the recent bank bailouts.
As for the state providing people with free housing, that is completely wrong. Social housing was never free, there's the small matter of rent. Which amazingly in the world of state "unreality" eventually amortized the cost of building the housing stock. Social housing was also reserved for workers, which is the key point. Until the ideologues got their hands on it that is.
It was the Labour party that created the mass ghettos of the unemployable by changing the housing act so that various definitions of "neediness" became the priority criteria for housing. Before this change to the housing act you had to have some non-benefits means of paying the rent. i.e. work. You also had to be a good tenant. After the change it was simple for the Conservatives to flog it off cheap. Both parties engaged in the exact opposite of what was needed.
There are also good examples that basically prove that social housing works if it is protected from the sweaty hands of the political and economic manipulators. The Peabody and Guiness Trusts. Same model as council housing but protected from being used as a political football. They still function in the same way that State social housing used to. http://en.wikipedia....i/Peabody_Trusthttp://en.wikipedia..../Guinness_Trust
I know that I seem to be contradicting myself by citing essentially private examples, my point is that Guinness and Peabody were free of political opportunism and ideological manipulation. It wasn't the state model that failed but the politicians that used it for their own ends that caused the failure.
The model could easily be adjusted to protect it from politics while using the economies of scale that a the state can supply. The housing act worked, and can work again but needs to be rebalanced towards supporting the productive part of the economy. Working people. And changes to the act could then be protected by something like a Parliamentary super-majority
to stop a repeat of the same abuses for political expediency and/or dogma.
Low rents give people a chance to save a deposit to buy their own place while at the same time covering the cost of construction over the lifetime of the building and acting as a balance to private sector rents.
Edited by Control, 14 March 2012 - 07:44 PM.