George Osborne’s Help to Buy scheme ‘stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business’, according to a leading City analyst, reads the Guardian, 4th June 2013.
Albert Edwards, who heads the global strategy team at Société Générale said the chancellor’s flagship Help to Buy programme was artificially inflating property prices and driving young people deeper into “indentured servitude”.
In a research note, Edwards said it made him “genuinely really angry” that burdening young people struggling to pay off student loans with more debt was seen as the solution to the problem of excessively expensive housing.
“Why are houses too expensive in the UK? Too much debt. So what is George Osborne’s solution for first-time buyers unable to afford housing? Why, arrange for a government-guaranteed scheme to burden our young people with even more debt! Why don’t we call this policy by the name it really is, namely the indentured servitude of our young people.
“I believe it truly is a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business. It ranks above some of Alan Greenspan’s very worst blunders.”A number of experts have warned that Help to Buy will drive up house prices, pushing younger people out of the market.
You can read the whole article here.
The reality is that house prices were pushed up by the hundreds of billions of pounds of new money that banks created in the years before the financial crisis. In the ten years up to the start of the financial crisis, house prices rose by over 300%. Many people think this is because there were not enough houses around, but that is only part of the picture. A major cause of the rise was that banks have the ability to create money every time they make a loan.
Watch this short video:
Read more on Why are house prices so high.