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Credit Crisis? What Credit Crisis?

Posted by softestpawn on October 29, 2008

So there’s been a disastrous economic meltdown and capitalism has failed. Private financial institutions are broken and have to be rescued by governments. Globalisation, rampant consumerism and the greed of bankers and home owners has finally driven the fragile house of cards that is modern life over the edge, and the whole edifice has come crashing down. We must regulate more strongly, or even abandon capitalism altogether.

Yet I visited a well-known high street bank and discussed remortgaging a house (which I could, but wouldn’t save much on the one I have with – gasp – Northern Rock) and taking out an unsecured loan (which I did).

According to the Nationwide’s September house price report house prices are down – but down from last year. By a few percent. Even with all this fear, uncertainty and doubt house prices are still above the apparent long term trend. See also BBC House price calculator

And yet the institutions that are supposed to have frozen are quite happy to lend long term fixed rates on 80%+ mortgages:Nationwide, Barclays/Woolwich, Halifax

On the way home I stopped at a supermarket and bought some New Zealand lamb – so the global consumer markets seem to be working.

No doubt there will be a bit of a shock while we scale back (not abandon) plans from the ones that involved borrowing even more – whether for holiday, more furniture, food, beer or that corporate acquisition – but the increase in unemployment is tiny over the last year (though obviously unpleasant for those people), and we still have all the usual safety nets.

Blaming capitalism because it supposedly encourages the greedy individual at the expense of society also rather misses the way it works: you serve your own interests by serving other people. That is, in order to buy the things you want, you have to provide something other people want to buy. So far, it’s been the best match between progress (and that means health, comfort, information/education, longevity, aqueducts, etc) and human nature.

Houses with heating and double glazing, the comfy furniture, the washing machine that released women from a lifetime of drudgery, the well-traveled food that keeps our diet more healthy than a local one could, the cars that give us opportunities to work and live where we like, most of the medicines we take, the computers we use to access more knowledge than ever before, all and much more are products of people and companies working selfishly to bring you stuff that you want.

‘Meltdown’ is something you can apply to Somalia, or Zimbabwe. It’s not something you’d generally use to describe things not going quite as well as we were expecting.

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2 Responses to “Credit Crisis? What Credit Crisis?”

  1. yes I left a post regarding that on my site…

    http://www.positiveeconomicnews.com

    I received a letter from my bank the week after the “bailout” offering me a second mortgage, or a refi of my current…

    Funny how if you have good credit, money is always there.

    Barry

  2. softestpawn said

    Economist article “Scissors & Stone” shows credit still increasing, though not as much as before:

    http://www.economist.com/world/britain/displaystory.cfm?story_id=12726152

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