Government Lending to house buyers: is it a good idea?

anotherpaul_2

Teacher2301 wrote: »

it's the banks fault, so should we have left them to fail - this is capitalism afterall isn't?

While it can certainly be argued that the banks were at fault, with elements of peer (and shareholder) pressure and soft regulation not helping matters, my opinion is that having a large number of banks fail would be far, far worse for the economy.

Even if deposits were safe, lending would have dropped to near nothing (much further than it has) - all those companies that use their lending facilities to pay invoices, wages, etc (and I suspect it's a significant proportion of the total) would have ended up insolvent too. Unemployment would have rocketed, tax receipts would have plummeted, anyone for civil disorder, looting?

There's also an element of needing to act in a similar way to other countries to avoid being at a disadvantage when things pick up.

While the government hasn't handled things the way I think I would (and I accept that I have the benefit of not having to live with my decisions, while they don't), I think much of what they have done has been necessary, because the consequences of inaction were really severe.

Certainly, the treasury's finances could and should have been better than they were after... however many consecutive quarters of growth it was Mr Brown liked to mention. But apparently, we didn't need to save for a rainy day. (Government's never do - there's no political gain to it).

Teacher2301

In otherwords anotherpaul - the trouble we are currently in, still lies at the feet of Gordon Brown (I, like you, tend to agree with this) but would another government had done any better, in 2005, the last general election we all felt financially savvy and were we not riding a financial tidal wave? perhaps we shouldn't let the politicians off scott free and re-elect the labour party back in to sort out this mess...i wager that history will repeast itself and we'll have a populous that will elect a conservative government (this won't be punishment for labour because they will not have to clear up the mess - anyhow!)