UK 'Help to Buy', or just a regular party at Uni?

After a first turbulent decade of the new century, with artificially-low interest rates, Subprime crisis and housing booms you'd figure Governments around the world learned a thing or two about what just happened.

As perhaps a few students have experienced over the years of University life, curing an awful hangover with more booze might work for a day or two (or weeks, as Fresher's Week taught us), but the nasty, horrible hangover will return - worse than before.

"The Hangover is not the problem. The Party was." - Johan Norberg

What a bum, saying yesterday's epic party was the problem! How dare he? Luckily, he's referring to the economy and its crisis witnessed over the last few years rather than your fabulous party.

The US government created the largest financial crisis for generations by lowering interest rates, the economic equivalent of free shots to everyone. The political purpose of 'every american a home owner', made sure the government buddies Fanny & Freddie bought every mortage loan available, no matter how risky or insecure that mortage was (that is, book U2 and Green Day for your livingroom party - someone else's dad will pay for it). On top of that, we had the issues of foreign currencies streaming into the US, that is; invite everyone you know. All set for an epic party, right?

When we all woke up from that heavy hangover of ours, we found ourselves in a weird situations; our economies didn't work properly. We had debts all over the place - and nobody to pay for them. Clearly, that bum's dad didn't pay U2 enough, now we're all screwed!

Today, in 2013, we're still deep down in debts. Most Western governments run major budget deficits (Pay for the booze with your credit card), and the UK Government figured they'd do something about the expensive Housing Market. Clearly, those venues for your crazy party ideas are a bit too expensive, are they not? Earlier this year, Help To Buy was introduced, as a way of "helping young people onto the property ladder" - by providing them with free loans for the first 5 years, and taking on responsibility for 20% of the mortage value.

Absolute rubbish! How do you think we got into this mess to begin with?

A Crisis caused by too low interest rates, perverse government intervention and mortgage loan for everyone, CANNOT be solved by LOWER interest rates, MORE government stimulus and MORE mortgage loans. 

Ask any student if more drinks will solve that horrible hangover. I guess even governments like to keep partying.


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Financial Times has a nice run-through of the Help to Buy Scheme.

I absolutely recommend Johan Norberg's book. It will blow your mind