I write this burdened by an overpowering weariness, an incredible boredom with the world. I feel uninspired, as though I have seen most of life’s coming and goings before. From where I stand history simply repeats itself, in a never ending circle and in the period between the beginning and the beginning again, we forget what got us there. It has taken me ages to re-adjust to the real world and even as I write this I feel detached from what is happening around me, as though it is a programme on television.
I have emerged from the funk of exam revision to find that we are reliving the 1970’s, the economic environment has evolved into a much bleaker animal than I left it at the back end of March. The phrases credit crunch, rising commodity prices and stagnant real rates of pay are being bandied around; the outlook for the global economy is austere. The aforementioned terms are constantly being thrown at us by increasingly desperate sounding, distraught looking, economic experts. But what does all of this doom saying really mean?
My day job, in corporate recovery, places me at the frontline of the coming onslaught. I watch, counsel and take advantage, as some people’s businesses fail and others become unable to manage their monthly outgoings. They all come to firms such as ours seeking refuge from their financial woes.
There are all types of suffers, but for me the saddest are the individuals, especially the ones who did not really see this coming. A great number of them do not understand what taking loans from institutions means, the implications of it. They have no comprehension that using a credit card or an overdraft facility is borrowing money and you may be called on to pay the cash back at some point, most likely when you are least able to afford it. And most people don’t realise that if your house has any lending attached to it, effectively you do not own it; the provider of lending does, until the money is paid off.
This last misunderstanding is the most heartbreaking of all, we watch as people are dragged, quite bewildered, through the relatively painless bankruptcy process by their creditors and at the end of it they maybe forced to sell their properties to pay off some meagre proportion of their debts or perhaps they try to hide from their financial problems by doing nothing and then their houses are repossessed and they find themselves effectively homeless, with no financial cushion to assist them to resolve the situation. They were, unfortunately, over stretched.
There has, admittedly been mis-selling and careless lending on the part of the banks and other providers of finance, the once respectable institutions delving into the murky waters of sub-prime lending; this has, however, long been encouraged by the government, the very same government who are now attempting to continue to encourage financial intuitions to lend people cheap money to buy property while on the other hand endeavouring to stem the tide of commodity driven price increases. At the risk of sounding gleeful, at least the greedy behaviour of banks has come back to bite most of them in the backside, with their billion pound write offs and the many of them scrambling for ways to improve their capital positions without looking like wallies. One can truly say “that’s Karma” though how much comfort this will give a person about to be thrown out of their home is debatable.
As I came in on the train this morning a thought struck me; given that very few people actually finish paying off their mortgages before they die, given that the relatives of the majority of people who leave unencumbered property will likely have to sell the property in order to pay the inheritance tax on it anyway, why in the world is everyone clambering to get on the property ladder?
What is wrong with renting? After all, all you are doing when you get a mortgage and begin to climb the property ladder is swapping one landlord for another. If the going gets tough, it is very likely that this landlord may be less forgiving than a flesh and blood person; there is no respite just because you have your name on the deed. In fact, you are taking yourself out of a house where the landlord may not have many avenues for recourse if you default on your payments and into a situation where the effective owner of your house has billions of pounds behind any threat they make to throw you out of your home.
I find it interesting that logical, rational people would act in very irrational ways to put themselves in harms way, especially at this time of such great uncertainty. But it is a cultural thing; British people like to own their own homes, even if they have to give their limbs and vital organs to the bank as collateral to do it.
And in the coming economic downturn this cultural trait will be the cause of much embarrassment and pain.