Billions for a failed project and just a fraction for the real economy
Amazingly, considering the need to rebuild the economy, they are required to provide three times more credit for mortgages than for small and medium sized businesses.
The banks subsequently announced they intend to provide e2 billion in mortgages for first-time buyers. I did not see any announcement by the banks that they were going to provide credit for small and medium size business.
It is difficult to know the purpose of this arrangement.
It couldn’t have been to start rebuilding the real economy that actually produces things, sells things, exports things, or develops new things. Because if that was the intention, then the ratio of credit would have been the other way round — three times more for businesses than for mortgages.
Neither could the purpose have been to provide people with homes because if that was the case, then with around 60,000 people who desperately need a home but cannot afford a mortgage, the Government would have told the banks not to provide mortgages, but to give finance to local authorities to build council housing, or even to undertake a massive programme of social housing itself, perhaps using land confiscated from developers who are in debt to ‘our’ banks. So why focus on mortgages? After all, house prices and wages are falling and jobs are disappearing. Who is going to buy a house today that might be worth less tomorrow?
Considering that very little interest has been shown in affordable housing so far in this recessionary period, where are the e40,000 per annum first-time buyers to come from?
The only explanation for government policy that I can think of is that it cannot shake off its neoliberal, free-market capitalist ideology and is now trying to resuscitate the very capitalist housing market that had a large part in causing the present crisis.
I assume the Government hopes this will resuscitate the economy, and save it from having to engage in building council houses, financially supporting productive businesses and undertaking a programme of job-creating public works.
Maybe it hopes also that if it can revive the housing market it might bail out the developers, too.
Brian Abbott
Glencairn
Bishopstown Road
Cork
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