Mortgage Relief and the economy

In a fanfare, together with billions of squid being doled out to the banks, interest rates were cut last week. All part and parcel of the taxpayer rescuing the failed private sector.

It seems the model made so popular by Thatcher and Reagan, and subsequently deregulated further by Bush, has failed. It was a bad idea to take Adam Smith's enlightenment era advice of 'let the market alone' literally after all. As many of us knew before the credit crunch. The official line of 'no-one could have seen this coming' simply is not true.

Ideology aside the immediate evidence for now is that banks are not passing on the interest rate cut to those struggling with mortgage payments. In fact mortgage rates remain, at best, static. With massive support from the taxpayer to bail out banks in their hour of need the least we should expect in return are mortgage rate reductions, so that ordinary families can live free from the fear of repossesion.

With the limited powers and resources available to us the Plaid deputy housing minister Jocelyn Davies has already taken crucial steps to protect homeowners caught up in the current crisis. But the banks should be caring less about profit and more about their consumers until this crisis has passed. One would hope for an immediate half a percent reduction in mortgage rates. With greater powers Wales could add this string to any bail-out actioned.

Unfortunately this rate cut does not seem to be on the cards and the most we can hope for in the short term is that the gloom mongering news is abated for a day or two and that the economy can take a breath and begin to recover.

The upshot of the entire rescue package is that New Labour, through effectively nationalising so many banks, inadvertently, and in a very roundabout way, end up fulfilling one of their key 1993 manifesto pledges. It is all very much the accidental death of New Labour economics.

Anyone hankering for a socialist utopia on the back of all this nationalisation should not get their hopes up though. It seems most unlikely that either the Tories or New Labour would allow for a similar nationalisation deal to be permitted for any part of the Welsh transport or energy sector. It is one rule for the bankers and another one for the rest of us. This incumbent government in Westminster are the same crew who were until recently declaring an end to boom and bust and asking the FSA to back off the banks. New Labour economics have failed-and in Wales only Plaid have a convincing programme to begin to replace it.