A bit of education for the people pt 2!

And lurking behind the subprime crisis is the spectre of negative equity. City economists have been making increasingly bleak predictions about house prices which have now fallen for five months. A note by ABN AMRO, the investment bank, said — I quote for its full gore — ‘The UK looks more vulnerable to a housing correction than the US. The degree of overvaluation looks more acute, nearing 50 per cent in the UK compared with 25 per cent in the US. The ‘prosperity’ which Gordon Brown has boasted about for the last 11 years was bought on the never-never, a ‘golden age’ on tick. Householders were encouraged to borrow against their inflated house prices — with euphemistic phrases, like ‘equity withdrawal’, making such transactions sound like a visit to a cashpoint. Now, the ten-year debt binge is ending in the hangover which, with each morning’s headlines, becomes that bit more painful. Let’s spell it out: British households are not just more indebted than their counterparts in America, but more than in any other western European or G7 economy.

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