Read Storm, The for Free Online Page A

a premature and artificial recovery.
    The most dramatic and far-reaching interventions in the UK economy have not been in monetary or fiscal policy, nor in the
     housing market, but in the banking system. In that respect Britain was caught up in a wider international banking crisis.
     But this is not to minimize the specific shock to the British economy of having several banks nationalized, others partly
     nationalized, and others still dependent for their survival on government guarantees. Britain also pioneered what became a
     collective response to the crisis in the form of recapitalizing banks through government capital.
    The global nature of the crisis has left in its wake a somewhat confusing and unsatisfactory political debate, in which the
     government claims that the financial crisis and its aftermath of recession are problems whose origins lie exclusively overseas,
     while its critics, notably the Conservative opposition, simply blame the government for mismanagement. A balanced assessment
     has to be that there is both an international and a domestic dimension. Without diminishing in any way the global origins
     and nature of the crisis it is also necessary to debunk the self-serving myth that Britain has, in Gordon Brown’s words, created
     an economic environment of ‘no more boom and bust’, and that the country was uniquely well placed to ride out the global storm.
     On the contrary, Britain’s housing and debt bubbles have been larger than elsewhere; the government has relatively limited
     freedom of manoeuvre in fiscal policy because of structural deficits; and a large financial services sector, centred on the
     City of London, has exposed the UK to the full force of the gale that is blowing through international financial markets.

    These failings are not just technical, but reflect deep social currents. The extremity of Britain’s housing bubble stems ultimatelyfrom a national obsession with property and property values. Those who feel that they must ‘have a foot on the property ladder’
     are not just making a calculated assessment about the future value of a capital asset, but are buying into the notion that
     ‘an Englishman’s home is his castle’ and into the concept of a ‘property owning democracy’. Mrs Thatcher’s brilliantly populist
     ‘right to buy’ policy – under which council tenants could buy their homes, usually at a hefty discount to the market price
     – contributed mightily to the idea of the ‘first-time buyer’ as an essential pillar of society, an iconic figure on a par
     with the self-sacrificing, saintly NHS nurse or the self-made entrepreneur. New Labour understood perfectly the importance
     of the icon: the sense of self-esteem and security that came from discovering that one’s own bricks and mortar were worth
     more and more; the economic value and personal satisfaction derived from home and garden improvements. The plethora of TV
     property programmes and the domination of national newspapers by property supplements and house price stories reflected our
     national mania. It is not in the least surprising that a bubble in property prices was allowed to run out of control. The
     government now faces the anger of voters whose dreams of a property-based nirvana are now being dashed.
    There was another set of British illusions that have played powerfully into the current crisis: the glamour of the City and
     the lure of Big Money. After the demise of much of Britain’s manufacturing industry, the City emerged as a national success
     story. The banks and finance houses whose offices now define the skyline of London may be owned by foreigners, but they have
     chosen to operate here. Lots of Dick Whittingtons have discovered that the streets of London really are paved with gold. The
     City has sedulously cultivated an image of buccaneering, innovative entrepreneurship. Britain has been projected as a place
     with the cleverest, most hard-working and attractive