I love Topcat's analysis on the excellent Urban 75 discussion board of the housing market which posits a 60% drop in prices followed by the rise of a right wing demagogue. We're in for a period of stagnant house prices and some misery in the job market, but there are factors working strongly against the boom + bust = fascist outlook for the UK.
Interest rates are now running at 5.75% and the Bank of England will jack them up in the autumn to 6%. But inflation has already begun to fall, and while this is a dishonest statistic which excludes housing costs, it is nevertheless the get-out the authorities need to stop increasing the pain and inducing a nasty slowdown.
Will we have a housing bust and terrifying recession as we had under Major in the early nineties? The situations are not equivalent, even though the country seems addicted to debt of all kinds, and is terribly exposed.
The eighties saw a housing boom as tax cuts and a half decent economy left people feeling cash rich and borrowing to buy their homes, which spiralled upwards in price as we're seeing today. And the decision by Nigel Lawson, Thatcher's key chancellor, to end double mortgage interest tax relief saw thousands climb on to the property ladder while they still had a chance before the measure came in. But a few months later interest rates were heading into the stratosphere - rising from 7% to 15%.
Thousands of people lost their jobs and then their homes (I met some of them and it makes me angry still), and many more faced negative equity - which in practice means being stuck where you are until inflation and economic recovery means you can move on.
So why not this time?
The decision by Gordon Brown - on Day 1 of the Labour government - to hand interest rate control to the Bank means sharp jerks on the economic steering wheel can't be made by politicians in response to falling poll numbers. It remains the best thing he's ever done. 6% will be as high as it gets. I remember a day when rates took off , rising several percent - people walked around the office I was working in saying: That's it, I've got to sell the house.
We won't be going there.
Except. As a country we've had a massive credit splurge, borrowing on masses of plastic to finance HDTVs, conservatories and the like. The saving to spend ratio is at its lowest since 1960. The BofE has to tread really carefully here it's true.
But Buy to Let people won't be throwing in the towel because something else has happened since the 1980's which means they can't. Those flats are the middle class replacement for pensions, the destruction of which is one of the less clever things Gordon Brown has presided over. They won't sell up - it would be suicidal - so no crash.