Council Credit Crunch

Per The Sunday Times from the ever-excellent Jason Allardyce:

Scotland's biggest local authorities are to use millions of pounds of public money to offer mortgages to people who have been turned down by banks.

Councillors believe the mortgage deals, offering borrowers three times their annual salary, will help hundreds of first-time buyers onto the property ladder and boost economic activity in their areas.

This is not a party political issue. The approach is due to be taken by councils in Dundee, Edinburgh and Glasgow and it is simply madness.

The world's best banks tried this generous lending approach with NINJA mortgages and it ended in utter disaster. Our councils do not have the resources or the knowledge to do this successfully, regardless of how good an idea it may seem at this juncture.

Let's remember that interest rates are going to skyrocket once we get through the worst of the recession and the most vulnerable homeowners at that stage would be these people that are being targetted by the councils.

So, on the 3rd weekend in a row that I've taken the recycling out to find the plastics/cardboard bin is still full, I would urge the council leaders to stick to the core activities that they are paid to do and not go speculating in markets that even the best economists can't reliably predict.

And if there's any money left over, I'll take a tax cut please rather than throwing money at people that the private sector won't touch with a bargepole.