First cracks appearing in Home-Owner-Ist Coalition

The fundamentalist wing of the Home-Owner-Ist coalition (see below if you're not sure what that is) has spoken. They have realised that their economic model was never going to work in the long run, but the wheels have come off, so now they are exhorting people to spend, spend, spend to try and breathe some life back into the economy. Whether it will reinflate the house price bubble is highly unlikely, but at least it will get people further into debt, thus increasing banks' future potential income.

The problem is that the foot soldiers - actual homeowners, in whose interests the fundamentalist wing claim to have been acting but clearly weren't - aren't listening. "We'd rather pay off our mortgages, if that's all right?"
----------------------------------
For nearly ten years, the Home-Owner-Ist coalition functioned very well:

1. Homeowners took a delight in rising prices and celebrated by borrowing an additional £328 billion using the rising 'values' of their homes as security, which added 9% to their post-tax incomes. Interest rates just kept on falling and the total 'value' of UK housing still kept going up to the tune of £200 billion a year. People somehow thought that the tax-free capital gains on their homes would somehow be sufficient to repay the loans, or something.

2. The politicians loved it because it kept them in power (having bribed the voter's with the Fool's Gold of seemingly ever rising house prices) and because it provided them with a handsome source of tax-free capital gains by 'flipping' their taxpayer-funded 'second homes'. The government happened to be Labour, which is nominally left-of-centre, but they kept natural Tory voters onside by bribing them with £325 billion of their own money (see 1. above) and keeping new development to a minimum (see 4. below). They had learned that Thatcher's idea of flogging off the best council houses to the better-off poor was a sure fire vote winner (notwithstanding the fact it made no economic sense at all for the long-suffering taxpayer) and so they pressed ahead with that.

3. The bankers were rolling around in their annual bonuses, which reached a peak of £13 billion in 2008, all on the back of shuffling bits of paper around. Not for nothing did an investment bank give former Prime Minister Tony Blair a £500,000 a year job a few months after he left office.

I'd consider the bankers and the politicians to be the Fundamentalist Wing and the homeowners to be mere prawns in this game.

4. It's also worth mentioning that the Coalition even managed to square the interests of home builders and NIMBYs - although homebuilders weren't allowed to build very many new houses, they were compensated by the fact that the value of their land bank was rising three times faster than house prices.

5. The current government is instinctively even more Home-Owner-Ist than the previous lot, the problem is that Labour have used up all the ammunition - once new construction is down to "none" it can't go any lower; once taxes on income and output have reached their revenue maximising rate, they cannot be pushed any higher, so they have no money left for propping up banks and house prices.

Most people manage to make the connection between the recession/depression we are in and the banking/financial crisis; most people realise that lack of new lending by the banks tends to push house prices down, but otherwise the banking crisis and the house price bubble are seen as two completely separate topics, but they are not, they are one and the same thing.

The credit bubble is behind everything - to problems in Euro-zone to banking crisis to house price bubble/bust, and who's behind the credit bubble? The Chinese? What do they get out of it except piles of depreciating paper with "US Treaury" written on it?