Wednesday, September 3, 2008

Belfast Telegraph: UK's Prospects Worst Since 1945

According to the Belfast Telegraph of 09/02/08 ("Cross-border buying spree on cards as sterling slumps," Brendan McDaid), the record lows of the British pound against the Euro are a symptom of economic conditions that Alistair Darling, British Chancellor of the Exchequer, described as being worse than at the end of World War Two. The Bank of England released figures showing that UK mortgage approvals dropped to a record low of 33,000 in July, further demonstrating serious structural problems in the economy of the United Kingdom and Northern Ireland.

Ironically, the fall in the pound is seriously affecting the economy of the northern portion of the Republic of Ireland, which uses the Euro. Tourists, an important source of income in Éire, are opting to stay in Northern Ireland where their money goes further. Cross-border workers who live in the Republic but work in Northern Ireland are also being hard-hit, to say nothing of jobs being lost in the Republic as a result of the decline in tourism, while shoppers flock across the border to the relatively cheaper prices in stores in Northern Ireland.

The irony is that none of this is necessary. A common currency would cure one of the symptoms of the UK's economic malaise, but a fundamental restructuring would eliminate the disease. A program that has been proposed for the United States and for a number of other countries is called Capital Homesteading for Every Citizen, from the book of the same title.

One feature of Capital Homesteading that could be implemented almost immediately after a few minor legislative refinements is called the "Homeowners' Equity Corporation," or "HEC." The HEC is a way for ordinary people to enter a "rent to own" arrangement, gain collective bargaining power for mortgages and insurance, and over time obtain clear title to a residence without risk of default. The HEC was developed to address the sub-prime mortgage crisis in the United States, but could be implemented anywhere, especially in the UK or Éire, with their similar legal systems.

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