For most people in my neighbourhood the "boom" which preceded the credit crunch was a far removed economic phenomenon of which they knew little. However, those who did benefit during those times, with their city breaks to European cities, the annual holidays abroad, the conspicuous consumption -- courtesy of easy credit -- & the almost orgasmic pleasure with which they boasted of how their house's value had risen over a decade or so, are now ruefully recognising that there is a downside for their middle class routines. Put simply, their children & perhaps even grandchildren will have to pick up the tab.
Writing in the Guardian last week (http://www.guardian.co.uk/commentisfree/2008/dec/12/pre-budget-economy ), Jenni Russell penned:
"On the day of the pre-budget report my teenage son was listening to a news item about the huge expansion of government borrowing, and the debt being built up for the future. 'I don't understand - who's going to pay for all this?' he asked. I thought for a millisecond. 'You are,' I said."
Russell highlighted the bogus arguments deployed by the government to try & justify student loans; leaving university with a degree is no longer a guarantee of a well-paid, secure career. Nor is a graduate's financial prospects enhanced by the debt he/she has taken on for university education (up to £20,000), particularly at a time when the chance to land well-paid work in order to address that debt is rapidly diminishing.
Russell also drew attention to the housing issue:
"Even falling house prices aren't automatically good news for the young. Homes are still expensive compared with salaries; loans without high deposits are impossible to find; and those who buy at a time of very low inflation are going to find their mortgages won't shrink as they did in the past. The only people exempt from this will be those whose parents can spare some capital. In other words, generational inequality is going to further entrench social inequality."
Russell didn't prescribe any answers. Instead, she confined herself to cliched, liberal hand-wringing. Be that as it may, her piece on this "legacy issue" is timely & urgent.
In one of those instances of unwitting journalistic synchronicity, the same day's edition of the Financial Times carried an arch & sardonic article by Jane Owen on the government's contradictory message to the electorate that they should save & spend simultaneously (http://www.ft.com/cms/s/0/6b0496b0-c79d-11dd-b611-000077b07658.html?nclick_check=1 ):
"I have been resisting the temptation to pump up my family's nano-economy with debt and, instead, turn down the heating and whisper the 'S' word. However, saving is now reserved for the hard of thinking. If only I had bought that Bombardier Learjet 45XR with personalised numberplates instead of stashing the cash in a plummeting individual savings account."
"The point is this. Mr Darling's debts give our children two things: wierd messages about how to cope with lean times and a future saddled by having to pay back what the government has borrowed on our behalf. We have witnessed a huge transfer of wealth from one generation to another: such wealth transfers used to be from parents to children. This time it is from children to parents. Season's greetings."
There will be a painful reckoning for those whose parents let the good times roll with interest.