One of the oddest things about the housing problem - another being the uneasy fact that nobody really wants to 'solve' it, or not entirely anyway - is the way that it has turned into a money-lending and money-borrowing business that never gets any nearer to building houses than those little pictures of them that frame the soaring house-price graphs in the newspapers.
Why don't building societies build houses instead of lending money to other people to do it for them? We might wonder. The answer, alas, is that they tried doing it that way in the 19th century and it ended up in an 1892 building society crash that set the movement back 50 years.
Nonetheless, another of the odd things about the housing problem today is that it is perilously close to revisiting that alarming territory. After more than a century of fiscal probity the building societies have changed their image. In the past 20 years they have shaken off tax relief and taken on remortgaging and equity leakage, so that when the alarm bells started ringing over mountainous consumer debt - as they did with a vengeance last autumn - who was illuminated in the headlights? Not the supposedly naive and borrowed-out householder in the foreground, but the kindly building society lady who forced all those unwanted loans upon him.
This new way of not seeing things while looking at them may shock old pre-demutualisation obser-vers of the building society scene, but for those with nerves of steel there is a parachute in there.
If the housing market of 2004 is only one step short of disaster, it has not been the cause of a disaster so far, which means it cannot yet be villainised with a clear conscience. Which is to say that a comprehensive collapse seems unlikely.
The housing problem may nowadays be freely acknowledged to reside in the monstrous accumulation of debt on the part of owner-speculators, re-financers, bankrupts and holidaymakers in the Bahamas, but no blame at all attaches to these credulous folk.
Their parts in the drama have already been sketched in and we shall see them being 'gutted' or 'devastated'by something that has not happened yet. They are the victims who will be wheeled in to hide the guilty.
It is part of the unique identity of the modern housing problem that it should have nothing to do with housing. Part, too, that its critical phase should be approached obliquely by commentators who see disaster ahead, but necessarily at one remove.Thus nemesis will come from some unclear side effect of inflation resulting from a debt mountain which will itself result in high interest rates, which in turn will lead to wholesale evictions when borrowings can no longer keep up with mortgage payments.
Put this way, the inevitable bonfire of the loan sharks seems avoidable. Indeed it is very close to a piece of recent Japanese economic history, with static interest rates, house prices gradually stabilising and a progre- ssive end to the capital gains tax exemption of owner occupation. This is at least as plausible as the proposal from the OECD (Organisation for Economic Cooperation and Development) published last week, which called for a series of interestrate increases designed to head off another surge in house prices that would otherwise lead to a sharp fall in house prices, which would 'wreck consumer confidence and threaten growth prospects'.
The trick here will, of course, be to get the stepped interest-rate increases out of the Monetary Policy Committee, which is seemingly incapable of doing anything but sit on its hands, despite its central role in all these de-debting plans.