I have just been listening to the “experts” discussing what effects the aftermath of the credit crunch will be, and the results sounded very familiar. I realised that we had lived in a credit crunch for many years. It is just the last 22 years which have been an illusion!

When I was growing up, the saving habit was encouraged early on when we bought National Saving Stamps at school. These were 6d and 2/6d each. When we started earning we generally chose a bank either for its geographical convenience or because our families used them. There was a bank manager in each bank, who knew not only us but our families too and could give us sensible advice. We tended to stay with the same bank because all the banks were pretty much the same anyway.

When we wanted to buy a house we usually opened an account with a building society and saved the deposit, usually 10%, which demonstrated that we could save money. Never the less our ability to repay was scrutinised  thoroughly before an offer was made; never an instant decision. The only choice we had was repayment or endowment – no fixed rates or special offers. As a rule of thumb we reckoned on about 10 pounds per month for every 1000 pounds borrowed. On joint mortgages only one salary was taken fully into account and approx 1/3 of the other salary. As most building societies offered similar rates we stayed with the same providers, unless we moved house and a different  society was more convenient geographically. The only extension to the mortgage we could get  was for improvements, not for new cars, holidays, or to pay off other debts!

For those who could not meet these criteria there were far more council houses to rent and private rents were much more affordable and often included rates and water rates.

Credit was strictly controlled. Hire purchase mostly required a deposit and again was rarely given before credit checks had been made.

Suddenly in the eighties credit was deregulated, the utilities were privatised,council houses were sold off  (and no replacements built),  some building societies demutualised and the great god “market forces” was worshipped.  We felt very rich in our shareholding, house owning democracy and borrowed money to go on exotic holidays and to fill our homes with electrical gadgets, ripped out perfectly good kitchens for the latest fashion. Jobs which had been learned “apprentice style” from the experienced people who actually did the jobs, suddenly needed a degree course with its accompanying debt and dire shortage of practical experience. Houses were no longer homes to live in but assets to be plundered. We needed a degree in economics to decide which bank, service provider, credit card etc to change to, or which “get rich quick scheme” to follow. Now, the bubble has burst and we realise that it was an illusion. We have to face the consequences, tighten our belts and get back to normality.

Is it really so bad? My father used to say that if he had a roof over his head, a change of clothes and food in the cupboard he was a contented man. Maybe this is a bit too simple, but if we can get back to a simpler attitude towards “Things” we will lead happier lives. Maybe we will even get back bank managers who can make decisions without recourse to a centralised computer! House prices may become more realistic and we will all become more careful shoppers and be less of a “throw away society”and thus help the environment too!

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