Analysis of the Post-2008 Financial Crisis - Essay Example

An analysis of the post-2008 financial crisis as being multi-faceted crisis Introduction In the years between 2008 and 2009, the world experienced the worst financial and economic crisis ever since the 1930s (Castells et al. 2012 pp 44-78). The global economic crisis brought into being a mostly adverse social outcomes across the globe right from individuals, families, communities and societies at large. Its impact on education and health is slowly becoming evident, and soon the impact on this sector will be fully noticeable (Dale 2014 pp354). People usually change their lifestyles and household behaviours so as to cope or adapt to the prevailing situation like during an economic and financial crisis. However, these changes are detrimental to health and education to be precise in the long run especially for the affected children (Castells et al. 2012 pp. 44-78). The financial crisis in 2008 brought about the highest order confusion that disorganised many sectors among them the housing sector. It is easy to say that people cope with situations so as to continue surviving. This has not been true when it comes to the case of housing system in England, thus the housing situation in the United Kingdome in 2008 can only be described as a multifaceted crisis (Castells et al. 2012 pp 44-78). Over the years, say three decades before, citizens were used to the social housing system. These were houses that were owned by council, tenants paid considerately low rents for them, and they could as well buy them at subsidised prices by the government. Although there were privately owned homes, the rent rates were jointly controlled by the government. The government controlled housing rates system was not very much popular with the corporate sector though (Tourain 2014 pp 8-12). After the global financial crisis of 2008, governments were almost brought to their knees by economic fluctuations and that brought an adverse effect to many governments throughout the world. England’s economy was no different (Dale 2014 pp354). The post- 2008 crisis has been viewed by many social scientists, among them being Hodgkinson, as a multidimensional kind of a crisis (Castells et al. 2012 pp 44-78). They argue that in as much as it is a multifaceted crisis, three main aspects of the crisis are of much weight. These aspects of the crisis are inferred to divergence in the difficulties experienced by lack of housing making the crisis to be multifaceted, and they included; the loss of affordable housing, unaffordable mortgages and a growing rate of homelessness in England and rough sleeping (Hodgkinson, et al. 2013 pp. 57-77). Inferring to the manner with which the housing situation in England took a multifaceted approach in 2008, the crisis rendered most residents of England experiencing high rates of housing loss since 2008 due to repossession of their homes by the banks. Repossession has been on the rise due to the owners’ inability to pay their mortgages in time. Banks are charging high interests now than before due to the economic crisis that has forced the lenders to impose high rates on the mortgages. An increase in unemployment and austerity measures are significant problems the homeowners face yet the banks cannot be patient any further (Chakraborty 2014 pp 12). Another face of the 2008 housing crisis in England was an economic decline in the country’s performance making the residents unable to buy or rent houses. Average real wage levels have been relatively constant for almost decades now while the cost of buying or renting a house has significantly increased. In as much as there has been a slight fall in the house prices since 2008, about 25%, first buyers still find it hard to acquire. High deposits imposed by lenders make this impossible (Touraine 2014 pp. 8-12). Additionally, the multifaceted nature of the 2008 housing crisis in England was manifested through increased home loss and unaffordable housing together with reduced social housing causing increase in homelessness and rough sleeping. The problem of homelessness is significant in as much the government statistics showing how small it is. Quite a large number of residents live in temporary accommodation while others reside in overcrowded homes (Castells et al. 2012 pp 44-78). Various experts have aired their views on the origin of the housing crisis ailing our society. Hodgkinson believes that the problem started in the historical neoliberal initiative of privatization of our households. He states that the initiative began in the 1970s when the government wanted to restore capital’s power by privatization and liberalization policies. To this effect, they gave away state control in regulations, subsidizing, protections, ownerships services and adopting new pro-capitalist regulation and style of governance (Hodgkinson, et al. 2013 pp. 3-16). Corporate run housing that is currently on the rise has played a significant role in the housing crisis in Britain. Removing housing from the hands of public welfare and putting it into the private sector is denying the residents their right to shelter. The private sector is precarious and co-modified competitive a market that place their house prices as dictated by the market dynamics. In this perspective, the homebuyers together with those renting homes become the sufferer parties (Castells et al. 2012 pp 44-78). This corporate ownership of the housing sector had failed in the 19th and early 20th centuries due to the same crises we faced now and had to the public domain. By 1970s, the public housing was the best an option for all residents and to those in the privately owned houses as they enjoyed the protections of rent controls and long-term tenancies. In as many opponents to the public housing, system may find many counter-arguments for the public housing system, they should agree to some of its advantages. The Public housing system has several merits like the fact that it dilutes the power of employers to exploit, dampening property speculation and to enabling the middle class to live centrally and build local communities (Touraine 2014 pp 8-12). With the emergence of Margaret Thatcher’s Conservative government in 1979 brought a new dawn in the housing sector. Thatcher initiated the system whereby public housing was subsidized by the government using taxpayers’ money. To that effect, houses were set aside for those who dearly needed them, say the poorest or most in need tenure. Thatcher’s idea was to eliminate the social stratification mentality and introduce the collectivism. She did this by ensuring the property was widely owned throughout the country and by turning everybody into small capitalists whose roles were to increase individual wealth and pass it down to their lineage. This system was swept away by Victorian-era of self-reliance and entrepreneurship per individual (Touraine 2014 pp 8-12). Gustavo Cardoso et al. in The Culture of Economic Crisis book have examined the events that have taken the course in the event of the crisis. They have clearly shown the world we are now entering is very different from that which existed three decades ago. They have examined the cultures and institutions that play a leading role in the emergence of the crisis that has now led to the development of new economic and social cultures. They are quick to remind us that there is no quick remedy for the current financial and social system. They suggest that we need a transformation of the mentality that was in the first place the mother of the crisis if at all we need to save ourselves from the crisis at hand (Castells et al. 2012 pp 44-78). The history of housing privatisation is concerned; it dates back to the 80s. The right to buy policy allowed the incumbents of homes to buy them accompanied by substantial discounts on about half the market price. All these benefits were scrapped off in the first privatisation wave in the 80s. Once the residents bought the council houses, the government then stopped financing the houses maintenance. Since most of the buyers were middle-class people, they were not able to maintain their houses. The houses started falling houses and poor housing. The devastating situation of the houses attracted private developers who bought, managed and later rented out the rooms at their rates. This process underwent several regimes until the 2007-2008 crises when housing matters took a disastrous turn (Harvey 2011 pp49-69). Ever since the current government took power, it has done nothing to save the poor resident. Instead, it has encouraged the ongoing encroachment of the private sector to take over the housing sector. The first change it brought was cutting off fifty percent in the affordable housing budget for 2014-2015 in efforts its claims to reduce the national deficit. We need to get our housing sector out of the private home ownership as soon as we can. We need to seek another housing system, one that offers appropriate, secure, decent and affordable homes for each every person in need of a home. England and the greater United Kingdom is headed for a dreadful future if its residents do not come out and demand a type of housing system that suits their needs. Even though, the current government clearly does not show signs of going towards this direction; it is a time the citizens came out with one voice to demand one of their rights and needs, shelter. It sounds hard because it is indeed hard, but like the neoliberals, I doubt if we have an alternative (Harvey 2011 pp49-69). As at now, it is evident everybody is crying from the rich to the poor. The current government is starting a new system that will see the high-earning social tenants pay higher rents or risk eviction. Let us not mention about the weak cries (Corporate Watch 2011 pp. 23). Jasmine Stone, a young lady of about 21 years, is the leader of the Focus E15 Mothers. She has kept her family about 30 other tenants from being evicted from their homes in Newham by fighting the authorities who wanted to move this group of women from their hostels in East London to Birmingham and Hastings. They probably fought more than any other activist group there was last year to force social housing up the political agenda. Despite facing various court actions and water being cut off, they never were weakened but instead were energized more to fight more aggressively for their primary rights. Focus E15 is still fighting for better housing policies and against evictions threats from. This group shows that it is possible to get better policies if only we came out in large numbers and spoke with one voice (Corporate Watch 2011 pp 23). To wrap it all up, David Cameron openly announced that the solution to the housing crisis is to re-establish ‘The to Buy’ policy. He also added that introduction of discounts and made it easy for the tenants to buy their council houses will help end the crisis. From this, it is evident that it is possible for us to end the housing crisis and focus on other economy-building activities (Chakraborty 2014 pp 12). It will be redundant to state here that the housing system in the UK has enormously changed. Not a single person can resist change because otherwise you have no business in this world; it is full of it. With system almost being entirely capitalised, we expect to see capitalism everywhere, the housing sector is unexceptional (Rastogi 2014 pp 443). The private renting has grown with the social renting system moving towards the market levels since the crisis in 2007-8 in many parts of England. The Housing Benefit is no longer able to protect tenants from higher rents from both the social and private house ownership as there is raising cost pressure that is set to continue as time moves (Loftus 2008 pp 335-355). It is proper for activists to run up and down the streets chanting ant-privatisation slogans. Nevertheless, they need to ask themselves is, why is everybody ‘’silent’’? The times are changing throughout the world, and people are by default, capitalists, that is what humanity has become in this century. Take the example we talked about earlier; the Westbrook Company. The company realised that they no longer were relevant in the housing market due to the small rents they collected. Therefore, they decided to sell it to a foreigner company. The cries from the people were only met by mere adjustments like appointment of a caterer from the tenants and delaying of rent increment to later mid of 2015. Therefore, it shows that change is inevitable in the end (Ndung’u 2012 pp. 65). Conclusion To clearly explain the 2008 housing crisis in England, take for example a case of the New Era saga that can be clearly termed as a multifaceted crisis. Inferring to the dynamics of the 2008 housing crisis in UK was the travel of residents of a housing estate in east London to the United State Investment company headquarters that bought their homes to protest against its eviction plans. This saga, the New Era, is quite unfortunate at this age of civilisation. It for a fact represents the broken England broken housing market. Westbrook first bought the estate in Hoxton and consequently sold it to another overseas company in the US (Corporate Watch 2011 pp 23). The company operating under capitalist system and being corporate owned plans to evict the residents so as to maintain the estate and then re-let the houses at the market value. The market value currently could be two to three times the current rates. The tenants saw their houses being ripped off them right from beneath their feet as they stared. In as much as the incumbents of the houses need to realize that times are changing with the current economic turmoil, it is also considerate for the Westbrook Company to be considerate and sell the houses to a local landlord who understands the situation and who will help bring the tenants together (Chakraborty 2014 pp 12). We all need to think of an amicable solution to this problem whereby we will marry the both the capitalists’ interests of profit making and those of the tenants. The landlords need to realize that the changing the system from social housing to the private system or increasing the rents to the market value only need a gradual change. References Castells .M, Caraca. J and Cardoso.G (2012) Aftermath: The cultures of the Economic Crisis, Oxford, University Press pp. 44-78. Chakraborty, A.: New Era Estate Scandal: Families at the Mercy of International Speculators, The Guardian 19 November 2014 Chakraborty, A.: The Heroes of 2014: Focus E15 Mothers, The Guardian 31 December 2014 Corporate Watch (autumn /winter 2011) (issue 40/50) Housing Crisis? Corporate -critical research since 1996 .www. Corporatewatch.org Dale, C. (2014). Regional theories of the MNE: post the 2008 economic crisis. International Journal of Economics and Business Research, 8(3), p.354. Experience from the financial and economic crisis of 2008 -2009. Communist and Post-Communist Studies, 46(1), pp.109-122. Harvey, D. (2011): Rebel Cities, London/New York: Verso Heyes, J. (2012). Vocational training, employability and the post-2008 jobs crisis: Responses in the European Union. Economic and Industrial Democracy, 34(2), pp.291-311. Hodkinson S., Robbins G (2013): The Return of Class War Conservatism? Housing under the UK Coalition Government, Critical Social Policy, 33, pp.57-77. Hodkinson S., Watt P; Mooney G. (2013): Introduction: Neoliberal Housing Policy - Time for a Critical Re-Appraisal, Critical Social Policy, 33, pp.3-16. Loftus, J. and Purcell, J. (2008). Post-Asian financial crisis reforms: an emerging new embedded-relational governance model. Accounting, Business & Financial History, 18(3), pp.335-355. Ndungu, J. and Wepundi, M. (2012). Transition and reform. London: Safer world. Pp. 65 Rastogi, S. (2014). The financial crisis of 2008 and stock market volatility - analysis and impact on emerging economies pre and post crisis. AAJFA, 4(4), p.443. Touraine .A, (2014) After the Crisis .Cambridge Polity Press. Read More