UK - If one was to take a dispassionate look at the United Kingdom's problems, then we have to look at the role that housing has played in the finical crisis.

Or to be more accurate we have to look at the role that house price inflation as had in stoking the boom and the subsequent bust.

It can be argued, and this commentator will argue that the successive governments have conspired to exclude the cost of housing from the real inflation figure's. This was not Just ZaNuLabor project of Tony Blair and Gordon 'Wanker' Brown, the Conservatives under both Margaret Thatcher and John Major were every bit as guilty.

That said both the Thatcher and Major governments did use interest rates to rein in house prices and therefore inflation.

Boom and Bust

By not counting house price (and rent) inflation as inflation, and allowing people to use their houses as auto bank tellers, Governments have been able to hide the lack of performance of British industries, and the decline in the manufacturing sector of the British economy.

This works by having an official inflation rate of 3% and a house price inflation rate of 15% The house appreciates in value by 5 times, creating a theoretical profit. The theoretical profit could be accessed by taking out a second mortgage on your house.

Bust

It was this theoretical profit fuelled the ZaNuLabor boom. The problem was that if you have a boom then you always have a bust following it. It is a simple law of economics.

ZaNuLabor stupidly believed that the boom would go on for ever a mistake that not even a fresher economics student would make. The Bust that we are now in is 100% the responsibility of Gordon 'Wanker' Brown, by virtue of his position as both Prime minister (first lord of the treasury) and chancellor of the exchequer.

The result of the boom is that that house prices and rents are vastly over valued. Some say that housing is about 40% over priced and that although the house prices have fallen back about 10% in some arias, other have seen price increases.

Action needed

The Government now needs to act to force house prices down, together with rents. This will inevitably result in an increase in the number of houses that are re-possessed. Particularity in the buy to let sector.

That will result in the need for a lot more not less social housing. Not just that but housing with rents at about 60% of the current going rate.