Last week, in his pre-budget statement, Gordon Brown averted disaster. Of course, the disaster he averted was one that would have been entirely of his own making. He decided that we would not be able to invest money from our private pensions in property, which was in any case an idiotic, middle-class-crowd-pleaser of an idea he came up with a couple of years ago.
In the UK, property is king. It's a small island with a lot of people and, as the saying goes, the one thing God isn't making any more of is land (though the Dutch are another issue). Our consitution has traditionally focussed on property rights as the highest good, whose protection is paramount. For a few hundred years, it gradually developed some ideas about personaly liberty and rights, but Blair has pretty efficiently gutted those out of it.
Why was adding property to personal pensions a bad idea? It's simple. At the fragile high-water-mark of a property bubble, people were itching to blow six figure sums into second homes and buy-to-let schemes. There was no winning scenario here. If prices rose further, and stayed there, increasing numbers of people would find property unaffordable. If prices spiked then plummetted, well, your pension just fell by 20% with six years until retirement. Fancy retiring at 80?
And there was another facet. A rush to property speculation would have attracted money away from productive sectors of the economy. All that money is already sitting there, invested in equities, bonds and (a little) cash. The price of money to industry - a major cost of doing business - would have, until the property crash, risen.
So the net effect would have been a flight of capital from productive to rental sectors of the economy, and very probably a period of house-price inflation followed by a crash in property prices, widespread negative equity, and massive losses to the pensions of those with large funds, i.e. those closer to retirement.
Gordon Brown is an idiot and a thief. At least this time somebody slapped him awake in time, unlike the last time he postponed everyones' retirement through idiocy and greed. On balance, though, I'd have to say his father, old Dr Brown from Insch, was a very nice man.