How too much "Construction" led to "Meltdown"

"'When she was nine or ten', Elena recalls, 'my parents spent their evenings writing brochures, which they said were on 'questions of Party construction'. For a long while I thought the Party built houses'"
Extract from "The Whisperers - Private Life in Stalin's Russia" By Orlando Figes

Having spent some 6 years reading Geoffrey Hosking's excellent book on "Russia and the Russians" - which I shall reflect on more fully some time - "The Whisperers" seemed an obvious continuation of my journey, if not exactly into the Russian "soul", then something similar.

I would now, however, like to quote from Hosking's account of the 1998 Russian banking crisis.

"To cover its persistent deficits the treasury issues bonds (GKOs) at attractive rates of interest, which found a ready market both at home and abroad. They kept the government afloat, and also enabled it to persuade the International Monetary Fund that it was solvent and deserved generous loans to finance its economic reform program. In August 1998, however, the elaborate balancing act came to an inglorious end. Unable to fund its soaring GKO obligations despite a large recent IMF loan, the government declared that Russia was defaulting on its debts. Overnight, most of Moscow's large banks became technically insolvent, the wealth of the "oligarchs" was sharply reduced and the new middle class lost much of its savings. Real wages fell by 40% over the next six months, the rouble declined to less than a third of its previous exchange rate, and the proportion of the population living below the official poverty line left from around 20 percent to more than 35 percent."

In the light of recent history, it should, therefore, come as no surprise that last weekend's Observer newspaper's business section should carry an article headlined : "Russians hoard cash as fear of crisis takes hold"...."after the government devalued the rouble five times in six days", nor that the cash in question should be dollars ! The article continues that in a letter published in the newspaper Vedomosti :

"Former Soviet leader Mikhail Gorbachev yesterday joined a chorus of influential Russians criticising the handling of the economic crisis. ' Resources are directed not so much at protecting the interests of the majority of citizens as at saving the assets and property of a narrow circle of influential businessmen'.....Olgarch Alexander Lebedev, who is buying the Evening Standard, was also a signatory".

Mention of the London Evening Standard, of course, brings things closer to home, and I now want to return to one of this nation's favourite topics : housing. It so happens that the same edition of The Observer quoted above, also carried a selection of articles published in The New York Times. Recalling Tom Wolfe's great novel "Bonfire of the Vanities", one of these articles is entitled : Housing Policies Stoked the Mortgage Bonfire. An extract from this follows :

"....The global financial system was teetering on the edge of collapse when President Bush and his economic team huddled in the Roosevelt Room of the White House for briefing that, in the words of one participant, 'scared the hell out of everybody'...

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr Bush is leaving office, as he himself said recently, 'faced with the prospect of a global meltdown' with roots in the housing sector he so ardently championed..."

Whilst it may indeed be largely a consequence (and a very serious one too !) of United States housing policies, it is wrong, in my view, for former President Bush to bear so much of the blame for the global financial crisis, although the United States and, countries like Britain, might well do so. For much of what has transpired has its roots not in the Bush administration, but in that of Clinton : whose affordable housing ideology , incidentally, has also been at the core New Labour policy.

So - to invert the confusion surrounding the real work of Elena's parents in The Whisperers -have the United States and British Governments also in truth been engaged in an ideological construction which has gone very badly wrong ? The irony is, of course, that most Russians still, I think, enjoy greater security of housing tenure than we in the "Old West".

Barack Obama's new chief of "Housing and Urban Development", Shaun Donovan, please taken note; and US planners please sort your own very big problems out before telling people over here what to do !