The council house issue isn't a unlikely as you might imagine. A number of local authorities - notably Camden - bought up a lot of property to add to their housing stock during the 1970s property crash.

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Well, I don't think this will happen.

We shouldn't worry about the initial drop as a large part of that isn't real, but a paper readjustment to unwind the pay-to-let discount scams (so a paper 90% mortgage was really 100+%). Many new flats were 10% to 15% overvalued at the Land Registry compared to what they really cost, and unwinding this is an apparent rather than real price drop. On top of that some market froth is evaporating. My guess is a 10% to 20% drop, then prices flat for many years.

I don't think a Tory govt would have foreseen the sub-prime crash any better than New Labour did - it would have rode the boom as well but without NMW and less social spending, so greater inequality. I think this is a problem largely imposed on us by veracious fee and commission hunters in New York, fed by overly low US interest rates so they play with easy borrowed money.

I do suspect the west has some painful readjustment to face over the next 30 years, as Asia has its century. Neo-liberal capitalism moves quickly and efficiently with innovation in a time of rapid growth, and if everything is growing unfairness is not paramount or that painful. But in a period of very low-growth innovation is less important and fairness a bigger issue - which should feed into leftward movement of the Labour party.

I think we are moving back to a phase of Keynesian economics and tighter regulation. Looks like the neo-liberal party is over. If this is indeed the correct analysis I do hope Brown is capable of seeing it.

NB Just heard the IMF Chief Economist on yesterday's C4 News: 25% chance of global recession, US in mild recession - recovery not expected for 2 years, but emerging states keeping global economy spinning, largest spending shock since the 30s, we need to use public spending in creative ways. 5% chance of a major international bank failing, with huge fallout.

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