In the United States, the result of this increased demand for equities was the longest bull run (a bout of optimism and rising stock prices) the world had ever seen. Cash flooding into high yield corporate bonds had also inflated a corporate debt bubble — it was so easy for even the most poorly managed companies to access cash that economists were pointing to the problem of the “zombie” corporation, which could only afford to service the interest payments on its outstanding debt.
The main impact of QE in the UK has been felt in the housing market, where prices have skyrocketed to far above where they were prior to the financial crisis of 2008 — particularly in London, the South East, and Manchester.
The pandemic has been a recession like no other — rather than falling, as they have during all previous recessions, house prices have risen. Thanks to the closure of offices and resulting emigration from cities, house prices in the countryside are now rising at a rate of around 14 percent per year next to 7 percent for urban areas.
What’s more, with interest rates at rock bottom and pensioners able to draw down their entire pensions in one go, many more older people have decided to purchase second homes to rent out to younger people. The Conservatives have created seven hundred thousand new landlords over the course of the last decade, shoring up their voter base while exacerbating the housing crisis.
Absent rent controls or a functioning social housing system, young people are being forced to pay extortionate amounts — often half to two thirds of their salaries — on rent just for the privilege of living within commuting distance of their jobs.
Meanwhile, huge international asset managers like Blackstone are taking advantage of the plentiful cash now available in the international financial system to buy up huge swathes of real estate to rent out themselves. The rise of the corporate landlord was first evident in the United States, then in Ireland, and now it is becoming increasingly visible in the UK.
In other words, the most powerful states in the capitalist world system are now in the business of creating millionaires. Undemocratic and unaccountable central banks are using the power of signories to inflate the fortunes of the wealthy; meanwhile the UK Treasury tries to prevent people from accessing sick pay.
The dramatic increases in the fortunes of the superrich during a pandemic in which millions have died and millions more have been pushed into poverty provide yet more evidence that we live in a warped economy and a sick society. But observing the irrationality of the current system is not enough; unless working people organize to hold the powerful to account, the capitalist state will continue to support the interests of the millionaires over the millions of people who work for them.
By Grace Blakeley for The Jacobin Magazine
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