The Boom and Bust of Just About Everything. A Circle of Blame Parable in the Manner of Will Cuppy

Being a Natural History of Housing Speculation, With Footnotes on the Curious Habits of Economic Predators

Jul 08, 2025

Chapter XVII: The Great British Housing Bubble

Or, How Everyone Became an Expert on Everyone Else's Mistakes

The Great British Housing Bubble of the early 21st century presents one of nature's most fascinating examples of collective delusion, rivaling even the Tulip Mania of 1637 for sheer audacity¹. Unlike tulips, however, houses cannot be stored in warehouses or eaten in times of famine, making the British experiment considerably more ambitious than anything attempted by the Dutch.

The Housing Bubble, like most economic phenomena, operated on the principle of the Circle of Blame—a behavioral pattern first observed in kindergarten playgrounds but perfected by adults with access to mortgage lending². In this system, every participant points accusingly at every other participant while the actual beneficiaries count their profits in soundproof rooms.

The Cast of Characters

The Housebuilders claimed they were merely responding to demand, like any sensible business³. They couldn't help it if people wanted houses, could they? The fact that they controlled the supply through something called "absorption rates"—limiting sales to 0.85 homes per outlet per week—was simply good business practice⁴. After all, flooding the market would crash prices, and nobody wanted that. Well, except for the people trying to buy houses, but they didn't count because they weren't shareholders.

The Planners insisted they were protecting the countryside from urban sprawl while ensuring sustainable development⁵. The fact that their departments were funded by development fees created no conflict of interest whatsoever. They were professionals. The 63% shortfall between housing need (300,000 homes annually) and actual supply (110,500 homes) was simply evidence of their rigorous standards⁶. Quality over quantity, they said, apparently unaware that zero quantity makes quality rather academic.

The Politicians blamed market forces, as politicians have blamed market forces since markets were invented⁷. They couldn't interfere with the sacred mechanisms of supply and demand, except when they could, which was whenever it benefited their donors. The £28 billion Help-to-Buy scheme that increased prices by 84% while increasing supply by only 16% was hailed as a great success⁸. Success at what was never clearly specified.

The Banks claimed they were simply meeting customer demand for credit⁹. The fact that they created £1.68 trillion in mortgage debt—money that didn't exist until they lent it—was just modern banking. They couldn't help it if 77% of housing costs went to interest payments rather than actual construction¹⁰. That was just how compound interest worked. Mathematics, not greed.

The Homeowners blamed immigrants, young people's avocado toast habits, and anyone who suggested that perhaps houses shouldn't cost twelve times annual income¹¹. Their own homes were investments, naturally, and investments were supposed to appreciate. The fact that their children couldn't afford to live in the same neighborhoods was unfortunate but hardly their fault. They hadn't invented capitalism.

The Renters blamed landlords, which was reasonable enough, except that landlords were often just homeowners with extra mortgages¹². The real enemy was the system that made housing unaffordable for purchase, forcing people into rental markets where they paid landlords' mortgages plus profit margins. But systems are hard to blame because they don't have faces or forwarding addresses.

The Curious Case of the Empty Houses

Perhaps the most remarkable feature of the Great British Housing Bubble was the simultaneous existence of 700,000 empty homes and 250,000 homeless people¹³. This phenomenon, known to economists as "market efficiency," demonstrated the system's remarkable ability to allocate resources to their most profitable rather than most useful applications.

Dr. Adrian Wrigley, a mathematician who had the poor taste to apply actual mathematics to housing markets, pointed out this inconvenient fact to a Parliamentary committee in 2011¹⁴. His reward was to be ignored with the thoroughness that only democratic institutions can achieve. After all, if empty houses and homeless people could coexist, it simply proved that homelessness was a choice. The houses were there; people just weren't choosing them correctly.

The Vienna Anomaly

The Circle of Blame was occasionally disrupted by inconvenient examples from abroad. Vienna, for instance, housed 60% of its residents—including lawyers, doctors, and other respectable people—in social housing funded by community-controlled revenue rather than debt¹⁵. This created what economists call a "natural experiment," though they preferred not to discuss the results.

Singapore achieved 90% homeownership through state-led development using sovereign credit creation¹⁶. North Dakota operated a state bank that funded community development at 0% default rates by creating credit rather than debt¹⁷. These examples were dismissed as "not applicable to British conditions," though what made British conditions uniquely unsuited to affordable housing was never explained.

The Mathematics of Impossibility

The Home@ix Formula revealed the mathematical precision underlying the chaos¹⁸:

AN = HD + (HM × P × AR × D × T × PVC × (F-1)) + NCC

Where Affordable Housing Need (AN) could only be met by implementing the New Circuit of Credit Creation (NCC), because the existing system was designed to prevent rather than enable housing provision.

This formula was as popular with housing economists as Darwin's theory was with Victorian bishops. It suggested that the crisis wasn't accidental but structural—that the system worked exactly as designed, just not for the people who needed houses.

The Beneficiaries

While everyone blamed everyone else, certain parties quietly prospered. Banks collected interest on £1.68 trillion in mortgage debt¹⁹. Landowners watched their holdings appreciate without lifting a finger. Developers maintained profit margins through controlled scarcity. Politicians received donations from grateful beneficiaries.

The beauty of the Circle of Blame was that it obscured these relationships entirely. Everyone was too busy pointing fingers to notice who was picking pockets.

The Inevitable Conclusion

The Great British Housing Bubble, like all bubbles, was destined to end badly for most participants and very well for a select few²⁰. The Circle of Blame would continue spinning until communities discovered they could create their own credit, control their own land, and build their own homes without enriching distant speculators.

This discovery would be delayed as long as possible by those who profited from the current arrangements. After all, the Circle of Blame was working perfectly—just not for the people trapped inside it.

Footnotes

¹ The Tulip Mania at least produced flowers. The Housing Bubble produced mainly debt and empty homes, which are considerably less decorative.

² Kindergarten children, however, eventually grow out of this behavior. Adults with mortgages appear to be stuck in permanent developmental arrest.

³ "Responding to demand" in this context meant creating artificial scarcity to maximize prices, much like diamond merchants who keep most diamonds in vaults to maintain the illusion of rarity.

⁴ The absorption rate manipulation was so precise it could have been choreographed. Perhaps it was.

⁵ Protecting the countryside by making it impossible for countryside dwellers to afford homes there was a particularly sophisticated form of conservation.

⁶ The 63% shortfall was presented as evidence of high standards rather than systemic failure, demonstrating the remarkable flexibility of bureaucratic logic.

⁷ Politicians blaming market forces is like weather forecasters blaming the weather. Technically accurate but professionally useless.

⁸ Success was measured by the amount of money transferred from taxpayers to property developers, a metric that showed remarkable consistency across all government housing programs.

⁹ Customer demand for credit is like customer demand for oxygen—artificially created by making the alternative unpleasant.

¹⁰ The banks' claim that they were merely facilitating transactions was like a casino claiming it merely provides entertainment. Technically true but missing the point entirely.

¹¹ Avocado toast became the official explanation for housing unaffordability, demonstrating that economists had finally discovered a food item more expensive than houses per square inch.

¹² Landlords blaming tenants and tenants blaming landlords was like passengers on the Titanic arguing about deck chair arrangements while the ship sank.

¹³ This ratio suggested that homelessness was roughly 2.8 times more efficient than housing, by economic measures that prioritized profit over shelter.

¹⁴ Dr. Wrigley's mathematical analysis was ignored with the same thoroughness that Victorian scientists ignored evidence for evolution. Some truths are too inconvenient for immediate acceptance.

¹⁵ Vienna's success was attributed to "special circumstances" that somehow never applied to anywhere else, despite being replicated in multiple cities across Europe.

¹⁶ Singapore's achievement was dismissed as "authoritarian" by democracies that had somehow authorized the transfer of £1.68 trillion from citizens to banks without a vote.

¹⁷ North Dakota's state bank was ignored by financial journalists with the same determination that medieval cartographers ignored reports of lands beyond the edge of the world.

¹⁸ The Home@ix Formula was received by housing economists like a vegetarian cookbook at a barbecue convention—technically interesting but practically threatening.

¹⁹ The £1.68 trillion in mortgage debt represented the largest peacetime transfer of wealth from working people to financial institutions in British history, achieved without a single shot being fired.

²⁰ The definition of "badly" and "very well" depended entirely on whether one was inside or outside the Circle of Blame, much like the definition of "weather" depends on whether one is inside or outside during a storm.

Roger Lewis writes from Grub Street in Exile, where he studies the natural history of economic delusions and their remarkably consistent patterns of boom, bust, and blame redistribution. His previous works include "The Conquest of Dough" and "Why Everything Costs More Than It Should: A Field Guide to Financial Predators."

Author's Note: This analysis is based on actual data from the Savills Research Report for Richborough Estates, the Resolution Foundation's housing studies, the Joseph Rowntree Foundation's affordability research, and Dr. Adrian Wrigley's parliamentary evidence. The Circle of Blame, however, is a literary device used to illuminate real economic relationships that are usually obscured by the complexity of modern financial systems. Any resemblance to actual economic bubbles, living or dead, is purely coincidental and probably actionable.