The butterfly effect: How a blip became a credit crunch
A year ago this week, the world felt the first effects of what we now call 'the credit crunch'. But how did it begin? Who were the key players? And is the worst yet to come?
Published 07/08/2008 | 08:37
American Dream Realty – Reduced Price! The estate agent hammering the "for sale" placard into the yellowing lawn of a family home in the Weston Ranch district of Stockton, California, this week could hardly have been optimistic. Almost every second home had a similar sign.
This suburb, created from nothing 15 years ago, had promised so much to the low-income families who streamed in during the building boom, a roof of their own at last for people deemed "sub-prime borrowers" and – perhaps – a nice profit if house prices continued to defy gravity, as they seemed they would a few years ago.
When the crash came, when the US housing market ran out of sun seekers migrating from the North and speculators hoping to flip their purchases for a quick buck, the surge in foreclosures blighted neighbourhoods. In Stockton, foreclosure capital of the US last year, the lowering of tone has been tangible, in an unpleasant way: residents became alarmed at the number of abandoned swimming pools lying uncleaned, magnets for mosquitoes and disease. Such things don't show up in the statistics, but they are as telling an indicator as the 25 per cent drop in American house prices over the last year alone.
In Weston Ranch as elsewhere, egged on by brokers on fat commissions, during the boom, residents had taken on mortgages they could not afford. Of all the bits of jargon, it is the "Ninja" loan that will stand out as the abiding symbol of the US real estate bubble – "no income, no job, no assets". Now that their cheap "teaser"-rate loans have run out and they can't find credit, they're giving up. Meals lie half finished on dining tables as families bolt the moment the sheriffs arrive to repossess the property. In many cases, owners simply post the keys through the letterbox and walk away rather than continue to pay for a home that is slumping in value.
Even now, it is impossible to know what, precisely, triggered the credit crunch. In the familiar story that is always used to explain chaos theory, the flap of a butterfly's wings in the Amazon rainforest can provoke a tornado on the other side of the globe, because even the tiniest chance alteration in a weather system can be amplified into the most dramatic of outcomes. Nature has always been global; now the globalisation of finance has made similar phenomena possible in economics. In the case of the credit crunch, the butterfly's wings might have been the crack of a real estate auctioneer's gavel a couple of years ago, heard in some corner of California, as a former dream home in Stockton went for a knockdown price as a foreclosure special. Or some casual gossip in a bar that prompted a buyer to pull out of a deal. Or a family break-up that forced a distressed sale. At some point, the momentum behind America's property boom ran out, the moment where reality caught up with the debt delusion. The credit crunch would follow, a trillion-dollar ($1,000,000,000,000) meltdown of banking losses that has left the world's financial system so feeble that banks are too scared even to lend to each other, for fear they will never be repaid. The paranoia is sometimes understandable. On 18 January this year, a little alarm bell rang inside a French investment bank, late on a Friday night. There is something strange about a derivatives trade just executed by one of Société Générale's junior traders, Jérôme Kerviel, a 31-year-old with a big mouth and a big ego but no great shakes inside the company. An investigation begins. Its conclusions stoke a panic on global markets and – suddenly staring recession in the face – the chairman of the Federal Reserve, Ben Bernanke, orders the most dramatic cut in US interest rates in a generation.
Kerviel is the new No 1 on the list of rogue traders, leaving Nick Leeson eating dirt. For over a year, he had been running a secret trading book at SocGen that had amassed some eye-poppingly large derivatives positions. By the time he was rumbled and his positions liquidated, SocGen was sitting on losses of €4.82bn (£3.81bn). (For contrast, Leeson brought down Barings with a trifling £827m loss. SocGen survived, although its reputation for good management and the career of its chief executive, Daniel Bouton, did not.)
In the febrile atmosphere of the credit crisis, rumours that a major bank was liquidating positions were enough to send European markets plunging that Monday, and when US traders headed nervously to work after the Martin Luther King bank holiday, a full-on crash was in prospect. For months, Bernanke had resisted the big interest rate cuts Wall Street had been clamouring for, claiming the economy was not so weak as to justify them. In the face of an impending crash, though, he turned on a dime and shaved three quarters of a percentage point, the biggest cut since the Eighties.
It wasn't until two days later, when SocGen came clean and "le rogue tradeur" was unmasked, that the stock market panic was explained – but by then Wall Street was cheering the boost to the economy. As the influential economic analyst Ed Yardeni put it: "Merci, Jérôme."
So banks are not keen on lending in such a nervous atmosphere to anyone. Hence the mortgage famine in this country, and the housing recession that threatens to turn into a slump, creating a vortex of downward factors on the economy every bit as vicious as nature's tornadoes, blowing away confidence and trust. And without confidence there is no growth, jobs go, pension funds are devalued, repossessions mount and families become homeless. The human costs, incalculable, are being paid all over the developed world.
But when did what was first thought to be essentially a problem affecting the American property market and perhaps a few unlucky Wall Street bankers go global? HSBC was an early confessor, but as late as July last year the charismatic Charles "Chuck" Prince, boss of the biggest bank in the world, Citigroup, was able to deliver the best soundbite of the crunch: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing." Almost before the words had dropped from his smiling lips, the dance party was over.
That moment was 9 August 2007, the day the short-term money markets froze, an extraordinary event. Previously, routine overnight or month-long loans by the big banks to each other were just that – routine. Barely a second thought was given to the chance that one might fail overnight. That changed. For 9 August was the day that the French bank BNP Paribas decided to suspend three of its investment funds, totalling €2bn, citing "problems" in the US sub-prime sector. The funds, like many others, were heavily invested in securities backed by those US sub prime loans in places like Weston Ranch that had started to go bad – €700m worth in the case of the French bank's funds. Banks all over the world had invested in them, and few had yet owned up to the problems. Some still haven't. A few months of defaults on loans in the US and the problems stated to show up in unexpected places, and then pretty much everywhere. Over the next few months, virtually every big name in the world of banking had to admit to losses from the sub-prime crisis. BNP declared that it could not value the funds because the market for those securities had closed. Investors got the message, and rushed for cover. The European Central bank pumped in €95bn to ease the crisis, to little avail. The US Federal Reserve and the Bank of Japan took similar steps, but still market interest rates soared, as banks required a bigger return for much higher perceived risks. These "risk premia" are still high.
On 9 August, the Bank of England did not intervene, later saying that to have done so would have been "irresponsible". It was to be another five days before the governor, Mervyn King, would be told of the impending doom facing Northern Rock. The market for mortgage-backed securities had collapsed, probably never to reopen, and it took a bank down with it.
The Rock story is well known, and illustrates what went wrong perfectly well. First, Northern Rock relied more than any other institution for its funding on the credit markets, the very ones that were now grinding to a halt. Without a steady, reliable flow of money from those markets to lend on to the customers, and to roll over its existing debts, Northern Rock would soon run out of cash. Which it did. Having become the largest supplier of new mortgages in the country through its aggressive activities, it was rewarded with a huge increase in its share price. The non-executive directors were there presumably to query and control the ambitions of the young chief executive, Adam Applegarth, who appeared to be a dictator. They didn't. Nor did the others. The only executive capable of standing up to Applegarth had retired. Yet the fiefdom was allowed to run itself into trouble when the regulator, the Financial Services Authority, suffered a "systematic failure of duty", according to the Treasury Select Committee's subsequent inquiry, in failing to spot the "reckless" business plan.
Second, much of its business was hidden "off balance sheet" in a "special investment vehicle" or SIV. This one had a bizarre link with a Down's Syndrome charity in the North-east, but it was a link that the charity itself was seemingly unaware of. This lack of transparency and abuse of the charitable status of offshore trusts was common in the banking world, and remains an obstacle to the rebuilding of trust in financial markets even now.
Third, there were the usual lavish rewards for failure. When Applegarth quit he didn't leave empty handed. The man who suffered the first run on a British bank since 1867 was given his full salary of £760,000, plus £25,000 in other benefits. He had a pension fund of £2.6m, enough to furnish an income of £300,000 per annum from age 55. He also got to keep the £2.5m house, Aston Martin and the Ferrari he bought for his wife on the back of a share sale in early 2007. All peanuts compared with the $42m payoff enjoyed by Chuck Prince, or the $200m Merrill Lynch boss Stan O'Neal walked away with, but not bad for what had until a few years earlier been a middle-ranking building society.
We should think of Northern Rock as a typically British take on an American phenomenon, a bit of a pale imitation, an amuse bouche before the feast. For, despite the strenuous efforts of the central banks, the crunch intensified in the spring of this year. Its next victim was to be much more notable than Northern Rock.
One minute it was there, one of Wall Street's most august old institutions, an investment bank with an 85-year pedigree; the next minute it was gone. Over the weekend of 15 to 16 March, Bear Stearns was wiped out. It was suddenly clear that no institution is too big to be crushed in the path of the credit market hurricane.
Like the credit crunch itself, it is not clear exactly what triggered Bear's dizzying collapse, what constituted its butterfly moment. Jimmy Cayne, its septuagenarian chairman, who himself lost a $1bn fortune, is among the bitter executives who allege a conspiracy of short sellers, out to profit from malicious rumours.
But the fingers of many of the 5,000 employees who lost their jobs are actually pointed at Cayne. Bear's cash reserves were weak, whittled away by bad bets on the mortgage market. Yet Jimmy Cayne was on the golf course when underlings fought in vain last summer to save two internal hedge funds. And the week that Bear went into its final death spiral, he was in Detroit, keeping his engagement at the North American Bridge Championship.
Rumours about Bear's financial health morphed quickly into tales of financial institutions refusing to do business with the company – tales that became self-fulfilling. The situation fed on itself with dizzying speed, and by close of play on Friday 14 March it was clear the company would be unable to meet its short-term trading obligations. In short, it was bust.
Cayne did make it back to the office for the denouement, when the revolving doors to Bear's Midtown Manhattan office tower spun and phones rang off the hook. That bitterly cold March weekend, the most powerful men in global finance struggled to prevent the run on Bear Stearns from igniting a chain reaction of losses through the financial system.
The Federal Reserve, convinced Bear's collapse would pull down a house of cards, agitated for the company to be sold, and senior executives from the likes of Barclays were among those who dutifully trooped into the offices to pore over Bear's books. Jamie Dimon, penny-pinching chief executive of JPMorgan Chase, went without sleep to keep abreast of the deal, and finally it was he who signed on the dotted line, with just hours to spare before the start of Asian trading on Sunday night.
Global finance got up, bloodied, ready to fight another round. Bear Stearns shareholders, though, limped away with just $10 for shares that were worth 10 times that at the start of the year. Or, in Jimmy Cayne's description: "We were roadkill."
In the US, they call it the "perp walk" – the alleged perpetrators of a crime are paraded in front of the world's cameras, a humiliation for them and a warning to others. Matthew Tannin and his former boss Ralph Cioffi, two hedge fund managers from Bear Stearns, woke up on a sunny June morning knowing that they would be taking the first perp walk of the credit crunch. Tannin surrendered at his New York apartment, Cioffi outside his New Jersey home. The two are charged with soliciting new investors into their mortgage funds last year, painting a rosy view of the future when they already knew the bottom was falling out of the market. The ultimate collapse of the funds cost investors $1.6bn. The FBI says it is investigating housing developers, mortgage lenders and brokers, lawyers and estate agents, among other players in the credit crisis. There will be more perp walks.
There's a political impact too, a change in the intellectual climate. For a quarter of a century or more, since the twin victories of Thatcherism and Reaganomics, market liberalism has been held to be the answer to almost everything, just as social democracy was in the decades between the end of the Second World War and the 1980s. That may be changing now that unregulated financnial markets have failed at the most basic level, with crisis followed quickly by crisis, the whole machine needing almost constant life support from the public sector to keep going. Crises have become the norm. The sovereign debt crises of the early 1980s; the 1987 stock market crash; the recession of the early 1990s; an earlier mortgage-backed securities crisis in 1994; the Asian and Russian debt crises of 1998; the hedge fund collapses the same year; the dot.com bust; post-9/11 slumps; and now the credit crunch. Each one has been followed by a swift response from the authorities, cutting interest rates and stimulating economies through tax cuts and increases in public spending. It's all spawned successively bigger bubbles and successively more violent crashes. And it has spawned what the experts call the "Greenspan put" – a put being a sell trade and in this case one that cannot lose money, since the Alan Greenspan, chair of the Federal Reserve from 1987 to 2006, always came along and rescued markets by lending unlimited funds on the cheap. Yet the crises returned.
A better model is "to take away the punch bowl just as the party gets going". That was the famous motto of William McChesney Martin, one of Greenspan's predecessors, who served presidents from Truman to Nixon. For good reason or bad, the world's central banks failed to follow that dictum in the boom, and they have been left with the consequences. As President Bush (and he should know) remarked the other day, "Wall Street got drunk... It got drunk and now it's got a hangover. The question is how long will it sober up and not try to do all these fancy financial instruments?"
And they were very fancy indeed, creating a financial alphabet soup; AAA, ABCP, ABS, CDO, CDS, SPV, SIV. If we want to look for a scapegoat we need look no further than the inventor of the CMO – the collateralised mortgage obligation. This was a man named Larry Fink, who worked for First Boston in 1983. Mortgages were transferred to a trust, as they had been before, but were now repackaged to create a range of risk/reward alternatives for investors with varying tastes. Thousands of individual mortgages and repayments of capital and interest were "diced and sliced" until they yielded various returns. So the safest of the bonds thus sliced got first dibs on all cashflows. So unless some extraordinary levels of defaults arose, they would always be safe. Normally, given this background, the credit agencies would bestow upon them a AAA rating, given that they had excellent collateral in the form of American residential property and because of their relatively safe position. But if those bonds were on the top of the hill, the ones at the bottom were not; and because some or all of their capital was at risk, investors in these bonds were offered higher rewards. At a time when the world was undergoing a step change to extremely low interest rates, the prospect of earning more on what was still a supposedly comparatively safe investment – provided the economy kept growing and the house prices carried on rising – was very tempting. It was what the bankers called the "quest for yield" which sounds like Cockney rhyming slang for "greed", which is of course what it was. Yet the risks on these lower-graded bonds were very high; not for nothing were they called "toxic waste". They were sold to the unsophisticated and to the sophisticated alike.
The next mutation inflicted on an unsuspecting residential mortgage involved the terrifyingly difficult sounding "credit default swap". This was another piece of clever financial engineering, and created yet another new financial instrument. It means that, for a fee, a bank or hedge fund will guarantee another bank against any losses on a loan portfolio or mortgage-backed security, say from trouble in the sub-prime market, in return for the fee and the interest income. You can see the problem: when the hedge funds, in particular, went in for these schemes they received excellent one-off income from fees, but the wave of bad debts about to hit the market rendered the stream of interest worthless, because there wasn't any income. The problem was compounded by the fact that the hedge funds borrowed huge sums to carry out this risky business. Hence their failure on 9 August, and a few before, and hence the panic. The value of these credit default swaps went from $1 trillion in 2001 to $45 trillion in mid-2007.
Is the worst over? Maybe, now that the largest possible victims seem to have been saved. Mid-July saw Hank Paulson suffer another weekend without being able to go bird-watching. Instead, the US Treasury secretary, who had been reluctantly wooed by President Bush from his $30m-a-year job running Goldman Sachs in 2006, was engaged in another firefight to save the financial system from meltdown. This time, the crisis of confidence was in Fannie Mae and Freddie Mac, the two companies which own or guarantee almost half of all the mortgages in the US. That's $5.2 trillion of them. Fannie and Freddie had so far admitted mortgage losses of $12bn between them, but it was clear that that figure was heading much higher.
Such is the interconnectedness of the global financial system that almost $1 trillion of Fannie and Freddie's own debt is held by foreign governments, and their collapse would have been unthinkable, turning the US into a financial pariah.
And so it was that Paulson announced that – reluctantly – the Bush administration would do whatever it takes to keep Fannie and Freddie afloat. Taxpayers could lend billions to the two companies, or even buy shares in them, he said. When Republican congressmen threatened to block this "blank cheque", Paulson asked them bluntly: have you got any better ideas?
Feeling the crunch: The winners and losers
Winner: Campsite owner Joanne Bridgen, 48
Camping is definitely "in" at the moment. It's so expensive to go abroad and no one now has got the money to just splash it about: they think about their summer holiday and realise, crikey, that it's going to cost them £2,500 for a week with the family – but here it's a couple of hundred and everyone has a great time. One client told me that he usually takes his family to Tuscany in August but they're not going this year because diesel alone would cost him £600, so he's coming here and saving himself a fortune. He's rebooked for a fortnight. Business is up 15 per cent on last year despite the bad weather and I think it'll keep improving.
We bought our campsite at South Lytchett Manor 18 months ago and invested heavily in the facilities. Campers these days expect the facilities of a four-star hotel and that's what we give them. Our showers and loos are top of the range and spotless; there are professional hairdryers and even fresh flowers. We also invested in TV hook-ups, which has gone down very well with caravanners. We're three miles from Poole and we get all sorts of people, some with a £20 tent and some with top-of-the-range motorhomes but there's no snobbery.
Winner: Regional managing director of Aldi, Graham Hetherington, 39
Our sales are up by 30 per cent on this time last year, and customer numbers are up by the same amount. Half our customers are now from the affluent ABC1 shopper profile, people you'd typically find in Sainsbury's or Waitrose. It's the biggest customer shift away from the big four supermarkets in almost 20 years. It's massive.
You can see more Audis in the car park. But what brings it home it for me is that Aldi trades at its best in the most affluent areas. Our bestselling frozen line is a lamb shank. That's a reflection of the customers that we've got.
More affluent customers also tend to buy more fresh products, so our fruit and veg sales are up 80 per cent. We have about 400 stores in the UK now, but we're going to open a new store a week for the foreseeable future.
We sell our own-label products at a discount of 20 to 30 per cent on what you'd spend in supermarkets. That can save a family £1,000 to £1,500 a year. The crunch makes us an obvious choice.
Loser: Estate agent Charles Peerless, 40
We've increased our stock by 40 per cent, but buyers are down by 50 per cent, and it was particularly tough between March and June this year. Viewings are back up now, but we're still well down on last year. I'm lucky to be in London. I really wouldn't want to be working in Birmingham, Cardiff or Manchester at the moment. There are buyers here, but they're all bombarded by negative publicity and are told they'd be mad to buy now, which I don't agree with. It's harder for buyers to finance themselves, but you can still get mortgages.
Borrowers should never have been being offered 100 per cent mortgages in the way that they were. The interesting thing is that the last time there was this kind of boom, before a bust, 100 per cent mortgages were being offered. When the bust came, everyone said that they wouldn't let it happen again – and yet here we are. I wouldn't be surprised if the same thing didn't happen all over again in 12 years' time. To anyone who lived through the recession of 1990 or 1991, the situation at the moment isn't that bad. Back then, it was just grim.
Loser: Managing director of house builder Berkeley Group, Tony Pidgley, 61
The short answer is this: the credit crunch is there and if you can't get mortgages of course it is going to affect your ability to sell houses. From my point of view, we won't see a recovery in our business until we see a recovery in mortgage availability. Of course it has affected my business. We had lived in a market for 15 years that had hundreds of mortgage products. At the moment you can get a mortgage, but it takes you three months to sort out. So we have got a bottleneck in the process and until it's finished we are in trouble.
Winner: Insolvency solicitor Richard Curtin, 47
I've just got back from holiday and I printed out my emails and the stack was about a foot high. The fall-out from a credit crunch for someone in my line of work is a lot more mortgage fraud cases and bankruptcies. When there's a lot of credit, as there was 18 months ago, people are tempted to overstate their earnings on their mortgage applications in order to borrow more. Then when you have a downturn and interest rates go up, they can't afford their monthly repayments and that's when they get uncovered.
And then there are those who simply feel that they are entitled to a higher standard of living than they actually are. I've seen cases of amazing levels of credit card indebtedness – between £20,000 and £50,000 is not uncommon. So many people bury their heads in the sand, which is a mistake: creditors are much more likely to listen if you deal with them early. I see a lot of sad cases, but it's difficult to have sympathy with some people.
With hindsight, lenders should probably have been more cautious, but it would have been a brave bank that operated a more conservative lending policy at the time. I don't think all the insolvencies have come through yet – we will see a lot more in the second half of September and in the last quarter of this year. There is going to be a lot of pain. A lot of people are going to have a miserable Christmas.
Winner: Mathew Hendon, 28, product manager for an orthopaedic company
I've been saving since I started working and also got some bonuses from my job. I paid off some uni debts, bought a house, did it up a bit and then I was left with a lump sum that I didn't really know what to do with. I was conscious that interest rates are going up, which is pretty painful if you're borrowing, but if you're saving it's really good news.
I went on to moneysupermarket .com and had a look around and found a Cahoot account with Abbey. I ended up with about £5,000 to save, and the interest rate is just over 7 per cent – anything over 7 per cent is good. I had a look at a few applications and picked the one that was easiest as I'm a little bit lazy. I really enjoy skiing, which is pretty expensive, a bit like setting fire to money and throwing it out of a car window, so I might use it for my next skiing holiday. Or, when I'm 30 next year, I might buy myself a present and have a decent party. And there's always my partner – I'm sure she can think of lots of things to do with the money!
Loser: Animal ambulance worker Suzanne Waller, 45
There's been a sharp increase in the number of abandoned dogs here in Halifax. The rescue centres we work with are choc-a-block. Kennels are full to the brim. People can't take in foster dogs because there's no space, and a lot of them have to stay in the pounds. A lot of people don't even hand the dogs over and say, "Sorry, we can't afford them"; they just open the door and let them go. We found one dog tied to a park bench.
We've had to put our prices up just to cover our fuel bills. In November we were paying about £400 per month for fuel. Now it's £700 a month. We've noticed a drop-off in demand since we put up our prices.
Some breeders have stopped breeding because they're getting no requests for puppies. They have to hand their dogs over to rescues because there's no demand for them, even though they're quality dogs.
A lot of people want younger dogs from the rescue centres, but there are a lot of older dogs out there as well. People have had them for years, and all of a sudden they're out on the street.
Keeping a dog can cost as little as £10 a week, but I've got four German shepherds. What with food and insurance, I spend between £150 to £200 per month on them. But if I was struggling for money, the dogs would still get fed before me – and so would my two kids!
Loser: Debtor, Mark, 35
We bought our house on a 100 per cent mortgage. It seemed like the best thing to do at the time. We had just had another baby.
We were also spending on credit cards. We paid for a new car with the cards and juggled payments between them. Things started going wrong for us late last year, when interest rates started going through the roof and we couldn't afford the mortgage payments, plus the credit cards, plus bills and school fees for the kids. It got out of control and we ended up owing £60,000 with no way of paying it off.
We've had to sell the house and we've learnt our lesson – we won't borrow that much on credit again.
Winner: First-time buyer with large deposit Tim Fuller, 27
I had an offer accepted on a two-bedroom flat in a Victorian conversion house for £245,000 earlier this year. Normally I would have expected to pay a lot more. It was on the market for £260,000. The news about the credit crunch influenced me to go out and get somewhere and to push for something for a better price. At the time I was looking there were lots of places on the market and many of them are still on the market now. I am obviously really happy about how it worked out. But I had £50,000 saved up for the deposit, which allowed me to meet the conditions of the mortgage lender.
Crunch in numbers
33 - Percentage rise in the price of eggs since August 2007
9 - Percentage fall in British house prices since their peak last year
15 - Percentage rise in bookings at Butlins in Skegness
1974 - The last year that consumer confidence was this low
150,000,000,000,000 - The approximate size of the global securities market (in dollars)
36 - Percentage rise in plastic lunch box sales at Sainsbury's
42M - The approximate pay-off (in dollars) given to former Citigroup boss Charles 'Chuck' Prince
1 billion- The amount (in pounds) withdrawn from Northern Rock on 14 September 2007
19,200 - Estimated number of City job losses this year and next
9,152 - Number of house repossessions in first half of the year
70 - Percentage decline in new mortgages approved since 2007
9.94M - Loss (in pounds) made by organic supermarket Whole Foods in its first year of trading in the UK
19,200 - Estimated number of City job losses this year and next
2,735 - Mentions of the word "recession" in British newspapers during the last month
93.6 - Percentage decline in the value of Bradford & Bingley shares, peak to trough
9,000 billion - Equity withdrawn (in dollars) by Americans from the value of their homes, 1997-2007
1 - Number of British bank bosses to have lost their jobs because of the credit crunch
38 - Percentage rise in sales of camping equipment
30 - Percentage jump in profits for Aldi
25 - Percentage rise in tent salesover the last year, according to outdoor specialists Tiso
2,000,000 - More McDonalds meals a month being sold in the UK compared with last year
600 - Number of Starbucks branches set to close in America this year
4.5 - Fall in food sales for upmarket food retailer Marks & Spencer
13,500 - Loss in value of the average British home