Monday, Apr 30, 2007
Aha!
BBC News: Dirty money exploits housing boom
I know that the British house buying public could not be so stupid as to chase up the prices of property and not realise what was happening. Criminal gangs have been contributing to excess housing demand in order to launder the proceeds of their crimes.
Posted by royston @ 07:36 AM (39 views) Add Comment
9 Comments
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1. royston said...
typo, should have read: "I KNEW that the British house buying public.........."
2. dobber said...
"New-build properties in the UK, for instance, have been at the heart of the housing boom - but valuations are difficult, and rapid resales are far from uncommon.
The perfect cover, some experts fear, for the aspiring fraudster... "
Oh I see Royston, its the £200k 2 bed boxes in the sky at the very heart of this one then?
3. paul said...
This is the perfect cover for saying that the impending unravelling of the housing market is due to a corrupt minority rather than dodgy lending practices resulting in runaway credit expansion. Oh and the BBC themselves talking up the market and in the process talking up their own interests - which of course is called corruption if a stockbroker does it. Why isn't it corruption what the state sponsored media does it?
4. confused76 said...
Paul
Whatever can unravel the housing market ... crooks, polonium drinks, corrupt lenders,... I don t care, as long as it happens soon!!
5. dohousescrashinthewoods said...
A component of the US boom/bust was fraud too.
A colleague of mine is quite direct about the fact that London's uber-priced Kensington and Chelsea is about money laundering.
6. harold said...
Royston, I'm with Paul on this one in that it is unlikely that the level of fraud has had a significant effect on overall prices. For that to have been the case the level of money laundering through property would have to be in the tens of billions. I'm not saying it's impossible, but unlikely (but maybe I'm being naive). The fraudsters have exploited the bubble, but did not create it. But of course when things do go pear-shaped, lame excuses will be wheeled out (by the BBC and others) in order to divert attention away from the real culprits...
7. Sam said...
guys, am sure the earthquake in kent is going to have it's effect on the market. -- am sure no-one is now planning on buying there in the next few months. -- even surveys done last week will now be invalid.
8. Scott said...
Harold and Paul, Royston is partly correct. Not nationally, but specific areas in London had had massive price increases due to the profits made from money laundering in our 2bn pound finance industry, and the only people who can afford to live in Kensington, Belgravia and Chelsea, are the culprits themselves, such as the Russian Oligarchs/mafia. They don't call Belgravia Londongrad for nothing.
9. royston said...
Excessive credit expansion drove demand way beyond the level at which we could build houses! Excess drives prices up. However, bubble frenzy, the belief that "if I don't buy now, I will have to pay more later", then kicked in, driving prices even higher. I wholeheartedly accept that argument. I am simply arguing that criminal money laundering added to the mix.
As for "the BoE did it", I don't disagree. However, the BoE is the establishment. Absent a revolution, the establishment don't get called to account. We are nowhere having a revolution right now, so there is nothing to gained by pushing that story.
I hope the money laundering story gets wider coverage in the media and that it gives Joe Public some pause for taught about what is happening to his house prices - and, ultimately, stop him buying. In my view, "it's a criminal conspiracy" has a greater hope of doing that than "the Bank of England are incompetent", even if the latter is nearer the truth.
Finally, Harold: "The fraudsters have exploited the bubble, but did not create it."
- Everybody who has purchased property contributed to the creation of bubble. It is not possible to exploit it without contributing to it. In fact, I would even go so far as to suggest a new word - "expl-eation" - to describe their exploitation/creation effect. ( - then again, perhaps not!). Also, it wouldn't require the tens of billions you suggest - prices are driven by the small part of a market that is actually traded - not by the whole market. Increasing the amount of money chasing the small number of houses for sale at a particular instant can have a hugely disproportionate impact on price.