Monday, Oct 15, 2007
Wobble, Wobble at the top of the Bubble?
Financial Times: Reflection of reality? Fears are growing for the durability of Britain’s record house price boom
In the last Big crash unemployment doubled in 1990-92 from 1.5m to 3m and in 1991, one in 130 people lost their home. The big difference between then and now, however, is supposedly low inflation. In the 1980s it was out of control and, within the space of a year, the government had doubled interest rates from 7.5 per cent to 15 per cent after inflation almost trebled from 3.4 per cent in 1986 to 9.5 per cent in 1990.
Many juicy bits of info in the second half of the article.
Posted by enuii @ 10:59 PM (898 views) Add Comment
10 Comments
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1. Cheekie Charlie said...
Ah but we don't have real inflation any more we have CPI.
2. Cheekie Charlie said...
“I am worried that the collapse of home prices might turn out to be the most severe since the Great Depression,” says Robert Shiller, economics professor at Yale University and co-developer of the Case-Shiller index.If anything, the British market arguably appears more vulnerable than in the US to a sharp fall."
Gorden is a moron, Gordon is a moron, Gordon is a moron, Gordon is a moron!!!!
3. taffee said...
noted that mortgages used to be in the inflation basket, so how manipulated is it now?
All I know is that living costs are through the roof and general number of direct debits per household is probably double what they used to be.
People have been remortgaging to live??????
The current rate of inflation is thought to be about 4.8%
4. This comment has been removed as it was found to be in breach of our Blog Policies.
5. David said...
Just shows that markets are driven by greed on the way up and fear on the way down. Nobody cares about the underlying value of an asset if they think they can sell it at a profit quickly afterwards hence we are in the position we are now. Conversley nobody cares about whether the market will stabilise on the way down, all they want is out, which like a run on the bank causes prices to fall further as more people pile out.
I actually wonder if there really is a shortage of properties or whether it is a shortage of properties to buy, but whether we are at the top of the market is debatable, prices could yet rise further. When the drop does start I think this one will be particualrly bloody. In the mean time we sit back and watch our young priced out of the market move abroad to start families - 200,000 indiginous Brits went last year - a record apparently. Australia and New Zealand seem to be solving their demographic problems with our children!.
When the downturn happens, will all the economic migrants stay around to pay for the elderly British. I think the government should start thinking beyond the next election and start thinking long term. Any politician who can do that gets my vote!
6. The Baldman said...
When everyone wakes up to the fact that the CPI is just an index cynically exploited by crash Gordan perhaps the truth about inflation will come out.
7. tyrellcorporation said...
Astonishing graph showing the divergence of prices for London and the rest of the country after years of parity. London IS now a seperate state in all but name.
8. inbreda said...
What was the low to which interest rates recently went? 3.5% was it? so to double that to 7% still leaves them below the long term average by a long way. They don't have to raise much more to have doubled IRs just like they did in the 80's. The only difference this time is that people are MUCH more in debt and will suffer MUCH MUCH more if their mortgage interest payments doubled.
And with oil continuing upwards and inflationary pressure from China on the way, I am certain that interest raetes are headed up only. But just to be on the safe side I have sold GBP against currencies such as asian: THB and SGD, CHF as their economies are based less on debt than any others.
9. inbreda said...
Oh - and good comments david. I can only assume you are not the same David as David_2004?
10. dbnazz1 said...
The bald man.
you are spot on! You have it in one, the great inflation con-trick. I have posted many comments on what I feel is the great INFLATION CON-TRICK. I have over the past few weeks
been communicating with several of the large unions to find out there position on whether they feel that inflation in reality is far higher than what is being reported. Such unions have quite strong feelings on this subject and it seems that major industrial action is loomimg. I will hopefully be in a position to report back the actual comments from the unions. Labour are starting to loose the support of there traditional supporter.