Wednesday, Aug 18, 2010
Enormous monetary and fiscal stimulus seen as temporary fix
FT: House price figures spark concern
Fund managers have expressed concerns about a continuing weakening of UK economic data following the latest publication of house price figures from the Royal Instititution of Chartered Surveyors (Rics). Mike Riddell, fixed income manager at M&G Investments, warned concerns still persisted that monetary and fiscal stimulus measures had only served to halt the decline in house prices, adding a further fall could place a strain on the banking sector.....Mr Riddell said while this did not suggest the housing market was "about to fall off a cliff", there was still reason to be worried given that the economic slowdown in the US in recent months no longer appeared to be contained to the US alone.
Posted by jack c @ 07:53 PM (1496 views) Add Comment
6 Comments
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1. paul said...
Enormous amounts of taxpayers' cash being a temporary fix won't stop the Bank of England doing it again and again and again until we are neck deep in hyperinflation.
Watch this carefully - if the Bank starts talking about more queasing, we'll have double digit inflation by the end of the year and the Bank of England will continue to be 'surprised'.
"A weaker housing market is often associated with a rise in unemployment so this is likely to exacerbate any impact of public sector layoffs."
No - that's quite clearly a muddling of cause and effect. Falling house prices don't cause unemployment.
2. Crunchy said...
1. paul said...No - that's quite clearly a muddling of cause and effect. Falling house prices don't cause unemployment.
Perhaps you need to look at it this way paul. Falling house prices=bank credit tightening=business undercapitalisation=contraction=
layoffs=unemployment=falling house prices.
Too many ways to slice and dice a cheesy loop.
3. peter said...
Always amusing in these sorts of mainstream articles that there are 'fears' of house prices returning to sain levels.
Needless to say the BoE will do its best to stop this correction.
4. general congreve said...
I've got good money on these idiots throwing the kitchen sink at this 'problem'. Quease away Merv!!!
5. Umaguma said...
Government seem convinced they can hold property prices up by keeping money cheap, reminds me of king Canute.
6. nod2glod said...
Paul - is that double digit CPI, RPI or the real rate of inflation. There are so many things linked to both the CPI and RPI the government has a huge VI and massaging the stats down. The real rate of inflation, i.e. what it cost the liked og you and i to live is already cost to double digits. With the 20% VAT rise in the new year, we won't need any more official queasing (oh i like that one btw, is it yours) to get to double digits.
There will be more squeeze to house affordability irrespective of what prices do. The bond market yeilds are falling towards 0, which is mirroring what happened in 2008, which might be signalling another credit crunch in the banking sector as banks are hoarding cash due to deflationary fears.
The majority of people on this site have a VI in HPC, myself included. But i think everyone who actually takes some time to look at the fundamentals and think for themselves knows thats there is something rotten in the UK housing market, whether it agrees with they VI or not. I believe the market will tank significantly during this winter with negligible bounce next spring. It's coming to a street near you !