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Sweden Take Pre-Emptive Strike Vs. Emerging H P I

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http://www.bloomberg.com/news/2010-12-28/sweden-shows-central-bankers-how-to-fight-against-next-asset-price-bubble.html

Sweden Shows Central Bankers How to Fight Next Asset Bubble
By Kati "Katey" Pohjanpalo - Dec 28, 2010 11:01 PM GMT
..../
Riksbank Governor Stefan Ingves has raised the repo rate four times since July even as inflation remains below the bank’s 2 percent target. The increases occurred as house prices move above pre-crisis levels and credit growth hovers near 9 percent. While Sweden raises rates, the U.S., the euro region, Japan and the U.K. are keeping borrowing costs at record lows.
The financial crisis that started more than two years ago was exacerbated by central banks holding rates too low as inflation gauges failed to capture asset-price growth, according to Johnny Akerholm, president of the Helsinki-based Nordic Investment Bank. He says most policy makers are repeating the mistake..../
House prices, by contrast, rose for a 19th consecutive month in the quarter through November, gaining at an annual rate of 5 percent. The Riksbank, which raised its repo rate to 1.25 percent on Dec. 15, said then higher rates are needed to slow credit growth.

I would imagine the Swedes would regard Merv's "vigilance" as causing many problems down the road with inflation. Taking action is the required medicine, not vigilance.*

_____________________

*Vij-ee-lunce, lat. vigilantio....watching with intense interest.

Edited by Realistbear

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http://www.bloomberg.com/news/2010-12-28/sweden-shows-central-bankers-how-to-fight-against-next-asset-price-bubble.html

Sweden Shows Central Bankers How to Fight Next Asset Bubble
By Kati "Katey" Pohjanpalo - Dec 28, 2010 11:01 PM GMT
..../
Riksbank Governor Stefan Ingves has raised the repo rate four times since July even as inflation remains below the bank’s 2 percent target. The increases occurred as house prices move above pre-crisis levels and credit growth hovers near 9 percent. While Sweden raises rates, the U.S., the euro region, Japan and the U.K. are keeping borrowing costs at record lows.
The financial crisis that started more than two years ago was exacerbated by central banks holding rates too low as inflation gauges failed to capture asset-price growth, according to Johnny Akerholm, president of the Helsinki-based Nordic Investment Bank. He says most policy makers are repeating the mistake..../
House prices, by contrast, rose for a 19th consecutive month in the quarter through November, gaining at an annual rate of 5 percent. The Riksbank, which raised its repo rate to 1.25 percent on Dec. 15, said then higher rates are needed to slow credit growth.

I would imagine the Swedes would regard Merv's "vigilance" as causing many problems down the road with inflation. Taking action is the required medicine, not vigilance.*

_____________________

*Vij-ee-lunce, lat. vigilantio....watching with intense interest.

Yes and no. The media are talking about it, just read today in one of the (albeit) more tabloidy newspapers that the housing market is 40% overinflated :) Imagine reading that in the UK in the MSM.

The vice chancellor of the swedish Riksbank said "there is no housing bubble". But there definitely is and it has alread been fuelled by the last years of low interest rates. There definitely has been a bubble. The funny thing about Sweden is that they've been running a budget surplus of 2% in the good times. It's quite funny how a few years in England has completely made common sense strategies seem impossibly genius-like. How about that eh, running a balanced budget, even a surplus! Christ.

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http://www.bloomberg.com/news/2010-12-28/sweden-shows-central-bankers-how-to-fight-against-next-asset-price-bubble.html

Sweden Shows Central Bankers How to Fight Next Asset Bubble
By Kati "Katey" Pohjanpalo - Dec 28, 2010 11:01 PM GMT
..../
Riksbank Governor Stefan Ingves has raised the repo rate four times since July even as inflation remains below the bank’s 2 percent target. The increases occurred as house prices move above pre-crisis levels and credit growth hovers near 9 percent. While Sweden raises rates, the U.S., the euro region, Japan and the U.K. are keeping borrowing costs at record lows.
The financial crisis that started more than two years ago was exacerbated by central banks holding rates too low as inflation gauges failed to capture asset-price growth, according to Johnny Akerholm, president of the Helsinki-based Nordic Investment Bank. He says most policy makers are repeating the mistake..../
House prices, by contrast, rose for a 19th consecutive month in the quarter through November, gaining at an annual rate of 5 percent. The Riksbank, which raised its repo rate to 1.25 percent on Dec. 15, said then higher rates are needed to slow credit growth.

I would imagine the Swedes would regard Merv's "vigilance" as causing many problems down the road with inflation. Taking action is the required medicine, not vigilance.*

_____________________

*Vij-ee-lunce, lat. vigilantio....watching with intense interest.

I like the smell of good governance in the morning. :)

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Riksbank Governor Stefan Ingves has raised the repo rate four times since July even as inflation remains below the bank’s 2 percent target.

Whee!

Looks like a central banker who can tell the difference between inflation and a price index!

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Whee!

Looks like a central banker who can tell the difference between inflation and a price index!

Yes, the Swedes understand what proactive response is. Merv and our medical system is based on a reactive system.

Our Muppets need to go back and study the basics such as a stitch in time saves nine........

But in reality, they know what they are doing--they are trying to protect house prices because it is our major industry. 70% of what we do is based on HPI.

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Yes, the Swedes understand what proactive response is. Merv and our medical system is based on a reactive system.

Our Muppets need to go back and study the basics such as a stitch in time saves nine........

But in reality, they know what they are doing--they are trying to protect house prices because it is our major industry. 70% of what we do is based on HPI.

To be fair to Mervyn he did oppose Brown's switching of the inflation index in Dec 2003 (1 of the 3 main roots of the bubble, along with weak FSA regulation and planning blockages), and Mervyn even went public with his opposition. But I think he should have opposed it much more strongly, and even threatened to resign. And if even that hadn't stopped Brown's political/electoral tampering (with his eye on the 2005 GElection, preventing the BoE from raising IRs in 2004) then Mervyn should have resigned.

Anyone with even a basic knowledge of economics knew then that the switch was in effect a tampering with the inflation index/target and that the seeds of serious future problems were being sown by Brown the B@stard.

Edited by Tired of Waiting

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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