Carney Says House Price Boom Is 'manageable'

[cool_hand]

http://www.bbc.co.uk/news/business-25423838

Carney says house price boom is 'manageable'

Any potential bubble in the UK housing market is "manageable" according to Bank of England governor Mark Carney.

He said the bank is acting in a "graduated and proportionate way" to stop the housing market getting out of control.

He told the Lords Economic Affairs Committee that the strength of the recovery has exceeded expectations.

The UK economy grew 0.8% in the third quarter, and business surveys see further growth in the fourth quarter.

Mr Carney sought to reassure members of the committee about the housing market, as prices continue to rise not just in London but in many parts of the UK.

"In its most recent Financial Stability Report the FPC (Financial Policy Committee) paid particular attention to the risks posed by the recovery in the UK housing market. These risks are manageable and are being managed," he said.

Recent economic growth means that "barring further shocks" there was no prospect of further quantitative easing, he said.

Debt concern

However, he warned that unless the public and private debt situation in the UK improved, and unless an economic recovery in Europe took hold, then the recovery may be less robust than the current growth rate suggests.

Mr Carney defended his policy of forward guidance - a promise not to consider raising interest rates until the unemployment rate has reached 7%.

"My experience, having met more than 300 businesses around the country, is that business people understand forward guidance well," said Mr Carney.

Earlier this month the governor said that he was concerned about "potential developments" in the UK housing market.

'Warp speed'

In a recent speech made in New York, he said the Bank could change mortgage rules to prevent the housing market getting out of control.

"There is a history of things shifting in the UK and the housing market of moving from stall speed to warp speed and underwriting standards slipping. So we want to avoid that," Mr Carney said.

In his testimony on Tuesday to the Lords Economic Affairs Committee, Mr Carney questioned the economist Larry Summers' theory of 'secular stagnation in the economies of the developed world.

He said there needs to be a "degree of scepticism" when applying Summers' theory of a possible reduction in the capacity of the UK economy.

BBC have sneaked this one in this evening, is this some final admission that we are in a housing bubble in London/South East?

Why the hell have the TPTB thrown props at the market when they clearly are not needed?

[zugzwang]

Seems so much less threatening when you use the word 'boom' rather than 'bubble'.

[Bloo Loo]

There is only one way the prices will get out of control...lending.

So, what is he doing to control it?

Diddly.

And the implied threat....interest rate rises

[Shotoflight]

Old Irish proverb:

"It's no good sticking your finger up your b*m once you've sh*t yourself."

I know this to be true.

[TheCountOfNowhere]

Managing house prices, read as , price fixing.

They are trying lo price fix the most expensive thing most people ever buy.

Shameful.

Edited December 17, 2013 by TheCountOfNowhere

[erat_forte]

So, what is he doing to control it?

He's managing it, didn't you read? He's managing it and is very happy with the results presumably. Net transfer of money and resources from ordinary people to rich people.

[TheCountOfNowhere]

Who voted for him?

[giesahoose]

Why are they now acting as though the price just now is the natural non bubble starting point and everything should be based on movements from here?

I would say this is the most bubbled peaky point in history. Zero percent interest rates, subsidised deposits etc etc.

[Dorkins]

Who voted for him?

Osborne.

[Wurzel Of Highbridge]

Why are they now acting as though the price just now is the natural non bubble starting point and everything should be based on movements from here?

I would say this is the most bubbled peaky point in history. Zero percent interest rates, subsidised deposits etc etc.

They will look back and say that they did dot see it [coming].

[cybernoid]

Why are they now acting as though the price just now is the natural non bubble starting point and everything should be based on movements from here?

I would say this is the most bubbled peaky point in history. Zero percent interest rates, subsidised deposits etc etc.

They keep talking about a bubble as a future possible event and not something we are in currently. It is an outright lie. Every time they speak they lie. Why does no journalist point out blatant lying? It is sinister how they use this meme to cover the truth. It is disgusting. Why does no-one identify the blatant lies?

Edited December 17, 2013 by cybernoid

[wonderpup]

We seem to have slipped into an ersatz form of socialism in which price controls are to be deployed as a means to manipulate asset bubbles - but any attempt to apply the same logic to energy prices is met with howls of outrage from the right.

What's being claimed here is that the Central Bank is both willing and able to manipulate the price of houses- but even if they could- no one seems to ever raise the question if they should?

What the f*ck is the Central bank doing in the real estate business?

[billybong]

Apparently the new power that Carney has to take action on house prices is as a result of an eu directive that comes into effect in the UK via UK law in January 2014 - so very soon.

To prevent risk to the financial system from UK sectors of business including residential property.

Maybe he's just trying to convince himself because there's a chance that if the areas of UK housing that are in a bubble aren't brought under control then the eu might start asking for explanations why not.

There must be a more professional approach to deciding whether the house price bubble is a risk to the financial system than just a bald statement saying something like "it's manageable". That's more or less what they were saying before the economic collapse in 2007.

Edited December 18, 2013 by billybong

[honkydonkey]

This is my Britain as much as it is to any one of these corrupted govenment sell outs, probably more so, and I will never sit back and watch my country be completley destroyed.

That's an interesting statement to make, as I feel it's very easy to say these things but I doubt you're doing a single thing to change the system.

I moved countries because I don't want to support the system in any way. I think the native population will end up with the country they deserve due to their inaction.

[zugzwang]

Why are they now acting as though the price just now is the natural non bubble starting point and everything should be based on movements from here?

I would say this is the most bubbled peaky point in history. Zero percent interest rates, subsidised deposits etc etc.

Because the central bankers have painted themselves into a corner. The trillions they borrowed and printed (in the US and UK) were supposed to re-inflate the world economy - via the mythical Money Multiplier and trickle down - while at the same time allowing the financial mafia, businesses and households to quietly run off their debts and de-leverage. Professor Bernanke testified more than once before Congress in 2009 that this would happen. Professor Krugman editorialised even more frequently in the pages of the New York Times about the dangers of not letting it happen.

But the thing is - in practice - it didn't happen. The system didn't re-set. Five years of pumping free money to banks and leveraged speculators and the US economy has barely managed 1.5% GDP growth p.a. Five years of unprecedented sovereign debt creation and still only 47% of Americans have full-time jobs. Aggregate debt is at an all-time high. Asset prices are at or near their all-time highs because the top 7% held onto their unearned and undeserved QE winnings and reinvested them in, guess what? Stocks and houses!

So, Plan A failed abjectly. Debt substitution doesn't work. ZIRP and QE undermine capital formation and let the rich get richer while robbing the rest of us. We should have known, didn't the Japanese spend the last 20+ years demonstrating the fallacy.

So what's left to fall back on? Is there a Plan B? Perhaps we can facilitate some private debt creation again, create some growth however modest while attempting to unwind the odious ZIRP and QE?

Another sub-prime housing bubble it is then. But just don't call it that. Even in private.

[workingpoor]

That's an interesting statement to make, as I feel it's very easy to say these things but I doubt you're doing a single thing to change the system.

I moved countries because I don't want to support the system in any way. I think the native population will end up with the country they deserve due to their inaction.

thats exactly it, i used to think like john 1978 but ive come to realise everybody just wants someone else to do it for them whilst not being willing to stand up themselves.

Edited December 18, 2013 by Bringingitdown

[Bloo Loo]

Because the central bankers have painted themselves into a corner. The trillions they borrowed and printed (in the US and UK) were supposed to re-inflate the world economy - via the mythical Money Multiplier and trickle down - while at the same time allowing the financial mafia, businesses and households to quietly run off their debts and de-leverage. Professor Bernanke testified more than once before Congress in 2009 that this would happen. Professor Krugman editorialised even more frequently in the pages of the New York Times about the dangers of not letting it happen.

But the thing is - in practice - it didn't happen. The system didn't re-set. Five years of pumping free money to banks and leveraged speculators and the US economy has barely managed 1.5% GDP growth p.a. Five years of unprecedented sovereign debt creation and still only 47% of Americans have full-time jobs. Aggregate debt is at an all-time high. Asset prices are at or near their all-time highs because the top 7% held onto their unearned and undeserved QE winnings and reinvested them in, guess what? Stocks and houses!

So, Plan A failed abjectly. Debt substitution doesn't work. ZIRP and QE undermine capital formation and let the rich get richer while robbing the rest of us. We should have known, didn't the Japanese spend the last 20+ years demonstrating the fallacy.

So what's left to fall back on? Is there a Plan B? Perhaps we can facilitate some private debt creation again, create some growth however modest while attempting to unwind the odious ZIRP and QE?

Another sub-prime housing bubble it is then. But just don't call it that. Even in private.

Plan A failed because in a debt based system, the tokens you hold have to have a debt (value) behind them.

Printing disguised as QE simply dilutes the debt out there amongst existing value...it doesnt ever add value.

However, like any emission of valueless tokens, the first holders get rich as they cash in before the rest can do so...look at the BTC millionaires....cashed out and got rich...but, there never was anything behind that wealth...it came from those who bought in later....they lost, the early guys won...society gains nothing...nada..zilch.

Edited December 18, 2013 by Bloo Loo

[repetitive bleats]

Since John Major was booted out by slimey Tony Blair the UK has been sold out to anyone in the world who wants a bit of us.

As much as I despise Blair and specifically New Labour I have to point out that this statement suffers from selective amnesia at best. There is a very good reason why all our utility companies and housing stock are owned by anyone in the world that wants a bit of us and it happened before Major's tenure. But don't let facts get in the way of your predetermined 'blame it on the immigrants who are ruining England for the mythical indigenous English' narrative.

Edited December 18, 2013 by repetitive bleats