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Roger Bootle Calling A Crash, Again

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http://www.telegraph.co.uk/finance/comment/11779241/Investors-in-the-property-bonanza-may-have-to-find-room-for-regret.html

s interest rates rise, prices are going to come under pressure. If the rise in rates is modest and gradual, and it occurs against the backdrop of a strong economy, low unemployment, and rising incomes, then all this may mean simply a period of sogginess in the market.

But these happy preconditions may not be met. In that event, the market may suffer a more dramatic adjustment

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You know my thoughts on this.

Bootle is #turningidiotic

Except for the part about falling HPs. Rates don't need to rise for this. #turningjapanese

Edited by Killer Bunny

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prices are going to come under pressure. If the rise in rates is modest and gradual, and it occurs against the backdrop of a strong economy, low unemployment, and rising incomes, then all this may mean simply a period of sogginess in the market.

They would come under pressure, but rates aren't going to rise. The BoE pretend they have the choice. It's like someone pretending to be interested in the wine list when they can't afford anything on it. It's for show. If our economy was strong, why are we borrowing £100Bn a year? Why can't we raise that money ourselves? If you saw your neighbour racking up debts rather than paying them back, would you think his career was "strong"?

Edited by canbuywontbuy

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Bootle is #turningidiotic

:lol:

Still, this quote from the article is a nice turn of phrase; "But believers in “ladders” should beware of snakes. It has frequently been argued that the extended period of ultra-low interest rates has created damaging distortions in the economy. The greatest of these distortions is likely to have been in the housing market."

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:lol:

Still, this quote from the article is a nice turn of phrase; "But believers in “ladders” should beware of snakes. It has frequently been argued that the extended period of ultra-low interest rates has created damaging distortions in the economy. The greatest of these distortions is likely to have been in the housing market."

One of the best measures of inflation in the US, the BLS Producer Prices Index for Finished Consumer Goods, has been above the Fed's 2% target for 19 consecutive months. In July it rose by +2.9%. This would have been much higher had an input of actual house prices and rents been employed rather than OER (Owners Equivalent Rent), an imputed measure designed to suppress CPI (as is the case in the UK). The Fed is miles behind the curve. US house prices have been growing 6% annually for the last three years not ~1.5%; and market rents at 4-5%, typically, but much faster in many cities. Eventually, OER will start to heat up, reflecting the true state of the US housing market. When it does that might make uncomfortable reading for the occupants of the Eccles Building.

Sufficient justification for a rate hike?

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