Sunday, February 10, 2008
When the sunday papers predict a crash you know it is going to happen
We all know there are no fundamentals underpinning UK house prices, just psychology and greed."growing evidence that UK housing market is already slowing sharply. Prices have slipped for 3 consecutive months and repossessions were already at a 14-year high in 2007. In the US, early in 2007, analysts were puzzled that the fallout from sliding prices did not appear to be hitting consumer spending or jobs, and Ben Bernanke remarked in the spring that he thought the problem was 'largely contained'. Less than 6 months later mortgage defaults sparked a financial crisis; by the end of the year, joblessness was rising. In other words, a housing market downturn can itself sow the seeds of a broader economic downturn - especially if it has been pepped up by an outbreak of profligate lending"