Tag Archives: housing bubble

Housing wealth soars while productivity lags

A century ago, the roaring ’20s were a time of hedonistic excess. After the horror of World War I, people wanted to rebuild, but also to forget. Wealth increased, and so did prices.

While we like to think we are smarter, or at least more knowledgeable than 100 years ago, there are worrying similarities between the two periods. If anything, the excesses this time around are much greater.

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Why the ECB is in no hurry to fight inflation

The euro has lost a lot of ground versus other major currencies as the European Central Bank (ECB) is taking a very dovish stance even compared to the usually dovish Bank of England.

As expected, a German has the difficult task of being a lone hawk amid doves: Isabel Schnabel, member of the ECB’s Governing Board, recently warned that the central bank has consistently been wrong in its inflation forecasts.  

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Why inflation does not bother Boris Johnson too much

After Brexit, the UK seems to be jumping randomly from one crisis to the next, and the government seems strangely unperturbed by the general distress.

Partly, this can be attributed to the politicians’ own failure to learn. Prime Minister Boris Johnson has proven again and again that he is prone to repeating past mistakes — the way he handled the multiple lockdowns in the Covid-19 crisis is the best example of this.

But what if at least part of it is deliberate? There could be a couple of reasons for which crises suit Johnson and his government very well, at least for a while.

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Consumer price inflation or house price inflation? UK has to choose

The perfect storm is brewing for UK inflation. Boris Johnson and his government will not admit it, but their choice of a hard Brexit will exacerbate price rises, on top of the effects of the Covid-19 pandemic.

This could put the Bank of England in the unenviable position of having to choose which bubble to burst: consumer prices, or house prices.

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House prices are becoming red hot, and this is scary

House price growth is accelerating in the UK and the rest of Europe, but it is far from healthy growth. The consequences of lax rules on lending to house buyers could be devastating.

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Mortgage guarantee could sow the seeds of trouble

The UK government awarded hard-working medical staff a meagre 1% pay rise in the most recent budget, all the while splashing out on yet another indirect subsidy for house prices: the mortgage guarantee.

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The UK should stop subsidising house prices post-Brexit

Forget Covid-19 and Brexit. The question to which most people in the UK would want an uncertain answer is what will happen to house prices in 2021.

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Subsidise workers, not property speculators

UK chancellor Rishi Sunak seems to be trying to build for himself the image of a man who is not afraid to “tell it like it is” when the situation requires it. But his actions show that he is prepared to sacrifice long-term economic development for a short-term boost for his Conservative party.

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China cannot afford to stop housing speculation just yet

When he finishes negotiating his “deal” with China, US President Donald Trump will probably try to take credit for the country’s shrinking current account surplus with the rest of the world.

However, the fact that China’s exports are slowing is not a new phenomenon, and it is not necessarily a reason to celebrate.

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The safety of housing as an investment is about to be tested

The price growth of an “asset” into which investors everywhere around the globe have poured billions since the financial crisis has slowed dramatically, and this should worry policymakers.

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