September 30, 2006

Now they're starting to get it over here - Telegraph UK: US housing crash could bring UK down with it


Not sure what took 'em so long, but the UKMSM is now putting the pieces together. Next step is for the housing-ponzi-scheme-obsessed-real-estate-never-goes-down UK "investor" crowd to get it too. That subtle change in psychology where doubt and then fear enters their minds, and the realisation that they need to 1) stop investing and 2) get out at the peak.

My 1-bedroom London flat would list for $1.2 million. I'd say it's fair value is around $350,000. You know the drill.

Here's the Telegraph article, a good first step, but the writer still doesn't understand it's not just the slowing economy that'll crush the UK - it's the end of the UK housing ponzi scheme, bigger than the US bubble, combined with the slowing economy, that'll bring the country to its knees.

If you'd like to help the author get it, you can contact him here (edmund.conway@telegraph.co.uk)

US housing crash could bring UK down with it
By Edmund Conway, Economics Editor

Peter Warburton, who runs a small consultancy called Economic Perspectives, believes that the UK will slump into a full-blown recession next year, shrinking by some 0.3pc over the 12 months. This would be the worst economic performance since 1991, the last recession, which came amid Britain's ignominious ejection from the European Exchange Rate Mechanism.

Mr Warburton - a member of the Shadow Monetary Policy Committee - warns that the UK will be badly hit by a US housing market crash.

He says: "There is an increasingly large possibility of a scenario where, frankly, economic activity could fall quite materially. In short, I do not believe that the UK has become a more stable economy."

His thesis is that for the past decade, despite its stable growth rate and low inflation, the UK economy has been brewing up potential problems. These include the record level of debt taken on by the household sector, a similarly large jump in government borrowing and a fall in manufacturing output. If, as many experts predict, the US suffers a housing market collapse next year, this could trigger an even more dramatic downturn in the UK.

13 comments:

Anonymous said...

Home sales are starting to move up - YOU LOSE. GET OVER IT.

keith said...

man realtors are funny. sad, but funny.

Anonymous said...

Well Duhh! UK housing market is ready for a real pounding! basically no industry over there except the city and that gets helped with bond markets and international placements, guess what happens to all that when the game of pass the parcel in re-packaged mortgages finishes. If I'm not mistaken most mortgages there are ARM's linked to short term rates. No mercy for the FB's when it comes. Ireland same deal (prices already falling there) and Spain has a building bubble that would make your nose bleed! Only countries without bubble prices are Germany, Italy and maybe France (but prices there have run up fast in last 5 years). Think about it Euro economy depends on an increase in German optimism and a huge restructuring in Italy's completely F**ked economy. in the game of "find the biggest shit-show" its a tough call.

Anonymous said...

the silly part is "blaming it on the US." If I remember the quoted number correctly, approximately 50% of the real estate in London is owned by "oil rich arabs" because they need a place to invest their money. the more I think about that number, the more I start seeing why the mideast is in the middle of a war-- we're trying to restore an economic balance. we like their spicket of oil and they like our spicket of money. the problem is: what is the US and London a spicket for? marketing? wal-mart? hmos?

Anonymous said...

It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a £15,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

keith said...

had a nice chat with a brit who recently got out at the peak and is now bubblesitting

why did he sell? because he figured out rents were detached from ownership costs

bravo!

speedingpullet said...

What part of London do you live in Keith?

I'm in the process of selling my mums flat (probate sale) in Putney, and I'd be interested to hear about whats happening in other parts.

Anonymous said...

Long Live Benny!

LARenter said...

Man, I Loved that show!

Anonymous said...

Benny Hills' take on Bizet's opera Carmen, IMO, the pinnacle of British comedy.

haggis said...

Well, we've sold our London home.

And you wouldn't believe the stick (for Yanks substitute sh*t) we've received. The average London property sits at 6.5X the average salary and we were informed in earnest that we were stupid because the papers were predicting a 40% rise over the next four or five years.

Which to my calculations would give you the option - after paying your mortgage - of being naked and hungry. Or, eating & being clothed but not paying your taxes.

I was there for a month and I didn't dare make any comment about this rather difficult set of maths. Seriously, the mere mention of property even staying static resulted in a verbal beating I'm just not used to.

And I'm a guy who helps developers do the initial pro-forma for massive projects? And I'm slagged off like a complete idiot.

Which may be justified for other aspects of my life...

Cheers.

Anonymous said...

Fred Scuttle, where are you when we need you?

Anonymous said...

hopefully, my ex-wife's would-be assclown sheepfucking dickweek boyfriend Alastair McComb of Glasgow Scotland takes it up the ass as hard as he gives it to the sheep in the neighboring farms.