The global housing crash, and what lesson can we draw for the UK
31 Oct 2008 [0 Comments | 183 views]
We all know house prices are falling in the UK. And they are declining in the US and Spain, too. But what about the rest of the world? Where else are you likely to see house prices fall, and by how much?
And then take a look at China. Use China as a kind of helicopter view, you will be surprised at the lesson we learn for the UK property market.
The US recession begins, global recession set to follow
31 Oct 2008 [0 Comments | 175 views]
The US is in recession. It’s about as official as you can get. In the last quarter, GDP contracted at an annualized rate of 0.3 per cent. Can anyone be surprised? Maybe the recently estranged from Mars might be a tad shocked; if you had been cryogenically frozen a couple of years ago, and just woken up, you may be surprised; but for the rest of us, it was about as predictable as Russell Brand’s resignation from the BBC. And yet, the latest set of data released yesterday is important nonetheless.
Just as important come the latest quite shocking forecasts for global economic performance from Capital Economics.
The real news in yesterday’s data release
Porsche, the philanthropic saviour of the dispossessed hedge fund managers
31 Oct 2008 [0 Comments | 208 views]
Aren’t those people at Porsche ever so nice? You may know, shares in Volkswagen rose so higher earlier this week that for a few minutes it was the largest company in the world. Yesterday saw another twist in that tale, as hedge funds found themselves on the receiving end of Porsche’s philanthropy.
The economics of Ross and Brand
31 Oct 2008 [1 Comment | 267 views]
Okay, so what has the Jonathan Ross–Russell Brand affair got to do with economics and the credit crunch? Answer, well actually, quite a lot. No doubt you are sick of reading about it, but perhaps this slightly different twist on the affair can shine some light on the big danger the economy faces right now.
Zero interest rates move closer
30 Oct 2008 [3 Comments | 203 views]
Did you ever get a zero mark when you were at school? Probably not, unless you missed the deadline and your teacher was feeling especially mean. Nought is not usually considered to be a good thing. It isn’t really especially good in economics either. Zero interest rates could kill saving, and as the Bank of England said earlier in the week, banks need to attract more savings to fix their funding gap. But, desperate times, and all that…
Zero interest rates are on their way. They could be days off in Japan, weeks off in the US and, maybe, months off in the UK. The decade beginning in the year 2000, and finishing in 2010, may be known as the noughties for more than one reason.
Oil bounces back, IEA gives supply warning. Is it set to soar again?
30 Oct 2008 [1 Comment | 145 views]
It’s up again. At the time of writing, oil stands at $70.49 a barrel, meaning it has risen by around 10 per cent in just two days. Is this a new trend?
According to the International Energy Agency, oil production is going to lag behind demand for decades, or so says the FT, which claims to have seen an early copy of the IEA report due out in a few weeks.
So is that it? Is the decline in the price of oil over?
Have you noticed the similarities between the arguments over the price of oil and house prices? On the one hand, you have got those who argue prices will always go up, because demand growth is outstripping supply. On the other hand, you have those who say it just doesn’t work like that. Real demand is based on what people can afford, and in the longer-term there is a limit to just how much prices can go up. Who is right?
Student loan changes cut to key problem with UK economy
30 Oct 2008 [1 Comment | 252 views]
What have student loans in the UK got to do with the US elections? The answer, quite a lot actually. And it is all down to a perverse logic of incentives. Don’t tax the super rich, it will kill incentive. But instead, governments clobber the middle class.
House prices fall 15 per cent in 12 months – Nationwide
30 Oct 2008 [1 Comment | 147 views]
You have to feel a little sorry for Fionnuala Earley, Nationwide's Chief Economist. Every month she somehow has to put up a credible case for the housing market, even though the Nationwide’s own predictions for the market have been so completely and utterly blown out of the water.
Even so, her comments this morning on the Today programme take the biscuit.
Average house prices – source Nationwide – not allowing for CPI inflation...
January 2000 £75,060
January 2001 £83,430
January 2002 £93,231
January 2003 £117,905
January 2004 £134,806
January 2005 £151,757
January 2006 £158,478
January 2007 £173,225
January 2008 £180,473
October 2008 ...
Madness descends on markets
29 Oct 2008 [0 Comments | 187 views]
Madness was the most popular commodity in the world yesterday. It was perhaps the most extraordinary day seen yet in the whole tale of this economic crisis. Screw your eyes up a bit and look at yesterday’s events, and you could say the US enjoyed its worst and second-best day ever, simultaneously.
Meanwhile, for a few minutes yesterday, a certain well-known German firm became the largest company in the world – not for any fundamentally sound reason, but because short-sellers suddenly realized they had made a terrible mistake, and they panicked.
As for the UK, well, it could be a lot like the US today. Expect some gloomy news on the economy, and don’t be surprised if the FTSE soars as a result.
But to tell the story of yesterday’s backwards logic, we must begin, appropriately enough, in the
Iceland takes extreme step to stave off collapse, but what about the extreme risk in Pakistan?
29 Oct 2008 [0 Comments | 168 views]
Well, would you Adam and Eve it?
Yesterday, on news that the IMF is bailing out various economies across the world, we said: “The usual IMF formula is for rises in the local interest rate to protect the currency.” It’s a controversial approach, with many arguing the standard IMF formula causes more problems than it solves.
Well, yesterday, true to form, it was Iceland’s turn for the IMF remedy.
