Hanging In The Balance

UK property prices have been hovering dangerously around the zero price growth mark for the last couple of months. Year on year growth is of course dropping substantially and we are now just below the 3% annual mark. Definitely one to keep watching.

UK house price inflation fell in August according to the Office of the Deputy Prime Minister, giving further indications of a slowdown in the property market. Annual inflation fell to just 2.8 per cent in August, down from 4 per cent in July and 13.6 per cent a year ago.

The ODPM reported that house price growth in London, which tends to lead overall trends in the market, slowed to 0.8 per cent from 0.9 per cent in July. The average house price in the UK barely changed in August, standing at �186,208 compared with �186,207 in July.

Some analysts have concluded that these numbers suggest that the market might be stabilising at current levels. …But there will be continued concern that as house price inflation on all the main indicators heads towards zero, the current stability in the market will not last. Nervousness is likely to increase as property investors realise they can no longer rely on the prospect of capital gains to offset the reality of low rental yields.

More Details Emerge

Sky continue to maintain their original claim that there were four bombers, and that they are all dead. This has not had direct police confirmation. But sky do provide a lot more details. One of the most important of these is that images of the four were captured by CCTV cameras at Kings Cross. There may be some doubt about the fourth of the bombers because the police inform that three come from the Yorkshire area, but say nothing about the fourth.

Deputy Assistant Commissioner Peter Clarke explains:
Continue reading

The Dangers Of A Housing Boom

Last year 700,000 new homes were built in Spain. A record number, and one which seems disproportionately high for Spains real future housing needs. In all likelihood the Spanish property market will one day crash, and prices drop considerably from their current highs. But what if they don’t? What if we ‘merely’ get a soft landing. This is a question the FT puts today in the US context, but what it says may be even more applicable to Spain. The economy is driven by the construction and property sector, simply slowing-up is going to have repercussions.

As property values have soared so has the level of interest in working in real estate. The number of realtors in the US has jumped by 45 per cent over the past four years to 1.1m, and many have left blue-chip companies or even delayed college to join the property jamboree. More joined the profession last year than at any time since records began in 1975.

Add in jobs in residential construction, furniture and DIY stores and mortgage finance, and the buoyant property market emerges as the main driver of employment growth over the past four years. Economy.com, the consultancy, estimates that about a third of the 2.6m jobs created in that period were in housing-related sectors.

This raises the question of what happens to these workers when the housing market cools.

21st Century Socialism.

As all of Germany seems to engage either in market or Marx bashing these days, I thought it is time to add my two cents to the debate – and I’ll do it with the help of the US Europhile Jeremy Rifkin, who gave the “Stuttgarter Nachrichten” an interview about an old book of his, “the end of work.” The current German debate – the “Kapitalismuskritik” (“capitalism critique”) – is the result of a surprising lack of political imagination, a lot of disappointed social democrats, an important regional election in May, and the lack of a referendum about the European Constitution that would serve to channel the electorate’s fears, as it just happens in France.

Despite the fact that almost everyone, including business professors, in Germany – just as everywhere else – agrees at least theoretically, that there are issues to be debated with respect to the way our economy works, including obvious CEOcratic excesses, the political participants don’t seem to be able to update their class-struggle vocabulary to the needs of the 21st century. While I always thought “the left” had won a conceptional edge over so-called free-market fetishists by accepting that markets are “one coordinational mechanism among others”, I’m not sure about that anymore after having to endure the conflicting and confusing use of so many economic terms by leading German Social Democrats.

Thus, I suppose it was a good idea of the German government to invite Jeremy Rifkin to talk about his ideas concerning the future, or rather the end of work as we know it.
Continue reading

Digitally Scared.

No doubt about it – revolutions are truly scary. Whether you think of the French one, the ones that freed Eastern Europe, or the digital revolution that is currently changing much of the transactional structure of our economies, and in particular the music industry. But contrary to most people, I do pity major label executives who never even stood a chance of understanding just what happened to them. After all, this is an industry where the average person?s desk had not seen a computer in 1996, as some insider once said.

Continue reading

This Is One To Keep An Eye On

2003 was a good year for the Spanish banks, with interest rates at historic lows, lending boomed. News has it today that net profits at Santander Central Hispano, Spain’s largest bank, rose 29.6 per cent in the fourth quarter to ?681m ($857m) mainly on strong mortgage lending in Spain and growth in its consumer finance business in Germany and Portugal. Net profits totalled ?2.61bn for the full year, a 16 per cent increase over 2002 and the best year on record, while credit inside Spain was up 16.2 per cent as the housing boom continued on its relentless path hence generating strong demand for mortgages.

So good luck to the bank, and that’s it. Well again, not exactly. Why is there a boom in consumer credit and mortgage lending right now in Spain? That really should be the question.
Continue reading

Interesting Take on Yukos

A very interesting take on the Yukos situation from the Moscow Times. And one which relates directly to some of the privatisation issues we were debating recently. Boris Kagarlitsky, director of the Institute of Globalization Studies, argues basically that given that the Russian economy is dominated by an oligarchic structure of raw materials quasi-monopolies, and given that a majority of the population seem to want these monopolies returning to state ownership, the only ‘democratic’ solution is an authoritarian one. Khodorkovsky had another idea, and hence off he went to prison. Any comparisons with or lessons for Iraq here? Can democracy be introduced like this? Off you go.
Continue reading