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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Haim R. Branisteanu who wrote (7303)	2/8/2004 9:44:15 AM
From: mishedlo	Read Replies (1) of 110194

From RobiMart in the UK Guys - the UK is part of the EU and always has been, but it is not part of EMU (Economic Monetary Union) which leads to the adoption of the euro as a currency and interest rates being set by the ECB. The UK is of course managed by the Bank of England, which in fact only raised interest rates to 4% this week (I think that's the rate now). Whilst this raise was expected in all quarters this has done little to deflate a completely crazy housing market. I really mean crazy. I can't tell you the number of times I've talked to taxi drivers who say they drive "just for fun" and all their money is being made by buying property. Similarly 22 year old friends of mine are buying $300,000 one bedroom flats/studios in central London at salaries of less than a tenth. And they consider me nuts for "flushing rent money down the toilet" when the spread between falling rents and rising property prices is higher than ever (the latter surely lags the former). Whilst I don't watch TV I am told there are at least 2 programmes which are dedicated to the "buy restore sell" scheme i.e. you see house wives buying 400K properties, spending 2 months restoring them and buying furniture on CC and then bringing the houses back to the market. I have heard the programme depicts this "strategy" as a one-way road to riches and a dramatic number of people have left their jobs to do this (just like with daytrading several years ago)... It really is quite scary and I would argue that the consumer here in the UK is in a very similar situation to those in the UK. Personal indebtedness and credit card is at a record high. As is the number of personal bankruptcies which made the headline on the FT yesterday. I have been itching to short the propert market for 2 years now and am glad I haven't as i'd be badly down. Interestingly London prices seem to finally be stalling and it's usually a leading indicator of other regions. However, I'll wait a few months to see whether rising City bonuses and employment give it another lift. cheers, robimart

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