Thursday, May 29, 2008

UK House prices

Annualized fall of over 25%

Research by Morgan Stanley reveals that countries hosting the Olympics usually enjoy something of a boom in the year leading up to the event, only to be followed by a slump during the following eighteen months. Particularly noticeable downturns were experienced by Australia in 1956, Japan in 1964, the US in 1984 and Korea in 1988. Spain fell into recession the year after their 1992 Olympics, while more recently Athens and Sydney saw some 2 per cent shaved off their growth.

Four major forces are unfolding over the next three years that should line up for a pronounced global slowdown.  One most if not all Real Estate cycles or Kuznets cycles (the longest on record are coming to a close) that propelled most of the artificial demand from the 2000-2008 growth in the world, two China hosting of the Olympics, will be the additional drag on the global economies once it is over this summer, three we are witnessing global tightening not from the central banks but from the market as banks are forced to tighten lending standards, this propelled unsustainable consumer spending, over the past 8 years. And lastly the generational and or baby boomers in the developed west have or are approaching their peak years in spending. These deadly ingredients pose a potential rapid deceleration in a  debt laden global economy forming the potential for an systemic accident in the global economy..



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These are my own views, please enjoy these insights