Economic Downturn: House price crash goes global


Richard Moore

We all know what a virus is, either the organic kind of the computer kind. What the Federal Reserve did – quite intentionally – was to inject a destructive virus into the international financial system. That virus came in the form of bundled debts, fraudulently insured as being grade A investments, and including among them loans which could never be repaid, what have been called ‘subprime mortgages’. The Fed actively encouraged banks to make ‘no doc’ loans – loans with no documentation of ability to pay – an
This virus was easy to spread, because speculators made money by playing the game, pumping up the bubble. Investors don’t fear bubbles per se, they figure they can get in and out and make a profit. This virus was promoted big time, both at the production end (encouraging bad loans) and at the distribution end (encouraging investment in these mixed funds). 
What I have said so far is factual from observation. The question of why? is more difficult. Ideas are welcome from readers. Perhaps, given that the dollar will collapse in any case, they decided to bring the whole global economy down as well, to create a level playing field. Or perhaps it’s just to accelerate the dollar collapse, so as to justify the North American Union and the Amero. Or perhaps it’s simply a final looting scam, before capitalism collapses and a New Economic Order is installed. 

Economic Downturn: House price crash goes global
Globally, the rate of house price growth fell to 4.8 percent in the second quarter of 2008, down from 6.1 percent in the first quarter of the year.
by Patrick Collinson
(The Guardian)
The property crash that began in the US is spreading across the globe, according to international estate agents Knight Frank, which said today that steep declines are now taking place across Europe and into Asia.
The country recording the sharpest fall is Latvia, where house prices have plummeted 24.1% over the past year. New Zealand, Denmark and Lithuania have all seen falling prices, along with Malta, Germany, Ireland, Estonia, Britain and the US.
Even countries where prices have not fallen are witnessing a rapid deceleration in price growth.
In South Africa the rate of house price inflation has collapsed from 15.5% this time last year to 3.8%, and is expected to be negative soon. In France, Spain and Greece price growth has halved and is running below 3.2%.
The only countries to have bucked the trend are Bulgaria, Slovakia, Cyprus and the Czech Republic, where house price growth has accelerated.
Last year’s fastest growing market, Russia, which was seeing house price growth at an astonishing 53.7% in the second quarter of 2007, has dropped back to 26.5%.
Nick Barnes, head of international research at Knight Frank, said: “The index shows that global house price inflation is continuing to fall back, with much of continental Europe now seeing low or negative growth.
“Housing markets in countries such as Spain, Denmark, the UK and Ireland are all being severely challenged by the global credit squeeze.” 
Long-term decline
Globally, the rate of house price growth fell to 4.8% in the second quarter of 2008, down from 6.1% in the first quarter of the year.
Several countries are now entering their second year of house price declines. Among the worst hit is Germany, where prices were falling at a rate of 4.4% last year and 2.5% this year.
“There is less demand for owner-occupied property in Germany than in many other European countries and there is no shortage of supply,” said Barnes.
In Spain, the Knight Frank index recorded a price rise of 2.4% annually, but it warned that falls are now almost inevitable.
“The well-publicised problems in Spain have not yet fed into house price statistics. So far, price falls have been concentrated in the coastal resorts and among new developments in the large cities,” said Barnes.
“Spain looks likely to fall into recession later this year, and house sales fell steeply during June. The number of sales dropped by 34.2% in May and 29.6% in June, suggesting that wider price falls could be imminent.”
But investors who bought second homes in Bulgaria have reason to feel bullish. Knight Frank said current annual price growth is 32.2%, only slightly lower than the 33.7% rate recorded in the first quarter.
Biggest fallers: Year-on-year house price change to Q2 2008
Latvia -24.1%
United States -16.8%
Estonia -16%
Lithuania -9.9%
Denmark -9.6%
Ireland -8.1%
UK -3.9%
Malta -2.7%
Germany -2.5%
New Zealand -2.2%