A bubble waiting to be pricked

Roger Bootle has been a long standing critic of rampant asset price inflation. In the Business Telegraph he provides a caustic and hard-nosed look at the housing market recession.

“There are two major causative factors at work. First, houses have become extraordinarily expensive, to the point where ordinary people can barely afford a shoe box. And second, the ample supply of credit which allowed this to happen is now tightening. The second may be the proximate cause of the coming fall in prices. But don’t let anyone fool you into believing that it is the fundamental cause. That prize goes to the ludicrous over-inflation of prices. In order to get on the “ladder” you have either to own property already or mortgage yourself up to the eyeballs. This has been a bubble waiting to be pricked.”

The rest of his article which is excellent for students preparing for the housing market paper (AQA unit 3) this summer can be found here

Over at the Independent, the superb Stephen King looks at the credi crunch and market failure

From Pope Pius VII to the credit crunch, market failure lives on