In the past 12 months house prices have fallen 16% in Sweden but have risen 4% in the US Yet both housing markets share similarities of overvalued prices and higher interest rates. Why is there such a big difference?   After a surge in prices during Covid, housing markets around the world have endured a bumpy ride. The biggest drops have occurred in countries like New Zealand, Canada and Sweden. Yet, whilst some have already fallen, other housing markets are on edge. This shows the global levels of house price to incomes, and why countries like Portugal and Netherlands are particularl ..read more

After being one of the worst performing currencies of 2022, the Pound has staged an impressive recovery against the US Dollar, rising 15% from the depths of last September’s crisis. After years of decline, markets are now more optimistic the Pound will continue to strengthen. But why is the Pound rising when many in the UK face a cost of living crisis? And is the Pound’s apparent recovery really as good as it looks? If we look at the value of the Pound to Euro, we can see little recovery but only a long slide and the depreciation of the past 20 years. Why Pound Sterling Recovered in 2023 Th ..read more

As elections loom, the Turkish economy is facing a self-inflicted economic crisis of high inflation, and a cost of living crisis that dwarfs what we see elsewhere in Europe. In recent years, Turkey has seen inflation rate surge to over 80% – leaving over 53% of people in Turkey unable to meet their daily expenses. Yet, as we shall see this is largely a self-created crisis from the unorthodox policies of the government, a reminder of how political short-termism can have devastating effects. Why did things go so wrong in Turkey? and how bad might they get? In the past 20 years, Turkey’s econo ..read more

Last autumn, UK house prices reached record levels – with the highest price to income ratio since the nineteenth century. And just at this moment, the Truss/Kwarteng budget sent mortgage rates soaring – it was a shock to a market heavily reliant on ultra low-rates. This combination of factors was the perfect trigger for a fall in house prices – at the height of the Truss craziness, it looked like we could see a very real crash as mortgage rates topped 7%. But, despite the economic pain of higher mortgage rates, at least there was a silver lining that we might return to a fairer housing market ..read more

Greed Inflation is a term used to describe a higher inflation rate due to firms increasing their profit margins. In a period of high inflation, it becomes easier for firms to slip in rising profit margins too. Greed inflation is more likely in markets where firms have a degree of monopoly power and they can successfully increase prices. UK inflation has been surprisingly stubborn. Whilst inflation in Europe has fallen to 6%, UK inflation remains stuck in double digits. Whilst real wages for workers fall, some companies are reporting record profits with concerns firms are taking advantage of i ..read more

In both 2007 and 1991, house prices fell 20%, will see something similar this year? The really interesting question is whether house prices return to the post-war levels of affordability like after the crashes of 1990 and to a lesser extent 2008. If house prices were to quickly fall to 3 times earnings, it would require a 50% fall in house prices. If house prices fell to 5 times earnings like 2009, it would require a 23% fall in house prices. Assuming salaries stay at £39,130, the price drops will be £270,000 6.9 = £39,130 £207,389 5.0 = £39,130 (-23% fall) £124,430 3* = £39,130 (-54%) Thou ..read more

Given an unprecedented cost of living crisis, the UK electorate are turning against Brexit. The % regretting Brexit has grown to record level. There is no chance of a quick return to the EU. Neither the UK or EU want it. But, what about the next generation of voters and politicians? If things can change so quickly in the past two years, what about the next 20 years? Could the UK rejoin? Something that seemed far-fetched a few years ago, now seems quite different. Reasons why UK is likely to rejoin or get closer 1. Generational change The first reason why the UK could rejoin the EU is the gen ..read more

I began a Youtube channel in 2009, and despite the dire quality got quite a few views. But, I decided there was no future in making videos, so I stuck to writing a blog. In the summer of 2022, my website traffic was stagnant and I was looking for a way to boost my website, so I started making videos on Youtube to embed in the website. These videos got a few views but not too many. The thing is that once you start making videos on Youtube you can’t help but be attracted by the lovely statistics that are offered to you on how many people are watching. If you spend several hours on a video, you p ..read more

Bank bailouts are back. But, why do governments go to such lengths to save banks who took risks, ignored regulations and made a loss? This title about bank failures destroying the economy is not actually linkbait title. I think it is fair to say, the US bank failures of 1930-33 really did destroy a good part of the US economy and cause widespread economic and social damage. The Great Depression Let’s go back to 1930, the United States was in the midst of a severe recession, triggered by the Wall Street Crash of 1929. But, there were no imminent signs of financial collapse or prolonged depre ..read more

In 2008, the world global banking system went into meltdown after the bankruptcy of Lehman Brothers. It stemmed from a toxic combination of falling house prices, rising interest rates and sub-prime mortgage debt. To relive the 2008 Credit Crunch – see this article on Credit Crunch Explained (which was one of my earlier articles as an economics blogger) In 2023, we have some similarities and some differences. Interest rates are rising, bond values have fallen considerably and small and medium sized banks look vulnerable. Silicon Valley Bank failed and required a bailout from the Federal Deposi ..read more