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And will NZ be affected if Mr Mellon's predictions come to pass?
Here is a link to the full article:
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And will NZ be affected if Mr Mellon's predictions come to pass?
'UK house prices will fall by up to 50%'
25th Sep 2005, a Sunday
In an article published in The Observer today, financier-turned-economic pundit Jim Mellon identifies five trends that he predicts will lead to a dramatic fall in house prices in the US and UK within three years. "Stock markets will collapse, house prices in the over-extended markets of the UK and the US will fall by up to 50%, and major investment banks and other financial institutions will go bust," forecasts Mellon.
The article argues that US and UK consumers "have been using rising house prices as a kind of ATM machine to take out equity to spend, often on imported goods. When the merry-go-round stops - as is beginning to happen - the consumption stops too."
The five basic trends that Mellon highlights are reprinted below:
1. Anti-Americanism and the beginning of the end of US hegemony.
2. Balances - trade, fiscal and societal - which are out of kilter as never before.
3. China's growth which has put it on the way to being the world's largest economy and the main Pacific power.
4. Debts run up by consumers, companies and governments are at all-time peaks, and a dramatic and painful correction is the only remedy.
5. Environmental: even ardent Bushites must be beginning to think man is having some effect on the planet's climate. The world's population has quadrupled in 60 years, and the problems of waste and consumption, as well as of pollution, are not going to get any better.
As pay, and therefore living standards, adjusts to the effect of Chinese competition, Mellon predicts that the correction process for the Anglo-Saxon economies will last as long as a decade.
25th Sep 2005, a Sunday
In an article published in The Observer today, financier-turned-economic pundit Jim Mellon identifies five trends that he predicts will lead to a dramatic fall in house prices in the US and UK within three years. "Stock markets will collapse, house prices in the over-extended markets of the UK and the US will fall by up to 50%, and major investment banks and other financial institutions will go bust," forecasts Mellon.
The article argues that US and UK consumers "have been using rising house prices as a kind of ATM machine to take out equity to spend, often on imported goods. When the merry-go-round stops - as is beginning to happen - the consumption stops too."
The five basic trends that Mellon highlights are reprinted below:
1. Anti-Americanism and the beginning of the end of US hegemony.
2. Balances - trade, fiscal and societal - which are out of kilter as never before.
3. China's growth which has put it on the way to being the world's largest economy and the main Pacific power.
4. Debts run up by consumers, companies and governments are at all-time peaks, and a dramatic and painful correction is the only remedy.
5. Environmental: even ardent Bushites must be beginning to think man is having some effect on the planet's climate. The world's population has quadrupled in 60 years, and the problems of waste and consumption, as well as of pollution, are not going to get any better.
As pay, and therefore living standards, adjusts to the effect of Chinese competition, Mellon predicts that the correction process for the Anglo-Saxon economies will last as long as a decade.
Regards
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