In the American housing market, where the crisis started, homes are priced at around fair value on the basis of rental yields, but they are overvalued by almost 30% in Britain and by 50% in Australia, Hong Kong and Spain.
Today the prices of many assets are being held up by unsustainable fiscal and monetary stimulus. Something has to give.
Friday, January 08, 2010
Markets are too dependent on unsustainable government stimulus
SHOOT: I thought this might be a really insightful article by the ECONOMIST. But not a peep about the unsustainability of Easy Motoring, or our consumer culture. Not a peep about propping up banks and credit and car and house selling - well a little about house selling. To live sustainably we have to be more integrated with the landscape, that is, less disconnected from it. We have to start growing things, forming communities, and getting away from a car-centric way of life. What is sustainable? Where experiences and relationships must be more valuable than money and things.