It appears we are exporting the shitpile–
The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.
This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.
In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries, like this one, will face an even more wrenching adjustment than that of the United States, including the possibility that the downturn could become a wholesale collapse.
Good times.
Zifnab
One more reason for the rest of the world to step in and bitch slap a Superpower when it gets out of line.
4tehlulz
I know that Britain has been an implosion waiting to happen, but the other countries were a bit of surprise.
Xenos
I don’t think it is fair to say we have exported the shitpile, except to the extent that we sold our crappy mortgage backed securities to people overseas. Many European countries have promoted high housing costs, directly intervening in the markets (with tax-payer subsidized mortgages) to a much greater extent than in the US, where the problem arises mainly from poorly regulating an increasingly dishonest industry.
The basic fuel for the real estate booms, cheap and easy credit, has been a global phenomenon. Certain countries which maintained firm regulatory control and did not promote speculative homeownership are doing quite fine (Germany is one example, I don’t have a list of the others). UK and the Netherlands will be having the most problems.
Walker
I would just like to say that I was talking about this in the comments on this blog over six months ago. And everyone else thought I was crazy. Comments like “Prices in the UK have always been high.”
The UK will make California look like a model of price stability. And Spain is going be positively crippled.
Suicidal Zebra
Given that Ireland and Spain are favoured retirement locations of Brits… retirements which were supposed to be funded by the UK housing boom of the last 10 years… a downturn in their housing markets should have been expected.
As 4tehlulz says, the UK has been an implosion waiting to happen (at least since 2004 IMO), mainly because of the way that UK financial institutions have done business since the 1980’s without any significant regulatory improvements. And the Government, largely by dint of their obfuscation of the figures since 2002 in an attempt make a terribly insecure economy look like a still healthy and growing one, have neither the balls nor the tools to do what is necessary to ease the nation into a moderate downturn and lessen the impact of the various looming ills. I.e. the Housing Crunch, Credit Crunch, rising inflation and interest rates, reductions in pension pay-outs and increases in the cost of living (fuel, food etc.).
Makes me wonder if I should join the thousands of people a year emigrating out of the UK to (economically) sunnier climates….
vwcat
This is an example of what fun arises from no regulations.
The Other Steve
Nobody could have anticipated this.
frogspawn
Well, sir, we’re hoping to boost consumer confidence by repeatedly invoking the Great Depression in our testimony before this committee.
Zifnab
It gets a little exhausting. Every time the stock market takes a dip, someone somewhere has to invoke the Great Depression. One of these days, people are finally going to get a depression and I expect one of two reactions – “Oh shit, so this is what everyone was bitching about” or “Wow, still bad, still really really bad, but not as bad as it was portrayed to us all repeatedly on TV.”
D0n Camillo
The Irish housing market has been out of control for even longer than the US. It was a market correction waiting to happen. Still it’s amazing just how widespread was this idea of housing as a neverending rising asset. It’s also amazing just how much many economies’ growth seemed to depend on leveraging the rising cost of housing.
El Cruzado
The Spanish implosion (and it will be an implosion) could be seen coming years ago. The coastal property bubble got inflated more by foreign money than Spanish money. Since the downturn is going to be global, the money well will dry up more completely than if it had been a Spanish-only bubble, which means the downturn will be worse than average.
My parents are trying to sell their condo of many years (where I grew up) and they were complaining that they couldn’t expect anymore to get 400k euros out of it (that’s over 600k USD at today’s rates) for a 120 sq. m./1300 sq. ft. 4 bedroom home. IMHO is a pretty nice place to live in (and built with concrete, brick and mortar unlike my shitty townhouse in the NOVA suburbs) but one has to wonder how many people considering Spain’s average/median income could ever afford it?
I told them to just slash the price big and sell it. They’ll probably still get more than they would if they wait, and besides that place has been paid out for over 20 years.
p.a.
It used to be glib to warn of Republican economic policy turning us into a banana republic; ‘BananaRepublicanism’. We were wrong. Seems the real model is North Korea. Crash the economy to such a degree the military is the only promising career left; food and medical provided with a dash of danger included.
It’s the only way to sustain the Global War on Whatever without instituting the political kiss-of-death of conscription.
And more tax cuts for the rich! We need the yachting industry and the Caymans Isles vacation home industry to sustain the economy.
frogspawn
Zifnab-
I got that listening to Ben Bernie and someone else before some committee on C-SPAN in the car the other week- the “biggest this-that-or the-other since the GD” over and over; I was wondering how many rattled nerves they thought they were going to soothe with lines like that.
Ninerdave
another wonderful by product of globalization! We’re all fucked together.
over_educated
Perhaps if we lived in a country where uncomfortable truths were allowed to be spoken by public officials we wouldn’t be in this mess.
jon
No one expects the Spanish Implosition!
Phoebe
Ok, but at least the stupid crazy boom is over. The longer it went on the more effed up it would be at the end. It’s like if your husband is gay – finding out is not pleasant, but the sooner the better, really.
ThatLeftTurnInABQ
Actually Kevin Phillips has been saying for years now that we are following down the exact same downward path as the empire of 16th-17th cen. Spain – in fiscal and monetary policy, military overstrech, and religous extremism. I think the only parallel he hasn’t pointed out (IIRC) is that they also helped to re-monetize the Chinese economy since most of the silver mined in the New World ended up paying for tea, silks, porcelain, etc. bought by Europe. The parallels are more than a little bit scary. Viva La Reconquista!
priscianus jr
What Xenos said.
DeSelby
Great, I can finally buy that farmhouse in Kerry and apartment in Malaga to spend my waning days in – because the USA will be hellish by then (not too far away).