I find the idea of a Finnish housing bubble very disconcerting. The Finns seem far to sensible to be taken in by the property speculation and housing madness. Unfortunately, the sickness has even reached the far flung reaches of Northern Europe. Cleck out the Finnish Housing bubble blog. It is written in English. I can only assume that if it was written in Finnish, the bubble would have remained a secret.
4 comments:
Perhaps you read about the little Norwegian town that sank its municipal funds into a US sub-prime mortgage fund and lost everything--now they're talking about closing down services. And that's no fun when it's dark 24 hours a day.
I did hear about it. I felt sorry for the town. Obviously, the mayor was a bozo. It also reminded me about Orange County in California. A few years ago, it went bust trading derivatives. More recently, it took a major hit on subprime debt.
There is any point saying that some people never learn? Not really.
Alice
The Finns are not immune to financial manias. A housing boom of the late '80s was followed by a severe slump in the early '90s, when the whole economy tanked. It is characteristic of financial manias that the vast majority of the participants do not perceive the risk. For example, recent pub talk I have heard in Finland has included so-and-so has got into BTL.
nov
Thanks Alice,
To be franck it's global phenomenon.
Who could better describe this situation than the ex U.S. FED Chairman Alan greespan with his own words:
"I have no particular regrets. The housing bubble is not a reflection of what we did, as it is a global phenomenon."
He was criticized because he let the interest rate to low for too long...but fortunately for him, it's not only a US problem but it's well spread throughout Europe.
There are many explanations on why house prices went out of control:
-the belief by central bankers/banks/investors/private people that interest rates could stay low for long or put it in another that inflation would not be an issue for long. This happens to have been a wrong assumptions.
-After the stock market collapse in 2000 (The Tech bubble), everybody went away from "paper"/shares to real assets.
-Due to the war in Irak, people feel good at home and wanted to "own" it: "Home Sweet Home"
-baby boomers in the age of setting families and home.
-Psychology: "If I don't buy, I will not afford later ...". This is self fulfilling and push prices at higher and higher level beyond rationality...that's the irrational exuberance applied to real estate.
-last but not least: Politics, Greed and Fraud. All participated: government promising home to everybody. Greed from sellers, real estate agents and bankers. Fraud or corruption from agencies either private or governmental by dragging their feet on land planning.
So now the mortgage bubble is about to unfold : next year Spain and UK/Ireland will start to come down sharply followed by France, Danmark...The nordic country are starting to see the first signs...they will follow as it has always happened historically.
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