Friday, 24 October 2008
Housing Permit, 1990 replay?
"In January to August 2008, new building permits were granted for a total of 34 million cubic metres, which is 13 per cent less than in the corresponding period of the year before.
The cubic volume of residential building permits decreased by just under one-fifth and that of commercial and office building permits by one-fourth from January-August of the year before. Cubic volumes went down also in the other building types apart from public service buildings." Said Statistics Finland.
The building permit is dropping as fast as the stock market. One could say what is not falling? from confidence to stock market, all indicators are showing a fast, unseen, untested, undocumented and unpredictable deterioration of local and global economy.
One has to notice that the government has already taken action as if we were already in recession, trying to shift job losses from private construction sectors to the public one, with a 45% growth in public sector building. Indeed the tax money is here to smoothen the construction sector cycle. I would argue that, instead, they should focus on more forward looking investment ...
The gloomy view is reflected in the small and medium size enterprise :
"The Federation of Finnish Enterprises said in a statement Wednesday that its small and medium-sized enterprise (SME) outlook indicator had dropped to -12 points from +6 points returned by its previous poll, carried out in August.
Harri Hietala, an economist at the lobby, said the last time the SME indicator was below nil was during the early 1990s recession."
I think policy makers had a chance to solve the issues back in 2000 -2003, in order to cap the household debt burden, lower the bank leverage, slow down a crazy housing market and put a break in stock market speculation... The contrary happenned and today we see the results...