Wednesday, 22 June 2011

Post Traumatic Stress

"In Finland, the rising trend in house prices has flattened out since spring 2010.

The moderate rise in market interest rates has helped restore a more balanced position on the housing market.
Even so, the relative price of housing is still higher than the average for the past decade.

From the perspective of macro-stability,
the trend of recent years in household debt has displayed worrying features.
The proportion of highly indebted households grew rapidly throughout the first post-millennium decade.

Continued growth in household debt will undermine the ability of both households and the economy to adapt to economic disturbances.
"

Source: http://www.suomenpankki.fi/en/julkaisut/bulletin/financial_stability/Documents/B_2_11.pdf

To that statement, I see a worrying Bank of Finland that is relief that housing price somehow take a pause in 2010 however Bank of Finland seem to show all the element of a post traumatic type stress due to the unprecedented rise of debt level, when compared with what makes sense to compare to, the trend in debt over time.

I highlight the fact that recently bankers and politicians like to play the relative game by measuring data with other international data - i.e our debt is lower then the neighbor debt while failing to see and address the internal issues at the time when all warning are red.

That was my morning thought...I go back hibernating.

7 comments:

Balmat said...

Hibernating ... or enjoying the Finnish Summer ...
Regarding comparing with the neighbours ... recent history shows what are the results ...
Ireland which said that they were different than Greece ...
Portudal which said that they were not Greece ...
And Spain to come ...
Never trusts policiticains especially when they are addicted to debts ...

Regarding the housing market ... I am still waiting ...

Andrew said...

The printing moment just gets closer and closer. If everybody in the world got the equivalent of 1000USD it would be a bit more equitable than some of the current stuff going on.

Andrew said...

In breaking news after it became apparent the French and German banks need the biggest bailout in all of history an Italian is the next governor of the ECB.

French sources felt that there was always more room to contribute and it was unreasonable to talk about taxation. Germans however raged about bailing out those responsible for the worse crisis since the second world war.

Further north the Finnish president and Russian prime minister were photographed together at their shared summer cottages.

HousingFinland said...

Clearly the situation is getting worse for the Eurozone - and no one really knows how it will blow up and its consequence. Of course everyone from the political and business sphere knows that the situation is out of control and the outcome will be ugly.

Finland for the moment enjoy money coming from investors, not because it is a platform for growth in the year to come, but simply because these money does not find place anywhere else (i.e PIGS situation, dollar situation, etc...).

It could be similar to what has happened in 1987 or 1997, each time a crisis affected key centers and nordic where the only place seem to be safe ... turning those safe heaven into massive bubbles, which ultimately blowed up.

My guess is that history repeat itself but this time it could get worse considering the aging and population growth issue in Finland.

The interesting thing is that the economical and political future of Finland is not depending on domestic actions (as Finnish politicians seem to think - however they could only make think worse) - but instead it will depend on external factors - mainly to the decision made by the ECB, China and the US...the rest is only damage control.

Indeed fin need to look east, toward russia, the only place where they can extract some easy growth in the future - albeit at a political cost.

..that was the sunday morning thought :-)...and the bird stopped singing (though they are Finnish bird, shy by nature - they only sing when no one is around :-))

Anonymous said...

Summer poll:

Which will come first?
a) a housing collapse in Finland.
b) Finland leaving the Euro zone.


"Island Crow" whom like the birds you mentioned has been very silent recently.

Andrew said...

I wonder what they will come up with today for Greece? Shock and awe seems discounted. Finland is talking about frightening consequences. The markets already seem to think it will be better.

Balmat said...

And the old dwelling prices continue climbing ... what shall we say ... bigger will be the downfall ....