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IMF Warns of Housing Bubble

IMF Warns of Housing Bubble


June 12, 2014 (EIRNS)–Under the front-page banner headline, “IMF Sounds Housing Alarm,” the {Financial Times} reports that IMF Deputy Managing Director Min Zhu, warned of the dangers of dramatically rising housing prices in various countries. He made this statement at a Bundesbank seminar prior to the ECB’s decision to open the floodgates, but it was kept secret until now. Zhu said that while the “tools” for containing housing booms “are still be[ing] developed … this should not be an excuse for inaction.” (He, of course, did not mention that the best “tool” for this is Glass-Steagall.)

He pointed to the runaway housing markets in Australia, Great Britain, Belgium, Canada, Norway, and Sweden. In Canada home prices are 33% about their long-run average in relation to incomes, and 87% about the long run average for rents. For the U.K. the figures are 27% and 38% respectively. Similar increases are seen in “emerging markets” such as the Philippines and China. However, housing prices have fallen in Greece (7%) and Spain (5%), and even the U.S., Germany, and Japan have seen decreases.

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