We normally learn from mistakes although historically even that statement should be a no-brainer since we never learn from them in fact and just repeat them constantly like new-born babies.
Today, the UK is experiencing a 3.9%-growth rate in housing prices. Great? No, not so great. It smacks of the subprime crisis and that’s without a shadow of a doubt. But, despite it being just about as plain as anything, the British government seems far from worried.
The International Monetary Fund and former Governor of the Bank of England Mervyn King have both warned that the two situations are too close for comfort. But, the UK government has ploughed ahead with the creation of two schemes to make borrowing easier for people who would not necessarily get mortgages. Mortgages are easier, prices are rising in a bubble but salaries are remaining fixed. It’s all fine until the interest rates get a hike from the Bank of England. That will come, the bubble will burst and the questions will start. As soon as unemployment falls below 7%, the interest rates will get pushed up according to Mark Carney of the BoE.
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