Japan is a massively exporting nation and we are not. We will suffer very high inflation as a consequence of printing hundreds of billions of pounds worth of funny money. The only way to stop a Sterling collapse will be to offer an attractive rate of interest to the world. We will have high interest rates.
That's when house prices will stage their second collapse.
Right, but a mass outbreak of personal bankruptcy would reduce the money supply ... all that debt vanishing into thin air, and the assets being sold off at firesale prices. The 'funny money' might be all that's left. Inflation problem yes, hyperinflation ... probably not. And in any case, what was the alternative - don't print the money and let the UK banks except HSBC collapse?
I think the UK will be able to hold down rates for a while yet. Who is offering anything significantly better? They will have to rise when the Fed and ECB do it BUT a sterling crisis will happen regardless at some point in the next 2-3 years ... its just too easy a target for the speculators (unlike the dollar - which is China's problem anyway) - they'll get round to it eventually.
It'll be interesting to see the timing as to which factor really kills 'UK Housing Ltd" - rising interest rates (and with the credit spreads as they are now mortage rates would be >10% even with 'normal' base rates) or the huge spike in unemployment in the pipeline when the public sector gets shredded by the Tories. My guess is the latter will happen first - I can almost name the day.
Bottom line is that average UK living standards will be set back by
decades and demand for air travel will adjust correspondingly significantly downards and so will capacity - including (albeit with a lag) FTO capacity. The die is already cast and nothing can stop it now. If the result is a long term cultural aversion to taking on personal debt (something that is still true in parts of Europe) it might not be such a bad thing.
Since I bought dollars at 2:1 (1.97 to be precise) and exited stage left with zero debt I can't wait to pick up a bargain 3 years from now with property 50% down from the top and Sterling at parity with the dollar
