"The financial crisis that started in the United States has struck Japan..."

[Catoneinutica]

That seems to be pretty much the boilerplate expression used in every reference to the recent thud in equity markets and real estate, but here's the thing: did it really "start" in the US? The US housing bubble is generally believed to have commenced after 9/11, with all the tech money that had fled the mkt in 2000 fleeing to real estate, encouraged by Greenspan lowering rates to 1% and lenders loosening their standards to Del Taco levels. But in 2001 the housing bubble in England and Ireland had already been underway for a few years. To me, it looks like Blighty led the way, much as it did with Thatcherism. But nowadays the Brits seem to be keeping a lower profile than a Royal Navy sailor in a cheap Iranian suit, letting Big Daddy absorb all the recriminations.

-catone
-so, basically it amounts to this: judging from their state-controlled presses, the big exporters like Japan and Germany (China seems to be strangely quiet) are furious that those profligate, fatass Americans aren't being as profligate these days. You Americans! With your mullets and your "wifebeater" shirts! We despise you! Now buy our goddamn exports!

[Mulboyne]

The rise in UK property is usually dated back to '92-94, depending on how you measure it. We had just experienced the bust following the Lawson boom so the starting point was genuinely low. I think people thought houses were getting "pricey" around '98 but we were just about to get into the tech bubble which saw additional asset inflation. As you mention, the loose monetary policy introduced by the Fed in the wake of that bust helped fuel property in the new century. In Europe, the ECB also contributed by maintaining low euro rates which suited a weak economy like Germany but pumped up property in countries like Spain. You still needed financial institutions to extend credit but there were plenty of those around.

Rather than sparking the property bubble, I think the major contribution the UK made to the current crisis was to drive down standards in financial regulation. When the US tried to increase oversight following Enron and Worldcom, the UK continued to maintain a "light touch" which meant that Wall Street began to lose business to London. This forced the SEC and Fed to back down which is why it was left instead to individuals like Eliot Spitzer to pursue prosecutions in America. I also wouldn't be surprised if countries like Iceland effectively subcontracted financial regulation to Britain, assuming that City watchdogs would know more about the risk of their banks operating in London.

[Catoneinutica]

Mulboyne's post is, to me, vastly more informative than anything I've read in, say, The Economist or BusinessWeek. We bought our second house in Seattle, a 1928 brick "tudor" pile, in 1994 for a comp-busting price of $249,000 (I remember our neighbors were a bit miffed that the sale price of the place we bought had dragged down their appraised values ). Seattle, like California and most of the US at the time was still in the throes of the early-nineties real estate slump.

We visited London the same year, and I was surprised to see that the real estate market was far more buoyant. In 1994 we still had to prove to the lender that our mortgage bill wouldn't exceed 36% of our combined gross income; looks like Brits weren't under similar constraints. The debased lending standards the US subsequently (apparently) imported from Blighty must be the most pernicious thing to come out of the place since BSE. That or Are You Being Served.