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Is Mervyn a twitcher?

Posted by: katalysis

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Last week in the shadow of the Liver Birds Bank of England Governor Mervyn King gave a speech to the Institute of Directors. In explaining the Bank’s decision to print more money he issued some sobering strictures. Our underlying problems stem from a period of “unsustainably high levels of consumption”. On the face of it throwing more money at the situation “appears diametrically opposite to the direction in which we need to go in the long term” and the effect will be to “delay and exacerbate the size of the adjustment ultimately required.” In short, we will all have to get used to spending less and saving more. But if, in the longer term, people have less money to spend then will that include money to spend on houses? If Mervyn is right then those who are sitting tight hoping house prices will soar to previous heights may find that they have an albatross round their neck when the chickens come home to roost.
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