Monthly Archives: September 2012

James Mackintosh

Greece has become synonymous with dodgy statistics, after its government lied about debt and deficits in order to qualify for the eurozone. If you think government pressure on statisticians is history, think again: Greece started a criminal probe of the head of the new independent statistics agency late last year, for supposedly inflating the national debt (he says he simply told the truth about Greece’s dire situation).

Spain has also repeatedly overshot its deficit goal, although less outrageously than Greece.

It turns out Spain and Greece are just part of a wider picture: economic forecasts from eurozone countries are far more likely to be influenced by wishful thinking than other countries. Even worse, Harvard researchers Jeffrey Frankel and Jesse Schreger found that all the extra optimism showed up when governments were in breach of the Maastrict treaty’s 3 per cent budget deficit rule. Today’s Short View video discusses it, but more below.

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John Authers

There are interesting arguments over whether the US residential housing bubble has really finished correcting, as I argued in a column earlier this week. But if it hasn’t, then the outlook for property in theUK, and most especially London, is alarming.

Of all the local property bubbles, Miami’s was the most extreme. Let’s look at it in comparison with London. For the US, we use the S&P Case-Shiller data, which are now widely followed. For the UK we use data from the LSL Property Services/Acadametrics indices, which is deliberately setting out to map the UK property market in the same way that Case-Shiller maps the US. Handily, both are set so that the beginning of 2000 equals 100.

So Miami plainly had all the symptoms of a bubble, with prices leaving for orbit in a way that they never did in London. But London’s inexorable rise looks extraordinary by comparison. Read more