Friday, April 27, 2012

Let's Go: "Easy Money Policies Risk Creating a Housing Bubble in Germany"

Let's Go is a series of budget travel guides perfect for the impulsive property speculator.
More seasoned investors may want the challenge of pre-WWI Baedeker Guidebooks.
From History Squared:
Hott and Jokipii found keeping interest rates two low, as measured by the Taylor rule, can explain up to 50% of the overvaluation of the property market in previous bubbles. ~ voxeu
Credit Suisse notes the Taylor rule (inflation and unemployment rate), indicates "peripheral Europe needs a policy rate of minus 6.5%, while Germany needs policy rates of 6%. Rates at current levels 1 .25% are equivalent to a 2% boost to German GDP growth, on the OECD Interlink model." 


"We believe Germany will likely continue to see a monetary policy that is too loose — and thus we continue to buy domestic Germany." 

Real estate may be a better play....MORE