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It's back - one of the early signs of a housing bubble and bust

BIScom Subsection: 
Editorial Staff

If you are a fan of Alan Greenspan, look away now. That's what he did when the first shoots of the housing bubble were evidenced - and then said he wouldn't have known anyway because the data at the US Fed was too recent. Except that it wasn't - it was simply parochial. The data was there - the Fed didn't think about it. And now, here is is again.

The very first sign of a housing bubble is almost always with the launch of dodgy advertising for dodgy loans. Even if the loan is not itself dodgy, the process by which it's obtained is.

The signs are common - adverts with a non-geographical telephone number such as xy00 numbers, or numbers allocated to phone diversion systems (like, incidentally, Skype so that if you call it, it reaches the advertiser's mobile if he's connected to the internet anywhere in the world or, depending on the service, to a landline in one of many countries).

The advertising will cite a PO box or a drop box or virtual office. And it will contain a lie to pretend it's not spam - claiming that you "are registered with" the advertiser.

It will promote a benefit - maybe suggesting that it's services are usually available only to commercial buyers e.g. developers or "flippers."

In one that's floating around it offers "no quantity surveyor's fees" - which emphasises that it's linked to commercial development.

But the fact is that what it's really looking to do is to find people who have a need for a short term loan, perhaps to cover the purchase of one property while they sell another - called a "bridging loan."

But the reality is that such adverts are pre-cursors to the imminent deluge of adverts for cheap loans, fast loans, any-thing-you-want loans.

So, the fact that these are now floating around at the rate of several per week arriving in one of our mailboxes and triggering our alerts shows exactly what we saw in the USA in 2005 and it's exactly what happened, in the pre-email days, of the 1980s in the UK which led to a similar housing catastrophe.

Pay attention central bankers: you've missed it twice in the past 30 years. Can you really afford to miss it again?

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