Housing bubbles in Sweden and Germany and the over-reliance on monetary policy

Today's commentary
Summary: The central banks in Sweden and Germany are concerned about overheating economies as the European sovereign debt crisis has led to a net inflow of investment into their housing sectors. If one looks at European economic policy, these bubbles are the natural outgrowth of a continued over-reliance on monetary policy in economic orthodoxy. More bubbles will follow.

Here's what is happening on the ground. In Germany, the Deutsche Bundesbank has issued a formal warning on overheated residential property markets in seven German cities: Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart. The Bundesbank's report says that the housing market is as much as 20% above trend in these markets, with German property experts openly talking about "local bub...


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