IS THERE A HOUSING BUBBLE?

Comments from Barney Frank, Chairman of the House Financial Services Committee, U.S.A. and Paul Jenkins, Senior Deputy Governor of the Bank of Canada, about a housing bubble. Interesting points of view!

Here is Rep. Barney Frank (D-Mass.) on June 27, 2005 on the House Floor:

"Those who argue that housing prices are now at a point of a bubble seem to me to be missing a very important point. Unlike previous examples we have had when substantial excessive inflation of prices later caused problems we are talking here about an entity, home ownership, homes where there is not the degree of leverage where we have seen elsewhere. This is not the dot-com situation. We had problems with people having invested in business plans of which there was no reality; people building fiber optic cables for which there was no need. Homes that are occupied may see an ebb and flow in the price at a certain percentage level. But you're not going to see the collapse that you see when people talk about a bubble and so those of us on our committee in particular will continue to push for home ownership."

Jenkins says no housing bubble

Mon, 22 Feb 15:39 PM EST

VANCOUVER (Reuters) - The Canadian housing market is strong, but it is not experiencing a bubble, Paul Jenkins, senior deputy governor of the Bank of Canada said on Monday.

The Canadian government said last week it will bring in new mortgage rules to cool the housing sector and prevent home buyers, tempted by record low interest rates, from overextending themselves.

At the same time, it said there was no housing bubble, a point echoed on Monday by Jenkins, who was speaking at a panel discussion at the government of Canada and Financial Times Global Business Leaders Day in Vancouver, where the housing market is especially hot.

"At the moment, we are certainly seeing a certain amount of the recovery in the Canadian economy coming from the housing sector" he said.

"I would certainly not say we are looking at a housing bubble," he added.

Unlike the struggling U.S. housing market, sales and prices of existing homes in Canada soared last year, boosted by the central bank's near-zero interest rates and the resulting low-cost mortgages. Many in the industry have forecast further strength in 2010.

(Reporting by Nicole Mordant, writing by John McCrank)

FAME AND FORTUNE: DEBBIE MOORE

DEBBIE MOORE is a former model who became famous for being the first woman to launch a company on the London Stock Exchange.

Moore is the author of two books, The Pineapple Dance Book and her autobiography, When a Woman Means Business. She was appointed OBE in 2009.

Are you a saver or a spender?

I’m in no way a shopaholic or extravagant, but I like to use my money to enjoy myself.

I also make sure that I’m covered with insurance and life policies so that when I go, my daughter is well taken care of. She’s disabled and needs a lot of money spent on her health issues.

How much did you earn last year?

I earn a fluctuating six-figure sum according to dividends from Pineapple.

Have you ever been really hard up?

Yes, when my first husband ran off with a younger girl — I was 21 and she was 17. I came to London to find my fame and fortune but I started to put on weight so I had to give up modelling, take in a lodger and do a double waitressing job.

Do you own a property?

I’ve got a beautiful Georgian mews house in Belgravia, which I’ve had for about 10 years. I bought it for about £1.5m and I had it valued recently and it’s now worth £3.2m. I own my daughter’s house in Cricklewood, north London, and have a five-bedroom villa in the south of France, which I bought nearly two years ago for £1.5m.

Are you better off than your parents?

Yes. They lived in Manchester, in the shadow of Old Trafford, Manchester United’s ground. My father was a plumbing contractor and my mum was a clerk.

What’s been your best investment?

In my health — and my daughter’s. I do homoeopathic and complementary medicine. I don’t believe in doctors who dish out statins and antibiotics like sweeties.

What’s the most extravagant thing you have ever bought?

My villa in the south of France.

Do you manage your own financial affairs?

I’ve got an in-house team of advisers, plus my accountants.

What’s the most important lesson you’ve learnt about money?

There’s no such thing as a free lunch.

Lenders Have No Rights

David Rosenberg says in his newsletter today (February 26, 2010) we’ve reached a stage in this crisis where lenders have no rights

CAPITALISM GOES ON RETIREMENT

In March 2008, I published a report titled “Capitalism Takes a Sabbatical.” If only that were the case. I really can’t believe what I just read on Bloomberg News (Obama May Prohibit Home Loan Foreclosures Without HAMP Review). In a nutshell, the White House is considering a tactic that would prevent banks from foreclosing on defaulted homeowners unless they have been screened and rejected by the government’s Home Affordable Modification Program (HAMP). George Orwell must be rolling over in his grave.

To think that the government is at the same time pressuring banks to start extending credit again, but the question is why bother when you have absolutely no recourse. We’ve reached a stage in this crisis where lenders have no rights. The long-run distortions from such a heavy handed interventionist approach are too long to list right now, but suffice it to say, this will do more to exacerbate and prolong the deleveraging cycle than solve it.