Wednesday 20th November
Forget house prices for a moment; stock markets are going crazy too. Yesterday the Dow Jones in America broke the 16,000 barrier, for the first time ever. BitCoin, a virtual currency that you can only use in (dubious) internet trading, or sell to other people has reached 780 dollars a ‘coin’; this is a currency that doesn’t even exist, it has no real value, only what people think it might be worth one day. Twitter floated on the US markets and was valued at over 20 billion dollars, yet has made huge losses since it started, and only had advertising revenue (revenue not sales) of 500 million dollars last year. Over here they sold the Royal Mail (some say too cheaply) and the price has soared as those who missed out on shares are eager to buy them at almost any price; and this for a business in decline for years, that will soon face real competition as their monopoly is diluted.
What exactly is happening? Panic. An ordered panic maybe, but panic nevertheless. Interest rates have been so low for so long, and Quantative Easing (printing money to you and me) is threatened to end soon (especially in America) and investors, speculators and assorted spivs know the good times won’t last much longer. It is almost a game of out-staring each other, waiting for the blink that starts the race to increase interest rates. Actually the game is more like pass the parcel, buy some shares, no matter what price, because the market is still rising and then sell them at a profit before the music stops. And money is so cheap to borrow, and yet useless to hold, as you get nothing in interest on it, so you have to spend it somehow. Shares, Houses, anything except keep the money in the bank.
What will happen when the music stops? Oh, we don’t worry about that.