The Captain is right
(and to clarify the points in my previous post for Al)

The market will correct itself, some people have made themselves rich and have gotten their fingers burned.

I'll give an example:

About four years ago a consortium bought a plot of land a few hundred yards from Colchester's main railway station. A series of blocks containing luxury two bedroom flats were built and investors were all told that these flats would be rented for £1000 a month - at the time the average rent in Colchester was circa £400p/m.

Investors fuelled by greed jumped onboard, borrowed to the hilt and waited for the first time buyers priced out of the market "executives" to sign up.

There were unsurprisingly very few takers and the investors all cried "foul" in the local papers as several were declared bankrupt.

Karma.

This happened two years ago. The writing has been on the wall for this current credit/housing bubble for some time.

If the next government, be they Labour, Conservative or Liberal has any sense whatsoever they'll impose restrictions on the housing market to ensure that borrowing remains sustainable. They'll also be forced to slash spending and as a result taxes will fall thus ensuring that consumers have more spending money in their pockets. We'll see our economy growing again within a couple of years.

I remain confident, provided that we have a sea change in political attitude towards both spending and borrowing. The blame for the current mess lies with both banks and central government - the latter has actively worked to encourage inflated housing costs as an alternative to having to fund a pensions black hole in thirty years time.
(Bicycle Repairman "you're also a bit of a wanker", Tue 16 Sep 2008, 12:17, Reply)