No it isn't. It's to do with overlending in an economic boom. Something that has happened across the globe. The sub-prime property market in the US has also had a huge impact. It's got very, very little to do with future speculation.kylef wrote:
The reason the market is unstable is because people are worried of your two-decadely market crash. Wasn't there one 20 years ago? And 20 years before that? Now, people take it as it comes like that - ie, it'll happen every 20 years. I was watching the news earlier when they asked some randomer on the street about what he thought of this and he said "don't buy, just rent. the market is going to crash!" - it's this that causes the crash.Bertster7 wrote:
No. Just like the property market, it is a matter of supply and demand.kylef wrote:
Sorry, the reason 'gas' is so high is that people are scared it will rise. And so it does. Just like the property market, contrary to what the buyers think, they are doing it themselves. The newspaper reports oil prices are rising so people get worried and expect prices to rise, so they do. I'm not saying they will magically fall again, but it isn't just that oil is running out.
UK house prices are currently falling because people cannot afford to buy them (due to credit crunch and rising mortgage prices). This creates a reduced demand and means the prices fall until the market stabilises.
People don't buy at the moment because the banks have very little money to lend, so rates are high. If you have a large deposit, you can get a decent mortgage, but if not, you can't. That's why there are so many big programs to lend the banks taxpayers money so more money is available for them to lend, so mortgages can be more affordable. Although the UK property market has been growing at far too high a rate and a crash has been predicted for a long time - it is just current economic weaknesses that have caused it to come about.
As with all economics, no matter how in depth and complicated it gets, it all comes down to the basic principles of supply and demand. People being worried and not spending is not a cause, it is a feedback effect and in the case of oil prices, is of negligible importance.
