Comments by Bank of England governor Eddie George that monetary policy will have to be significantly...
Comments by Bank of England governor Eddie George that monetary policy will have to be significantly tightened up if the economy is to avoid overheating through strong consumer spending and fast rising house prices takes front page in most papers today.
The Times says that George's deputy David Clementi added to the fears through his statement that "the longer it goes on the sharper is likely to be the eventual correction" of house prices.
The buy-to-let market has already shown signs of falling off in parts of the country, The Times says, but the problem is the lack of supply of new housing in the key southeast market for those who still want to own their own homes.
Skewing the picture still further is action by lettings agencies to coordinate business in order to artificially prop up prices in the buy-to-let market in the face of an Office of Fair Trading investigation into estate agents.
The Times says lettings agencies want to restrict supply to keep buy-to-let prices firm, while prices for buy-to-own properties are rising on average by £140 per day at present.
The Scotsman says yesterday's comments are evidence that house prices are about to crash in places such as Edinburgh, Stirling and the west of Glasgow, leaving many people at risk of falling into the negative-equity trap.
Edinburgh has easily outpaced London as the fastest rising market in the past 12 months, which puts it most at risk of a downturn, The Scotsman says.
In other investor news, investors who lost more than half their savings in less than a year are to receive compensation from Aberdeen Asset Management in a move that may be copied by other product providers, according to today's FT.
The move is significant because Aberdeen was seen as the leading promoter of the split caps sector, and now is seen as the leading target for investors peeved that their money has been frittered away.
Split caps were often sold as low risk investments, but they have turned out to be anything but.
Aberdeen has inserted the thin edge of the wedge by admitting that its Progressive Growth unit trust, which invested in split caps, was mis-sold, and that it intends to "pay back investors original investments over time", the FT writes.
The split caps issue could quickly be forgotten if Japan, the world's second economy, goes into a faster downwards spiral again, and the FT reports that there are now serious fears even among the country's economics advisers that the government there could go bankrupt if it does not push through a tougher fiscal line.
In an interview with the paper, Hiromitsu Ishi, chairman of Japan's tax commission and "the most senior adviser on tax issues to prime minister Koizumi" said the country could go bankrupt in 10 years unless taxes were raised.
Other friction reported today involves the Scottish Investment Trust, which has launched an attack on two of its biggest institutional investors who have complained about a persistent discount and demanded the trust be split up.
Scottish Investment Trust says it has thrown out the proposals, adding that there was "no virtue" in the idea that returns could be improved by breaking up a company that has been around for well over 100 years, according to The Scotsman.
According to Cicero report
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