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30/06/2008 - Back to Reality

Investment Adviser printed this foreword recently:

Property prices have plummeted. Oil prices are forcing people off the road. The era of cheap flights is over. Isn’t it about time someone stood up and said good, good, good?

Property prices were horrendously overpriced. Chelsea cupboards costing a quarter of a million pounds became common. First-time buyers were priced out of the market and the country was awash with empty homes caught in the buy-to-let mania. Everybody said a bubble was emerging in the market. Why are we so shocked by the fact it has burst?

Fuel costs have risen dramatically in the last six months. Car owners are now thinking of other ways to get to the office. Use of public transport has shot up. You now cannot move for the thicket of bicycles wending their way to work. Isn’t this what we have been arguing for over the last five years? Climate change has forced us to look again at how we consume. Yet it took financial pressure to ensure we actually started to modify our behaviour. Good? More like tough. And that final environmental anathema: easyJet, Ryannair, etc, etc. the days of flying to Greece for £30 could soon come to an end. Fewer flights are mooted as a mean of expending fuel more efficiently. Again, why is this bad?

How many times have you flown into Heathrow only to find yourself parked and circling for an hour as the authorities attempt to cram yet more planes onto the already overcrowded runway?

In the emerging markets, consumption – of everything – has increased as the countries become more developed. This is only natural and to be encouraged. But – in the developed West – if we engineer a corresponding drop in our spending and consuming habits, then maybe, just maybe this planet will still be habitable or our children and our grandchildren.

Investment Adviser is a weekly newspaper published by The Financial Times Ltd. No responsibility for loss occasioned to any person acting or refraining from acting as a result of material in this publication can be accepted.

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