In my opinion the main reason for the house price boom has been the easy availability of debt to finance the purchase of a home.

6 or 7 times earnings are not unheard of, 30/40/50 year mortgage terms, zero deposit requirements (upto 125% of the value of the property), huge multiples of earnings, an increase in interest only mortgages and lax lending requirements (i.e. very little proof of income or ability to cover the repayments).

This has created an environment which encouraged house price inflation (HPI).

Now that credit availabilty is tightening I believe that we will see a dramatic fall in house prices. Put simply, people will not be able to get the financing required to pay the asking prices of property, property prices will therefore need to fall to meet the lower available credit limits.

The supply and demand argument often used to explain HPI is, in my opinion, false. Granted, it does contribute soemwhat to HPI, but my overriding point is that house prices are a function of available credit, i.e. as credit levels increase then house prices will increase to soak up this credit.

As estate agents increase the price of property, mortgage lenders increase the amount they would lend, therefore estate agents could increase prices more, mortgage lenders would then lend more etc. etc....

Put simply, if there was no limit as to how much a lender would lend, there would therefore be no limit to how high house prices could go.

I believe now though that we are reaching the end of this process.

Today we were out for a walk and decided to see how the infamous Clissold Leisure Centre in North London was progressing. We were not suprised to see that it is currently under construction and surrounded by scaffolding.

For those of you not aware of the debacle, here is a brief history of Clissold Leisure Centre:

• 1993: Hackney Council set a £2m budget for Clissold Leisure Centre, and an opening date of 1999.
• 1998: The estimate went to £8m and then when Stephen Hodder, the award winning architect was comissioned, the price went to £12m.
• 2000: A model of the leisure centre was taken on a world tour in an exhibition called "12 for 2000: Building the Millennium", organised by the British Council, "It is a reflection of the UK on the verge of the 21st century," said Chris Smith, Culture Secretary at the time.
• June 1999: The original opening date comes and goes.....
• February 2002: The centre finally opens to the public!
• November 2003: The centre is closed "temporarily" for investigation into various problems. It has been closed ever since.

It's estimated repairs will cost £13m raising the overall price to £45m.

It might be open in time for Christmas 2007, 14 years after it was first planned and 4 years since it closed temporarily.

Check out the unofficial website for the latest news.

This has to be the most ridiculous quote of the week. A US delegation, led by Senator John McCain, visited a market in Baghdad. The delegation included Republican Mike Pence who offered up this quote about his experience of looking around a Baghdad market:

"Like a normal outdoor market in Indiana in the summertime"

What!!

I never been to a market in Indiana but I don't suppose this description applies:

"More than 100 soldiers in armoured vehicles as attack helicopters circled overhead. Soldiers redirected traffic, restricted access to the Americans and sharpshooters were posted on the rooftops."

Check out the photograph of McCain wearing bullet proof vests flanked by a military escort as he wanders around the "normal outdoor market"....

So far the most recommended comment on the BBC News Site regarding what do about the 15 British sailors currently being held by the Iranians is this:

Added: Saturday, 24 March, 2007, 12:47 GMT
"48 hours to release our troops, or Natanz and other sites reach 10,000 degrees in 3 seconds."
Recommended by 387 people

I am speechless.

This is the most recommended comment by far, and it is not alone. There are comments calling for the bombing of Iran's nuclear plants, firing cruise missiles at downtown Tehran etc, etc...

And I am supposed to be living in the civilised Western world......

I received several emails today with a "40% off wine at Threshers" voucher attached. Is this too good to be true?

After a little research on the Internet I discovered that Threshers offered the same voucher in December. The campaign was obviously successful then otherwise they would not be offering it again.

Normally Threshers offer 3 bottles of wine for the price of 2, i.e. a saving of 33%. This offer is not valid with the 3 for 2 offer, so what they are really offering is a saving of 7%, not that great really.

However this campaign gives them lots of publicity, people think they are taking advantage of a "mistake" by Threshers, also when Threshers accept the vouchers but state that they didn't expect so much demand, people think Threshers are the "nice guys" by honouring the offer.

It is called viral marketing, if you trace the email back it probably originates in Threshers Marketing Department......

I thought I was clear on my views on global warming, I thought we all needed to act now to save the planet.

I have been doing my bit, we've recently changed electricity suppliers to Good Energy, electricity from 100 renewable sources, we also recycle as much as we can.

Maybe I thought wrong.

After watching the Channel 4 documentary The Great Global Warming Swindle I am not so sure. I can't say that I have totally changed my mind, but I do wonder what the real facts are and what the real motives are behind the Green Bandwagon.

I will continue to "do my bit" but I will try to find out more as to what is happening to our planet, and what, if anything we can do about it.

My site is now being indexed by Google!

I know this because if I search for "site:andrewsinclair.co.uk" on Google, this returns all the pages from my site that are indexed by Google (currently 7 pages; my home page, an article about Cambodia plus 5 blog related pages).

The initial results for my test search terms are:

• "andrewsinclair" - position 3 on the results page
• ""andrew sinclair" - position 4 in quotes and not in quotes
• ""andrew sinclair website" - position 4 (not in quotes)

So, my site is now indexed my the 3 top search engines, I will now work on adding more content and hopefully attract more visitors to my site and improve my search engine rankings!

My website is now indexed by Yahoo!

Unlike Live Search, only my home page is currently in the index. I know this because if I search for my domain name "andrewsinclair.co.uk" then only one result is returned, i.e. my homepage, unlike Live Search where 8 of my pages are returned.

Anyway, back to Yahoo, these are the initial results of searching for my website on Yahoo:

• "andrewsinclair" - position 34 on the results page
• "andrew sinclair" - position 37 enclosed in quotes, 59 not in quotes
• "andrew sinclair website" - position 6 (not in quotes)

Compared with LiveSearch:

• "andrewsinclair" - position 3 on the results page
• "andrew sinclair" - position 1 in quotes and not in quotes
• "andrew sinclair website" - position 1 (not in quotes)

There is some debate as to whether meta tags are used by the search engines, well, all I can say is that if I search for "andrew sinclair newcastle" then my website appears at the number one position. The only place on my entire site where the word "newcastle" appears is in the meta tag "keywords".

This would indicate that Yahoo uses meta tags as part of it's page ranking process. However, if I search for "andrew sinclair newcastle" on Live Search, my page does not appear anywhere in the first 100 results; obviously Live Search does not place as much importance on meta tags as Yahoo.

Still no sign of my website on Google though.

I have recently built my own personal website, it went live a couple of weeks ago. My website has been crawled and indexed by Microsoft Live Search already, but not by Yahoo or Google.

To check where my site/pages fit within the Live Search hierarchy I performed the following searches and noted the position within the search results where my page appears (these words are simply words that appear on various pages, I have not done any optimisation):

• "photographs Iran" - position 39 of 163,313 results
• "photographs Iran trip" - position 7 of 163,064 results
• "photographs trip Iran" - position 3 of 163,313 results
• "cambodia siem reap tonle sap floating village" - position 17 of 6,986 results
• "Mexico City Zocalo Palacio Nacional" - position 79 of 5,500 results
• "website visible web search index" - position 44 of 849,957 results

I am very suprised by the position of "photographs Iran", this perhaps demonstrates what I have read about Live Search, i.e. it gives high priority to new content (also there can't be that many sites out there of photographs of Iran!).

As an experiment I will concentrate on moving the Iran photographs page up the rankings. I will add keywords to the text, change the title, meta-tags etc. and see what, if any, difference that makes to the rankings. I will update this blog as I learn more about search engine optimisation.

There is an interesting piece in the Independent today by Robert Fisk concerning disinformation in the Iraq war. As expected it makes depressing reading, and as usual Fisk is one of the few reporters to look behind the propaganda:

"Accurate information in Iraq is like water in the desert: precious, rare, often polluted"

I highly recommend his book The Great War For Civilisation (which I am currently reading), it is not the easiest book to read but it gives you a comprehensive insight into the history of the Middle East.

Is the long awaited crash happening? or is it a blip? World stock markets tumbled today. The Yen gained over 2.5% versus the dollar, is the carry trade unwinding?

The next few weeks could be very interesting...

Officially UK inflation is running at 2.7%, which is very low by historical standards, yet I don't know about you but I feel that the cost of living is increasing at a far higher rate.

For example, I often buy a juice drink from Sainsbury's, it costs me 99p, and has done for at least 6 months, the reason I remember the price is that it is often all that I buy. Recently it has gone up to 1.05, which is an increase of just over 6%, double the rate of inflation.

This got me thinking, how much have other items gone up? I really have no idea, I rarely look at the price of goods in the supermarket, and cannot tell from one month to the next if prices have gone up and by how much.

So, I will be monitoring basic household items from Sainsbury's and from this I will attempt to see what their rate of inflation is. The basket of goods I have chosen and their prices (according to Sainsbury's website) are below (all prices in British pounds). I will revisit this list in future updates.

• Skimmed milk 2pints 0.64
• Cheddar Medium Matured 1kg 5.19
• Medium Free Range Eggs 6 0.99
• Hovis Wholemeal Medium Sliced Bread 800g 0.99
• Tomatoes (loose) 1Kg 1.38
• Broccoli (loose) 1kg 1.28
• Bananas (loose) 1kg 0.85
• Beef Sirloin Steak 1kg 12.87
• Chicken Skinless Breast Fillets 1kg 11.52
• Cod Fillets 1kg 8.48
• Kellogg's Cornflakes 500g 1.38
• Heinz Baked Beans 415g 0.46
• Sainsbury's Basmati Rice 1kg 0.90
• Napolina Spaghetti 1kg 0.99
• Napolina Chopped Tomatoes Tin 400g 0.67
• Cadbury's Dairy Milk 250g 1.39
• Nescafe Coffee Granules 100g 1.94
• Kronenbourg 1664 Lager 4 x 440ml 3.79

I thought I would kick off my first blog entry with news that the Bank of Japan has, as expected, raised interest rates from 0.25% to 0.5%.

Now you may be thinking "so what, central banks often raise or lower interest rates", well the repercussions, like the butterfly flapping it's wings, could reverberate around the world over the coming months.

The reason? A phenomenon called the "carry trade" which basically involves borrowing in a cheap currency (in this case Japanese Yen), and investing the proceeds in a higher yielding asset. With Japanese interest rates being so low that means pretty much any, and every, asset on the planet.

The result of this has helped to stoke the fire of inflated asset prices around the world, from fine art and wines, to property via equities and commodoties. Now, as Japanese interest rates rise (due to a buoyant Japanese economy), the Yen will strengthen and the carry trade will become increasingly unattractive, not only due to the increase in cost of borrowing but also due to the change in the exchange rate; those dollars that you now own will buy less Yen when you cash in your investment!

Anyway, like any hypothesis in finance time will tell, maybe we are in for a repeat of the 1998 Asian crisis when the Yen surged 20% in less than two months! The world of international finance could be heading on a collision course over the coming months, hold onto your seats!

On a lighter note (excuse the pun) another story which caught my attention, but strangely wasn't widely published, was the news that Australia is to ban the traditional incandescent lightbulb by 2010.

Energy saving light bulbs use up to four times less electricity than traditional bulbs and with lighting accounting for around 10% of our domestic electricity usage the savings can be significant. What is suprising is that it is Australia that is taking the lead here, maybe other Governments can follow and join the "War on Lightbulbs"!

© Andrew Sinclair 2007 [andy@andrewsinclair.co.uk]