What is happening in the UK market

One thing we've kind of assumed is that the next bubble won't be in housing. It never seems to happen that the next bubble is the same as the last one -- it's always something else that comes out of nowhere, while we had our eyes turned bakcwards.

But, if you print enough money, and the banks are flush, and the one thing the banks now how to do is lend to homebuyers, well then you might get a double-bubble.

Here we're not seeing much of a rebound -- everyone expects home prices to show a dip come August -- but something's happening in the UK, and regulators are freaked out.

Daily Mail: The Bank of England has been taken aback by the recent rebound in house prices and is watching the market carefully for any signs of excessive 'exuberance'.

The comments to economists at a meeting at the Bank came amid signs of a recovery in household confidence and a firmer set of lending figures.

Property values have staged a marked rebound in recent months, with the Halifax reporting the average price now stands at £160,973, almost the same level as in December 2008.

The Bank called the meeting to discuss its quantitative easing scheme to City analysts. Coupled with rates of just 0.5 per cent, the £175billion scheme amounts to an unprecedented effort to refloat the economy.

Governor Mervyn King has previously suggested he might take the additional step of cutting the rate paid to banks on their BoE reserves, in order to discourage them from hoarding cash. Officials yesterday suggested any such move is a long way off.

A spokesman for the Bank refused to comment on the meeting, which was confidential.