There are several routes that get us from a credit squeeze to a recession. Last week I wrote about a falling dollar as a transmission mechanism. The property market is another one, at least for some European countries.

Over the past decade, we observed large housing booms in the US, where property prices almost doubled between 1996 and 2006 in real terms. Price increases were particularly strong in coastal regions. We have also seen extreme movements in the UK, Spain, Ireland and in central Europe.