For they are affected by the same macroeconomic viruses that the United States is, only these viruses are more concentrated there, their economy is even less diversified, and their bubbles even larger.
What's worse is that the nuimber of interest only and short term arms over there is staggering relative to the US and very few have a 30 year fixed.
The brits are in deep shit, and its just starting. I wonder who the major bank players are on those ARM mortgages. Short those mortgage/bank stocks or start buying puts.
there are plenty of hedge funds that tied in with mortgages in the uk. look them up. its not that hard. some of them have already capitulated. other then that the high street banks. hbos. aliance and leicester. b&b. etc etc
http://www.georgesoros.com/lse-creditcrisis08-video In this interview, towards the last 20 minutes, Jeremy Grantham of GMO gets up and asked Soros a question- He points out his own research saying how overbought UK real estate is relative to household income and that the prices could mean revert 50%.... His July report is here: http://www.investmentpostcards.com/wp-content/uploads/2008/07/gmo-quarterly-letter-july-2008.pdf
It depends how fast the market comes off. 50% in a year then a few big banks go under. If it takes longer and the government keep supporting the market by letting the council buy the houses then banks will just get owned by sovereign wealth funds. Barclays is already 16% owned by Singapore but if it needs more capital at a lower price than already issued they have to give more stock to Singapore. It is called death spriral financing.
That's easy - bet against the pound, UK banks & lenders, property companies etc. Buy gilts and Short Sterling interest rate futures. The problem is that this is to a large extent priced into the market - sterling is off 25 points in 6 weeks, and banks & property stocks have been hammered for 2 years+. Even if there is more downside (which IMO there is), a lot of the move has already happened. There will probably be sharp short-covering rallies, making it far from a one-way bet.
I think that was exactly the point Daal was trying to make. There is likely a unfavorable risk/reward ratio betting on a collapse of the British economy from here. The OP made it sound like it was risk free money.