Robert Shiller, one of this year's Nobel memorial prizewinning economists, has long been my guide to bubble spotting. Perhaps in the hope of teasing fellow economists he has taken to treating a bubble as a condition best diagnosed with a psychiatrist's checklist: "Sharp increases in the price of an asset like real estate or dotcom shares; great public excitement about said increases; an accompanying media frenzy …" Tick, tick, tick.
The most interesting question is the hardest to answer: is London's innovative and cultural dynamo in danger of slowing down? Perhaps rich Russians and Saudis will live in Chelsea, their needs taken care of by armies of Poles commuting in from Bromley and Walthamstow, while French and American bankers will sleep four-hour nights in luxury flats in Canary Wharf and work flat-out the rest of the time. The entire mega-city, in this scenario, would contribute to the UK only in the way that an oilfield in the Thames Estuary would. The capital would be a plug-and-play, could-be-anywhere financial hub grafted on to a London experience theme park for visiting billionaires.
Perhaps. I am struck by how heavily this dystopian vision leans on the idea that foreigners are to blame – an idea that always seems to engender panic and shut down the critical faculties. "It's foreign investment, buy-to-lets," one estate agent recently told a worried Guardian columnist. But that does not mean Brits cannot live in London. They can – but often as tenants of a foreign landlord who may well have overpaid.