  In the aftermath of the burst of the ``new economy'' bubble in 2000, the
Federal Reserve aggressively reduced short-term rates yields in less than two
years from 6.5% to 1.25% in an attempt to coax forth a stronger recovery of the
US economy. But, there is growing apprehension that this is creating a new
bubble in real estate, as strong housing demand is fuelled by historically low
mortgage rates. Are we going from Charybdis to Scylla? This question is all the
more excruciating at a time when many other indicators suggest a significant
deflationary risk. Using economic data, Federal Reserve Chairman A. Greenspan
and Governor D.L. Kohn dismissed recently this possibility. Using the theory of
critical phenomena resulting from positive feedbacks in markets, we confirm
this view point for the US but find that mayhem may be in store for the UK: we
unearth the unmistakable signatures (log-periodicity and power law
super-exponential acceleration) of a strong unsustainable bubble there, which
could burst before the end of the year 2003.
