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Garvan Walshe was National and International Security Policy Adviser to the Conservative Party until 2008.

To Ireland for a wedding and the inevitable conversations with relatives unseen from some years about house prices – about the friend who had bought, for an astronomical sum a flat in Dublin’s once fashionable Smithfield development. Billed as an exciting new neighbourhood focused on a converted distillery, it is now being reclaimed by the gurrieris hiberniensis (distant relative of the chavus britannicus) native to the north inner city. He is now stuck with an enormous mortgage and negative equity. Or the cousin who spent some years commuting from Wexford, eighty miles from the capital because she couldn’t afford anything closer, but subject to repeated appeals from mortgage brokers to use her place as security for a sure fire buy-to-let investment.

All rather different from the talk on this side of the water which resembles that heard in Dublin circa 2006. First time buyers found themselves unable to get onto the property ladder. Estate agents insisted on showing clients around in groups. People got gazumped in the stampede to secure a house.

On no account, insisted growing numbers of property bulls, was this a bubble. The increase in property values was structural. Dublin had an expanding population. Former emigrants had returned. People were crowding in from the rest of the country in search of work. A weaker Catholic Church meant more, smaller, households were being formed. Even – and this had scarcely happened since the seventeenth century – foreigners moving in.

Each of these excuses should sound familiar to Mark Carney. The reliable indicators – the ratio of prices to incomes and prices to rents – all suggest there is one in London. Smithfield style developments have sprung up at improbable points on the Thames, close to little more than the Dartford crossing.

Bursting the bubble however would cause enormous short term damage. Millions of people in negative equity (“mortgage prisoners”, to use the over the top emotive terminology of this age). Quite a few on interest only mortgages too, and so faith is being placed in macro-prudential regulation. These are the targeted sanctions of central banking.

But they have a central flaw. A bubble is when people buy something (houses, tulip bulbs, facebook shares) not because of what it’s worth but because they think they can sell it on for more money. These macro prudential rules hope to halt London’s house price growth. But quite a lot of people have bought houses on the assumption their value will go up further. If prices stabilise they will find themselves stuck, and may come under pressure to sell. When interest rates rise, the pressure will become considerably more intense.

In a market as emotional as that for residential property, values aren’t set by long term expectations but by the feelings of the buyers and sellers in the market at the time. Small changes in sentiment can move prices very quickly. Perhaps that is why Carney insisted his first macro prudential measures would be too weak to actually do anything.

Like the first couple of rounds of sanctions against Russia they were supposed to be a signal of intent. Doves hoped that they would just be enough; hawks feared they would be understood as weakness.

Carney’s dilemma thus resembles nothing more than Angela Merkel’s over Ukraine. She is all too aware of the Russian threat, but has to carry a public reluctant to assert German power. She must take care not to stray too far from the consensus on what we might call her Foreign Policy Committee and show that if she does override the interests of her housebuilders (that is, gas companies) she has only done so after the most careful consideration.

The result of this division is a very gradual toughening of policy like Angela Merkel’s while the underlying phenomenon carries on. Her need to act only after demonstrating deliberation prevents her from being able to employ the tactical surprise required to jolt Putin into abandoning his Ukrainian adventure.

It’s now two weeks since Russia started supplying its allies with (oldish) tanks. “Sectoral” energy sanctions are at last, to squeals from energy firms, being bruited. The best hope now is that she conveys to Moscow the prospect of a slow implacable siege. The risk, in Russia as much as the housing market, is that the inevitable reckoning will be delayed rather than avoided.

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