Finland

Photograph, uncredited, of girl and submarine on one of the many small islands in the Bay of Finland neighboring Helsinki where I am Monday night. I have been fortunate to know this city on five or six occasions these last four years and every time I visit I am taken by its charms. There remains a strong Russian or Soviet influence in the architecture and the buildings box-like and strong with differing drab colours in the city center where I stay at The Kamp. The bay is completely frozen and the two towering pleasure ships must be tugged to port behind ice-crushers. Otherwise the docks, which bustle in the spring and summer, deserted. Overlooking everything is the glorious, Finnish Russian Orthodox Church with its roots in the medieval Novgorodian missionary work.

Reuters reports that one in five US mortgages underwater with the sun-states off by 50% in over-built areas. In the UK housing prices down but no where near reflective of the correction taking place in public or private markets. I see this in private equity where funds, by design, meant to suffer recessions by investing and reap rewards during good times - this why they are ten-year vehicles. Inside the portfolios, however, one can see the growing destruction wrought by leverage which may wipe out a class of vintage years. Today now there is grumbling about bank covenants being breached and in some cases like Candover Partners, one of the UK's largest buy-out funds, the closure of business - Candover bailing out of its recent €5 billion fifth fund. Even the secondary market is dead - when you don't know the bottom, you don't buy the assets. All this may suggest that we have pain to suffer, which has not yet passed along to the single-biggest household asset - property. While the decline is ongoing and bloody in the US, London still feels rather content with the run-ups since '95 and unwilling to depart with its "fair value." As the recession bites deeper, this will change I fear and once gone - confidence with it.

Madeleine and I play a game of tag-your-it on the playground before school. Eitan has trials for the Richmond Borough Swimming Gala this afternoon, which I will watch from the stands. 45 schools compete and Eitan has been selected, after a school competition, to represent us.