Friday, Feb 23, 2007
This link is worth it just for the picture!
Atlantic Free Press: The Second Great Depression
This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”.
Posted by lvmreader @ 04:16 PM (165 views) Add Comment
9 Comments
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1. lvmreader said...
December’s figures indicate that foreign investment is drying up and the world is no longer eager to purchase America’s lavish debt. The only thing the Federal Reserve can do is raise interest rates to attract foreign capital or let the dollar fall in value. The problem, of course, is that if the Fed raises rates, the real estate market will collapse even faster which will strangle consumer spending and shrivel GDP. In other words, we are at the brink of two separate but related crises; an economic crisis and a currency crisis. That means that the unsuspecting American people are likely to be ground between the two mill-wheels of hyperinflation and shrinking growth.
2. Dabreh said...
The storm clouds are gathering over the global economy. Uk next?
3. Bangybongo said...
hehehe
4. This comment has been removed as it was found to be in breach of our Blog Policies.
5. harold said...
Will the real stagflation please step forward.
6. inbreda said...
Do Glorious and NoHPC have any opinion of articles like this? They must surely be able to see that property is doing very badly in the US, so when they read this report do they just not beleive it? Or do they think it's a valid opinion but wrong for some reason? Or do they think it simply wont affect the UK? Or do they just stick their heads in the sand?
Genuinely, I would like to know.
7. monty said...
Err, I'll take a guess that it's because, unlike some on this forum, NoHPC and Glorius do not read an article on the state of the US economy and immediately extrapolate it word for word onto ours. Granted, there are some similarities but there are very many more differences, most of which I've pointed out before. Just because there is overbuild there does not mean there is overbuild here. We are at very different points in the interest rate cycle, we have different money supply numbers, trade deficits and tax regimes. The US in recession may well affect us just as it will affect all their trading partners but it does not immediately imply that we are in recession, does it now?
8. harold said...
"Just because there is overbuild there does not mean there is overbuild here."
The crash in the US is not due to overbuild; it's a symptom, but not the cause. Were lots of people to default on their mortgages here, repossessions rise, and properties to flood the market, no doubt some commentators would erroneously claim that it was all due to overbuild too.
9. inbreda said...
Monty - I wasn't implying that the article can be used as evidence of what would happen here - I genuinely wanted to hear their opinions of it, which is why I suggested they may just think it won't happen in UK. You're right that it doesn't mean we are in recession just because the US is. You are right there are differences. Personlly I think the similarities are stronger now than at any other time.