Friday, Oct 26, 2007
It's a bloodbath across the pond
The Times: US rate cut looks certain after new data
US house prices slumped yet further last month, while another steep drop in the numbers of homes being sold pushed the size of stockpile of properties on the market to a 22-year high.
Another cut in interest rates from the Fed next week is now a racing certainty, with economists expecting that the US central bank will match September’s half-point cut.
"There is massive downward pressure on house prices,” said Paul Ashworth of Capital Economics. “The credit crunch has clearly had a devastating impact on an already weak housing market. This is much worse than even housing bears like ourselves thought it would get.”
Posted by little professor @ 10:18 AM (1482 views) Add Comment
16 Comments
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1. trough2010 said...
50 basis points cut and record oil prices?? hmm...
2. planning4acrash said...
When do you let the housing market correct itself naturally and protect your currency? Because the housing market will correct, come what may, a currency crisis is the choice of the American central bank and is not inevitable.
3. tyrellcorporation said...
An Inflation frenzy and a plunging Dollar - Nice one Greenspan/Bernanke! The US economy is now on a knife edge and a drop in IRs may actually have the reverse effect of creating a flight from US assets.
4. Techieman said...
cut the rates, cut the rates, hmmmm will we get to the stage when we are "pushing on a string"?
5. fahrenheit451 said...
I agree, perhaps they should increase the base rate, this might:
- improve the money markets
- strengthen the dollar
- give inflation a push (which will then erode the value of the property market)
- make rents more affordable (for those who cannot manage their finances)
Give it about 2 or 3 years and recovery is in sight.
If 20% or more, of children in the UK Comprehensive Schools, cannot read (let alone write) by the time they are 7 or 8 years old, it is probably much worse in the USA. Any hope that they will be able to manage their finances is just a dream, so for their own sake, perhaps, they would be better advised to stay in the rental market.
(And computers just make us lazy with spelling and not checking our grammer, etc.)
6. Deadspider said...
GrammAr :-)
7. Janitor said...
Brilliant. Housing should never be allowed to be a "market". It's a basic human right. I hope the credit crunch bites so hard to the level where houses can be bought for crash rather than credit, so people can work hard and buy outright so they can put their money on real investments; e.g. the education of their children.
8. su said...
"If 20% or more, of children in the UK Comprehensive Schools, cannot read (let alone write) by the time they are 7 or 8 years old, it is probably much worse in the USA."
I may be wrong but I think UK children start school at a younger age than USA and most of Europe.
In Germany, for example, children start school at age 6 and have 4 years at primary school, only attending classes in the mornings. Germans are not known for being numerically backward or illiterate, so can we learn anything from their education system?
Does anyone know how the American education system works?
9. Sinner_the_saint said...
"Does anyone know how the American education system works?"
It doesn't. You just have to look at their president.
10. Techieman said...
Su you should read a couple of the Michael Moore books to see how the US education system DOESNT work!! :-)
11. Ericthered said...
Su Said,
Does anyone know how the american education system works?
Not really sure but the film Bowling for columbine by michael moore makes interesting viewing.
12. inbreda said...
grammar?
13. inbreda said...
Gold is flying - la la la la
dollar is dieing - tum diddly dee
What a glorious october morning it is turning out to be
:-)
14. shipbuilder said...
Is this article trying to blame the housing crash on the 'unforseen' credit crunch? Didn't the crunch happen beacause of an overinflated housing market? The circles of logic and blame will get ever more bizarre in the near future, I suspect.
Cutting rates again looks like a ridiculous move - once people are in debt, they're in debt and cutting rates won't get them spending again.
Why are we so afraid of the crash and recession that's needed? Well becuase for the last 20 years the financial industry and banks have been perverting market capitalism into a no-lose scheme for themselves, becuase they can. Hence the taxpayer-funded bailouts for over-extended companies that would crash and burn in a real free-market - supposedly for the good of the economy, but who really wins? Yet again, they do.
15. paul said...
That's it shipbuilder, again a deliberate confusion of cause and effect.
Everyone's trying their best to look panic striken but behind closed doors everyone knows it was in the pipeline.
16. An Bearin Bui said...
It's crony capitalism at its best: the free market is used as an excuse to cut government spending, lower wages and allow house prices to rise out of the reach of the majority of working people but then as soon as the wonderful free market goes the other way, the interest rates are slashed, bail-outs at taxpayers' expense are organised (for companies, not poor people) and figures are massaged.
As for George W. Bush being a good example of the US education system not working: he's actually an example of the private, fee-paying US education system not working because he went to fee-paying schools and private Ivy-League Yale. He never stepped inside a state-funded education institute in his life (except to read My Pet Goat to those kids on "9/11"). Maybe that's what's wrong with him...