Friday, October 27, 2006

US housing bust coming to an end?

Greenspan: Housing slump spares economy

Former Federal Reserve Chairman Alan Greenspan said Thursday the U.S. economy was pulling past a sharp housing sector downturn. Turning to the U.S. economy, he said it had gone through a very weak patch during the summer, due to an accelerating decline in housing construction and a slowing pace of inventory building. But the outlook was now "reasonably good." "Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third quarter."

Posted by little professor @ 08:39 AM (575 views)
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13 thoughts on “US housing bust coming to an end?

  • Greenspan has to talk the US economy up as he wants his reputation left in tact for long enough to blame someone else..

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  • The Capitalist says:

    He’s scared to death that his policy of money for nothing has created a bubble which is making a whistling sound. Poor old Ben now is the patsy in all this. With ARMs reverting to floating rate over the next 12 to 18 months this is going to be a bloodbath.

    UK will go through the same scenario in 12 months time.

    Hold cash, buy gold, rent your home.

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  • sold 2 rent 1 says:

    This is a critical time for the US now.

    If sentiment turns and consumers stop buying houses and going to the malls then it is recession straight ahead.

    The Fed has its hands tied with inflation high and no room for IR cuts

    The front cover of “The Economist” last week was that if the US stalls then Asia can keep on going. What I don’t understand is that if Asia keeps booming how will this help the US?

    Asia’s boom will just keep inflation and world IR high. It’s not as if the US can have an export-lead (to Asia) recovery to get out of this mess. I just can’t see Ford and GM being able to sell cars in Asia now Americans don’t want them.

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  • I bet Bernakes happy with this old fool saying everything is rosey whilst in the real world he’s walking a tightrope between inflation and growth!

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  • Spin spin spin ….. reminds me of Nero and his fiddle

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  • “The worst is probably behind us”

    Probably?

    Hmmm……maybe.

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  • The Greenspan “put” alive and kicking…this comment on US asset markets coming from the guy who eased US Fed Funds in 1998 by 75 basis points while GDP growth exceeded 4%, all because…the hedge fund LTCM was collapsing (Russia’s default) and causing US capital market liquidity to dry up. Effectively, support the markets even though they cronically mis-priced credit risk. Privatise the profits, socialise the risks.

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  • The economist article suggested that whatever happens in the U.S and the west, the economies in the east will keep up demand for international resources. e.g. oil and gas. The boom over there is now self-fulfilling with a growing middleclass increasing demand. Therefore their currencies should become stronger.

    The only thing that America provides which no one else can is hi-grade computer technology and pharma (including Gm crop) products. Software, services, cars etc… are all made in other parts of the world often better in quality terms.

    What this means for Europe/UK depends on whom we decide to follow, and whether we can sell anything to the eastern countries. Contrary to what people say, we do make a lot of cars here in the UK, most of them for the UK/US and EU. We do however export them back to places like Japan so there is a chance we may not get left behind.

    Finally, during passed tipping points the US has got away with printing more money because it was the defacto international currency, this time round it has the Euro to contend with, and both India and China have such huge economies the US will have trouble maintaining the value of the dollar.

    BTW: the US and the UK make a lot of money from arms sales, most of which we used to sell to the Middle East and Africa. India and China (more so China) prefer to buy from the former soviet block or knock off their own. But I don’t know what could happen there in the long term.

    Finally; the worst case is not recessions, but the euro maintaining its value and people start trading oil/gas in the Euro. I guess if trade between the east and the EU remains buoyant while the US becomes more protectionists towards its flagging industries we could see that happen. Then I think it will be all out war.

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  • Thetidewillturn says:

    …if the outlook is “reasonably good ” for the US economy then why has one of the big four UK banks recently put the US on a recession alert for 2007 ????

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  • Sam….

    It has been said before that Iran’s biggest potential weapon isn’t the nuclear bomb, but its own oil bourse, whose grand opening in euro currency seems to be continually stalling, but always with the threat it will surface and take hold. Not to start any unfounded rumours, but I sometimes wonder if that was the real issue in Iraq, that Saddam may have been planning the same. There was news that he was stashing euros and dollars in anticipation of controlling markets. How realistic that is, I don’t know. But there has been war indeed.

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  • Sam….

    It has been said before that Iran’s biggest potential weapon isn’t the nuclear bomb, but its own oil bourse, whose grand opening in euro currency seems to be continually stalling, but always with the threat it will surface and take hold. Not to start any unfounded rumours, but I sometimes wonder if that was the real issue in Iraq, that Saddam may have been planning the same. There was news that he was stashing euros and dollars in anticipation of controlling markets. How realistic that is, I don’t know. But there has been war indeed.

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  • India, I think if Iran gets a hold of a nuclear bomb it will be a bigger potential weapon than it’s oil. Anyway Iran is asking for a nuking at the moment and if they carry on with their current behaviour then will be stopped by any means necessary. I don’t think we’ll ever know the truth behind Iraq but at least that’s saddam taken care of.

    Which first? North Korea or Iran for a blasting? Neither if they stop their nuclear ambitions. The fact we are talking about this shows how unpredictable the future is. Britain could possibly have near zero rates in a few years time if it goes into major recession. Who knows?
    Maybe tony blair will come out of the closet and marry gordon brown?

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  • Nohpc….

    Your casual comments on “nuking” millions in their beds explains a great deal about your blithe recommendation that Brits should be expected to take on impossible financial burdens in order to have a bed they can call their own. I believe even the supposedly trigger-happy Ahmadinejahd would give more thought to the subject of Armageddon than you propose.

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