G7 Discussing Slumping US Housing
From Bloomberg, accentuating salient points we have already brought to the attention of our Naybob readers: Sales of U.S. existing homes have declined every month since G-7 officials last met in April.
The International Monetary Fund yesterday branded the slowing U.S. housing market a ``key risk'' to expansion.
With the world's most dominant consumer likely to retrench in the aftermath of a bursting of its housing bubble, the rest of the world can hardly be expected to sidestep this blow,'' said Stephen Roach, chief economist at Morgan Stanley in New York.
Some G-7 members are already worrying. The Bank of Canada last week left interest rates unchanged in part because U.S. spending might ``slow more rapidly than expected.''
Flagging home values would remove a source of wealth that has helped drive consumption and growth during the past five years. Housing accounts for about 15 percent of the economy.
Crude oil slid this week on signs the world economy is slowing, and gold, copper, aluminum and silver tumbled.
``The problem is the U.S. economy has been sustained by consumption,'' Nobel laureate Joseph Stiglitz, former chief economist at the World Bank, said in an interview. American consumers ``were taking money out of their houses. That isn't possible if house prices start to go down. This was a crash waiting to happen.''
If Americans stop shopping, foreign economies that rely on exports to the U.S. may also stumble. Morgan Stanley's Roach estimates U.S. households spent $8.7 trillion last year, a fifth more than the Europeans, nine times more than the Chinese and three times more than the Japanese.
Andrew Cates of UBS AG calculates the U.S. generated 25 percent of global growth in the second quarter. The 12-nation euro economy accounted for 16 percent, China 13 percent and Japan 10 percent.
The Nattering One has hung his hat on this from day one: We catch a cold, they get the flu, so our trading partners will continue to buy our bonds to suppress rates and support our dollar. To do otherwise would result in financial and political hari kari on a global scale.
The International Monetary Fund yesterday branded the slowing U.S. housing market a ``key risk'' to expansion.
With the world's most dominant consumer likely to retrench in the aftermath of a bursting of its housing bubble, the rest of the world can hardly be expected to sidestep this blow,'' said Stephen Roach, chief economist at Morgan Stanley in New York.
Some G-7 members are already worrying. The Bank of Canada last week left interest rates unchanged in part because U.S. spending might ``slow more rapidly than expected.''
Flagging home values would remove a source of wealth that has helped drive consumption and growth during the past five years. Housing accounts for about 15 percent of the economy.
Crude oil slid this week on signs the world economy is slowing, and gold, copper, aluminum and silver tumbled.
``The problem is the U.S. economy has been sustained by consumption,'' Nobel laureate Joseph Stiglitz, former chief economist at the World Bank, said in an interview. American consumers ``were taking money out of their houses. That isn't possible if house prices start to go down. This was a crash waiting to happen.''
If Americans stop shopping, foreign economies that rely on exports to the U.S. may also stumble. Morgan Stanley's Roach estimates U.S. households spent $8.7 trillion last year, a fifth more than the Europeans, nine times more than the Chinese and three times more than the Japanese.
Andrew Cates of UBS AG calculates the U.S. generated 25 percent of global growth in the second quarter. The 12-nation euro economy accounted for 16 percent, China 13 percent and Japan 10 percent.
The Nattering One has hung his hat on this from day one: We catch a cold, they get the flu, so our trading partners will continue to buy our bonds to suppress rates and support our dollar. To do otherwise would result in financial and political hari kari on a global scale.
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