US real estate market recession may cause serious economic drag

US real estate market recession may cause serious economic drag
Oct 25, 2007 03:38
DREAMLIFE Points: Join Date: Sep 5, 2007 Status: offline	Influenced by the subprime crisis, US real estate market recession has become worse and worse. The sales of houses in September dropped about 8%, hitting a new record low. What's more, the sharp drop in housing demand shows that the real estate market has entered its worst period. The constant falling in housing prices and the drop in housing demand surely have negative impact on economic growth. Last month, the Fed cut the interest rate to prevent economic recession. However, it did not meet their expections. Dollar has been depreciating for a while. If US can not find effective ways, I guess the economy will really go into its downturn.

Oct 25, 2007 03:38

DREAMLIFE
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Join Date: Sep 5, 2007
Status: offline

Influenced by the subprime crisis, US real estate market recession has become worse and worse. The sales of houses in September dropped about 8%, hitting a new record low. What's more, the sharp drop in housing demand shows that the real estate market has entered its worst period. The constant falling in housing prices and the drop in housing demand surely have negative impact on economic growth.

Last month, the Fed cut the interest rate to prevent economic recession. However, it did not meet their expections. Dollar has been depreciating for a while. If US can not find effective ways, I guess the economy will really go into its downturn.

Oct 25, 2007 11:11

APAULT
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Join Date: Mar 11, 2006
Status: Offline

The housing issue is not a great problem, except for a few lenders and their shareholders and for some of the borrowers (who should not have been given loans) who can sometimes lose their small savings when they are foreclosed.

The big issue has been raised by Greenspan (ex head of the US reserve bank) for several years. Every year the US govt borrows billions of dollars from the rest of the world. This was fine while lenders trusted that the US economy ws strong enough to pay the interest on the loans and when required, repay the loan. However, there MUST be a point where lenders decide that the US's ability to service the loans is becoming uncertain. Then how does the US pay for the current level of expenditure?

In Greenspan's view, that point is close. So what? Well, the US must cut back on its consumption. That will hit US industry and that will impact on th rest of the world.

It is ironic that the US has been financing its invasion of Iraq on money borrowed overseas, no doubt much of it from countries that have condemned the US for this action!

Oct 30, 2007 03:37	#2
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	How about now? Dollar has been depreciating for some time, hitting the record low in history. Many foreign owners of US bonds start to sell them. Do they lose their confidence in US's economy?

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