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Thread: US real estate market recession may cause serious economic drag

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[quote=APAULT,251740]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!

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