Housing crash in 2006?
Warning signs of the housing crash, is an article warning that we're in a housing bubble that will crash at some time in the future. When people were worried of an over exuberance in the dot-com bubble, the bubble kept rising for years after others said it would crash any day now. But the dot-com bubble is different than the housing bubble. With stocks most people play with their disposable income, with their house it's nearly everything that they own. With mortgages it's the bank that really owns the house, and the banks are so used to making billions in profits every year that when they get spooked they'll may start foreclosing like there's no tomorrow. A little rise in interest rates can make it impossible for people to pay their mortgages.
There are so many areas of weakness in the American economy that it can happen in many ways:
There are so many areas of weakness in the American economy that it can happen in many ways:
- The US deficit is enormous and growing, mostly because of cutting taxes to the rich and the wars they've lead.
- The US can't easily get out the war in Iraq, and thus stop spending all that money, it's like a three year cell phone contract that you can no longer afford.
- The educational system has suffered under the "no child left behind" and from funding cuts that makes American workers less capable for the high tech marketplace.
- Outsourcing has grown enormously, making the US less of a technology leader.
- China has been loaning a great deal of money to the US, which they may stop doing (although it will hurt them as much as the US)
- Oil prices are fluctuating more wildly and talk of Peak Oil is heard more often.
- As jobs are lost, a natural reaction is to reduce worker Visas and tighten the borders. This reaction doesn't help businesses compete.
- More people don't want to move to the US even if they can and it means making more money. They don't like US foreign policies, and they may not like the fervent religious right that is anti-abortion and anti-gay, etc..
- Some countries are beginning to sell (say oil) based on the Euro instead of the US Dollar. This and a few other indicators may mean that the dollar is weakening.
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