Have the real effects of this monster-bubble been softened by the huge trade deficit?
Yes, because America currently borrows $800 billion a year from China, Japan etc. which keeps the economy sputtering along while our manufacturing sector continues to be ransacked.
The $800 billion account deficit is like a sedative which lulls us to sleep while the country is looted right in front of our eyes. For example, in the last 12 years, foreign ownership of US assets has soared from $3 trillion to over $12 trillion.(400%) At the same time, over 13,000 major US companies have been sold to foreign corporations since 1980. Nevertheless, Americans are only-too-happy to ignore these unpleasant facts as long as they can totter off to Wal-Mart to buy little Johnny his new video-game. It’s only a matter of time before the scattered, bleached bones of American industry appear everywhere across the American heartland.
And, does the Fed realize that Americans borrowed another $825 billion from their home equity in the last 12 months (to spend on house repairs, shopping, boats etc) and that without that consumer spending the nation’s growth rate (GDP) will shrivel to nothing?
Yes, because they provide all that data, too.
So, what does this mean for the homeowner whose future depends on the steady increase in his home equity? What can he expect?
Well, first of all, you can ignore all the gibberish you hear on the business channel about “soft landings” and a “temporary downturn”.
There’ll be no soft landings. This is the Big One; Real Estate Armageddon followed by a plague of locusts.
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