US house price boom – a time-bomb ticking One of the key elements in holding up consumer spending – and therefore sales and profits – in the USA has been growing house prices. The growing nominal value of housing has led to a widespread phenomenon of remortgaging, i.e. borrowing more to keep up annual family incomes. This cannot continue for much longer. The signs are already there that we are close to the limit.
The perfect circle of success Capitalism in the advanced capitalist countries is becoming ever more based on finances and services. The idea is that the actual production of real goods can be done in less developed countries where labour costs are much cheaper. For this to work, the consumer boom in the West must be maintained permanently, otherwise who will buy the goods? Can this be maintained in the long run?
Oil price shock After Hurricanes Katrina and Rita have ravaged the US coast of the Gulf of Mexico, does the fast-rising oil price presage a worldwide economic recession? The track record of oil shocks is indeed close to perfect. In the case of the US, each of the previous three oil shocks was followed by recession.
