The American economy: keeping track of US economic developments.

An interesting development in the US housing market in respect of vacancies. The fall in vacancies of rental and owner properties has reversed as prices continue to fall in the sales market, suggesting that disappointed vendors are reverting to the rental market. However rental values remain subdued due to a plentiful supply and low incomes growth.

On top of that, the national housing vacancy rate is surging. The homeonwer vacancy rate hit 2.5% in Q3, the highest level ever. And the rental vacancy rate climbed to 9.9%, up from 9.6% in Q2 and 9.5% in Q1. As more stuck flippers realize they can't sell, and start trying to rent instead, you can bet MORE rental supply is going to hit the market.
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http://interestrateroundup.blogspot.com/
 
Re: The American economy

walk2dewater said:
Great article!
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Still cant figure why the Chinese buy so much funny money dollar debt. It could be a long run strategic play to run down the industrial infrastructure of the capitalist running dogs, while building up their own:) Or maybe in a totalitarian dictatorship policies that benefit the select few party members are pursued. without too much concern for China's greater good. Inscrutable; very apt description.
 
Re: The American economy

Duplex said:
Still cant figure why the Chinese buy so much funny money dollar debt.
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Almost impossible to know for sure and maybe a host of factors. At the moment China are providing a Harvey Norman-type finance deal to the U.S. - they're literally loaning them the money to buy their products. As for how long this strange dance will last, who knows? The U.S. is becoming less and less important as a Chinese customer and maybe in a few years the U.S. will find that the preferential finance deals they currently enjoy are no longer available. China will stop buying dollars, mortgaged-backed securities and treasury notes and maybe freely float the Yuan on the open market. The hope for the U.S. now must be that China has accumulated so many dollars that they too now need to prevent a dollar collapse or serious devaluation, so we're probably looking at a gradual unwinding rather than simply dumping that trillion on the open market. This will suit Bernanke too, a keen student of the 1930's depression and who has frequently postulated that the strength of the (then gold-backed) dollar made it especially hard to combat deflation.
 
Probably china is governed for the benefit of the ruling elite.
In a country of a billion +,the ruling elite must number at least a million,who are probably doing very well out of the present arrangement.
I M sure that the u.s. and china have done secret deals at a high level.
Even though china has a trillion in the bank,its workers receive very little money in dollar terms.
Contrary to the article in the economist ,I believe that its not such a big problem to spend this money in a country where much improvement in infrastructure and services is needed.
And it surely is very nice if the u.s. can repay all the dollar debt for the billions of hours of chinese labour by cranking out the printing presses.
Is the same arrangement present between china and e.u._that china loan us the money to buy their goods?
Anyway isn t it very nice of the chinese to sell us all those cheap goodies to increase our standard of living.
Finally is it possible that this trading arrangement between china and the west could continue indefinetly.
 
Yes, the figures look big, but how many years of Chinas oil supply does USD 1 trillion buy?
3 or 4 years worth I think?
when you throw in copper and steel consumption the bank balance doesnt look like such a mountain anymore.

The Chinese probably understand that the US is facing the chance of a recession, when that happens US consumers will no longer be buying so much from China and the dollar mountain stops growing so fast...then what does China do?

It probably uses this as ammo to fight the recession that it has caught from the US...
 
china buy dollars to keep the yuan low, its gives them a competitive advantage via fx rates...or put it another way, they prop up the dollar as they need the dollar to buy alot of their goods.
strong dollar, easy for us to buy more of chinas goods.....weak dollar, yanks can't buy as much chineese goods and chineese economy slows down.

Ok, china holds alot of dollar, which will cost them alot, but it's worth it as it keeps there economy super-hign and allows them to push the steady state of capital higher along the curve to a more productive equilibrium point.
 
sunrock said:
Probably china is governed for the benefit of the Finally is it possible that this trading arrangement between china and the west could continue indefinetly.
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No,

everything must come to equilibrium....
Only two ways of this.

from productivity side

or

from purchasing power parity side....ie: fx rates.

dollar to drop, relative to the yuan....if yuan free floats, chinnese economy will stall....china will slow rapidly and the government there will most likely fall.....alot of hungrier mouths then.
 
The Dollar faces other dangers as well. The Iranians are looking to develop a Euro burse for their oil exports. The fact that China will need to buy oil from Iran in Euros along with every other country could have a major impact on the long term value of the dollar.

I spend one week a month in Saudi and our own media plays very little attention to what is happening in Iran other than the usual topic of weapons of mass destruction.

If the Iranians do create a Euro burse, then the world that we live in may well change, faster that any of us expect.
 
kerrybull said:
The Dollar faces other dangers as well. The Iranians are looking to develop a Euro burse for their oil exports. The fact that China will need to buy oil from Iran in Euros along with every other country could have a major impact on the long term value of the dollar.

I spend one week a month in Saudi and our own media plays very little attention to what is happening in Iran other than the usual topic of weapons of mass destruction.

If the Iranians do create a Euro burse, then the world that we live in may well change, faster that any of us expect.
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Was that not also imminent in Iraq before GW et al decided to send the troops in. I dont recall exactly but I think it was one of the reasons (apart from the actual oil itself) that it was put in motion so quick.
 
Hibernicatio said:
Was that not also imminent in Iraq before GW et al decided to send the troops in. I dont recall exactly but I think it was one of the reasons (apart from the actual oil itself) that it was put in motion so quick.
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Very good point!
Iraq was invaded because it had a nuclear weapon programme,oil,corrupt leaders and it threatened to sell its oil in currencies other than the dollar _take your pick of the above reasons_could definitely apply to iran.
Oil is sold in dollars. Any country that decided to sell its oil in euros or whatever would draw down the wrath of uncle sam.
This would be a much more serious threat to the u.s. than a nuclear weapons programme.
Its no co incidence that all middle east countries sell their oil in dollars.
If they demanded gold instead i d imagine that the u.s. would go berserk and threaten war.
Now that the shia and sunni are involved in a civil war.
, an attack on iran by u.s. forces if they go ahead with an alternative bourse would be a definite possibility.
 
The issue of a possible Dollar slide should be of major concern to everyone in Ireland.

For property Bulls they might find some short term solace in the fact that the ECB may well have to look at it's strategy for 2007 if the Dollar trades between $1.30-$1.40. We may see 3.50% or at most 3.75% as the medium term ceiling.

However, of all European economies we are the most vulnerable to the consequences of any major Dollar slide.

The fate of the Dollar may well be the fate of the Pope's children.
 
Median U.S. house price posts biggest loss on record today, dropping 3.5% from October 2005. Also a new record for existing homes for sale, 3.9 million. Even the most bullish "experts" are calling for a dismal 2007 with further drops. I think I read in another article that this is the first time since the great depression that the national median house price has fallen. Hmmm...

http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?postversion=2006112810
 
Not alot of good news coming accross the internet today. More doom and gloom from South Florida. Home values down 12% from last year in Palm Beach and big developments going bust in Miami. But that can never happen to us, becuase we're in for a soft landing and prices will continue to go up forever and all our houses will be worth million in five years......right?


http://www.palmbeachpost.com/business/content/business/epaper/2006/11/28/1128housing.html
 
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