On Feb 6, 2007, at 8:19 AM, Yoshie Furuhashi wrote:
> China, Japan, and the Gulf states pay for American consumption,
> keeping interest rates low.
They're lending the US the money. You make it sound like they're
picking up the tab.
"Lending" makes it sound like they are all intending to collect at a
profit. :->
We're paying them interest, no? And the increasing flow of interest
payments shows up on the US current account.
Housing has, for now, stabilized, so it's not that much of a drag
anymore.
Vacant homes for sale, 2.1 million in the final months of 2006, "have
climbed up to their highest level in four decades," bringing the
national homeowner vacancy rate to "2.7%, up from 2.0% a year earlier"
(Michael Corkery, "Vacant Homes for Sale Cloud Economic Hopes," WSJ, 5
Feb 07, A1+).
Yeah, but most other housing indicators have gone flat or turned
slightly up. There may be a precedent in the UK housing market, which
took a dive several years ago when the Bank of England raised
interest rates, but then recovered when the BoE paused (just like our
Fed has since last summer). The BoE has recently tightened twice, the
last one something of a surprise if I'm remembering correctly.
Doug
