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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Wyätt Gwyön who wrote (53990)2/16/2006 11:12:44 AM
From: GST  Read Replies (3) of 110194
 
The housing bubble replaced the stock bubble as the "engine of the economy". Since the housing bubble has come to the rescue of the economy, we climbed further and further out on a limb with stupendously large government deficits where only a few years before we projected surpluses, a trade deficit of mind boggling size and a combined current account deficit that defies all logic and, so far, has defied gravity.

These feats of gravity defying daring are likely to come to an end if, as so many here assume, the housing bubble bursts. The bind bubble requires recycling the current account deficit, and the dollar cannot stay aloft without that support. The economy did not die after the stock bubble burst -- it found new life support techniques in the housing market. It is hard to see what new artificial means of life support will come along to enable the US economy to grow and finance its ridiculously shaky financial position -- the buck stops with the buck.
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