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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (5875)	5/8/2004 11:51:51 AM
From: CalculatedRisk	Respond to of 116555

Great article on housing in Australia! I especially like these quotes at the bottom of the article: "The decline will be mild in comparison with previous housing cycles," How do they know that? "The Reserve does not expect the decline in the housing market to generate a broader malaise in the economy." That is the million, uh, in America the multi-trillion dollar question: What impact will a decline in housing have on the economy? Will it take the economy into recession? The direct impact will probably just slow the economy (not lead to a recession). But human behavior is difficult to predict. If people start "feeling" they have less wealth, or if people feel their financial safety is threatened (with all that debt), they might pull back on their expenditures. In the aggregate, this probably will take the economy into recession.