[lbo-talk] Odd theory for housing bubble

[Kevin Robert Dean]

ECONOMY: CHINA’S CURRENCY POLICY LEADING TO HOUSING BUBBLE IN U.S. JAMES BERMAN, president of JBGLOBAL: “China must buy our bonds to peg its currency in order to possess enough dollar-denominated assets to serve as a backstop to the Yuan. This gun to their head shanghais them into buying treasury bonds without regard to our deficits or low yields —- the type of thing a normal investor would care about. The artificial buying of our bonds without regard to price causes our yields to be lower than they would be in a truly rational market, which in turn keeps mortgage rates artificially. These low rates fuel our housing bubble in the U.S.” (3/21/05)