On Mon, 26 Sep 2005, Doug Henwood forwarded:
> U.S. homeowners had $7.96 trillion in home mortgage debt outstanding at the
> end of the second quarter of 2005, up from $4.82 trillion at the end of 2000,
> according to the Fed's most recent quarterly "Flow of Funds" report.
I'm no econo-wonk, but that just looks fucking crazy to me. How long can people keep using their homes as ATMs like this?
> As a result, if mortgage interest rates rise, home sales and refinancing
> would likely slow, and growth in consumption would also ease. Greenspan said.
> The personal savings rate, accordingly, would rise.
>
> Taking the hypothesis a step further, the Fed chair said greater savings
> would dampen imports of goods into the United States, and that the U.S. trade
> deficit would shrink.
Parse this for me, Doug: so Greenspan is concluding that reining in American consumers would be a good thing, in macroeconomic terms? Won't that make Wal-mart shareholders (among others) a little twitchy?
Miles