Just heard Russia's economy is near default and about to collapse.
Didn't realize the US treasury was also in the habit of purposely inflating Russian housing just to prop up their economy also.
Uruguay is in default, as are most Latin American countries. Does Uruguay also invest heavily in the US housing market??
The common denominator between nearly ALL those countries in dire financial straights (and there are dozens) is they are oil IMPORTERS.... as most exporting countries are still living high on the hog.
The quadrupling of oil and eneregy just happened to coincide with a time when many businesses were leveredged to the max -- NOT JUST American companies but all over the world.
Did the American financial leaders drop the ball too? You bet.
But had the price of a barrel of oil not spiked from $30 to $150, the US and world economy would still be plodding along in relatively good shape.
In debt.... yes, but in good shape.
Like Alan Greenspan said, "Liquidity in the marketplace is just another name for confidence in the marketplace."
People lost confidence (and froze liquidity) when energy quadrupled between 2005 and 2008.
Now that energy is back down, confidence will again return to the marketplace.
It's as natural as the incoming and outgoing tides...
Again, call me partisan... but this mess can and should be laid at the feet of the "No Drill" Democrats who refused to allow the US economy to have access to the very resources we needed to thrive.
Russia - the entire economy is built on natural resources/commodities. When those prices crash, the economy crashes. Putin was so busy taking all the money and building arms/funding Iran, Syria/rewarding his supporters that he forgot that prices that go up can also come down. Ditto for Chavez and Imadinnerjacket.
The reason the EU and the US are crashing in the bursting of the bubble in RE. When debt service can’t be sustained, prices fall. The US and EU economies are built on debt. Bad debt means failures at many levels. Energy was just one of the causes of debt unable to be serviced, as it started taking over a bigger part of the budget. Ditto with other commodities like food.
Debt is also the reason that the world economy has a long way to fall yet. Prices must deflate further, because prices can only reflect whether someone can afford to pay them.
The median price of a home has over the past century or so been 2.5x median income. In places like CA, the median price of a home in places was 9x median income - clearly unsustainable especially when recasts and resets of mortgages started to occur. Prices will need to revert to levels sustainable for the median income before deflation subsides. In the meantime, there’s a lot more job loss pain to occur, and thus more debt default, before this all ends.