Wednesday, September 19, 2007

Americans were borrowing at a remarkable pace

Bubble Man
Peter Hartcher

To know what happened in the US housing market, read the chapter titled ‘Nemesis’ in Peter Hartcher’s ‘Bubble Man’ ( ). It traces how the national housing stock was around 60-70 per cent of GDP (gross domestic product) in the early post-World War II years, and how it touched 100 per cent in 1981.

“During the course of the 1990s, the market value of the nation’s housing stayed in a steady ratio of 102-110 per cent. Even as the stock market slipped its traces and raced beyond all historical proportion to the US economy in the late 1990s, the value of the residential real estate market remained in a stable relationship with the size of the economy.”

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