Wednesday, November 23, 2005

Can we be a "SuperPower" if our economy sucks rocks?

... I noticed this story
U.S. to cut Canada lumber tariffs


WASHINGTON, D.C. - The Commerce Department said Tuesday it will comply with a NAFTA panel's order to drastically cut U.S. duties on imports of Canadian softwood lumber.U.S. officials said they disagree with the rationale behind the ruling but respect the panel's authority. Canada supplies about one-third of the U.S. market for softwood, which is easily sawed pine, spruce and other wood used in homebuilding. ...
And, I couldn't help but wonder why the Busheviks would suddenly start honoring international agreements. A little pondering brought me to the conclusions that it's an effort to off-set rising mortage rates and keep the 'Housing Market' from going (excuse the expression) teets-up... and dragging the rest of the economy with it.
As housing market cools off, so does employment growth

By DANIEL GROSS The New York Times


There's a growing consensus that the housing market is cooling off. This month, Toll Brothers, the luxury home builder, warned that sales of McMansions were falling, and its highflying stock fell to earth. Last Thursday, the Commerce Department reported that housing starts, a reliable gauge of present activity, fell 5.6 percent in October from year-ago levels, while building permits, a reliable gauge of future activity, fell 6.7 percent. ...

... If the frothy regional markets go flat or if prices simply stop rising at the rates of recent years, there will surely be wide-ranging economic effects on consumer spending and on jobs. "Housing and the job markets are joined at the hip," Mr. Zandi said. "And if housing cools, so too will hiring and the job market more broadly, particularly in the more juiced-up housing markets."

If housing prices are flat in 2006 and residential investment falls 5 percent, there could be a direct loss of a few hundred thousand jobs related to real estate, Mr. Hatzius said. And the indirect effects will certainly be larger, Mr. Zandi said: "Housing is going to go from being a key contributor to the job engine to being a significant drag on job growth." ...
The biggest sectors of our economy are the "Housing Market" and "Consumer Spending". Consumer spending has remained high because House prices have been inflating, allowing people to keep 'refinancing' their homes to fuel their consumer spending... House prices stop inflating, consumer spending drops off.

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