Working Papers

In Brief

Saul Eslake’s five-year outlook.

• Some predictions for prediction markets.

Barry Ritholtz updates the gold bugs’ favourite Rorschach tests.

David Smith on the dovish UK Shadow Monetary Policy Committee.

• Former Treasury Secretary John Stone on the politicisation of the National Archives.

posted on 10 January 2006 by skirchner in Misc

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Saul thinks “the next downturn in the US economy could be made in Beijing, rather than Washington” and fears that the People’s Bank of China might “pull the plug” on the economy if Chinese authorities come to the view that an orgy of debt-fuelled speculation in urban real estate is inconsistent with the “socialist market economy”.

Methinks it will happen the other way round; the downturn will begin in the US.  What happens when the US real estate market falters and the debt-laded US consumer stops spending?  Who is going to buy all those Chinese goods?  There is clear evidence in NSW and Victoria that consumer spending slowed when the housing boom ended and began to deflate, and there is no reason to expect anything different in America.

In Australia, the resources boom replaced housing as the driver of growth in the economy, but who or what will rescue the global economy when US consumption inevitably slows?

Posted by .(JavaScript must be enabled to view this email address)  on  01/11  at  06:42 PM

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