Louis Proyect wrote:
At 2pm, I attended a panel discussion on Bubbles and the US economy that was remarkable for Doug Henwood's obvious worries about the impact of rising interest rates in the home mortgage market, and consequently on the economy as a whole. When Doug Henwood starts to sound like the people from In Defense of Marxism, Watch Out!
Uh-oh, maybe I need to rethink. The numbers on what American households have been up to over the last 5 years are pretty scary, esp in the mortgage market. One quick stat: mortgage debt is now about 93% of GDP, up from about 63% in 2000. It took 45 years to tack on the previous 30 percentage points, from about 33% in 1955 to 2000's 63%. Debt service ratios are at record levels despite generation lows in interest rates. With averages like that, there have to be an extreme 10, 20, or 30% of households that would go to the wall if unemployment rose, interest rates spiked, or house prices fell. It's a very risky situation. And like I said at the conclusion of the talk (and my housing piece in the current Nation), about the only reassuring thing about the present situation is the seemingly endless capacity of the US economy to dodge bullets. I was really busy with other stuff this weekend so I didn't get to go to any other Left Forum sessions, but it looked like a very good conference. Doug
