Showing posts from April, 2008

One more on housing crisis in US

The genesis of sub prime-crisis is the riskier credit policies provided for the housing sector in US. Considering the existing situation, I wanted to know what is the situation prevailing in US regarding the housing scenarios

As can be seen from the above image, the housing prices in US have been steadily increasing until 2005. It took almost 3 decades for the prices to reach the 1975 level. But since 2005 the decline has been so steep that in less than 3 years the prices have reached levels below the 1970 prices. In the fiscal year 2007-08 alone the prices have declined by more than 15%.

With this steep decline, the amount of investment that goes into the housing sector has obviously reduced a lot. This is reflected in the graph below:

As can be seen above the decline in the investment in the housing sector has decreased by around 25% and that the contribution of the housing sector to the GDP has also declined drastically.

This in turn means that the employment in that sector has decrea…

Missile shield

There is a saying at our place that one is not able to take care of himself, but has started to protect the neighborhood. But it would be ironical if the neighborhood agrees that he can take care of them.

Similar situation happened with European Union and US. Rather, I should say, US is pushed into this deal by Mr. Bush who has had a terrible 8 years of near deplorable foreign relations. US wants to keep a missile shield over All the NATO countries as a protection to any future attacks. Earlier the EU wasn't convinced about it, but under the existing circumstances, where US makes everyone believe that Iran may attack, eventually EU fell for the trap and approved the defense shield.

I bet that most of the contracts for the defense shield will be awarded to US companies, and since US is heavily dependent on the performance of their military, this will certainly prove to be beneficial to their economy which otherwise is in doldrums.

It would be interesting to see how Russia and especia…