07-07-2015, 05:57 PM
(07-07-2015, 05:17 PM)Rotobeast Wrote: I've read about the empty cities that were built to prop up their GDP.
Am I correct in assuming that our debt to them has not matured ?
Should they collapse, what would happen to that debt ?
As far as our "recovery" and being due for another recession, do you think we are really poised for that ?
The housing market is still well below where we were before the bubble burst.
The debt maturing is a non-issue. Basically, a few things can happen:
1) China sells off it's $1T+ in debt...which causes higher interest rates for the US, but as the interest rates rise their debt is also worth less and less
2) Monetizing debt isn't a good thing, but the US and others have done it. In a global deflationary environment, the higher interest/inflation from such actions might actually be a positive effect
3) Otherwise, the US is basically always just issuing new debt to retire old debt. All that happens is your interest rate can change when issuing the new debt to retire the old (and that's something the administration has done to take advantage of the low rate environment).
Recessions happen frequently independently of the housing market, and will continue to. Central banks have generally gotten better at smoothing out the peaks and valleys of economic cycles, generally meaning longer & steadier expansionary periods and shorter & shallower dips. But we still typically see contractions every 6-8 years...well, 8-10 years might be more accurate (at least over the past 30 years, on average).
