US Headed Towards Recession

We might be focused on the property market in Cape Town but we have to keep our eyes on the US where things are seriously going pear shaped.
Housing Drop May Spur Recession Unless Fed Cuts Rates

Tighter credit standards among mortgage lenders might lower U.S. home prices by 10 percent this year and push the economy into recession if the Federal Reserve doesn't respond by lowering interest rates, Merrill Lynch & Co. said in a report.

Merrill analyst David Rosenberg, who previously forecast the Fed would lower interest rates in the second half of 2007, said there are two possible scenarios. With a rate cut, economic growth will slow to about 1 percent. If rates are left unchanged, and housing prices fall 10 percent, the probability of a recession is ``very close to 100 percent,'' Rosenberg wrote.

If the Fed cuts rates the dollar is going to get killed. Say hello to Mr Recession before the end of the year. That will not have a good effect on housing markets worldwide and will just exacerbate any negative movements here.