Many Americans seem convinced that their housing market will remain in the doldrums indefinitely. Conversely, the rapid recovery of China’s economy from the global financial crisis has led many to believe that real estate in the Middle Kingdom is a one-way bet. In fact, property is the most cyclical of assets. Housing booms crater, while depressed real estate markets eventually recover. Part One of this paper aims to describe a typical real estate cycle through its various stages. In particular, I try to identify the characteristic features of the cyclical peaks and troughs.

Part Two applies this understanding of the real estate cycle to the world’s two most important property markets, namely those of China and the United States.

Between Errors of Optimism and Pessimism – Observations on the Real Estate Cycle in the United States and China

Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China.

This is a good article. Fortunately, this relationship looks likely to continue for the time being, and it is the reason the present economic problems haven't turned into an all out catastrophy... The Chinese are literally bailing out our banks.

The $1.4 Trillion Question

The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday.

The warning over the future of the triple-A rating – granted to US government debt since it was first assessed in 1917 – reflects growing concerns over the country’s ability to retain its financial and economic supremacy.

What is the Democrat's Social Security Plan?

FT.com / World - Moody’s says spending threatens US rating

] LONDON (Reuters) - Oil prices could touch $105 a barrel
] in the next few years, the influential investment bank
] Goldman Sachs said Thursday.
] "Based on our analysis of gasoline spending and the economy
] noted above, we estimate that U.S. gasoline prices may need to
] exceed $4 per gallon," they said.

Goldman says oil could spike to $105 a barrel - Mar. 31, 2005

] I call it the Kerry trade, which is not to be confused
] with the "carry trade," a major position among hedge
] funds involving money borrowed at low U.S. interest rates
] and invested in products that pay higher rates.
]
] The Kerry trade has been rampant on Wall Street in the
] last several weeks as large investors sell their holdings
] to hedge against the possibility that the Massachusetts
] junior senator could actually, might possibly win in
] November.
]
] The theme behind it is that if a tax-and-spend Democrat
] wins the White House, the stock market will immediately
] tank, so better to sell now and be in cash as long as the
] polls indicate that it could be a close vote.
]
] But the theme is wrong for several reasons.

Unwinding the Kerry trade - Commentary: Sell Iraq, buy the economy

] But while the U.S. economy ekes forward, then slips back,
] the Korean and Chinese economies are growing some twice
] as fast. While the U.S. pretends to have a stock market
] resurgence--the figment of a commendably reflated
] dollar--Korea and China are undergoing real equity
] expansions

Check out South Korea Index:
http://finance.yahoo.com/q/bc?s=EWY&t=5y&l=on&z=m&q=l&c=

Forbes.com: Korean Broadband Explosion

] Believe it or not, the following projections are made by
] an advisory service whose 2004 target for the Dow Jones
] Industrials Average is 9,400 -- some 1,200 points below
] where it closed on Tuesday.

Value Line's forecast for the Dow in 2004

] I've done nothing basically because the environment is so
] binary (and all these trades are different expressions of
] the same view) that I feel no compunction to rush into
] anything, especially in the shorting-stocks department.
]
] I would rather be late to that party than early, since
] it's so clear to me that when stocks go down next time,
] they're going to go down for real. I anticipate that we
] will see a huge decline, with the major averages falling
] over 50%.

Yikes!

If 2004 goes bad, it will go really bad

] SAN DIEGO (Reuters) - U.S. Federal Reserve Chairman Alan
] Greenspan said on Saturday that policymakers have been
] proven correct in their decision not to try to prick a
] 1990s stock-market bubble that subsequently broke on its
] own.
] "There appears to be enough evidence, at least
] tentatively, to conclude that our strategy of addressing
] the bubble's consequences rather than the bubble itself
] has been successful," Greenspan told the annual meeting
] of the American Economic Association in San Diego, Calif.

Greenspan Defends Fed Stock Bubble Policy

] NEW YORK (Reuters) - Although the Dow has closed above
] 10,000 11 times so far this month, it's likely to be
] years before the oldest and most widely watched U.S.
] market measure stays over the mark without falling back.
]
] "If there is a possible correlation, we can expect
] essentially a trading-range bound progression that could
] indeed last up to 20 years, or toward the years 2015-20,"
] said Alan Shaw, a technical analyst at Smith Barney, in a
] recent study.

Get ready for a boring economy.

Dow 10,000 May Be Ceiling for Years, Patterns Show