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"California is big enough that it is going to drag a lot of the nation down with it"
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This Link is located in the Public Channel Housing Bubble and Bear Links.
Posted by ian 1 year 187 days ago (iht.com). Views: 178
Tags: california housing bubble recession |
| Related Tags: credit crisis gold wall street economics peter schiff inflation banks |
The figures are pretty bad. The median home price has fallen by 29 percent in the year to March, according to the California Association of Realtors, and repossessions are increasing.
Unemployment hit 6.2 percent in March, up 1.2 percentage points from the same month last year.
But most important, in the 10 months to the end of April, sales tax receipts in California are actually down in absolute terms. Gasoline tax receipts are essentially flat. When you factor in that there would have been considerable inflation during the period, and that some essentials like gasoline would have risen sharply in cost, the picture is clear: Californians are tightening their belts.
And California matters. It accounts for 13 percent of the U.S. economy. It was also where more than a third of the non-mainstream home loans, like subprime and Alt-A, were made in 2006 and 2007, making it very important to the health of the banking system.
"California is big enough that it is going to drag a lot of the nation down with it," said Christopher Thornberg of Beacon Economics, a consultancy in Los Angeles. "You can't have collapsing consumer demand in California and not expect it to have an influence."
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