Depression Winds - Bye Bye Dear House

Alan Greenspan

What’s Behind the Coming Depression?

Falling House Prices

When economists start drawing comparisons with the Great Depression, it may be time for America to face up to the gravity of its economic crisis.

Not since the Great Depression have American house prices fallen at a similar clip, nearly four per cent a year. Not since the Great Depression has the foreclosure rate been as high, with one in every 62 American households expected to foreclose by the end of this year.

Last week, it was revealed that in August, 4,000 jobs had been lost in the economy. With banks and mortgage companies now slashing staff, that number is likely to grow.

Falling house prices, provided there was job growth, was tolerable. But falling house prices and job cuts spells the death of spending by consumers and companies, the

twin pillars of the US economy. After all, if you were seeing the value of your house fall, your mortgage interest payment go up and your friends getting the sack, would you be in any mood to go shopping?

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