Thursday, October 20, 2005

Short Term Consequences of the Housing Bubble

The housing bubble has many effects. What are the pluses and minuses of this housing bubble?

Short Term Pluses ( while the housing bubble has not popped)
  • 'Helping' the economy
  • Jobs being created
  • Strong consumer spending
  • Rising amount of assets
Short Term Minuses ( while the housing bubble has not popped )

  • Significantly reduced amount of affordable housing to buy
  • People stretching and overextending themselves to buy houses ( 'house poor')
  • Lack of investment in export orientated industries or R & D ( research & development )
  • Contributes to the trade deficit by encouraging more spending by people using home equity loans

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