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Successful Prediction of the Day

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From David Harvey’s The New Imperialism (2003!)

…The most important prop in the US and British economies after the onset of general recession in all other sectors from mid-2001 onwards was the continued speculative vigour in the property and housing markets and construction. In a curious backwash effect, we find that some 20 per cent of GDP growth in the United States in 2002 was attributable to consumers refinancing their mortgage debt on the inflated values of their housing and using the extra money they gained for immediate consumption (in effect, mopping up over-accumulating capital in the primary circuit). British consumers borrowed $19 Billion in the third quarter of 2002 alone against the value of their mortgages to finance their consumption. What happens if and when this property bubble bursts is a matter for serious concern.

Score: Geographers-1; Economists-0


Written by Peter Wirzbicki

July 15, 2010 at 23:59

Posted in economics

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