Safe Sex Goddess's Journal: Is the American Economic Bubble Getting Ready to Burst?

I've always likened government spending under this administration to a person who doesn't want to work so they quit their job (lower taxes) but maintain their standard of living through spending their home equity (trade deficit) and maxing out all of their credit cards (federal budget deficit). Sure, the economy can seem like it's doing great when you're spending 500 billion you don't have.

What happens when there's no more credit left?

From Reuters on August 27, 2005
"The housing boom will inevitably simmer down," the Fed chief said. "As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease."

Greenspan's latest house price warning came during concluding remarks to an annual Kansas City Fed symposium -- his last as Fed chief and one focused on a retrospective of his 18 years at the Fed. Greenspan intends to step down at the end of next January.

The central banker famed for Delphic utterances offered an unusually blunt assessment of the challenges he sees facing his still-unknown heir and his views of issues such as inflation targets, economic imbalances and the budget gap.

On Friday, he warned investors not to assume rises in the value of assets such as stocks and homes were "structural and permanent" and that the buying power fueled by those price surges could evaporate if buyers turned wary.