Monday, March 12, 2007

America Today- Sweden Tomorrow

While for reasons mentioned in the previous post, the fall-out on the overall economy may be less severe than it would have been in the past, we are now seeing increasing problems created by the bursted housing bubble in America, as sub prime mortgage lender New Century Financial is basically bankrupt. This will likely be followed by similar news, and implies that the worst is far from over.

Meanwhile, Sweden, which is yet in the blowing up of bubbles stage of the business cycle, is seeing housing affordability fall sharply. While I don't expect the Swedish housing bubble to burst anytime soon, particularly given how the planned housing tax reform is likely to fuel it further, it clearly illustrates the strong cyclical element of the current Swedish boom.


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