I highly recommend you pick up the new Economist magazine (The World In 2006--displayed until March 2006) and read the article "Fragile Foundations". Here is the link to the "on-line" version (it's premium content, so you'll have to pay.)
I'll try to summarize what is said: The article states that we are living in a world economy so out of balance, it is dangerously vulnerable to shocks, and that we should prepare for slower growth, rising inflation and wobbly housing markets.
It goes on to discuss the world economy, and stresses that "rarely has the global economy looked so out of kilter with historical norms." Later, it then explains that "the global housing boom is the biggest financial bubble in history."
The author feels that increasing oil prices, due to growing global demand, will probably be the catalyst that pops the global housing bubble. Quote: "The consequences will be painful."
The article also explains that today's economy has many of the same characteristics as the 1970's, with large budget deficits, cheap money and high oil/home prices. Can you say--Get ready for inflation?
Rising inflation pressures will limit the Fed's options, so he may not be able to cut interest rates if the housing prices do fall (Homeowners couldn't be bailed out by the Fed with lower interest rates).
It wasn't all doom and gloom. Towards the end of the article, another stated possibility for the world economy in 2006 was a gentle slowdown--if oil prices remained tame and additional economies could take up the slack in global consumption--when America starts their consumption/spending pull-back.
I would also recommend the article "Tipping-Point"--same magazine
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