The IMF is on a roll. After telling us last week that the world's financial system is in great shape, they have recently reported that "there is no compelling evidence to suggest that the rapid rise in U.S. housing prices in recent years could collapse suddenly". Now we can all relax.
To tell the truth, even after they reassured us about the financial system, I was still....um....a tiny bit worried about the US housing market. With people pulling equity out of their homes faster than new homes can be built, real estate loans on a parabolic trajectory, the housing GSEs coming under the cloud of accounting scandal, up to 25% of properties being purchased by speculators to "fliip" within a few months, and even the Kiwanis Club speculating on real estate, I just couldn't see how it could end well. Perhaps next week the IMF will come out with a report stating that the US dollar is a strong currency and will remain stable.
