In this issue:

IMF: Housing Bubbles Everywhere, But Not in U.S.

To Create Jobs in Eastern Germany: Produce Rail for Eurasia!


From Volume 3, Issue Number 39 of EIR Online, Published Sep. 28, 2004

World Economic News

IMF: Housing Bubbles Everywhere, But Not in U.S.

There are housing bubbles everywhere, but not in the United States, the International Monetary Fund (IMF) wrote in its new "World Economic Outlook," released on Sept. 22. In its schizophrenic warning, the IMF noted that exaggerations in the housing markets have become a "global phenomenon" in recent years. The IMF singles out Britain, Australia, Ireland, and Spain as countries where house prices have risen more than 50% within the last six years and are now clearly "out of line with fundamentals" (IMF-speak for "bubbles"). In these countries "there is a danger that higher interest rates could trigger a much larger downward adjustment in house prices, with considerably more severe consequences for real economic activity." While higher interest rates will slow down price rises in the housing markets worldwide, there is the risk of "a more pronounced drop" in a number of special countries.

Coming out a week before the autumn IMF/World Bank/G-7 gatherings, and a few weeks before the U.S. elections, the IMF report draws some miraculous conclusions concerning the U.S. housing market. Here, the IMF analysis "does not find compelling evidence suggesting that a real house-price drop is in the offing."

To Create Jobs in Eastern Germany: Produce Rail for Eurasia!

An interesting report has been published by the German firm Vossloh, at the InnoTrans exhibit of transport firms and experts in Berlin, news wires reported Sept. 21. The report says that there is an urgent need for 13.2 billion euros of investment in railway modernization in Eastern Europe and Russia, between now and the end of 2006.

Russia alone needs 6.5 billion euros of investment; another 1.2 billion are needed in Poland. German manufacturers of railway and track materials, like Vossloh, could produce a lot for the East, if the governments cooperated actively with the producers, the firm's CEO Burkhard Schuchmann said.

What is true for his firm, which is based in the Sauerland region of western Germany, also applies to eastern German producers like Waggonbau-Bombardier in Saxe-Anhalt and in Saxony, which before 1990 supplied all of Eastern Europe and the Soviet Union.

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