negative equity

No-one can deny that the weakness of the housing market remains at the heart of the economic crisis in the US. In fact, it is the American equivalent of the sovereign debt crisis in the eurozone. The overhang of housing debt is forcing US households to run large financial surpluses in order to pay down their liabilities, just as the the overhang of sovereign debt in the eurozone is forcing governments to improve their financial balances. And that is resulting in weak economic activity on both sides of the Atlantic. The question of what should be done about it is now coming to the centre of the economic debate in the US. Diagnosing the problem is relatively straightforward. Solving it is not. Read more