The Good Side of the Subprime Mess

I don’t agree with everything here, but George Schultz and John Taylor make some interesting points about the silver lining in the subprime cloud:

Including both the direct investment effect and the personal saving effect, about three-quarters of the reduction in the current account deficit can be attributed to the housing market turmoil. So while the agreed economic policies have begun to improve the current account, and will continue to do so, they have had important assistance. The housing market correction has been an important factor in the current account correction; as a result we are seeing a dramatic beginning of a welcome rebalancing of the world’s investment and saving flows.

Posted by on November 7th, 2007 at 7:25 am


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