Is there a ripple effect?
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Around the year 2000, the US Fed had softened its monetary policy considerably in order to boost the economy. This resulted in a massive diversion of funds to the real estate sector, with heavy borrowing from banks. Later on, in the light of the bubble that developed, the Fed went on rate hike spree, increasing interest rates for 16 times in a row. The drop has hit hard. US home building stocks have fallen by over 50% from their peaks in the last two years.
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Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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