Alan Kohler: the market's four key threats - ASX - Australian Securities Exchange

America is just one of us, now...

Alan Kohler: the market's four key threats - ASX - Australian Securities Exchange

"Over the final weekend in June, the G20 leaders, including President Obama, agreed to halve their budget deficits by 2013. That confirms the end of fiscal stimulus and the beginning of an era of fiscal tightening. That goes double for states such as California and Illinois, which are just about broke.

According to the Center on Budget and Policy Priorities, 46 states have budget deficits that add up to US$112 billion; basically they are in the same mess as Greece.

The Federal Reserve cannot cut interest rates any more, so if there is a problem, the US economy is on its own. And, Houston, there is a problem. Employment growth is weakening, durable goods orders fell more than expected in late June, the ISM manufacturing index is falling, and capital expenditure is down.

But most of all, housing is in trouble. New-home sales crashed 30 per cent in May to a record low and the median price fell 1 per cent that month to US$200,900 - and is now down 10 per cent on a year ago. The median price has not been this low since December 2003. It is taking builders a record 14.2 months to sell a house."