US property market mimics 1969 before bubble burst - and world awaits impact

As the US bubble bursts, the world starts to take notice (and freak out a bit). When the US gets a cold, the world sneezes. Who'll buy that crap from China if the US consumer hunkers down? Or those cars from Germany? Not the Germans - they're economy is in shambles. And not the Chinese - they don't actually buy stuff - they just make it and ship it (see trade imbalance #s).

There are a number of parallels between the property bubble that burst in the United States in 1969/1970 and the situation today, and you should be aware of how the collapse of the US housing market will affect investment markets worldwide, Prieur du Plessis, the managing director of Plexus Asset Management, says.

It is difficult to predict whether what has been dubbed "the biggest bubble in history" in the United States housing market will burst, and if does, when, Prieur du Plessis, the managing director of Plexus Asset Management, says.

However, a decline in house prices, rising interest rates and the fact that a number of home loans have been given to buyers who are likely to battle to meet their repayments if conditions worsen for them, could affect not only consumer spending, but the US and global markets.Du Plessis says the seriousness of the situation is evident only when you consider the macro-economic consequences of the bursting of the house-price bubble, and therefore also the investment implications (In other words, we're F*cked, buy gold)