Uncle Sam is facing troubles he can't ignore - including "king-sized property bubble which is now deflating"

Good view from across the bay - which is interesting, because the UK is seeing the collapse of their own over-inflated housing bubble. But his view is "spot-on" as they would say - and I believe our bubble pop will resonate around the world - we'll be buying less imports, and when we get a cold, the world sneezes - bad

It seems clear that the US has experienced a king-sized property bubble which is now deflating. The evidence of danger is obvious. Across the country, house prices have risen by 50 per cent in five years, but in many places, such as California, property inflation has been far greater. Home values are now completely disconnected from any historical relationship with salaries or rents so most first-time buyers are priced out of urban markets.

Meanwhile, more than a quarter of home purchases are by investors - or speculators - many of them avid "flippers", who aim to turn property to other punters for a quick profit. Billions have been extracted from homes by way of secondary loans - essentially to fund current spending, rather than investment or savings.

And for the housing market participants - banks, construction companies, estate agents and DIY retailers - the boom has generated huge corporate profits and millions of jobs. This has been the engine that kept the US economy motoring, despite the dotcom reversal and a frightening trade deficit.

America must reform its healthcare system, and prepare for a housing shock. Even Bill Gates and Warren Buffett believe the dollar will decline owing to excessive imbalances in the system. I have complete confidence in the indomitable ability of America to recover from any setbacks and rise again. But I fear the Land of the Free is in for a period of increased turbulence.