This is the second installment of HSH.com’s Think Tank series which features in-depth question and answers from the nation’s top real estate professors and professionals.
The Federal Reserve’s Quantitative Easing program has provided great benefit to American home buyers and homeowners in the form record-low mortgage rates. But what has come in the form of aid to the American economy has actually had the opposite effect on other economies around the world.
We asked Raphael Bostic, Ph.D., director of the Bedrosian Center on Governance at the University of Southern California, Richard Green, Ph.D., director of the Lusk Center of Real Estate at the University of Southern California, and Peter Muoio, Ph.D., Managing Director at Auction.com to offer their perspectives on what impact the tapering of QE will have on some the emerging economies around the globe.
A: China is the one that matters most. We do the most trading with them, so it’s really China that matters. Investor money flowing out of other countries and back into the U.S. (as a result from the Fed’s QE reduction) will boost the value of the dollar, making trading with the U.S. less profitable for these other countries. The cost of doing business will increase for the BRIC economies.