China announced today that they were tightening monetary policy and boosting reserve requirements for banks to prevent a possible meltdown from real estate speculation. The move, along with other news, sent the Dow Jones Industrials down over 1.5%. The original MSNBC article is here:
As I said a few days ago, this is relevant because China is a huge buyer of our treasury bonds as well as goods and services from all over the world. The overall global economy and our recession recovery depend on China being strong financially. If they go down, we go down.
So, let's hope these new changes succeed in preventing a real estate bubble in China. If they do, our recovery should continue and recent improvements in home buying should continue as well - especially at the high end.