Even if house prices simply flatten off, the scope for mortgage-equity withdrawal and hence consumer spending will slow sharply.
There is still plenty of scope for private-equity firms to expand.It may well be, however, that the peak of the cycle is close at hand.
But that extra cash could soon run out: even if property prices stay high and mortgage rates stay low, the scope for home-equity withdrawal will decline.
"When Qatar decided to invest in City Center, that was really a wake-up call, not just to the District but to large-scale development teams looking to expand their scope in looking for equity," said Jose Sousa, a spokesman for the deputy mayor for planning and economic development.
Whatever may be the scope allowed generally for equity to intervene upon the ground of inadequacy of legal remedies, where no explicit congressional command exists for following a prescribed procedure, the problem when such a mandate is present is entirely different from one tendered in its absence.
But suppose house prices were to stabilise at their current level, rather than actually to fall: even if interest rates stayed low, the scope for further home-equity withdrawal would diminish sharply.
A fall in house values means there is less scope for running down home equity to prop up consumption.Mr Buiter agrees that this is an important channel through which falling house prices might hurt spending.
The scope for underwriting and trading Chinese equities and bonds and advising on domestic flotations and mergers (see article) could be big with fees reaching $12 billion by 2010.
"I don't see much scope for rationalization from combining debt and equity," said Ayo Salami, an analyst at Nomura International P.L.C. in London, who rates Credit Suisse shares a hold.
Because such companies are involved in a variety of activities there is greater scope for the type of restructuring private-equity folks specialise in, such as selling off less-profitable units or firing people.
