Vocabulary practice

The U.S. trade deficit soared to an all-time high of $725.8 billion in 2005, pushed upward by record imports of oil, food, cars and other consumer goods.

Since the closing months of last year, we have witnessed a dramatic meltdown in Middle Eastern stock markets, which after racing upward during most of 2005 have now lost much of their value.

A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid speculative increases in the valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic elements, followed by decreases (also known as a house price crash or a market correction) that can result in many owners holding negative equity (a mortgage debt higher than the value of the property).

Remember that things get overheated when the general public begins to spend money on investment vehicles with the idea of quickly doubling their money. When enough people get into speculation, it is a sure sign of a bubble. When people aren't buying a house for a place to live or as a long-term investment vehicle to rent out, you know the market is overheated. When you hear a lot of people talking about "making money on their house", then you know there's a big bubble.

The relationship between bubbles and crashes is similar to the relationship between clouds and rain. Since you can have clouds without rain but you can't have rain without clouds, bubbles are like clouds and market crashes are like the rain. Historically, a market crash has always precipitated from a bubble, and the thicker the clouds or the bigger the bubble, the harder it rains.

TEXTS TO TRANSLATE:

33. Russia's booming economy

It's not about just oil and gas

Russian economic growth hit a six-year high of 7.9% year on year in the first quarter, propelled by strong growth in construction, manufacturing and trade. The result is particularly impressive in light of the small contribution made by oil and gas. Although economic growth is likely to ease during the rest of the year, robust domestic demand may ensure that the full-year rate does not slow appreciably from the 6.7%.

State statistics agency RosStat released full first-quarter GDP data on June 14th. The main factors behind the 7.9% headline growth figure were a 23.2% rise in construction, an 11.8% expansion in manufacturing and a 9.1% increase in trade. Large gains were also registered for hotels and restaurants (13.9%), the wholesale and retail trade (9.1%), transport and communication (7.9%).

Saving and spending

Two themes permeate the data. First, investment is very strong and this is powering economic growth. Fixed capital investment soared by 20.1% year on year in January-March, according to estimates from the Ministry of Economic Development and Trade, compared with just 5.7% growth during the year-earlier period.

Second, household consumption is buoyant. With real disposable incomes up by 13%, private consumption rose by 12.7% year on year in January-March, according to the economic development ministry's estimates. This helped to fuel a 13.6% rise in retail sales and a 7.9% increase in the sales of services to the population. Strong domestic demand is also reflected in further rapid growth in imports of goods and services. These were up by 36.8% year on year in January-March; exports, by contrast, rose by 5.3%, with energy exporters still struggling to increase production volumes.

Improving access to consumer credit is also helping to fuel demand. Domestic credit rose by 46.4% year on year and continued to expand. The central bank reports a 53.7% rise in the value of rouble credit last year, with foreign-currency loans up by a more modest 29.3%. Loans to individuals recorded the fastest growth, on account of rapidly rising consumer credit.