London, United Kingdom (PressExposure) June 30, 2010 -- “Sovereign-International”, the investment broker, believes that investors are finally accepting the fact that the record stimulus provided by the US government to prop up the economy has been largely unsuccessful.

The company’s assertion came after the Commerce Department released data showing that sales of new homes in the US collapsed by a record 32.7% in May. The evidence, said a “Sovereign-International” analyst, points to the fact that the housing market is almost entirely dependent on support from the government.

http://www.census.gov/

A government-funded tax credit made available to first-time buyers expired at the end of April and home sales promptly plunged. Not even the artificial suppression of long-term interest rates provided by the Federal Reserve’s quantitative easing program has made property attractive to Americans who remain wary of taking on debt even if they’ve managed to hold on to their jobs.

“Sovereign-International” said that the US administration is likely to resort to asking Congress and the Senate for additional stimulus. If they are successful, said one analyst, there is little doubt that America would be subject to an inflationary spiral that could very well destroy the US dollar.

As stocks fell in response to the news, “Sovereign-International” suggested that there was little in the way of fundamentals holding markets up and advised clients to sell into any rallies.

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