In economic terms, “decoupling” is the antidote to “contagion”. Now, the notion of decoupling is itself contagious. Bulls espouse the theory that the rest of the world can shake off a slowdown in the world’s largest economy. Similarly, within the US, some contend that certain regions will prove immune to the general housing downturn.

Official US housing data, released yesterday, showed a big drop in new starts. Worse, though, was a fall in the less volatile – and forward looking – number of permits. The National Association of Homebuilders’ confidence index hit an all-time low. Meanwhile, the IMF cut its US economic growth forecast for 2008 by almost a third, partly on housing woes.