What do low-wage Chinese and Indian workers have to do with the favorable interest rates that fueled the housing boom in the United States?

In his new book, Niagara of Capital, published by the Urban Land Institute, author Anthony Downs says low-cost labor in Asia kept inflation down worldwide in the 1990s. So when the stock market crashed in 2000, the low rate of inflation allowed the world's central banks to stave off recession by increasing the flow of capital and cutting interest rates. This created a supply of cheap money, a so-called "Niagara of Capital" that needed to be invested somewhere.

"Since stocks were no longer a viable option, investment dollars poured into the real estate market," said Downs, speaking at a press conference Friday morning at ULI headquarters in Washington, D.C.

"So an ironic result of low-wage workers in China and other parts of Asia, as well as the stock market crash, was the enrichment of the majority of American households, since well over 60 percent own their own homes," said Downs, a senior fellow at the Brookings Institution.

Downs also fielded questions about the housing downturn. The author says while subprime foreclosures may exceed 20 percent in 2008, what's generally not reported in the consumer press is that more than 75 of subprime homeowners are not defaulting and are enjoying homeownership.

"The housing industry has to work through its inventory, which will take most of next year," Downs said, adding that he expects the housing and mortgage markets to recover, because the sheer number of lenders needing to write deals to make money will slowly bring the market back. "There's a huge amount of capital competing to go someplace," he said.

Downs said the era of cheap money can continue, but it has to be coupled with lenders exercising stricter underwriting standards. How long can the financial system keep producing low interest rates? Here's an excerpt from Downs' book:

"Nothing in this world goes on forever, and that includes the Niagara of Capital into real estate. In fact, the longer that Niagara continues, the more it undermines the very conditions that made it happen and have sustained it for so long," he writes.

"Even so, no reason exists to believe those conditions will disappear almost immediately, unless some hard-to-predict global event causes economic disruptions in worldwide flows of money and goods."

For more information on the book visit www.uli.org.