Housing Bubble Bursting?

[JSmith43]

This kind of shaky wealth will be vanished as fast as they were created.

Not if you cash out and park it at a "safe" rate. A varied tax exempt bond portfolio here, some precious metals there, maybe a flyer with a collection of previously dropped French WW2 era rifles.

Yes, I know that wasn't your point. I am partial to fundamental analysis, myself. It can be overdone, however. Homes were a darned good deal courtesy of low rates the past 4-5 years. Of course, the prices went up, but for sound reasons, overall. You might also look at it as an extended fire sale for money. It was really cheap to rent money, but it wasn't as cheap as some believe, if it is analyzed in terms of constant dollars.

 

[hastalavista]

a collection of previously dropped French WW2 era rifles.

Roger,

The market is flooded with these; "like new, never been fired"!

 

[moh malekpour]

Roger,
You are suggesting an aspirin for a chronic illness. The lack of equilibrium or balance that Austin is talking about is right on the target and even if you save your money in the bank deposit, the value of your money will decline almost daily
I am going to post an article by Hans F. Sennholz, who is a respected economist and has explained the history of our economic system very well. He calls it maladjustment but it is the same as imbalance or lack of equilibium. It is worth of reading
http://www.sennholz.com/inflationomics.html

In Keynesian tradition most American professors and media commentators favor credit expansion and deficit spending whenever a recession comes in sight. And most elected representatives call and vote for more government spending that promises more employment and higher incomes for their constituents. But whatever government may do to increase spending and whatever the central bank may devise in order to avert a recession, they inflate and depreciate the currency, aggravate the maladjustment, and prolong the pains of readjustment.

 

[JSmith43]

and even if you save your money in the bank deposit, the value of your money will decline almost daily

I said a "safe rate", not a stupid rate:icon_smile: Non taxable bonds will cover inflation. I merely proposed an individual strategy for the sky is falling crowd, so it wasn't even worthy of a bandit adjective, as applied to the economy.

That was a pretty good article. NAFTA was one of the few things Clinton spent political capital on that made sense, IMO & one of the times he literally switched sides after the '94 *** whoopin. Remember him sending out prince Al Gore to debate Ross Perot? Priceless!:icon_smile: Al Gore would sell out Greenpeace if there was enough in it for him. He literally boxed Ross Perots ears.

Other than the NAFTA comments, not much to disagree with, actually.
Cheap oil in the late '90's was a significant element of productivity. We also thank China and Wal-Mart.

The solution: A massive education campaign in economics for future voters, now in Jr High on up. Adults appear to lose receptor cells after their first few government jobs.

OK Bobby Bucks. I''ll attach Caveman's Money, but I have to issue some warnings-next post.

 

[JSmith43]

The real story about money and for those in need of a lay

I wrote this in '97 and it is a very ROUGH DRAFT. Corrections and research reminders to myself are in bold print all over the place on my copy. I cranked this out off the top of my head OK? Besides, I'm going to take out the political red meat and turn it into a childrens text some day:new_usa:

Last time I posted it someone zipped right past my error warnings and decided to publicly correct all the dates, etc. GIVE ME a BREAK!! Read it for entertainment and possible brainstorming. You might figure out how to get laid while learning all about money:icon_smile:

No more walking around with $100 bills taped to the forehead

I think I have to break it into FOUR posts to attach on this site. Here goes....

 

[Randolph Kinney]

Randolph,

I'll forget about the number of basis points since you are the only one I have ever heard of who claims you need 50 basis points for the market to react to it. Cite your source and I'll consider it. Not saying it is wrong- onoy that I have never heard this before.

Brad, here is a graphic link to the Cleveland FED:

Take note of the 50 basis point spread between the 2 year and 30 year Treasuries during July, 2000. You will remember that a recession did happen following that? The 2001 recession saw a 0.6 percent decline from the peak in the fourth quarter of 2000. Two consecutive quarters of decline in Real GDP is generally considered to be a recession. By this definition, the U.S. had a recession in the first three quarters of 2001.

The FED has published its findings on the yield curve inversion correlation.

FED: One way to distinguish between perceived changes in fundamentals and temporary market phenomena is to trace the persistence of yield curve signals. A signal that lasts only one day may be dismissed, but a signal that persists for a month or more should be looked at carefully. Statistically, these distinctions may be captured by using data averaged over one month or more, which is quite common in the literature, or by including lagged effects in the model, as in Chauvet and Potter (2005).

Further, we have documented decreases of about $7K from a top of $225K average for existing home sales. 3%. Assuming we get another such drop by end of Q2, it still is not approaching anything that one could claim nationally as "bubblicious"- apologies to the bubble gum maker.

You know what is funny about your statement, the 3% decline is on a national basis,which means you have both positive and negative price changes that averaged 3% decline over the entire population of homes across the U.S. The nation is reporting robust GDP growth and record low unemployment. Do you suppose that prices are going to be improving as the economy slows?

:new_popcornsmiley:

What I asked you for were your predictions of existing home sale price averages once interest rates have stabilized. Sorry if that question was not clear.

I don't know what you mean by interest rates stabilizing. Once it becomes clear to the FED that it as overshot credit tightening, it will react by cutting interest rates, much like Greenspan did in the 2001 recession. There will be a lag of 6 to 9 months before the affect of FED policy changes can be assimilated into the economy. Prices, if they are declining, will continue to decline until the FED has supplied enough liquidity and credit so that lenders will lend and borrowers will borrow. You will have a crisis of confidence. The consumer will have to be persuaded that the future of home prices will not decline further.

 

[Austin]

moh's article link

I hope everyone read that article moh posted. Have you ever heard the joke about the golfer that died and went to hell. When he got there the place was one nice golf club. The greens and fairways were perfect. He thought; boy did I make the right decision on how to live my life. This hell is the place to be. He got out his set of ping clubs and headed to the first tee, then he got the bad news. Lots of golfers lined up at the 1st tee informed him that there were no golf balls in hell.
The reason that story came to mind after reading that article is that if and when the Democrats get back in power in 2008, they are going to get the bad news. There ain't no money to give away or buy votes with. I guess we can call it Bush's revenge. He spent all of the damn money. That is why I am voting for Hillary. God's favority trick to inflict judgment is to give people what they crave and them not let them be able to use it. Like for example, no golf balls in hell or all power and no money to use it.

 

[JSmith43]

Caveman's Money Part 2

 

[JSmith43]

Caveman's Money Part 3

 

[JSmith43]

Caveman's Money Part 4