“Deflation”:
A. Re. the housing market. Subtract approx. ten percent of the population from the housing market and residential real estate prices will drop faster than they currently are.
Results: Rating entities will be forced to downgrade “Securitized” paper with the result that pension funds, insurance companies, and other institutional investors will be seeking compensation from Wall Street.
Many homeowners will be “upside down” re. home equity vs. debt. Abandonments will accelerate resulting in neighborhood value erosion, worsening the price decline.
More to follow...