What assets? Real estate? Since real estate makes up just 21% of our total household net worth, just how vulnerable is the average American when he has 57% equity in his home? The rapid appreciation in the real estate market is not a nationwide phenomenon. So, if a few markets experience a worst case correction of 20%, just how much impact is this going to have on the total real estate market and our net worth, of which only 21% comes from homeowner equity? This country has not experienced a year over year decline in the aggregate value of real estate since the 40's.
So, now you say the stock market is also overvalued. And you know this how? I am amazed by how many people here believe they know more than the markets. If this were really the case, you wouldn't be posting on FR, you'd be enjoying the scenery from your yacht along the Italian Riviera. ROFL!
What happens when the mortgage company demands the buyer pay the difference because the home has lost value?
If I'm paying my mortgage on a timely basis why would my mortgage company demand anything from me? Do you think the banks will make money on foreclosures? Is foreclosure something the banks want to do?
It was valued by his realtor at $ 1.5 million
Are you certain that the Fed values real estate the same was as this realtor?
The answer you leap at repeatedly tells you to borrow even money
The reason consumer debt is increasing is because of low interest rates and the increase in home ownership. The issue is not so much the level of debt but whether sufficient capital formation is taking place in a market-based way to maintain growth. It is. The fact that our household net worth continues to grow rapidly, in spite of this increase in debt is all you need to know.
As for the Federal debt; since 2001, the federal debt has increased by $2 trillion while our household net worth went up by $10.4 trillion. Our wealth is growing five times faster than our external debt. Our household assets are $65 trillion, which is more than twice what it was just 25 years ago, and is more than 10 times what it was in 1945. We've created more wealth in the past 25 years than the 200 years prior. Our per-capita assets are $89,800 which is the most of any country in the world and makes us the world's best savers.
You can preach and believe all the doom you choose but you can't back it up with any facts from reliable sources. To say that all assets are overvalued in a market economy is just silly. Remember, you predicted a nationwide meltdown in real estate values in this country by March of this year. We keep getting closer to that fateful month yet we see new home construction remaining strong in most areas of the country. I won't even bother to remind you what you predicted about bird flu.
As for the meltdown, it has already begun. Properties have stalled and fallen 15% in many California cities. Foreclosures hit a 12 year high in Boston last month. Hawaii just fell about 30% in December. Speculators are pumping and dumping condos all over the U.S. Wait, watch, listen.
Greenspan is responsible for pumping excess capital into real estate. Read the report below. There is a link to a recent comment by Fed Board Member Susan Bies about 'exotic mortgages.' http://www.freerepublic.com/focus/f-news/1570352/posts
Regarding the over valued stock market -- buy Google if actually you believe your argument. Why is that stock valued at $ 396 per share? What does Google make? What are its mortar and brick assets? Everything is a lot hot air today. Even Google.