Posted on 09/21/2006 8:02:27 PM PDT by GodGunsGuts
The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops
NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?
According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.
(Excerpt) Read more at economist.com ...
Just keep on telling yourself how right you are; nobody else believes a word of it. :-)
It doesn't matter what you fiat-fanatics think. Gold has no choice but to rise. The same economic realities that have been driving gold will continue to drive it higher for years to come. We simply have no short-term choice in the matter. Not me, not you, not the congress, not the FED, nobody. When gold hits 1650+, then we can start looking for tops.
Looks to me like we may have hit the bottom:
http://www.goldcentral.com/goldcentral/graphics/gc_nc_gold_daily.gif?
Oh dear, oh dear.....and you think that you will live long enough to see that happen? ROTFLMAOPIMP
Looks to me like you are bonkers. But why don't you max out all of your credit cards and go buy as much gold, on margin, as that sum will allow you to do, right now? LOL
I think I will see it in less than five years.
I think that you won't and from what I know about you, the history of the markets, and previous metal market trends, I'd say that I am the one who is right. ;-)
It's important to keep in mind that our financial markets are driven first by people and their trading decisions, and market prices are not directly determined by "economic realities." Those economic realities strongly affect the trading decisions of people which directly set market prices. But there are also other strong influences on market prices, such as the attractiveness of alternative investments, market psychology, and technical market factors.
There are also short sellers and they are a big force in the relatively small gold & silver markest--ignore short sellers at your own peril in the gold markets. It's important to realize that rising gold & silver prices tend to increase inflationary expectations and in effect tend to push inflation along. So which big economic forces in the world get hurt by rising inflation and the resulting higher interest rates? Well one of them is Wall Street (brokerage and investment banking firms), and from what I've heard that's where a lot of the short sellers work. Short selling contains the price of gold and silver and when prices reach a support level, the good short sellers cover their short positions and make a big trading profit too.
Ultimately gold & silver prices will probably rise substantially because of increasing demand and limited supplies in the future. But I wouldn't bet much on a big increase any time soon. That's just my opinion. You know what's best for you.
Remember the way gold was ambushed at $700 and knocked back down under $600. I don't have any data on this, but judging from the sharp and fast revesal at $700 I would bet there was heavy short selling around $700 along with heavy profit taking on long positions. I just bought some of the Gold ETF (GLD) at $568, just for a trade. I think it's likely to bounce back up to $600 as oil bounces back up in the next few months. That's of course assuming oil does bounce back up.
$1650? I strongly doubt that gold will reach that price any time in the next 30 years. When gold went above $600, there was a signficant decline in demand for gold in gold jewelry. I saw an article about people in India switching to lower grades of gold jewelry with less gold content. Unless inflation increases by another point or so, I don't think you'll see gold move above $700 any time soon. Inflation is apparently now starting to decline as oil supplies are beginning to grow slightly faster than oil demand and economic growth is slowing down. That is a close race but it looks like the oil producers are starting to increase excess capacity a little beginning next year.
The gold and silver markets are wild and volatile. The only market that looks more volatile to me is natural gas futures. That's where some hedge fund trader just lost $4 billion recently. Trading natural gas seems crazy to me. That amounts to betting on the weather, in addition to all the other supply and demand factors.
It may happen sooner than you think:
http://www.zealllc.com/c2006/Zeal011306A.gif
Naw, I know gold exists. I'm (we're all) forced to bear witness to your vigorous daily prostrations to your shiny metal god.
You're desperate to save face now, but you're going to have to do better than that. The evidence of your goldbuggery is too easy to find, too blatant to ignore.
Hmmm. I always wonder why some articles say this could be so bad it could lead to a "recession" and I keep thinking, what is to stop a worldwide "depression".
When I started researching this about six months ago, I was actually surprised to see that this was not just a US Phenomenon. Heck, even Ireland is in on this.
This does give at least a little more credibility to those who have been saying this is not a normal real estate cycle.
Things are gonna get interesting in 2007.
That Japanese rate of zero percent, in certain rare circumstances actually worked out, technically, to a NEGATIVE percentage rate!
>>It's happening right before your very eyes, and will continue to happen until the real estate bubble either fizzles or pops.<<
It's fizzling now. The only question that remains is will this be like a break in an earthen dam, where the whole thing comes down, or will it be more like a few drilled holes in a concrete dam.
We'll know in a few months.
This article was right, but premature as so many of us have been. And there is a reason.
Who knew just how creative lenders could be to keep finding "qualified buyers" to inject in the market to keep demand up. But even that has run it's course. The rocket has run out of fuel at an extreme altitude and, I fear, there are no wings to "glide" back to earth. It will be a rather hard landing.
Of course, the rocket has hit the top of it's trajectory and is just sort of suspended there as it slowly begins it's freefall.
Stay tuned for trajectory updates.
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