I did that last night. You criticized me for doing so. Nonetheless, I will do it again:
Behold, the face of your shiny metal god.
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 ...
There is no reason to save face. I openly lay my cards on the table. It's your fellow fiat-fanatics who refuse to acknowledge the gold bull and the fundamentals that are driving it. It's you guys who are trying to sweep your ignorance under the rug by dogpiling on anyone who dares to differ with your irrational exuberance.
I did that last night. You criticized me for doing so. Nonetheless, I will do it again:
In speaking with several brokers over the course of the last couple of months, my sense is that a lot of the sales are going to out of towners -- euro trash with cash and folks from the heartland looking to set their kids up in the Big Apple.
The city is flush with cash, but my friends on wall street seem to be stacking it like old ladies on fixed incomes.
Can you identify the last real estate bubble that burst without any quantifiable fundamentals?
The crash in the early 1990s that followed the 87 drop on wall street took the prices of real estate lower than fundamentals would suggest. That's part of the cycle: prices rise to an unreasonable degree and then drop to an unreasonable degree.
From what I've been hearing, the market is somewhat stalled in many areas. That is to say at the top of the curve. The next drop will probably be triggered by consumer debt and increased inventories of properties purchased for investment purposes, i.e. flipping.
Just my guess. I could be wrong.
And take the stock market down with it???
http://www.jsmineset.com/cwsimages/inventory/51702_Chart1-220906.jpg
Don't be ashamed of your shiny metal god. He knows when you do that.
And let's be clear: I'm Roman Catholic. You worship gold, and evangelize it on FR every day.
Depends on whether the bubble goes global or not. The economy/markets aren't the same as they were a decade ago...at least that's my perception.
bttt
Here is Jim Sinclair's formula for what we are seeing (and about to see):
First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella - Goldilocks situations.
We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
The formula economically is inherent in #2 which is lower economic activity equals lower profits.
Lower profits leads to lower Federal Tax revenues.
Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.
Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.
That guy is a gold bug, isn't he? Very suspect...
I still don't understand what people mean about a gold bug. If you mean he believes that gold and PMs are in the midst of a secular bull market. Then the answer yes. If you mean by that they he has an irrational attachment to gold, then the answer is no. His website is commerce free, if that makes you feel any better. One thing's for sure, he has a very impressive list of credentials. Check out his bio: www.jsmineset.com
I'd expect much of this was driven by lower bonuses for Wall Street and the financial industry in general. Additionally, 1990 was the beginning of tough economic times for some of the country.
From what I've been hearing, the market is somewhat stalled in many areas.
After eight years of incredible gains this should not be surprising.
The next drop will probably be triggered by consumer debt
Our debt to income ratio is only 18.3% and is just .5% higher than it was a decade ago. Our credit card debt is just over $800 million, which sounds like a lot until you consider that we have more than $4.3 trillion in time deposits and savings accounts alone. On a per-capita basis, counting mortgages and not houses, our net financial assets total $89,800 vs. just $76,900 for Japan, who are the number two savers in the world.
The debt worriers never stop to consider assets. If they did they'd have nothing to worry about and would be miserable. The whole debt issue is much ado about nothing.
and increased inventories of properties purchased for investment purposes, i.e. flipping.
What percetage of all properties are owned by speculators? Will they all be forced to unload at the same time? Is this a local and regional issue (like Miami condo's) or is this exposure happening on a broader scale? I've seen no solid stats on the issue other than the unsubstantiated belief that flippers unloading their properties could cause the real estate market to crash.
Oh, but I'm not proselytizing your adoration of gold. You are.
You don't say?
LOL
It is this deficit that must be met by incoming investment in the US in any form.
Why? This deficit is money ($$$) earned by foreigners selling us their stuff. We don't have to do anything. They have to find something to do with the ($$$) they're holding. They can reinvest them in America or not.
This is an economic downward spiral.
Economic idiocy. Goldbuggery. But then, I repeat myself.
This deficit is money ($$$) earned by foreigners selling us their stuff. We don't have to do anything...
Uh, we do have to pay it back and pay interest on it. Right now America is a debtor nation.
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