Another Post-Bubble Shakeout (Morgan Stanley on the bursting real estate bubble)

Morgan Stanley ^ | Aug 25, 2006 | Stephan Roach

[GodGunsGuts]

Excellent article by Stephan Roach ping!

[finnman69]

Stephen Roach has been a wise and brilliant economist for a long time. You could do yourself a favor by listening to his prognosis.

[PeterPrinciple]

When the last new bank building gets built then I will know the economy is going down the tubes. So far they are still building banks.

[11th_VA]

If the RATs take over in 2006, they'll get blamed in 2008 - could be part of the plan ...

[GodGunsGuts]

LOL! It would be nice if all this occurs on their watch!

[KevinB]

That may all be true, but housing is a necessary commodity and demand will continue to increase with population growth. At the same time, it will be difficult for supply to keep up due to local government political pressures making it difficult to find developable land.

[Always Right]

Five and a half years ago the equity bubble popped. Within six months, the US economy went into mild recession, and the global economy was quick to follow. Today, America’s housing bubble is finally bursting.

So we had 5.5 years of expansion with 80 or so percent rise, and we have 1 month that showed a decline of 1.7% and the bubble is bursting????? Oh the horrors!!!!!!!!!!!! The sky is falling.

[PRND21]

So we had 5.5 years of expansion with 80 or so percent rise, and we have 1 month that showed a decline of 1.7% and the bubble is bursting?????

Good point. Thankfully it burst right in my wallet.

[mugs99]

If the RATs take over in 2006, they'll get blamed in 2008 - could be part of the plan ...

That's my take on it.
.

[Jaysun]

The "housing bubble" claim is now competing with "global warming" in terms of absurd predictions and sheer ignorance.

[billhilly]

There was an old pollster(now deceased) that I knew quite well, but will not name. He made a living, and a very good one, polling consumer confidence for American corporations. He was as much a salesman as a pollster, and was in considerable demand as a panelist and lecturer.

Some wag once wrote of him, "He has predicted 7 of the last 2 recessions.

And so it goes.

[stainlessbanner]

bttt

[petercooper]

bttt

[WashingtonSource]

Roach ignores the fact that demand for housing is not going away, due to population growth. Houses are not stocks. That's his basic false assumption.

[GodGunsGuts]

Might want to take a look at the following charts:

http://www.safehaven.com/article-5841.htm

[BillM]

Roach is ignoring an enormous demographic effect. Baby boomers are on their last mortgage payments and their kids are finishing university.

This will lead to a staggering ramp up in liquidity over the next 15 to 20 years.

This will be followed by inherences and another round of spending/investment.

[thinkthenpost]

I am not saying that a decline in housing may bring the economy into recession, I am saying that all these drops are year over, in other words compared to one year ago, and that the housing market compared over many years is still fairly healthy. Mortgage rates have moderated and even dropped over the last few weeks, and I'm not convinced the sky is falling. The Fed needs to keep it paws off the interest rates, and hope the Bond market will keep mortgage rates low for the need several months and maybe this so called bubble will deflate rather than,.... POP.

[vin-one]

not only that but the few percentage of people who bought in the las two years, are the only ones short on equity. The rest of the country that has held a home for 5 + years should have some equity in that home. Unless they are stupid and cashed in over their heads.,

[Dr.Deth]