Posted on 09/19/2007 11:34:56 AM PDT by Red in Blue PA
WASHINGTON (AP) -- An economist who has long predicted this decade's housing market bubble would deflate said the residential real estate downturn could spiral into "the most severe since the Great Depression" and could lead to a recession.
Yale University economist Robert Shiller's written comments to lawmakers came a day after the Federal Reserve responded to credit market turmoil by slashing the target federal funds rate by a half point to 4.75 percent.
Shiller, in testimony prepared for a hearing of the Joint Economic Committee said the loss of a boom mentality among the public may bring on a drop in consumer confidence that poses a "significant risk" of a recession within the next year.
(Excerpt) Read more at biz.yahoo.com ...
Predict anything long enough...
Gold’s going to $2000! /sarc
He is correct, thus the 50 basis point drop. The great depression was not caused by the stock market crash, rather, the stock market crash was caused by the real estate speculative bubble popping in Florida and the resulting lack of liquidity in the banking system. I do not think we should have a recession as long as the Fed commits to lower rates by January another 75 to 100 basis points. It is the cheapest way to solve the housing market/mortgage market problems. Look for rates to continue down near term. Look for them to go up in 2009.
An economist who has long predicted this decade's housing market bubble would deflate said the residential real estate downturn could spiral into "the most severe since the Great Depression" and could lead to a recession.
This should have happened at least 3-4 years ago, the bubble of massive new building lasting so long just means the market is going to be flooded with homes for quite a while.
The taller and longer the wave the further the fall will have to be.
Shiller has been predicting gloom forever. Of course with yesterday’s rate cut, his ‘hypothetical 20 percent drop in home prices over two years’ is not going to happen. It would not have happened even without the rate cut, but now I doubt we see any further fall in prices.
Although I do think the housing market is significantly overvalued in my neck of the woods, this guy is hedging like crazy. At least Jim Cramer (”Mad Money”) went out on the proverbial limb and said there WOULD be a housing slump, not “could” be one.
Well said. I too have been waiting for this......it was indeed inevitable and long overdue.
Trees do not grow to the sky.
Let me finish his statement for him: "So, especially to my Democrat colleges on your fine committee, I am here today to fulfill the purpose of this meeting, to help get the ball rolling on deflating the public confidence. Maybe we can get the depression started before the fall of 2008, Allah willing."
The biggest problem I foresee is that interest rates are declining at the same time foreign investors are demanding a premium for their U.S. holdings (because of their certainty about the eroding value of the dollar due to inflation).
We can trust this liebral, shill writer??????????
That could occur. If it did look for gold to run to the sky. More likely, US exports grow maintaining strong core growth in economy. This market has been driven by low dollars for seven years and the interest rates have remained historically low. Foreigners invest in US because of the inherrent stability of our politics and economy. If your newly minted Chinese millionaire where would you put your safe money?
I might be wrong, but I think Shiller is the guy I saw just three weeks or so ago ranting and raving that a recession would occur before the end of the year.
I don’t see it. But if this was the guy, he was quite hysterical.
Some housing markets all already down 20% down to 2003 prices in California. More to come.
Get educated to what is really going on the hsouing market across the country. This site is a clearing house blog (sort of like Drudge Report in a blog format) on housing bubble news.
http://thehousingbubbleblog.com/
Yes you are now an expert. Any body can tell you what is going to happen the trick is knowing when. A market run won’t last forever but if you can time the turn you can make a lot of money.
It will be more than 20%. Housing prices have doubled in some areas in 5 years. Have incomes?
Prices are coming way down.
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