Posted on 09/20/2007 8:49:57 AM PDT by Hydroshock
Edited on 09/20/2007 10:12:24 AM PDT by Admin Moderator. [history]
Fresh economic shocks on the scale of the current credit squeeze will occur if US house prices continue to fall, one of the country’s leading housing experts warned on Wednesday.
Robert Shiller, a Yale university economist, told a US congressional panel that he feared “the collapse of home prices might turn out to be the most severe since the Great Depression”.
“The decline in house prices stands to create future dislocations, like the credit crisis we have just seen,” he told the Senate’s joint economic committee.
The warning underlines an increasingly widespread view that the turmoil in financial markets and tightening lending conditions are early consequences of a slump in the US housing market that is gathering momentum.
Warning signs There were fresh signs of weakness ahead for the US housing sector as figures showed applications for building permits fell to a 12-year-low.
Housing starts also dropped to the lowest level since June 1995, declining 2.6 per cent to an annual rate of 1.331m units.
The decline in construction activity appeared to be spreading to the north-east, where starts were 38 per cent lower.
Patrick Newport, an economist at Global Insight, said: “The eye of the storm is just ahead.”
But investors were cheered by the prospect of future interest rate cuts, as consumer price figures suggested a moderate inflation trend.
The government’s consumer price index fell last month by 0.1 per cent as prices at the pump dropped by nearly 5 per cent.
Core prices increased by 0.2 per cent. But the annual underlying inflation rate edged down to a 17-month low of 2.1 per cent from 2.2 per cent.
IF, MIGHT?
Hahah this guys an optimist.
There is no doubt prices will continue to fall, and the credit bubble will continue to deflate with massive consequences around the world.
The only question left is how fast and how long the deflation is going to take.. if its slow enough, we’ll just have a flat economy/recession for a good longwhile.. if its rapid, we’ll have a global depression.
Ah, so THAT is why the FED just slashed the prime rate by 50 basis points! The economic outlook is so strong, they just wanted to make it even stronger.
Yep, I sadly agree.
I’m having 70s flashbacks. NOT GOOD. Somebody get me a Vallium, slap me, electroshock therapy. Anything!
I’ve tried to purge the 70s from my mind and now the Fed slashing rates, talks of recession, stagflation and the crashing of the dollar are all sending me back into 70s flashbacks. Next thing you know, I’ll be collecting Pintos and Gremlins.
Aaaaaaarrrghhhhblleppffffffftttt!
OK, I’m better now. NO MORE TALK OF LEISURE SUITS, Donna Summer, or maxi dresses or...
Actually, with everyone working it should be cranking over at a slightly higher growth rate as has been noted by a number of people.
This rate decline is not a sign that we are going to tank. It is merely trying to tune the economy upward. If the housing sector begins to do well again, you will definitely see an increase in the growth rate.
is there a place or a thread for people to talk about “safe” investing and preparation in case, just in case, we do have a recession/depression/weather front or whatever?
“NO MORE TALK OF LEISURE SUITS”
Mini-skirts, however, remain in play.
I'll bet a lot of freepers don't remember that ( either they were too young or are now too senile...)
“I wish that I could figure out a way to make money off of you naysayers!”
Sell them gold. Get them prepared for “The Coming Recession”.
Learn how to short.
Or buy QID, SDD..or any number of other short vehicles.
Gold has been a nice place $$$ to be for a couple years.
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&yr=3&mn=0&dy=0&id=p67546646347
OMG, is that my rental property?
My local paper had a big story the other day bemoaning that house prices were out of reach for many in the area. Today they had an article bemoaning the falling house prices.
I wouldn’t call Shiller a hack. He predicted earlier price drops in his book Irrational Exhuberance - a term used later by Greenspan. Of course he could be wrong this time but I wouldn’t put him in the category of hack.
Why do we fight inflation everywhere else, but want inflation in the cost of housing?
Since we don’t save, it makes us “feel” wealthy.
ok
My local paper had a big story the other day bemoaning that house prices were out of reach for many in the area. Today they had an article bemoaning the falling house prices
You local paper is probably neither being hypercritical nor exercising a political agenda. They simply don’t know how to deal with instability.
Hopefully accompanied by an epic pretzel market.
Looks like the house of another government school educated six grade drop out who wanted to F around and not do any school work.
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