Sunday, August 28, 2005

Back from the Jersey Shore!

I just got back from a week with the family down at the Jersey Shore. I have been going there for 30 or so years. It is my observation that I have never seen so many people down there. I can only conclude that this is the trickle down effect of the cash out refi craze. The most exciting thing, obviously, from the last week were the comments from AG. The housing market is in his crosshairs. The stage is set for the showdown between the housing bulls and bears (and bond bulls and bears for that matter). I cannot agree with him more that there is a tremendous amount of arrogance from the finance community. I still do not sense any anxiety from people regarding the potential risks in the market. I think while the flippers in Florida are more concerned about the hurricane, they may not understand the wealth vortex that is approaching them. With the new bankruptcy laws, many people will not be able to just walk away. Chapter 7 may just be a dream. I wish it didn't have to come to this, but 10 years of living in sin have to be made up for by 10 years in repentance. The probably senario:

House prices down:
Taxes up:
Trade deficit down:
Budget defecit down:
Savings rate up:
Service economy down:
Manufacturing up:
Dollar down, but not out:
Asset Deflation:
Commodity Inflation:
Republicans out:
Democrats in:
Pain - Moderate to Severe!


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