Thursday, September 14, 2006

Current state of affairs.

It's obvious that the housing bubble is slowly deflating. Record inventories on top of increased, though historically low, interest rates have spelled doom for the market. The only real question is to what degree prices will fall and over what length of time. I am sure that all the mandarins at the fed are closerly monitoring the situation. It seem somewhat surreal that our government is so obsessed with real estate prices, but I suppose it is just the zeitgist of the times. Legacy to Big Al. It's obviously impossible to predict the amount of housing deflation that will occur. Predictions range from no absolute losses to 50-60% in some "hot" areas. There are just too many variables, as well as unforseen events to make an accurate prediction, in my opinion. I am going with a middle of the road 20-30% absolute reduction in prices. I am not a big fan of high real estate prices. I think it's bad for business as well as for families. It's obviously been a disaster in terms of net national savings and personal debt loads. I am just hoping for an "orderly" adjustment. i.e. no bread/soup lines or mass unemployment. I look forward to the day to when this country can back to the business of business.


Anonymous Anonymous said...

"Going back to the business of business" -- To get back to that point first we have to get rid of the idealogues.

The country is being killed slowly by idealogy. This free trade is bull. What China is doing is mercantilism. Mercantilism is a way of business where you use your strengh to sell more to the other guy, than what you buy from the other guy. A pure simple transfer of wealth.

Mercantilism has been try and done before. The US using the "Monroe Doctrine" & other foreign policy strength ensured that a wealth transfer occurred from Latin America to the US. The same thing happenned with European colonial powers with Africa. Now you see the mess both Latin America & Africa are.

So if we want to return to the business of business, first we have to realize that everybody wised up and is no longer going to allow us to suck them dry, and second we have to realize that the ivory tower think tank crowd that gave us things like the Iraq War 2 don't have a clue, and they are leading us up a blind path to our economic death as other countries are sucking us dry.

There is no way in hell - that a factory in the US is going to be able to fairly compete with a Chinese factory with barely slave labor wages.

Either we go to their level, which I believe we are heading fast or they come to ours. But we & our kids should not pay the price & cost of they coming to our.

6:57 PM  
Anonymous Anonymous said...

Part Deux:

Until we realize and act to protect our future, we are slowly going to cook ourselves - just like a frog put in cold water and a fire lit under it, the frog won't notice the temperature rising & jump out until is too late to save itself - into economic oblivion & third worldom.

The water tmeperature has risen enough, but we have not truly felt it yet, because of the easy credit bubble which has generate the stock & housing bubble.

This easy credit has masked the true economic debilitation that has occur.

The bigger disaster is not going to be the deficit or assorted bubbles popping, but it is going to be the rapid drop in average american's income & standard of living in the next few years, accompanied by social upheaval...

Think England, after WW 2, thru the late 70's. Economic stagnation & social upheaval -the birth of the punk movement, etc.

An MBA..

4:58 AM  
Blogger njdoc said...

Very interesting point

2:54 PM  
Blogger Larry Nusbaum said...

I am not looking for the housing market to suddenly turn back up on a dime. Too much inventory to work through. Some of that inventory will drop off as sellers cancel their listings (or they expire) as they were unable to sell at prices that are no longer available. These are the ones who didn't have to sell, didn't have to move, didn't have a bad mortgage to refinance, but were willing to sell at inflated prices and didn't pull it off.

12:13 PM  

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