You dont bury you heads in the sand. That is for cowards. You get up and meet life in the face and take apart adversity and whatever life dishes. Is there any other way? Sitting there depressed with doom and gloom you ain't going anywhere but down. I have seen cowards sink in holes they never dig themselves out.
When a market is in a dominate trend there are no shortage of proponents of the trend. I have only been a businessman for 7 years but I do know this: when people catch bits and pieces of information from news/print-media/blogs/etc. and speak as if they are authorities on a matter, it's likely that an inflection point has been reached and the current trend has already begun to reverse. Regards,
Did you read the article you posted? It was stating that two economists had a certain opinion. Newspapers loved to trot out the bee experts who discussed how the african killer bees would take over, but it was a dynamic system and their own genetics were watered down. The newspapers loved to print the words of epidemiologists who talked about how we'd all be wiped out by bird flu or ebola, but people took precautions and/or strains weakened. Again, a dynamic system. Our economy is a dynamic system. People will change. Laws will be enacted. Houses will be refinanced. Investors will look for distressed owners and buy them out before the banks foreclose. I'm not saying that things won't get worse, but folks sometimes forget that you can't extrapolate to absurdity. Just because an airplane is losing altitude doesn't mean its going to crash...there is a pilot at the wheel...an invisible hand. The bottom line is our dollar isn't worth much right now, and though there might be extra supply, building costs are high as hell, so it will get absorbed. How fast is anyone's guess, but trust me that the newspapers will always print the nightmare scenarios. SM
What was the driving force behind RE in the last 5-7 years? ACCESS to chip money? http://www.ft.com/cms/s/0/39f3e128-d808-11dc-98f7-0000779fd2ac.html
IMO everyone here needs to go back and look at that chart Thurgood put up above and dont forget it. MEW is associated with the levels of aggreagte or "total" real estate activity in the economy - sometimes called residential investment. Mauldin and Minyanville and everyone else that has pushed that chart around for the last few years has never really asked the key question - Just How Much Borrowing, How Much Of This MEW, How Much Residential Investment had to be done to get us that 2% GDP boost or whatver it was to save us from a much longer recession back then? Rather than answer it, I'll describe it with an adjusted Nasdaq chart which is a better visualization: 10 years chart The level of aggregate real estate activity now is about the same as at the start of the chart - 98, 99, 00. The top is Summer 03 but not at a Nasdaq level of 5,500 but somewhere closer to an equivalent of Nasdaq 20,000 to 25,000! Couple of points - dont confuse with sales - RE sales topped late summer 05 -- massive real estate investment ALWAYS precedes sales. Tops in real estate investment are usually associated with bottoms in rates - no big insight there. Another visualization of the bubble collapse - think of a trading account in summer 03. By summer of 04 you have lost 50 - 60%. By summer of 05 another 50 - 60%. Summer 06 - another 50 - 60% and Summer 07 another 50 - 60%. Yeah, I took some license to highlight the bubble and the gravity of the situation but I believe it is basically in accord with lending data from the feds, my state planning office forcasts adn data, some of my own RE business related data. Final point, even if you dont by a word of my spiel - What will replace the MEW on that chart? What happens if we dont have it anymore/
Wow, what a thread with interesting inputs. So, it seems that the housing situation is serious. Does it have any relation with the stock market? I mean is bearish markets bad for the economy as it seems to cause depression, crashes and losses? What causes markets to be bullish and bearish? What are their effects?