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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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From: UncleBigs	4/26/2006 4:17:14 PM
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An e-mail to me from George Karahalios: I absolutely am not concerned about the real estate bubble. I am concerned about the "dollar" bubble. My prediction is that the dollar will break hard and the real estate bubble will only break moderately. This is hard to imagine, and leaves me in a quandry. But I believe that because Southern California's unique weather pattern (it only exists here and in Southern Europe), that as the world's wealth grows, the demand from immigrants for housing in this area will continue to increase. That being said, if something were to occur -- such as closing the borders and preventing immigrants from all over the world from entering -- we could have a crash. But it looks to me like we are continually moving towards a borderless world (at least the big picture). My guess for how this all plays out: Paper currencies slowly erode, but the dollar is the worst of the lot. Well located properties are all bought up by foreignors, so the prices never crash. Essentially, America becomes a country of renters, at least in Southern California. And the only way out of this debt is to sell what we have. It is my guess that we will spend the next 30 years re-gentrifying the middle of the country. We just spent the last 30 years hollowing it out! When it's all said and done Americans will be relatively poorer and may not even realize it. People keep predicting the Great Depression. I don't see it. Just the opposite -- it's the Great Globalization. True, this paradigm shift is causing large imbalances which the world must work through, but it will ultimately end in more world growth. Hope this helps. Buying gold is the safest way to play the growth yet imbalance scenario. Commodities and foreign stock funds will be other ways. --george

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