two final bubbles yet to burst
real estate, USDollar
I remember in late 2000, several people thought fiber optic would survive the crashes and continue onward & upward
most of telecom had crashed
broadband was invincible, so many thought
my best buddy from Digital days thought fiberoptic would be fine
he was the smartest guy in our gang at Digital
he lost his ass
they thought the New Economy was smashed
but Old Economy was immune to such vile forces
wrong, 20% hit to Dow and S&P500
I now am reminded of many people believing housing will survive the slaughterhouse
everyone needs a home
they aint building any new land
town restrictions are everywhere
schools are limited in space
water and other resources are scarce
now the highend of property has seen huge declines
gogo towns like SanFran are seeing the worst declines
commercial real estate has eyepopping vacancies
my best Boston buddy in commercial RE is now selling half his property
he last sold property in 1986-87 at the top
he said this time he is one year late to sell
he expects property to suffer for at least two more years
the urban Real Estate bubble is slowly popping
more like a steady leak, with characteristic hiss
it took very sizeable drops in mortgage rates to keep prices steady, if not rising
the big force is for constancy in mortgage monthly costs
lower rates, higher price ==> steady costs
now... higher rates, lower price ==> steady costs
now rates are ticking back up
and real estate will be slowly hit, but not whacked
only the "fringe" will get hurt a lot
the rest will just see minor reduction in value
new home builders will get whacked
those who buy in distant suburbs will get whacked
and the effect on the US economy from ended refinances will be clear
then there is the USDollar
that totally ignored entity
that badly understood concept
that subject from the dismal science
the dollar has remained the stored value currency
it is saved in Argentina, Brazil, Russia, Germany, Taiwan, Malaysia
its high value has hurt US exporters
this stalls the US recovery effort
as fast as GreenScrotum prints money, foreigners scoop it up
foreigners use it to save money, hedge against own currency declines
foreign importers to the US receive in from our trade deficit
that all might change soon
the dollar must come down
but Asians will fight tooth & nail to debase their currencies
watch for the Euro to gain ground worldwide
they have more stability, less excess capacity, less debt in their system
eventually, GreenTurd will win the battle
foreign economies will enjoy a lift
but Argentina loudly showed in the last couple weeks...
NOT YET
they made a huge mistake in remaining tied to the USDollar
great idea on the way down, terrible as US peaks
you will know the US economy is poised for a sustained recovery, rally, and continuation
ONLY AFTER
both housing and the dollar see some healthy declines
so in 2002, expect a recovery, but a tepid delayed frustrating one
does anyone here understand anything I say ?
or just looking for a quick 2 pts on EXTR ?
or a 1-pt run on INTC ?
or chasing the next hot stock ?
last week it was fuelcell stocks
/ jim |
