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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (17881)4/6/2002 8:06:45 AM
From: mcg404   of 74559
 
<<The lesson which consumers—and also many over-sanguine economists—have to learn is that spending cannot outpace income for ever. House prices have saved America and the world from a deep downturn, but they do not remove the need for consumers to take care over their balance sheets. Homes are only as sound as their foundations. >>

from contrary investor:

What the raw real estate data tells us is that a good portion of the price appreciation in real estate over the last few decades has been monetized Not all, but a meaningful portion. Household real estate ownership today is more dependent on leverage than really ever before... Moreover, so much of this leverage has been securitized and sold off into secondary markets creating both the perception of heightened liquidity and engendering ever higher levels of lending activity. Real estate has simply been a part of the overall credit expansion process. Where conceptual trouble may lie in terms of financial and macro economic flexibility ahead is in the potential mismatch of assets and liabilities. For the portion of monetized real estate equity that has gone to fund current consumption, households have been left with long lived liabilities against short dated assets. The classic financial mismatch.
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