The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Elroy Jetson who wrote (3607)	7/28/2002 9:44:24 PM
From: JBonline	Read Replies (1) of 306849

Excellent analysis. Am a urban/economic geographer by training and a minor partner in a hi-tech software consulting business in Austin TX (Market Answers LLC). Lots of coursework dealing with US regional booms and busts since the 1800's, demographic cycles, etc. Started watching the stock market when my hubbie dumped his semiconductor /telecom portfolio in my lap right before the July 96 low, continued watching through the devaluation of the Thai baht in fall, 1997 immediately followed by the outflow of money from Brazil and other Latin American countries, continued watching still though the Oct 98 fiasco with Long Term Capital Management in which the feds bailed out several very large US companies because they were too large to let fail. Am now seeing stuff in my homemeade charts that is NOT matched by anything I saw on the previous downs. What has been becoming clear is that several of the previous downs were subcycles in a longer (and scarier) "master" cycle that began with the currency speculation and devaluations starting with the Thai baht. Yours is the first explanation I've seen after several weeks of looking that explains multiple phenomena, not just one piece of the puzzle. Some additional comments of my own that you might have some additional insights on follow: 1) the deflation experienced by some countries (e.g., Australia and S. Korea, now starting to describe themselves as "reflating" ) was "balanced" by the horrendous inflation in the US tech sector. This was presented in the US media at the time as indicating higher productivity in the US. I read an article in the Financial Times by Barry Reilly some time ago that said that Enron was the tip of the iceberg on US book-cooking and that so many US corporations would ultimately be found to have done similar overstatements that US economists wil be forced to backward- revise productivity estimates in a downward direction. (Basically his argument was that massive book-cooking at the corporate level throws national measurements that rely on those books off to a corresponding degree). 2) Some regions and groups in the US experienced the inflation you mentioned(example A-- techy-regions like Austin which used to rank behind Dallas and Houston in average household income, but now lead the other cities by a wide margin; example B-- massive increases in salaries for know-little 20-somethings here in Austin who moved here from California and other places and expected to/insisted upon experiencing immediately upon college graduation the same kind of financial success it took their "Happy Days"-Generation parents 20 years to achieve). However, the deflation was not limited to regions and groups outside the US, but included some inside the US-- midwestern farm areas (buying tractors at inflated Year 2000 prices but selling corn at deflated prices not seen since the 1960's) and what remains of the steel belts. 3) Biggest degree of income inequality inside the US since the 1920's. 4) Formerly middle-class families building mansion-size houses on tiny lots-- a pattern also seen in midwestern cities before the 1929 bust and also before (what I think was) a railroad-speculation related bust in/about the 1870's. Any comments?

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