Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: NOW who wrote (1308)	3/5/2004 3:13:30 PM
From: mishedlo	Read Replies (2) of 116555

housing mises.org There is a strong likelihood that the U.S. housing market bubble has already reached dangerous dimensions. The trend adjusted house price index has been following an explosive growth path. After falling to -44 in Q2 1997 the trend adjusted house price index jumped to +60 in Q4 2003. There are a lot of similarities in this regard with Japan in the 1980's and early 1990. During that period the trend-adjusted price index followed an accelerating growth path. A major reversal in this growth path took place after 1990 with the trend adjusted house price index plunging to -350 in Q3 2003 against a peak of +640 in Q3 1990. It seems to us therefore that the Fed is barking up the wrong tree. It is not possible to fix the housing market problem by fixing symptoms. What is needed is to restrain the Fed from its reckless monetary policies, which structurally distort the economic environment and give birth to various ugly symptoms

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