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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Steve Lokness who wrote (15810)6/24/2004 6:33:08 PM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
Maybe wages are rising faster than they appear?

i don't think so. we've had this housing bubble for years now in the face of the poorest real wage growth in any recovery in US history. i think the easier way to understand the continued housing "strength" is that "ownership" has been defined downward. now people can buy houses costing a half million or more with zero down, financed by interest-only ARMs, backed by "undocumented" income.

this kind of thing would have been extremely uncommon even five years ago, and unthinkable even in the early 90s.

so the increasing laxness of standards has provided a greater degree of flexibility to withstand rising long-term rates for "homeowners". of course, at some point the buck will have to stop, but i guess we must have some respect for how long the bubble has gone on, and the innovative genius of housing pimps to extend the bubble by "any means necessary".

i guess in the most extreme form, the bubble could be extended until it is essentially required that the vast majority of buyers rely on interest-only loans financed by ARMs. note that this is even more extreme than the Japanese housing bubble, when they relied on multi-generation mortgages--at least then, they were still making payments to principal!

basically, it seems the goal of credit pimps in the environment of incredibly irresponsible Federal "oversight" is to give consumers maximum rope with which to hang themselves, financially speaking.
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