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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: patron_anejo_por_favor who wrote (45187)11/9/2005 3:41:41 PM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
who knows how far things'll go when the snowball really gets rolling downhill?

that's the thing, when you consider how many people have little or no equity and are also tied to option ARMs (because they don't have the cf to be long-term owners). these people HAVE to have capital gains; capital losses they cannot afford. so we should expect at some point a cascade of sell orders as all the lemmings run for the door at once. when you consider that a couple years down the road, we could have some distressed creditors resulting in newly tightened regulations (along with tighter money), at that point it won't be so easy to buy houses with nothing down using no-doc income. so the natural buy level may be way, way below (in real terms) what was encountered in the wake of a "normal" housing bubble like in the 80s.

and another factor: lower inflation rates today mean that more of the real price adjustments have to come out of the hide of nominal prices.
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